LABOR 1 Conditions for Employment

Manila Terminal v. CIR

International Pharma v. NLRC
Mercidar Fishing v. NLRC
Far East Agri v. Lebatique
Labor Congress v. NLRC
Best Wear v. Lemos
Legend Hotel v. Realuyo

Manila Terminal Co. v. CIR and Manila Terminal

Relief and Mutual Aid Association
G.R. No. L-4148; July 16, 1952; Paras, C. J.
Digest by Donna S. Talledo

control of the Comm. of Customs and the Sec. of

Finance.
CIR dismissed the other demands of the Association for
lack of jurisdiction but ordered the Company to pay:
a.

Regular/base pay corresponding to four hours OT

plus 25% as additional OT pay (Sep. 1, 1945 May
24, 1947)

b.

Additional compensation of 25% to those who

worked from 6pm-6am (same period as above)

c.

Additional comp. of 50% for worked performed on

Sundays and legal holidays (same period)

d.

Additional comp. of 50% for worked performed on

Sundays and legal holidays (May 24, 1947 May
9, 1949)

e.

Additional comp. of 25% for work performed at

night (May 24, 1947 May 9, 1949)

FACTS

Sep. 1, 1945 The Manila Terminal Company,

Inc (Company) undertook the arrastre service in
some of the piers in Manilas Port Area at the
request and under the control of the US Army.
a.

The Company hired some thirty men as

watchmen on twelve-hour shifts.

b.

P3/day for the day shift and P6/day for the

night shift.

Feb. 1, 1946 The Company began the post-war

operation of the arrastre service at the request
and under the control of the Bureau of Customs,
by virtue of a contract with the Philippine Govt.

a.

The watchmen continued in the service with a

number of substitutions and additions.

b.

Their salaries were raised to P4/day for the day

shift and P6.25/day for the night shift.

Mar. 28, 1947 A member of the Manila

Terminal Relief and Mutual Aid Association
(Association) sent a letter to the Dept of Labor
(DOL) requesting for an investigation on their
overtime (OT) pay, but DOL did nothing. The
following month, six other employees sent
similar demands to DOL but also to no avail.

May 24, 1947 The Company instituted the

system of strict eight-hour shifts.

July 16, 1947 The Association was organized

for the first time and was registered with the
DOL. They filed a petition amending the one
previously filed by Manila Port Terminal Police
Association, praying for the payment of their OT
pay from the commencement of their
employment

May 9, 1949 By virtue of Customs Admin.

Order NO 81 and EO 228, the entire police force
of the Company was consolidated with the
Manila Harbor Police of the Customs Patrol
Service, a govt agency under the exclusive

Separate MRs of the Company and Association were

dismissed.
ISSUES
1. Whether or not the CIR has jurisdiction to render a
money judgment involving obligations in arrears.
YES.
2. Whether or not the agreement included OT
compensation. NO.
3. Whether or not the Association is barred by
estoppel and laches. NO.
4. Whether or not the invalidity of the employment
contract precludes recovery by the Association.
NO.
5. Whether or not CA 444 authorizes recovery of
bade OT pay. YES.
HELD/RATIO
1. Whether or not the CIR has jurisdiction to
render
a
money
judgment
involving
obligations in arrears. YES.
It was already decided and held on a previous case that
under CA No.103 the CIR is empowered to make such
orders for the purpose of settling disputes between
employers and employee.
2. Whether or not the agreement containing
specific wages for 12-hour shifts included OT
compensation. NO.
In times of acute unemployment, the people, urged by
the instinct of self-preservation, go from place to place
and from office to office in search for any employment,
regardless of its terms and conditions. They would be as
good as rejected if they ever try to be inquisitive about
the hours of work or the amount of salary, or ever
attempt to dictate their terms.
After the institution of the strict 8-hour shifts, no
reduction was made in the salaries they received under
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the 12-hour arrangement. The lowest salary was set

P5.50 per day for both day and night shifts. Although
the night shift rate decreased (from P6.25), the fact that
the day shift rate increased (from P4/day) tends to
militate against the contention that the salaries given
during the 12-hour shifts included OT compensation.
3. Whether or not the Association is barred by
estoppel and laches. NO.
The case is quite on all fours with the case of Detective
and Protective Bureau, Inc. v. CIR and UEWA where the
employees work for more than 8 hours, in addition to
work on Sundays and holidays, without receiving extra
compensation.
It was held that the law gives them the right to extra
compensation. And they could not have impliedly
waived such extra compensation, for the obvious reason
that they could not have expressly waive it.
The principle of estoppel and laches cannot be invoked
against the Association:
a.

It would be contrary to the spirit of the EightHour Labor Law, under which the laborers
cannot
waive
their
right
to
extra
compensation.

b.

The law punishes the employer for its violation

and leaves the employee free and blameless.

c.

The employee is in such a disadvantageous

position as to be naturally reluctant or
even apprehensive in asserting any claim
which may cause the employer to terminate the
employment.

4. Whether or not the invalidity of the

employment contract precludes recovery by
the Association. NO.
The argument, based on the principle of in pari delicto,
is untenable. CA no. 444 imposes a duty on the
employer to secure a permit from the DOL. Thus,
employer may not plead his own neglect as exemption
or defense.
The Eight-Hour Law, which provides that any
agreement or contract between the employer and the
laborer or employee contrary to the provisions of this
Act shall be null and void ab initio, is obviously
intended for the benefit of the employees.
The employer cannot invoke any violation of the Act to
exempt him from liability for extra compensation.
Moreover, the law makes only the employer criminally
liable for any violation.
5. Whether or not CA No. 444
recovery of bade OT pay. YES.

authorizes

Sections 3 and 5 of CA No. 444 expressly provides for

the payment of extra compensation in cases where
overtime services are required, with the result that the
employees are entitled to collect such extra
compensation for past OT work.

AFFIRMED. The watchmen will be entitled to extra

compensation
only
from
the
dates
they
respectively entered the service of the Company.
INTERNATIONAL PHARMACEUTICALS, INC. (IPI) v.
NLRC; DR. VIRGINIA QUINTIA
09 March 1998; Mendoza, J. | Digest Prepared by Hans
Santos
FACTS
IPI, a corporation engaged in the manufacture,
production and sale of pharmaceutical products
engaged Dr. Quintia as Medical Director of its Research
& Development department in March 1983. On the
same year, the government launched a program
incentivizing development of herbal medicine. IPI
decided to venture into the field and one of the
government requirements for entitlement to incentives
was hiring of pharmacologist. IPI thus contends that
Quintia was hired only for this purpose and is thus a
project employee.
The contract of employment was for the term of one
year from its execution 19 March 1983, subject to
renewal by mutual consent. When said contract was
about to expire, she was invited to be chair of the Xavier
University Pharmacology Department. However, Castillo
(president of IPI) prevailed upon her to stay, assuring
her of security of tenure. Thus, she stayed not only as
Medical Director of the R&D department but also as
company physician.
On 12 July 1986, Quintias employment with the
company was terminated. It is alleged that this was due
to her taking up the cudgels of rank and file employees
against the officers of the Savings and Loans
Association. She had reportedly pointed out inequality in
the imposition of interest rates, leading to a demand of
full disclosure of association finances. When Pres. Castill
returned from a trip to China, she was asked to report to
his office where she was berated in front of some
laborers. When she sought permission to explain her
side, this was turned down and she was told to leave.
On 10 July, she was replaced as head of R&D by Paz
Wong. On 12 July, she received an inter-office
memorandum officially terminating her services.
She thus filed a complaint for illegal dismissal before the
LA. IPI raised the defense that Quintia was a project
employee who had been hired on a consultancy basis
coterminous with the project involving the development
of herbal medicine. Her continued employment for more
than two years after the original employment contract
expired was based on an oral agreement with the same
terms as the written contract, or at least was based on
implied extension.
LA: Quintia was a regular employee and not a project
employee, thus could not be dismissed without
just/valid cause; also found that IPI failed to observe due
process.
NLRC: affirmed the ruling of the LA
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ISSUES-HELD-RATIO
WON Quintia is a regular employee of IPI: YES
IPI alleges that article 280 should not be used
as it distinguishes between regular and casual
employee, and they specifically allege that
there is no employer-employee relationship. The
Court ruled that there is no dispute that Quintia
is an employee with the issue being whether
she is a project employee (as alleged by IPI) or a
regular employee. Hence, the standard in art.
280 of work that is necessary and desirable to
the business applies.
IPI alleges that Quintias work was not
necessary and desirable but only for the
duration of the herbal medicine development
project. Both the LA and NLRC found that
Quintia was the head of the R&D Dept; that she
was also company physician; that she undertook
various civic activities for IPI; and that her
employment lasted for more than 3 years.
Hence, they ruled that Quintia was not a
consultant but a regular employee.
The NLRC observed that she was replaced upon
termination implying that she was occupying an existing
position and was not merely a project employee. The
employment contract also makes no mention of any
particular project or consultancy.
IPI alleges that Quintia was not required
to keep fixed office hours. As found by the
LA, this was indicative that she was a
managerial employee, who was not
covered by the Labor Code provisions on
hours of work.
IPI alleges that there was implied renewal, or at
least implied extension, of their written fixedterm employment contract. The Court found
that there is no principle of law to support this
contention. Furthermore, to sustain such
argument would allow employers to circumvent
art. 280 and allow employers to prevent
regularization
by
extending
fixed-term
contracts.
Moreover, if there was extension of the written contract
with the termination only being pursuant to the
expiration of the latest extension, then Quintias
termination would have occurred in March when the
term runs out and not in July.
WON there had been valid termination: NO

IPI alleges that the termination of Quintia was

valid, being based on the termination of the
herbal medicine development project. As the
Court has already found that Quintia is not a
project employee but is instead a regular
employee, this contention has no merit.

As
a
regular
employee,
Quintias
employment could only be terminated for
just or authorized cause. Though the
employer is given a wider discretion in
terminating employment of managerial
personnel
such
that
they
may
be

dismissed for loss of confidence, mere

allegation of such ground is not sufficient.
Moreover, as found by both the LA, IPI has failed
to accord due process to Quintia. The
memoranda sent to her on 10 and 12 July did
not sufficiently comply with the twin-notice
requirement nas they did not state the
particular acts or omissions for which her
dismissal is sought. Nor was she given the
opportunity to be heard.

WON reinstatement is feasible: NO, because of

antagonism between the parties and Quintias own
preference for separation pay, reinstatement would no
longer be feasible.
Petition is DISMISSED. Decision of NLRC MODIFIED by
ordering IPI to pay Quintia separation pay.
MERCIDAR FISHING v NLRC (FERMY)
G.R. No. 112574; 8 Oct 1998; MENDOZA, J.
Digest by Miguel
I.
Facts:
The private respondent was employed as a
bodegero/ship quartermaster for 2 years before he was
allegedly constructively dismissed. He alleged that he
had been sick and was allowed to go on leave without
pay for one month-- when he reported to work, he was
not allowed to come back yet. This continued until they
completely refused to give him work.
When the
respondent asked for a certificate of employment, they
refused to give it unless he submitted his resignation.
He then filed a complaint for constructive dismissal.
The petitioners claimed that he abandoned his work-after his leave expired, he was AWOL for 3 months. He
sought the certificate of employment because he was
applying for a competitor; when they gave it to him, he
refused unless he was given separation pay.
The Labor Arbiter favored the respondent, ordering
reinstatement with backwages AND service incentive
pay. On appeal to the NLRC, the petitioners
argued that the petitioner cannot be held for
service incentive pay as the respondent was a
type of field personnel (under Art. 82 LC), and has
no right to it. The NLRC did not consider this
argument, and affirmed the decision in toto.
Issue: Whether or not the respondent was a kind of field
personnel on account of his work hours.
Held/Ratio: NO. Actual hours of work could be
determined with reasonable certainty, making Art. 82 on
field personnel inapplicable.
- Art. 82 LC states that field personnel are nonagricultural employees who (1) REGULARLY PERFORM
THEIR DUTIES AWAY from the principal place of
business/branch office of employer AND (2) WHOSE
ACTUAL HOURS OF WORK cannot be determined with
reasonable certainty.

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Argument: The mere fact that work was performed away

from the principal place of business should suffice to
make the employees 'field personnel.'
In Union of Filipino Employees v Vicar, the Court
held that if in the course of a certain time period,
there is a means by which the employer had
control-- it would still be hours of work that can
be determined with reasonable certainty. This is
also found in Rule IV, Book III of the Omnibus Rules
Implementing the Labor Code, which points out that
field personnel are those whose time and
performance is unsupervised by the employer. In
this case, during the entire voyage, the fishermen had
to stay in the boat and were under the control of the
vessel's patron or master. They are not field personnel
as defined in the Labor Code.
(On constructive dismissal: It found that there was
constructive dismissal, as the respondent was
prevented from working in spite of submission of a
medical certificate.)
Far East Agri Supply Co. v Jimmy Lebatique
Feb 12, 2007; Quisumbing
Digest: jo
FACTS:

Petitioner Far East Agricultural Supply, Inc. (Far

East) hired on March 4, 1996 private respondent
Jimmy Lebatique as truck driver with a daily
wage of P223.50. He delivered animal feeds to
the companys clients.

January 24, 2000: Lebatique complained of

nonpayment of overtime work particularly on
January 22, 2000, when he was required to
make a second delivery in Novaliches, Quezon
City.

That same day, Manuel Uy, brother of Far Easts

General Manager and petitioner Alexander Uy,
suspended Lebatique apparently for illegal use
of company vehicle. Even so, Lebatique
reported for work the next day but he was
prohibited from entering the company premises.

January 26, 2000:

Lebatique sought the
assistance of the DOLE Public Assistance and
Complaints Unit concerning the nonpayment of
his overtime pay. Lebatique explained to
Alexander that he had never been paid for
overtime work since he started working for the
company. He also told Alexander that Manuel
had fired him. After talking to Manuel, Alexander
terminated Lebatique and told him to look for
another job.

March 20, 2000, Lebatique filed a complaint for

illegal dismissal and nonpayment of overtime
pay with the LA.
o LA found that Lebatique was illegally
dismissed,
and
ordered
his
reinstatement and the payment of his
full back wages, 13th month pay,
service incentive leave pay, and
overtime pay.

NLRC reversed the Labor Arbiter and dismissed

the complaint for lack of merit. The NLRC held
that there was no dismissal to speak of since
Lebatique was merely suspended. Further, it

found that Lebatique was a field personnel,

hence, not entitled to overtime pay and
service incentive leave pay
CA reversed NLRC decision and reinstated LA
decision. found that Lebatique was not a field
personnel and therefore entitled to payment of
overtime pay, service incentive leave pay, and
13th month pay.

ISSUES:
1. WON Lebatique was illegally dismissed?
2. WON Lebatique was a field personnel, not
entitled to overtime pay?
RULINGS AND RATIO:
1. He was illegally dismissed
a. in cases of illegal dismissal, the burden
is on the employer to prove that the
termination was for a valid cause. In this
case, petitioners failed to discharge
such burden.
b. records show that petitioners failed to
prove that Lebatique abandoned his job.
Nor was there a showing of a clear
intention on the part of Lebatique to
sever
the
employer-employee
relationship
c. It is clear also from the sequence of the
events leading to Lebatiques dismissal
that it was Lebatiques complaint for
nonpayment of his overtime pay that
provoked the management to dismiss
him
2. He is NOT a field personnel as described by Art.
82 of the LC
a. In Auto Bus Transport Systems, Inc. v.
Bautista, this Court emphasized that 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 employees performance is
unsupervised by the employer. We
held that field personnel are those who
regularly perform their duties away
from the principal place of business
of the employer and whose actual
hours of work in the field cannot be
determined
with
reasonable
certainty. Thus, in order to determine
whether an employee is a field
employee, it is also necessary to
ascertain if actual hours of work in
the field can be determined with
reasonable
certainty
by
the
employer. In so doing, an inquiry must
be made as to whether or not the
employees time and performance
are constantly supervised by the
employer.
b. Lebatique is not a field personnel as
defined above for the following reasons:
(1)
company
drivers,
including
Lebatique, are directed to deliver the
goods at a specified time and place;
(2) they are not given the discretion
to solicit, select and contact prospective
clients; and (3) Far East issued a
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directive that company drivers should

stay at the clients premises during
truck-ban hours which is from 5:00
to 9:00 a.m. and 5:00 to 9:00 p.m
c. Drivers, like Lebatique, are under the
control
and
supervision
of
management
officers.
Lebatique,
therefore, is a regular employee whose
tasks are usually necessary and
desirable to the usual trade and
business of the company. Thus, he is
entitled to the benefits accorded to
regular employees of Far East, including
overtime pay and service incentive
leave pay
3. Note that all money claims arising from an
employer-employee relationship shall be
filed within three years from the time the
cause of action accrued; otherwise, they shall
be forever barred
a. The amount that can only be demanded
by the aggrieved employee shall be
limited to the amount of the benefits
withheld within three years before the
filing of the complaint
b. Case remanded to LA to make a
determination of overtime pay limited
only up to 3 years from the filing of the
complaint.

Labor Congress v NLRC

GR No. 123938; May 21 1998; Davide Jr
Digest prepared by Mara Recto
FACTS

The 99 petitioners were rank and file employees

of Empire Food Products. They filed a complaint
for payment of money claims and for violation of
labor standard laws. They also filed a petition
for direct certification of Labor Congress of the
Philippines
(LCP)
as
their
bargaining
representative

The Labor Congress President Benigno Navarro

and Gonzalo Kehyeng and Evelyn Kehyeng in
behalf of Empire Food Products Inc. entered into
a Memorandum of Agreement:

Recognizing LCP as the sole and

exclusive
bargaining
agent
and
representative regarding wages, hours
of work, and other terms and conditions

Parties to the NLRC jointly and mutually

agree that the issues be resolved in the
CBA

Management of Empire Food Products to

adjust the wages within 15 days from
signing of this Agreement and agree to
register all employees with SSS

Empire Food Products agrees to deduct

thru payroll deduction union dues and
other assessments upon submission by
LCP individual Check-Off Authorization
signed by the union members indicating
the amount to be deducted. The
amounts shall be remitted to the LCP
Treasurer within 3 or 5 days upon
deduction.

Parties to the NLRC case jointly and

mutually agree that the case be
provisionally
withdrawn
from
the
calendar of the NLRC

Parties jointly and mutually agreed that

upon signing of the agreement, no
harassments, threats, interferences of
their respective rights, no vengeance or
revenge by each partner which might
disrupt operations of the business

MOA shall govern the parties in the

exercise of their rights

Parties jointly and mutually agreed to

respect and comply with all terms and
conditions
Mediator Arbiter Cortez approved the MOA and
certified LCP as the sole and exclusive
bargaining agent
LCP President Navarro submitted a proposal for
collective bargaining
Petitioners filed a complaint in the NLRC against
Empire Food Products for unfair labor practice
by way of illegal lockout and/or dismissal; union
busting; violation of the MOA; underpayment of
wages and damages
LA absolved Empire Food Products of the
charges. LA directed the reinstatement of the
individual
complaints
ruling
that
the
respondents violated a cardinal rule that a
payroll and other papers evidencing hours of
work, payments, etc. shall always be maintained
and subjected to inspection and visitation by
personnel of the DOLE.

Respondents should not escape liability

for this technicality, hence, proper that
all individual complaints except those
who resigned and executed quitclaims
and releases should be reinstated
admonition to respondents that any
harassment, intimidation, coercion or
any form of threat as a result of this
reinstatement shall be dealt with
accordingly.
NLRC vacated LA decision and remanded the
case for further proceeding ruling that the LA
overlooked testimonies of some of the individual
complainants
LA dismissed the complaint.

A charge of unfair labor practice

connotes a finding of prima facie
evidence of probability that a criminal
offense may have been committed so as
to warrant the filing of criminal
information.

The charge of illegal lockout has no leg

to stand on because the testimony of
respondent through their guard Orlando
Cairo that the complainants refused and
failed to report for work, hence guilty of
abandoning
their
post
without
permission. Due to failure to report to
work, the cheese curls ready for
repacking were all spoiled.

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Complainants also failed to specify what

type of threats or intimidation was
committed

MOA could not be the basis of an

obligation within the ambit of NLRC
jurisdiction as it spoke of a resolutory
condition which could or could not
happend

Complaint of underpayment has no leg

to stand on as the complainants
admission that they are piece workers or
paid on pakiao basis (certain amount for
every thousand pieces of cheese curls
or other products repacked). The only
limitation for piece workers is that they
should receive compensation no less
than the minimum wage for an 8 hour
work. Lazy workers earn less than
minimum wage.

No moral and exemplary damages as

there was no malice, bad faith or fraud
NLRC affirmed LA decision. MR denied
Petitioners filed special civil action for certiorari
under Rule 65

W/N employees abandoned work NO, 2 days after the

supposed abandonment of work, they filed a complaint
for illegal dismissal
o In finding that the employees abandoned work,
LA and NLRC relied on the sole testimony of
Security Guard Cairo. The failure to work for one
day, which resulted in the spoilage of cheese
curls does not amount to abandonment of work.
o In several cases, it has been held that one could
not possibly abandon his work and shortly
thereafter vigorously pursue his complaint for
illegal dismissal
o In De Ysasi III v NLRC, SC held that it is the
clear, deliberate and unjustified refusal to
resume employment and not mere absence that
constitutes abandonment.
The absence of
petitioner employees for one day on January 21,
1991 as testified [to] by Security Guard Orlando
Cairo did not constitute abandonment.
W/N employees are entitled to reinstatement YES,
they are entitled to reinstatement with full back wages
pursuant to Article 279 of the Labor Code, as amended
by R.A. No. 6715.
o As piece workers or packyao basis employees, it
does not mean that they are not entitled to
reinstatement.
o The work of processed food repackers is
necessary in the day to day operations of
Empire Food Products
o Burden of proving existence of just cause for
dismissing an employee, such as abandonment,
rests with the employer, a burden that it failed
to discharge in this case
o Employees are entitled to reinstatement with
full back wages pursuant to Art. 279 of the LC.
However, taking into account the number of
employees, the length of time lapsed from
dismissal, the resentment and enmity between
the parties, reinstatement would be impractical

and hardly promotive of the best interests of the

parties. Separation pay at the rate of 1 month
for every year of service, with a fraction of at
least 6 months of service considered as 1 year
is in order
W/N employees rights security of tenure and
constitutional right to due process was violated YES,
Section 2, Rule XIV, Book V of the Omnibus Rules
Implementing the LC requires a written notice from the
employer constituting the grounds for his dismissal. In
cases of abandonment, notice to be served at the
workers last known address
W/N petitioners are entitled to back wages Cannot be
fully settled, as piece rate workers, there is a need to
determine the varying degrees of production and days
worked of each worker which must be settled by the
NLRC
W/N petitioners are regular employees YES,
although they are piece-rate workers they are
regular employees and are entitled to other
benefits (holiday pay, premium pay, 13th month
pay, service incentive leave)
o 3 factors to conclude that although piece
rate workers, they were regular employees
1. The nature of the task of
repacking
snack
food
was
necessary and desirable in the
usual business of respondents
who were engaged in the
manufacture and selling of such
food products
2. Petitioners worked throughout
the year, their employment not
having been dependent on a
specific project or season
3. The length of time that the
petitioners
worked
for
the
respondents.
o Thus, while the mode of compensation was
on a per piece basis, the status and nature
of their employment was that of a regular
employee
W/N NLRC abused its discretion when it deprived
petitioners of their constitutional right to selforganization, security of tenure, protection to labor, just
and humane conditions of work and due process NO,
evidence does not support this claim
HELD: Petition GRANTED. NLRC and LA decision set
aside.
1. Declaring employees illegally dismissed, entitled
to full back wages, and other privileges, and
separation pay in lieu of reinstatement at the
rate of one months salary for every year of
service with a fraction of six months of service
considered as one year;
2. Remanding the case to the NLRC for
determination of the back wages and other
benefits and separation pay; and
3. Directing NLRC to resolve the issued within 60
days from receipt of decision
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Best Wear Garments v. Lemos & Ocubillo

G.R. No. 191281; Dec. 5, 2012; Villarama, Jr., J.
Digest prepared by Paolo Tamase

3.
4.

A. Facts
1. BEST WEAR is a sole proprietorship garments
company; Cecile OCUBILLO and Adelaida DE
LEMOS were sewers hired on a piece-rate
basis hired in 1993 and 1994, respectively.
2. 2004:
OCUBILLO
and
DE
LEMOS
filed
complaints for illegal dismissal; according to
them, they were arbitrarily transferred to
other areas of operations, and that the
transfer amounted to constructive dismissal
as it resulted in less earnings.
a. DE LEMOS: Transfer was because of her
refusal to render overtime work up
to 7pm
b. OCUBILLO: Transfer was because she
incurred excessive absences since
2001 when her father became very sick
(he later died) and she herself became
very sick
3. BEST WEAR says that (1) DE LEMOS and
OCUBILLO committed numerous absences
without leave (AWOL); (2) they signified their
intention
to
resign
and
asked
for
separation pay, but when informed that the
company did not have a policy for it, they
stopped reporting for work; (3) re: overtime,
they were piece-rate workers and therefore not
paid accdg. to hours worked
4. LA found (constructive) illegal dismissal and
ordered payment of sep. pay and backwages
5. NLRC reversed LA, holding that the transfers
were a valid exercise of management
prerogative
6. CA reversed NLRC/reinstated LA, finding no
valid and legitimate business reason for
transfers,
and
the
transfer
was
unreasonable,
inconvenient,
and
prejudicial as to amount to constructive
dismissal
B. Issue: WON OCUBILLO and DE LEMOS were illegally
dismissed. NO
C. Held: Petition granted. Decision of the CA reversed.
D. Ratio
1. The right of employees to security of tenure
does not give them vested rights over
their positions. Hence, an employer may
transfer an employee to another area of
operation provided (1) there is no demotion or
diminution and (2) it was not motivated by
discrimination, bad faith, or not a form of
punishment without sufficient cause; it cannot
be used as a subterfuge
2. That the work output might have been affected
by the change in work does not necessarily
mean a reduction in pay tantamount to
constructive dismissal. Assigning the sewers
to work on different types of garments as
determined by the needs of the company is
within
the
ambit
of
management
prerogative.

Objecting to the transfer on the ground that it is

inconvenient to the employees is not a valid
reason to disobey an order of transfer.
There was no evidence that the two were
dismissed; BEST GARMENTS even expressed
its desire to accept them back to work.

Legend Hotel, owned by Titanium Corporation v.

Hernani Realuyo
G.R. No. 153511; July 18, 2012; Bersamin, J.
Digest Prepared by Hans Cedric I. Santos
The weighing of the facts in relation to the four-fold test
is not bound by the designation given by the parties
(e.g. talent fee) and the standard of proof to be used
is substantial evidence.
I. Facts

Realuyo, under his stage name Joey R.

Roa, had been engaged as a pianist in the
Legend Hotels Tanglaw Restaurant
since September 1992. On July 9, 1999,
the management notified him that because
they had to cut costs his services were no
longer required effective July 30, 1999.
(The particular facts of the employment used in
deciding the case will be taken up in the Ratio)

Roa filed a complaint for illegal

dismissal, questioning the grounds of his
dismissal since the company was then
earning lucratively. The company raised the
defense that there was no employeremployee relationship since Roa was only
engaged as talent.

The Labor Arbiter ruled in favor of the

company, citing the fact that Roa had
admitted in a letter that the amounts he
was
receiving
was
talent
fee
and
furthermore, that he is paid nightly and not
bi-monthly like employees of the restaurant.
The NLRC affirmed this ruling by the LA.

The Court of Appeals overturned this

decision and ruled in favor of Roa, holding
that the four elements of an employeremployee relationship had been met. This
order is now under appeal before the SC.
II.

Issues-Held

WON the petition for certiorari filed with the CA was the
proper recourse: Yes, the CA is empowered to receive
evidence on factual issues.
WON
there
was
an
employer-employee
relationship between the company and Roa: Yes,
the four-fold test of employment has been met.
WON the Roa was validly terminated: No he was not
since the company was unable to discharge its burden
of proving that the retrenchment was justified.
III. Ratio
Petitioner-company questions the propriety of the
petition for certiorari filed with the CA since only factual
issues were raised and there was no allegation of grave
abuse of discretion. The SC found that, based on BP
129, such a petition could raise factual issues and the
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CA was allowed to receive such evidence to decide on

such factual issues. The recourse sought by the
respondent Roa with the CA was proper.
The Court held that there was an employer-employee
relationship
between
petitioner-company
and
respondent Roa. In ruling in this manner, the Court
stated that the ruling must rest on substantial
evidence, which is the amount that a reasonable
mind might accept as adequate to justify a
conclusion. Though the court is not generally a trier of
facts, it would be proper for the court to review the
factual issues in this case as the factual findings of the
CA were different from that of the LA and NLRC. The
Court held that an employer-employee relationship
existed between the parties as all the elements of the
four-fold test had been met.
On the aspect of selection, petitioners allege that Roa
had been the one to offer his services and they had
negotiated on his rates and time of availability. The
power of selection is evidenced by the written
recommendation to increase his remuneration in 1998.
(Note: This was the factual basis for ruling that they had
the power of selection though I cant figure out how
they are connected.)
On the aspect of wages, Roa was receiving an initial fee
of P400/night for playing from 7 pm to 10 pm, 3-6
nights per week. This was later raised to P750/night.
This amount was denominated as talent fees.
However, section 97(f) of the Labor Code defines wages
as remuneration or earnings, however designated...
for work done or to be done or for services rendered or
to be rendered. Thus, the fact that the fees were
designated as talent fees did not preclude them from
being wages. Furthermore, the company did not
produce its payroll recording the salaries of all
employees in order to prove that it did not consider the
amounts being paid to Roa as wages. The fact that Roa
only worked 3 hours per was not persuasive as the 8
hours mentioned in the Labor Code is only the
maximum number of regular working hours.

On the aspect of termination, the petitioner stated

that the power to terminate was vested on both parties
but the court did not appreciate this. The fact that the
present case arises from the memorandum informing
Roa of the discontinuance of his service indicated
to the Court that the company had the power to
dismiss.
On the aspect of control, which was mentioned to be
the most important aspect, the Court found that the
company exercised control over the ends achieved and
the means and manner used to achieve them. The Court
appreciated the fact that:
1. Roa could not choose the time of his
performance;
2. he could not choose the place;
3. he was required at certain times to
wear barong and/or only play Filipino
songs; and
4. he was subject to the employees
representation chits and checks.
After finding that an employer-employee relationship
existed between the parties, the Court found that the
company was unable to prove that Roa was dismissed
for authorized cause. To justify retrenchment, the
employer must meet the following standards:
1. the expected losses will be substantial;
2. the losses are reasonably imminent;
3. the
retrenchment
was
reasonably
necessary to prevent the loss; and
4. these must be proven by sufficient and
convincing evidence.
Since the company failed to show any evidence of
financial losses suffered, or about to be suffered, apart
from its bare statement, the Court held that it failed to
discharge its burden and the dismissal was illegal.
Petition DISMISSED. Decision of the Court of
Appeals UPHELD. Roa entitled to reinstatement
or, if no longer feasible, separation pay of one
month per year of service since 1992 until finality
and backwages from the time it was withheld
until finality of the decision.

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