Name: Plania, Madelaine S.

Subject: LAW 206.1 B - LABOR LAW I (STANDARDS)

CASE DIGESTS

Topic: Is the cook in this case a domestic worker?

Remington v Castaneda
Nov. 20, 2006

Facts:

Erlinda Castaneda ("Erlinda") worked as company cook with a salary of Php 4,000.00 for
Remington, a corporation engaged in the trading business; that she worked for six (6) days a
week, starting 6:00 am – 5:30 pm because she had to do the marketing; she continued working
with company until such time that she prevented from reporting for work when Remington
transferred to a new site in Edsa, Caloocan City. She averred that she reported for work at the
new site in Caloocan City on January 15, 1998, only to be informed that Remington no longer
needed her services.

Averred, she filed a complaint for illegal dismissal, underpayment of wages, non-payment of
overtime services, non-payment of service incentive leave pay and non-payment of 13th month
pay against Remington before the NLRC

Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic
helper and not a regular employee; Erlinda worked as a cook and this job had nothing to do
with Remington’s business of trading in construction or hardware materials, steel plates and
wire rope products. It also contended that contrary to Erlinda’s allegations that the she worked
for eight (8) hours a day, Erlinda’s duty was merely to cook lunch and "merienda", after which
her time was hers to spend as she pleased. Remington also maintained that it did not exercise
any degree of control and/or supervision over Erlinda’s work as her only concern was to ensure
that the employees’ lunch and "merienda" were available and served at the designated time.

Issue:
Whether or not the complainant is a domestic worker.

Ruling:
IN VIEW WHEREOF, the petition is DENIED for lack of merit. The assailed Decision dated January
31, 2005, and the Resolution dated August 11, 2005, of the Court of Appeals in CA-G.R. SP Nos.
64577 and 68477 are AFFIRMED. Costs against petitioner.

Ratio Decidendi:

The respondent worked as a cook at the company premises where her duty was not only to
cook for the members of family of Mr. Tan but also to the employees of Mr. Tan which clearly
redounded to the benefit of the petitioners’ corporation. Her line of duty falls within the
definition of a regular employee under the doctrine enunciated in the Apex Mining case., to wit:

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Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms "househelper"
or "domestic servant" are defined as follows:

"The term ‘househelper’ as used herein is synonymous to the term ‘domestic servant’ and shall
refer to any person, whether male or female, who renders services in and about the employer’s
home and which services are usually necessary or desirable for the maintenance and
enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the
employer’s family."

The determination of the existence of an employer-employee relationship is not basically

determined by the nature of the activities involved or whether the work is directly related to
the employer’s business. Having been said, the petitioner here is not a mere domestic helper
but a regular employee of Mr. Tan because her duty was not exclusively to the comfort and
enjoyment of the employer’s family but also to her employers other employee.

Topic:
- Non-Diminution of benefits
- Status of certain GOCC defines coverage of Labor Code or other law

PNCC V NLRC
JUNE 23, 2021

Facts:
In 1966, PNCC was originally incorporated pursuant to the Corporation Code of the Philippines
under the name Construction Development Corporation of the Philippines (CDCP). On March 3
1, l977, the government granted CDCP a thirty (30) year franchise to construct, operate, and
maintain toll facilities in the North and South Luzon Tollways.

CDCP obtained loans from various Government Financing Institutions (GFis) during the course
of its operations. On February 23, 1983, a Letter of Instruction was issued directing the GFis to
convert all CDCP's unpaid obligations to them into shares of stock. The implementation of said
LOI thus made the GFis majority stockholders of PNCC.

In 1986, pursuant to the government's privatization program, throughPresidential Proclamation

No. 50 (PP 50) creating the Asset Privatization Trust (APT), now known as the Privatization and
Management Office (PMO), as trustee of the equity shares of the GFis in PNCC. . Subsequently,
an Executive Order No. 331 (EO 331) was issued, placing PNCC under the Department of Trade
and Industry (DTI).

In 1992, PNCC started giving mid-year bonuses to its employees every fifteenth (15 th) of May
pursuant to a Collective Bargaining Agreement (CBA) with its then employees' union. Long after
the CBA expired though, the grant of mid-year bonus to the employees continued until 2012.

Meantime, on April 30, 2013, petitioner Atty. Luis F. Sison sought the opinion of PNCC's, the
Office of the Government Corporate Counsel (OGCC) statutory counsel on the release of mid-
year bonus for the year 2013. The OGCC advised PNCC to secure the approval of the
·Governance Commission for Government Owned or Controlled Corporations (GCG),

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In its Letter-Reply dated June 20, 2013, the GCG advised PNCC that it was not forwarding the
request for approval to then President Benigno Aquino III because the grant was legally infirm
and its abrogation does not violate the non-diminution rule. Atty Sison then circulated a
memorandum informing the employees that the 2013 Mid-year Bonus shall not be released.

the PNCC employees filed before the NLRC Arbitration Branch a complaint for non-payment of
mid-year bonus and diminution of wages and benefits.

Issue:
Are PNCC employees covered by the provisions of the Labor Code or by the Civil Service Law?

Ruling:

ACCORDINGLY, the petition for review is GRANTED. The Decision dated July 12, 2018 and
Resolution dated July 15, 2019 of the Court of Appeals in CA-G.R. SP No. 139311 are REVERSED
and SET ASIDE. The complaint in NLRC NCR Case No. 07-10180-13 is DISMISSED for lack of
merit.

Ratio Decidendi:

In Strategic Alliance v. Radstock Securities,42 the Court pronounced with finality that PNCC is a
GOCC, viz.:

The PNCC is not 'just like any other private corporation precisely because it is not a private
corporation' but indisputably a government owned corporation. Neither is PNCC "an
autonomous entity" considering that PNCC is under the Department of Trade and Industry, over
which the President exercises control. To claim that PNCC is an "autonomous entity" is to say
that it is a lost command in the Executive branch, a concept that violates the President's
constitutional power or control over the entire Executive branch of government.

Under Article lX-B, Section 2, paragraph I of the 1987 Constitution, only GOCCs with original
charters are covered by civil service laws, viz.:

SECTION 2. ( I) The civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled corporations with
original charters. (emphasis supplied)

Where a statute, by its terms, is expressly limited to certain matters, it may not, by
interpretation or construction, be extended to others.43 Since PNCC is a non-chartered GOCC,
incorporated under the Corporation Code, it is governed by the Labor Code, not by the Civil
Service Law.

Ricardo Vergara Jr v Coca Cola

April 1, 2013

Facts:

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Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines,
Inc. from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for
Las Piñas City, Metro Manila.

As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time, the
Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the
computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average
Performance Incentive (which is the total performance incentive earned during the year
immediately preceding 12 months) No. of Years in Service.

Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives

(SMI)7 and to the amount of PhP496,016.67 which respondent allegedly deducted illegally,
representing the unpaid accounts of two dealers within his jurisdiction, petitioner filed a
complaint before the NLRC on June 11, 2002 for the payment of his "Full Retirement Benefits,
Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary
Damages, and Attorney's Fees."

Issue:
Whether the SMI should be included in the computation of petitioner's retirement benefits on
the ground of consistent company practice

Ruling:
WHEREFORE, the petition is DENIED. The January 9, 2007 Decision and March 6, 2007
Resolution of the Court of Appeals in CA-G.R. SP No. 94622, which affirmed the January 31,
2006 Decision and March 8, 2006 Resolution of the NLRC deleting the LA's inclusion of sales
management incentives in the computation of petitioner's retirement benefits, is hereby
AFFIRMED.

Ratio Decidendi:

Generally, employees have a vested right over existing benefits voluntarily granted to them by
their employer. Thus, 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, to promote their welfare, and to afford them full protection. In turn, said
mandate is the basis of Article 4 of the Labor Code which states that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and
regulations, shall be rendered in favor of labor."

There is diminution of benefits when the following requisites are present:

1. The grant or benefit is founded on a policy or has ripened into a practice over a long
period of time;
2. The practice is consistent and deliberate;
3. The practice is not due to error in the construction or application of a doubtful or
difficult question of law; and
4. the diminution or discontinuance is done unilaterally by the employer.

To be considered as a regular company practice, the employee must prove by substantial

evidence that the giving of the benefit is done over a long period of time, and that it has been
made consistently and deliberately.

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In the case at bar, there was no substantial evidence to prove that the rant of SMI to all retired
DSSs regardless of whether or not they qualify to the same had ripened into company practice.
The petitioner failed to prove his allegation that SMI has been consistently, deliberately and
voluntarily granted to all retired DSSs without any qualification or conditions whatsoever. The
principle against diminution of benefits is applicable only if the grant or benefit is founded on
an express policy or has ripened into a practice over a long period of time which is consistent
and deliberate; it presupposes that a company practice, policy and tradition favorable to the
employees has been clearly established; and that the payments made by the company pursuant
to it have ripened into benefits enjoyed by them.

Topic:
-Burden of proof in salary differential, SIL and 13th Month Pay
-Burden of proof in overtime and premium pays (work on holiday and rest days)

Wilgen Loon et al v Power Master

(G.R. No. 189404; Dec 11, 2013)

Facts:

Respondents Power Master, Inc. and Tri-C General Services employed and assigned the
petitioners as janitors and leads men in various Philippine Long Distance Telephone Company
(PLDT) offices in Metro Manila area. Subsequently, the petitioners filed a complaint for money
claims against Power Master, Inc., Tri-C General Services and their officers and asserted that
they were not paid minimum wages, overtime, holiday, premium, service incentive leave, and
thirteenth month pays. They further averred that the respondents made them sign blank
payroll sheets. they further claimed that the respondents relieved them from service in
retaliation for the filing of their original complaint.

Issue:
Whether or not the petioners are entitled to backwages

Ruling:
WHEREFORE, based on these premises, we REVERSE and SET ASIDE the decision dated June 5,
2009, and the resolution dated August 28, 2009 of the Court of Appeals in CA-G.R. SP No.
95182. This case is REMANDED to the Labor Arbiter for the sole purpose of computing
petitioners' (Wilgen Loon, Jerry Arcilla, Albert Pereye, Arnold Pereye, Edgardo Obose, Arnel
Malaras, Patrocino Toetin, Evelyn Leonardo, Elmer Glocenda, Rufo Cunamay, Rolando Sajol,
Rolando Abucayon, Jennifer Natividad, Maritess Torion, Ammndo Lonzaga, Rizal Gellido, Evirdly
Haque, Myrna Vinas, Nena Abina, Emalyn Oliveros, Louie Ilagan, Joel Entig, Amel Araneta,
Benjamin Cose and William Alipao) full backwages (computed from the date of their respective
dismissals up to the finality of this decision) and their salary differential, service incentive leave,
holiday, thirteenth month pays, and attorney's fees equivalent to ten percent (10%) of the
withheld wages. The respondents are further directed to immediately post a satisfactory bond
conditioned on the satisfaction of the awards affirmed in this Decision.

Ratio Decidendi:

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The petitioners are entitled to backwages. Based on the above considerations, In termination
cases, the burden of proving just and valid cause for dismissing an employee from his
employment rests upon the employer. The employer’s failure to discharge this burden results in
the finding that the dismissal is unjustified.

The petitioners are entitled to salary differential, service incentive, holiday, and thirteenth
month pays. As in illegal dismissal cases, the general rule is that the burden rests on the
defendant to prove payment rather than on the plaintiff to prove non-payment of these money
claims. The rationale for this rule is that the pertinent personnel files, payrolls, records,
remittances and other similar documents – which will show that differentials, service incentive
leave and other claims of workers have been paid – are not in the possession of the worker but
are in the custody and control of the employer.

However, the petitioners are not entitled to overtime and premium pay. The petitioners failed
to provide sufficient factual basis for the award of overtime, and premium pays for holidays and
rest days. The burden of proving entitlement to overtime pay and premium pay for holidays
and rest days rests on the employee because these are not incurred in the normal course of
business.

In the present case, the petitioners failed to adduce any evidence that would show that they
actually rendered service in excess of the regular eight working hours a day, and that they in
fact worked on holidays and rest days.

TOPIC:
-Discuss relevance of case re control test, nature of employment and entitlement to holiday
pay/Service Incentive Leave pay

A. Nate Casket Maker v Elias Arango

(G.R. No. 192282; Oct. 5, 2016)

Facts:
Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket Maker. They
employed respondents on various dates as carpenters, mascilladors and painters in their
casket-making business from 1998 until their alleged termination in March 2007. They alleged
that they are pakyaw workers who are paid per job order and that they are “stay-in” with free
board and lodging.

on the other hand, the respondents contend that the petitioners worked from Monday to
Saturday, from 7:00a.m. to 10:00 p.m., with no overtime pay and any monetary benefits
despite having claimed for such. on 2007, they were called by the petitioners to sign a contract
of employment where;
1. they shall be working on contractual basis for five month;
2. renewal shall be a case to case basis;
3. the petitioner shall reserve the right to terminate their employment if performance shall
fall below expectation;
4. wages shall be paid on a piece-rate basis;
5. they shall be obliged to strictly follow their work schedule;
6. they shall not be eligible to avail of sick leave or vacation leave, nor receive 13 th month
pay and/or bonuses, or any other benefits given to a regular employee.
the respondents refused to sign the contract, petitioners told them to go home because their
employment has been terminated.

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Issue:
whether respondents who are pakyaw workers and considered regular workers are entitled to
overtime pay, holiday pay, service incentive leave pay and 13th month pay.

Ruling:
WHEREFORE, the Petition is PARTIALLY GRANTED in so far as the payment of 13 th month pay to
respondents is concerned. In all other aspects, the Court AFFIRMS the Decision dated January 6,
2010 and the Resolution dated May 13, 2010 of the Court of Appeals in CA-G.R. SP No. 106965.

Ratio Decidendi:

A regular employment, is not determined by the four-fold test. the four-fold test only
establishes the employer-employee relationship which the following requisites must occur:

(a) the manner of selection and engagement of the putative employee;

(b) the mode of payment of wages;
(c) the presence or absence of the power of dismissal; and
(d) the presence or absence of the power to control the conduct of the putative employee
or the power to control the employee with respect to the means or methods by which
his work is to be accomplished.

The "control test" assumes primacy in the overall consideration inter alia. Under this test, the
employment relation is primarily being controlled by the employer where he has the control
over the means and method to attain the desirable result of the work performance.

The power of control of petitioners over respondents is clearly present in this case.
Respondents follow the steps in making a casket, as instructed by the petitioners, like
carpentry, mascilla, rubbing and painting. They had their own notebooks where they listed the
work completed with their signature and the date finished. The same would be checked by
petitioners as a basis for the compensation for the day. Thus, petitioners wielded control over
the respondents in the discharge of their work.

It should be remembered that the control test merely calls for the existence of the right to
control, and not necessarily the exercise thereof. It is not essential that the employer actually
supervises the performance of duties by the employee. It is enough that the former has a right
to wield the power.Hence, pakyaw workers are considered regular employees for as long as
their employers exercise control over them.

Thus, while respondents' mode of compensation was on a per-piece basis, the status and
nature of their employment was that of regular employees.

In determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and
SIL pay, the presence (or absence) of employer supervision as regards the worker's time and
performance is the key: if the worker is simply engaged on "pakyaw" or task basis, then the
general rule is that he is entitled to a holiday pay and SIL pay unless exempted from the
exceptions specifically provided under Article 94 (holiday pay)40 and Article 95 (SIL pay) of the
Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the
meaning of "field personnel" under the law, then he is not entitled to these monetary benefits.

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Based on the definition of field personnel under Article 82, respondents do not fall under the
definition of "field personnel."

(a) respondents regularly performed their duties at petitioners' place of business;

(b) their actual hours of work could be determined with reasonable certainty; and,
(c) petitioners supervised their time and performance of their duties.

Since respondents cannot be considered as "field personnel," then they are not exempted from
the grant of holiday and SIL pay even as they were engaged on pakyaw or task basis.

With respect to the payment of 13 th month pay, however, the respondents are not entitled to
such benefit.

Again, as We ruled in the case of David v. Macasio:

The governing law on 13th month pay is Presidential Decree No. 851. 45 As with
holiday and SIL pay, 13th month pay benefits generally cover all employees; an
employee must be one of those expressly enumerated to be exempted. Section 3
of the Rules and Regulations Implementing P.D. No. 851 enumerates the
exemptions from the coverage of 13th month pay benefits. Under Section 3(e),
"employers of those who are paid on xxx task basis, and those who are paid a fixed
amount for performing a specific work, irrespective of the time consumed in the
performance thereof' are exempted.

Topic:
Are commissions part of wages?

Phil Duplicators v NLRC

Nov 11, 1993

Facts:

Petitioner Philippine Duplicators, Inc. is a domestic corporation engaged in the distribution of

foreign-made copying machines and related consumables. In petitioner’s employ are salesmen
who are paid a fixed or guaranteed salary plus commissions, which commissions are computed
on the selling price of the duplicating machines sold by the respective salesmen.

P.D. No. 851, promulgated on 16 December 1975, prescribed payment of 13th month pay in the
following terms:

"Sec. 1. All employers are hereby required to pay all their employees receiving a basic salary of
not more than P1,000.00 a month, regardless of the nature of the employment, a 13th month
pay not later than December 24 of every year."

On 13 August 1986, President Corazon C. Aquino, then exercising both executive and legislative
authority, issued Memorandum Order No. 28 which provided as follows:

"Sec. 1 of Presidential Decree No. 851 is hereby modified to the extent that all employers are
hereby required to pay all rank-and-file employees a 13th month pay not later than December
24 of every year."

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In connection with and in implementation of Memorandum Order No. 28, Minister Augusto S.
Sanchez of the then Ministry of Labor and Employment issued MOLE Explanatory Bulletin No.
86-12 on 24 November 1986. Private respondent union, for and on behalf of its member-
salesmen, asked petitioner corporation for payment of 13th month pay computed on the basis
of the salesmen’s fixed or guaranteed wages plus commissions. Petitioner corporation refused
the union’s request, but stated it would respect an opinion from the MOLE.

Petitioner refused to pay the claims of its salesmen for 13th month pay computed on the basis
of both fixed wage plus sales commissions.

Respondent union thereupon instituted a complaint against petitioner corporation for payment
of the demand of its salesmen-members for 13th month pay. The union averred that the
salesmen received 13th month pay computed only on the basis of their fixed or guaranteed
wage.

Issue:
whether or not an employer is liable to give his employee a separate 13th pay on commissions
independently of, aside from and in addition to, 13th month pay on basic wage.

Ruling:
WHEREFORE, petitioner having failed to show any grave abuse of discretion on the part of the
National Labor Relations Commission in rendering its Decision dated 17 November 1992, the
Petition for Certiorari is hereby DISMISSED for lack of merit. Costs against
petitioner.

Ratio Decidendi:

Article 97 (f) of the Labor Code defines the term "wage" (which is equivalent to "salary," as used
in P.D. No. 851 and Memorandum Order No. 28) in the following terms:" (f) ‘Wage’ paid to any
employee shall mean the remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to
an employee under a written or unwritten contract of employment for work done or to be
done, or for services rendered or to be rendered . . ."

In the instant case, there is no question that the sales commissions earned by salesmen who
make or close a sale of duplicating machines distributed by petitioner corporation, constitute
part of the compensation or remuneration paid to salesmen for serving as salesmen, and hence
as part of the "wage" or "salary" of petitioner’s salesmen. Indeed, it appears that petitioner
pays its salesmen a small fixed or guaranteed wage; the greater part of the salemen’s wages or
salaries being composed of the sales or incentive commissions earned on actual sales closed by
them. No doubt this particular salary structure was intended for the benefit of petitioner
corporation, on the apparent assumption that thereby its salesmen would be moved to greater
enterprise and diligence and close more sales in the expectation of increasing their sales
commissions. This, however, does not detract from the character of such commissions as part
of the salary or wage paid to each of its salesmen for rendering services to petitioner
corporation.

Sales commissions form part of the "wage" or "salary" of salesmen and are not in the nature of
an "allowance" or "additional fringe" benefit. Once more, we note that in the instant case, sales
commissions form the bulk of the salaries or wages of petitioner’s salesmen.

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 PLDT V. Henry Estranero
G.R. 195218 October 15, 2014

Facts:
Petitioner PLDT is a public utility corporation engaged in the business of providing
telecommunication services to the general public. PLDT employed the respondent as an Auto-
Mechanic/Electrician Helper, Job Grade 3 with a monthly salary of P15,000.00 at the time of his
separation from the service in 2003.

In 1995, PLDT adopted a company-wide Manpower Reduction Program (MRP), aimed at

reducing its work force.

PLDT offered the affected employees an attractive redundancy pay consisting of 100% of their
basic monthly salary for every year of service, in addition to their retirement benefits, if
entitled. For those who were not qualified to the retirement benefits, they were offered
separation or redundancy package of 200% of their basic monthly salary for every year of
service.

the respondent expressed his conformity to his inclusion in the MRP. the respondent declared
that he has no objection to being included in the redundancy program of PLDT. After having
signified his intention and after approval thereof by his superior officers, the respondent's
name was included in the list of redundant employees.
However, the respondent had outstanding liabilities arising from various loans he obtained
from different entities. Thus, PLDT deducted the said amount from the payment that the
respondent was supposed to receive as his redundancy pay. As a result, when the respondent
was made to sign the Receipt, Release and Quitclaim, it showed that his take home pay was in
the amount of "zero pesos." The respondent filed a complaint for illegal dismissal with
reinstatement, as well as damages.

Issue:
As presented, the issue for resolution hinges on whether or not the petitioners can validly
deduct the respondent's outstanding loan obligation from his redundancy pay.

Ruling:
WHEREFORE, the Decision dated February 15, 2010 and Resolution dated May 25, 2010 of the
Court of Appeals in CA-G.R. SP No. 108297 are AFFIRMED.

Ratio Decidendi:

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It is clear in Article 113 of the Labor Code that no employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except in cases where the
employer is authorized by law or regulations issued by the Secretary of Labor and Employment,
among others. The Omnibus Rules Implementing the Labor Code, meanwhile, provides that
deductions from the wages of the employees may be made by the employer when such
deductions are authorized by law, or when the deductions are with the written authorization of
the employees for payment to a third person. Thus, any withholding of an employee's wages by
an employer may only be allowed in the form of wage deductions under the circumstances
provided in Article 113 of the Labor Code, as well as the Omnibus Rules implementing it.
Further, Article 116 of the Labor Code clearly provides that it is unlawful for any person, directly
or indirectly, to withhold any amount from the wages of a worker without the worker's
consent.

In this case, the deductions made to the respondent's redundancy pay do not fall under any of
the circumstances provided under Article 113, nor was it established with certainty that the
respondent has consented to the said deductions or that the petitioners had authority to make
such deductions.

Topic: Article 106 - Labor only contractor

ALLIED BANKING CORPORATION, now merged with PHILIPPINE NATIONAL BANK, Petitioner

vs. REYNOLD CALUMPANG, Respondent

G.R. No. 219435 (Jan. 17, 2018)

Facts:
Petitioner Allied Banking Corporation3 ("Bank") and Race Cleaners, Inc. ("RCI"), a corporation
engaged in the business of janitorial and manpower services, had entered into a Service
Agreement whereby the latter provided the former with messengerial, janitorial,
communication, and maintenance services and the personnel therefor.

On September 28, 2003, respondent Reynold Calumpang was hired as a janitor by RCI and was
assigned at the Bank's Tanjay City Branch ("the Branch"). He was tasked to perform janitorial
work and messengerial/errand services.

Petitioner, however, observed that whenever respondent went out on errands, it takes a long
time for him to return to the Branch. It was eventually discovered that during these times,
respondent was also plying his pedicab and ferrying passengers and the petitioner learned,
through the information of several clients from the bank, that the respondents have been
borrowing money from them. Due to this, the manager of the bank terminated Calumpang’s
service.

Averred, respondent Calumpang filed a complaint for illegal dismissal and underpayment of
wages against petitioner before the NLRC. The respondent contended that petitioner engaged
his services and exercised direct control and supervision over him through the Branch Head not
only as to the results of his work but also as to the means and methods by which the same was

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to be accomplished because he gives direct orders on the work to be done during working days
and also that the Branch Head directly padi his salaries every “quincia”. As for the power of
dismissal, respondent further alleged that it was petitioner Bank, through its Branch Head, who
terminated his services.

petitioner alleged that respondent was not its employee, he denied the existence of any
employer-employee relationship between itself and respondent. It asserted that respondent
was clearly an employee of RCI by virtue of the Service Agreement which clearly indicated in
Article XI thereof that there would be no employer-employee relationship between RCI's
employees and the Bank.

It further averred that RCI is a qualified job contractor because of its capitalization and the fact
that it exercised control and supervision over its employees deployed at the branches of the
petitioner in accordance with Rule VIII-A, Sec. 4, pars. (d) and (e) of the Omnibus Rules
Implementing the Labor Code.

Issue:
whether the CA erred in affirming the NLRC Decision which declared that RCI is a labor-only
contractor, and in ordering the Labor Arbiter to re-compute the award of backwages and
separation pay.

Ruling:
WHEREFORE, the petition is hereby PARTIALLY GRANTED. The Decision dated September 12,
2014 and the Resolution dated June 9, 2015 of the Court of Appeals-Cebu City in CA-G.R. CEB SP
No. 02906 are hereby AFFIRMED with MODIFICATION. Since Race Cleaners Inc. is a labor-only
contractor, petitioner Allied Banking Corporation now merged with Philippine National Bank is
declared to be the employer of respondent Reynold Calumpang, whose dismissal is declared to
be substantively valid for being based on sufficient and valid grounds. However, he was denied
his right to procedural due process for lack of the required twin notices to explain and of
dismissal.

Ratio Decidendi:

RCI is a labor-only contractor and thus solidarily liable with the petitioner bank for the rightful
claims of the respondents.

Article 106 of the Labor Code provides the relations which may arise between an employer, a
contractor, and the contractors' employees, thus:

ART. 106. Contractor or subcontracting. - Whenever an employer enters into a

contract with another person for the performance of the former's work, the
employees of the contractor and of the latter's subcontractor, if any, shall be paid
in accordance with the provisions of this Code.

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

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 The Secretary of Labor and Employment may, by appropriate regulations, restrict
or prohibit the contracting out of labor to protect the rights of workers established
under the Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.

There is labor-only contracting where the person supplying workers to an employer

does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed
by such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed by
him.

Permissible job contracting or subcontracting refers to an arrangement whereby a principal

agrees to put out or farm out to a contractor or subcontractor the performance or completion
of a specific job, work or service within a definite or predetermined period, regardless of
whether such job, work or service is to be performed or completed within or outside the
premises of the principal.

Labor-only contracting, on the other hand, pertains to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service for a
principal.

As a general rule, a contractor is presumed to be a labor-only contractor, unless such contractor

overcomes the burden of proving that it has the substantial capital, investment, tools and the
like.

Petitioner failed to establish that RCI is a legitimate labor contractor as contemplated under the
Labor Code. Except for the bare allegation of petitioner that RCI had substantial capitalization, it
presented no supporting evidence to show the same. Petitioner never submitted financial
statements from RCI. Even the Service Agreement allegedly entered into between petitioner
and RCI, upon which petitioner relied to show that RCI was an independent contractor, had
lapsed in August 2005, as admitted by petitioner in its Position Paper. 37 Notably, petitioner
failed to allege when the Service Agreement was executed, thus, making its claim that
respondent was hired by RCI and assigned to petitioner in 2003 even more ambiguous.

TOPIC:
- Discussion on the limits of humor and banter.
- sexual harassment

PBS-RTVM v. Vergel Tabasa

(Feb. 26, 2020; G.R. No. 234624)

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Facts:
Sharmila Kaye Angco (Angco), a contractual employee of petitioner Presidential Broadcast Staff-
Radio TV Malacañang (PBS-RTVM) avered that Tabasa, a close-in cameraman of PBS-RTVM
suddenly sat beside her and cornered her while she was seated in a sofa of the Engineering
Office watching Eat Bulaga. Tabasa then tickled her right knee much to her shock and
humiliation. Despite her protestations, Tabasa also held her, causing her to hit her left elbow in
the nearby cabinet when she freed herself from Tabasa. Angco filed an administrative
complaint against Tabasa,for sexual harassment or grave misconduct.

A Fact-Finding Committee (Committee) was then created to investigate on Angco's complaint.

where Tabasa insisted that it was intended as a joke and done without malice considering that
they were in a group who were laughing while watching television. He also questioned the
charge of misconduct against him arguing that it was not an act performed in connection to or
related to his functions.

On May 20, 2014, after due notice and hearing, the Committee adjudged Tabasa guilty of
simple misconduct. the second offense meted the by the Committee out the penalty of
dismissal from service.

Tabasa elevated the case to CSC contending that the penalty was too harsh considering the
presence of mitigating circumstances, such as length of service and good faith. However, the
Court of Appeals granted the complaint partially by affirming the decision with modification,
and reducing the penalty from dismissal from service and all its accessory penalties to
suspension of six (6) months without salary and other benefits as well as backwages.

Issue:
whether the reduction of the penalty from dismissal from service to suspension for six months
is proper.

Ruling:

WHEREFORE, the petition is GRANTED. The Decision dated March 30, 2017 and the Resolution
dated September 7, 2017 of the Court of Appeals in CA-G.R. SP No. 146150, is REVERSED and
SET ASIDE. Accordingly, Decision No. 160374 dated March 17, 2016 of the Civil Service
Commission , dismissing respondent Vergel P. Tabasa from the service with the accessory
penalties of cancellation of eligibility, forfeiture of all benefits including retirement, except
accrued leave/terminal benefits and personal contribution in the Government Service Insurance
System, if any, disqualification from reemployment in the government service, and bar from
taking civil service examination is hereby REINSTATED.

Ratio Decidendi:

No, the reduction of the penalty from dismissal from service to suspension for six months is not
proper.

In this case, Tabasa's antic of touching Angco's knee may be a joke to him, but for its recipient,
it was completely embarassing and inappropriate. Even though Tabasa could have the best of
intentions in making a moment lighthearted with Angco while watching a noon time television
show, the latter's reception of the joke was clearly resistive. For obvious reasons, Angco could
not be faulted for her own perception of decency and decorum exacting upon employees in the

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government service. The touching of the knee was clearly unsolicited and uncalled for and
Tabasa does not have any right to do so. Even if the act was done without malice, it is beyond
all bounds of decency and decorum for a person to touch any body part of another without
consent for that matter. Veritably, Tabasa not only demonstrated his moral depravity and lack
of respect towards female co-employees, but also his unprofessionalism in his interactions with
his colleagues.

Topic: WAGE DISTORTION

PHIL. GEOTHERMAL INC. EMPLOYEES UNION VS. CHEVRON

JAN. 24, 2018

Facts:

Petitioner is a legitimate labor organization and the certified bargaining agent of the rank-and-
file employees of Chevron Geothermal Phils. Holdings, Inc. (respondent). The petitioner and
respondent formally executed a Collective Bargaining Agreement (CBA) wherein Section 1
provides the governing salary increase of the respondent's rank-and-file employees.

On October 6, 2009, a letter dated September 20, 2009 was sent by the petitioner's President
to respondent expressing, on behalf of its members, the concern that the aforesaid CBA
provision and implementing rules were not being implemented properly pursuant to the
guidelines and that, if not addressed, might result to a salary distortion among union members.

Respondent responded by letter denying any occurrence of salary distortion among union
members and reiterating its remuneration philosophy of having "similar values for similar jobs",
which means that employees in similarly-valued jobs would have similar salary rates.

Finding the explanation not satisfactory, petitioner, with respondent's approval, referred the
subject dispute to the Voluntary Arbitration of the National Conciliation and Mediation Board
(NCMB). It averred that respondent breached their CBA provision on worker's wage increase
because it granted salary increase even to probationary employees in contravention of the
express mandate of that particular CBA article and implementing guidelines that salary
increases were to be given only to regular employees.

Respondent maintained that it did not commit any violation of that CBA provision and its
implementing guidelines; in fact, it complied therewith. It reasoned that the questioned
increases given to Lanao and Cordovales' salaries were granted, not during their probationary
employment, but after they were already regularized. It further asseverated that there was
actually no salary distortion in this case since the disparity or difference of salaries between
Lanao and Cordovales with that of the other company employees were merely a result of their
being hired on different dates, regularization at different occasions, and differences in their
hiring rates at the time of their employment.

After due proceedings, the Voluntary Arbitrator rendered a Decision favor of respondent, ruling
that petitioner failed to duly substantiate its allegations that the former prematurely gave

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salary increases to its probationary employees and that there was a resultant distortion in the
salary scale of its regular employees.

Issue:
Whether or not the increase to probationary employees is in contravention of the express
mandate of that particular CBA.

Ruling:

WHEREFORE, premises considered, the petition is DENIED. The Decision dated November 5,
2012 of the Court of Appeals in CA-G.R. SP No. 115796 is hereby AFFIRMED.

Ratio Decidendi:

Upon the enactment of the Republic Act (R.A.) No. 6727 (Wage Rationalization Act, amending
among others, Article 124 of the Labor Code) on June 9, 1989, the term "Wage Distortion" was
explicitly defined as "a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage or salary rate
between and among employee groups an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service or other logical
bases of differentiation."

In the case of Bankard Employees Union-Workers Alliance Trade Unions v. National Labor
Relations Commission, the Court discussed the possible implication of an expanded
interpretation of the concept of Wage Distortion, to wit:

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. An employer would be discouraged from adjusting the
salary rates of a particular group of employees for fear that it would result in a demand by all
employees for a similar increase, especially if the financial conditions of the business cannot
address an across-the-board increase.

The Court's ruling in the case of Bankard seek to address and resolve conflicting opinions
regarding the true concept of a wage distortion like the one presented in this case whereby a
legitimate exercise by an employer of its management prerogative is being taken against it in
the guise of an allegation that it is circumventing labor laws. An employer should not be held
hostage by the whims and caprices of its employees especially when it has faithfully complied
with and executed the terms of the CBA.

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