LAND AND HOUSING DEVELOPMENT CORP.

VS ESQUILLO
GR NO. 152012, SEPTEMBER 30, 2005

FACTS:
Esquillo was hired as a structural engineer by ABV Rock Group based in Jeddah. The
Land & Housing Development Corporation, a local placement agency, facilitated respondent’s
employment papers.
Respondent’s employment contract was pre-terminated, allegedly, for the reason,
‘reduction of force.’ Respondent subsequently received an amount from ABV, as final settlement
of his claims and was issued an exit visa that required him to immediately go back to the
Philippines.
“As a result of the foregoing, respondent filed a complaint for breach of contract and/or
illegal dismissal, before the POEA which was referred to the NLRC.
The Labor Arbiter issued his Decision, ordering [petitioners] jointly and severally to pay
Esquillo his salaries corresponding to the unexpired portion of his contract. “When [petitioners]
filed their joint appeal, the NLRC reversed the aforecited decision and dismissed the
[respondent’s] complaint for lack of merit. [Respondent’s] MR was denied in a Resolution,
The CA ruled that despite the absence of a written categorical objection to the sufficiency
of the payment received as consideration for the execution of the quitclaim, jurisprudence
supported the right of respondent to demand what was rightfully his under our labor laws.
Hence, he should have been allowed to recover the difference between the amount he had
actually received and the amount he should have received. The CA also found that the NLRC had
erroneously applied RA 8042 to the case. The appellate court held that respondent was entitled
to the salaries corresponding to the unexpired portion of his Contract, in addition to what he had
already received. Hence, this Petition.
ISSUE:
WON Respondent, despite having executed a quitclaim, is entitled to a grant of his
additional monetary claims.
HELD:
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED.
YES
**At the outset, the Court notes the Manifestation of the OSG, recommending that “the decision
of the NLRC be annulled and set aside and that Esquillo be awarded the total amount of his
salaries corresponding to the unexpired portion of his contract of employment**
Petitioners claim that the foregoing Release and Quitclaim has forever released them
from “any and all claims, demands, dues, actions, or causes of action” arising from respondent’s
employment with them. Unfortunately for petitioners, jurisprudence does not support their
stance. The fact that employees have signed a release and/or quitclaim does not necessarily
result in the waiver of their claims. The law strictly scrutinizes agreements in which workers
agree to receive less compensation than what they are legally entitled to.
“Along this line, we have more trenchantly declared that quitclaims and/or complete
releases executed by the employees do not estop them from pursuing their claims arising from
unfair labor practices of the employer. The basic reason for this is that such quitclaims and/or
complete releases are against public policy and, therefore, null and void. The acceptance of
termination does not divest a laborer of the right to prosecute his employer for unfair labor
practice acts.
To determine whether the Release and Quitclaim is valid, one important factor that must
be taken into account is the consideration accepted by respondent; the amount must constitute a
“reasonable settlement.” The NLRC considered the amount of US$6,716 or SR23,153
reasonable, when compared with (1) $3,900, the three-month salary that he would have been
entitled to recover if RA 8042 were applied; and (2) US$9,447, his salaries for the unexpired
portion of his Contract.
It is relevant to point out, however, that respondent was dismissed prior to the effectivity
of RA 8042. As discussed at the outset, he is entitled to his salaries corresponding to the
unexpired portion of his Contract. For these reasons, the consideration stated in the Release and
Quitclaim cannot be deemed a reasonable settlement; hence, that agreement must be set aside.
NOTES:
Indeed, an employee cannot be dismissed except for cause, as provided by law, and only
after due notice and hearing. Employees who are dismissed without cause have the right to be
reinstated without loss of seniority rights and other privileges; and to be paid full back wages,
inclusive of allowances and other benefits, plus proven damages.
With regard to contract workers, in cases arising before the effectivity of RA 8042 (the
Migrant Workers and Overseas Filipinos Act), it is settled that if “the contract is for a fixed term
and the employee is dismissed without just cause, he is entitled to the payment of his salaries
corresponding to the unexpired portion of his contract.” In the present case, the Contract of
respondent was until July 26, 1995. Since his dismissal from service effective December 18,
1994, was not for a just cause, he is entitled to be paid his salary corresponding to the unexpired
portion of his Contract
 LEONCIO VS MST MARINE SERVICES, INC
GR NO 230357, DECEMBER 06, 2017

FACTS:
Private respondent MST Marine Services (Phils.), Inc. (MST Marine) is a domestic
manning agency, with private respondent Thorne Ship Management Pte. Ltd (Thorne) as one of
its principals.
Starting May 5, 1996 and for a period of more than eighteen (18) years thereafter, MST
Marine repeatedly hired Leoncio to work for its principals, including Thorne.
On August 23, 2001, Leoncio disembarked from M/V Golden Stream, owned by one of
MST Marine’s principals, and was repatriated to be treated for his Coronary Artery
Disease/Hypertensive Cardio-Vascular Disease (CAD/HCVD) by the company-designated
physician. For two months, he received sickness allowance and was in the care and management
of the company-designated physician.
Thereafter, he was declared “fit to work” and redeployed by MST Marine, et al. on board
M/V Frontier Express, albeit with a demotion in rank.
After several more deployments from 2005, Leoncio was employed by MST Marine, et
al. on January 27, 2014 as Chief Cook on board M/V Knossos under a POEA Standard
Employment Contract (POEA-SEC). Prior to his embarkation, he underwent a pre-employment
medical examination
(PEME) and was declared “fit for sea duty.”
Leoncio eventually boarded the vessel. While performing his duties on board M/V
Knossos, Leoncio suddenly felt heavy chest pains, shortness of breath, numbness of the left
portion of his face, and hypertensive reaction. The Master of the Vessel allowed him to rest and
take medicine when Leoncio reported his condition. However, Leoncio again experienced the
same symptoms. Hence, the Master of the Vessel asked respondent MST Marine to refer Leoncio
for a medical check-up. Leoncio was admitted to the Geelong Hospital in Australia where he was
diagnosed with “unstable angina” and subsequently, underwent “PCI (Percutaneous Coronary
Intervention) to severe distal RCA (Right Coronary Artery).”
In due course, Leoncio was medically repatriated to the Philippines on July 12, 2014.
Two days later, he was referred to the company-designated physician for post-employment
medical examination and treatment of his coronary artery disease and hypertensive
cardiovascular disease. He was then confined at the St. Luke’s Medical Center for four days
under the care of Dr. Elpidio Nolasco. While under treatment, respondent MST Marine inquired
from Dr. Nolasco regarding Leoncio’s condition.
In particular, MST Marine asked the doctor to check or confirm whether Leoncio had
previously undergone stenting procedures. Dr. Nolasco confirmed that, indeed, Leoncio
had previously undergone stenting procedure sometime in 2008 and “there are stents
found on the LAD Left Anterior Descending and LCS Left Circumflex arteries in the
 heart or in the coronary arteries. ” Based on said formation, MST Marine cut off the
medical and sickness allowances provided to Leoncio on the ground of his failure to
declare during PEME that he underwent a stenting procedure in 2009 .
Leoncio then promptly consulted Dr. Ramon Reyes. The latter issued a certificate
declaring Leoncio unfit for work. Dr. Fernandez, an internal medicine-cardiologist at the St.
Luke’s Medical Center, echoed Dr. Reyes’ findings in a medical certification.
On account of the doctors’ findings that the lesions found in 2014 were new and not
connected with the previous stents, Leoncio filed a complaint for permanent and total disability
benefits against the private MST Marine, et al.
LA Ruling:
The Labor Arbiter rendered a decision finding for Leoncio.
The Labor Arbiter noted as Leoncio has insisted, that MST Marine, et al. were already
aware of the existence of Leoncio’s coronary artery disease (CAD/HCVD) since 2001 but
nonetheless reemployed and redeployed him to work for several more years.
Thus, for the Labor Arbiter, Leoncio’s failure to disclose the stenting procedure in 2009
cannot bar his claim for permanent and total disability benefits. Further, the Labor Arbiter noted
that the subject of the stenting procedure in 2009 were the Left Anterior Descending (LAD) and
the Left Circumflex (LCX) arteries, which are distinct and different from the cause and subject
of his angioplasty, and later repatriation, in 2014-the Right Coronary Artery (RCA).
MST Marine, et al. filed an appeal.
NLRC Ruling:
The NLRC granted the appeal. Relying on the ruling in the case of Status Maritime vs.
Spouses Delalamon, the NLRC held that Leoncio’s concealment of the stenting procedure during
the PEME is a misrepresentation that bars his right to any disability compensation or illness
benefit under the POEA-SEC.
The NLRC paid no heed to Leoncio’s argument that the respondent already knew of his
coronary artery disease since 2001 when he was first medically repatriated on account thereof.
The NLRC took the opinion that “a previous illness which occurred seven years prior to the 2009
medical procedure should not be used as proof of Leoncio’s illness.
The NLRC denied Leoncio’s motion for reconsideration. Therefrom, respondent went on
a Certiorari to the CA.
CA Ruling:
The CA ruled against Leoncio’s entitlement to the benefits he claimed, and accordingly
the NLRC.
Adopting the NLRC’s recitation offacts and likewise citing Status Maritime vs. Spouses
Delalamon, the legal conclusions reached by the NLRC were likewise adhered to by the CA in
holding that Leoncio’s concealment of the stenting procedure during the PEME bars his right to
disability benefit under the POEA-SEC.
With his motion for reconsideration having been denied by the CA in its equally
challenged Resolution, Leoncio files the Petition with the SC.
ISSUES:
1. Whether or not a medical procedure that is not declared in the PEME falls within the phrase
“illness or condition” that requires declaration otherwise, it will amount to concealment and
fraud.
2. Whether or not the knowledge of the employer ofthe illness in the previous contract is
obliterated upon expiration and execution of another.
3. Whether or not Coronary Artery Disease/Hypertensive Cardio-Vascular Disease
(CAD/HCVD) is work-related and compensable.
HELD:
The SC granted the petition.
The SC held that the resolution of this case pivots on the construction of the phrase
“illness or condition” in Section 20 (E) of the 2010 PO EA-SEC, which states that a seafarer who
knowingly conceals a pre-existing illness or condition in the Medical Examination (PEME) shall
be liable for misrepresentation and shall be disqualified from any compensation and benefits.
For Leoncio, the phrase refers to his “coronary artery disease.” Thus, given his medical
repatriation on account thereof in 2001, for which he was compensated and even demoted by
MST Marine, he cannot be considered to have concealed the same during his PEME in 2014.
MST Marine, et al., on the other hand, maintain that the phrase includes and requires the
disclosure of the stenting procedure on his LAD and LCX arteries undergone by Leoncio in
2009. Thus, for MST Marine, et al., Leoncio’s failure to reveal the same is a fraudulent
misrepresentation that bars his entitlement to any compensation or benefit under the POEA-SEC
and/or their CBA.
The rule is that where the law speaks in clear and categorical language, there is no room
for interpretation; there is only room for application. Only when the law is ambiguous or of
doubtful meaning may the court interpret or construe its true intent.
Even then, Article 4 of the Labor Code is explicit that “all doubts in the implementation
and interpretation of the provisions of the Labor Code, including its implementing rules and
regulations, shall be resolved in favor of labor.”
This liberal interpretation of labor laws and rules have been applied to employment
contracts by Article 1702 of the New Civil Code which mandates that “all labor contracts” shall
likewise be construed in favor of the laborer.
 In this case, nothing can be plainer than the meaning of the word “illness” as referring to
a disease or injury afflicting a person’s body. By the doctrine of noscitor a sociis, “condition”
likewise refers to the state of one’s health. Neither of these words refers to a medical procedure
undergone by a seafarer in connection with an “illness or condition” already known to the
employer as far back as 2001 .
The employer cannot validly decry his supposed concealment and fraudulent
misrepresentation of Leoncio’s illness on account of the non-disclosure of the stenting procedure.
Most importantly, the record is undisputed that Leoncio was first medically repatriated in 2001
due to Hypertension and Angina Pectoris where he was declared “Fit for Sea Duty” after
undergoing treatment by the company-designated physician.
Leoncio was initially demoted for one contract after said medical repatriation but reverted
to his old position as Chief Cook on subsequent deployments. MST Marine, et al. cannot claim
there was misrepresentation by the complainant on account of his medical repatriation in 2001
which contradicts their alleged lack of knowledge of said pre-existing illnesses of the
complainant. These circumstances indubitably establish MST Marine, et al.’s awareness of
complainant’s impaired medical condition despite being fit to work.
Hence, the allegations of fraudulent misrepresentation by MST Marine, et al. were not
given credence.
The SC did not apply the ruling in Status Maritime vs. Spouses Delalamon considering
that the seafarer in such case was disqualified from receiving benefits for knowingly concealing
his diabetes a pre-existing disease; not a prior procedure or surgery.
The SC did not apply as well the holding in the case of Vetyard Terminals & Shipping
Services, Inc. vs. Suarez because the seafarer in said case knowingly misrepresented during his
PEME that “he was merely wearing corrective lens” when in fact he had a previous cataract
operation that could have caused the he was diagnosed with. Clearly, in
Vetyard, the materiality of the active misrepresentation by the seafarer to the disability he
complained of, which was not heretofore known to the employer, cannot be more pronounced.
This spells the substantial disparity between the case at bar and Vetyard.
The so-called misrepresentation ascribed to Leoncio is more imaginary than real. As it is,
the stenting procedure undergone by Leoncio on his LAD and LCX arteries is nothing more than
an attempt to discontinue the steady progression of his illness or condition-his CAD/HCVD,
which was already known by his employers.
Simply, a stenting procedure is the “placement of a small wire mesh tube called a stent to
help prop the artery open and decrease its chance of narrowing again. As it is, the procedure was
intended to improve his health condition. Surely, the non-disclosure thereof does not diminish
MST Marine’s of the “illness or condition” he had already been diagnosed with since 2001.
Leoncio’s failure to reveal the said procedure does not amount to a concealment of a pre-
existing “illness or condition” that can bar his claim for disability benefit and compensation.
 That the nature of Leoncio’s employment is contractual is immaterial to the issue in this
case. For surely, the knowledge acquired by MST Marine regarding the medical condition of a
seafarer is not automatically wiped out and obliterated upon the expiration of a contract and the
execution another. Instead, the knowledge and information previously acquired by MST Marine,
as agent, is imputed to its principals. The latter cannot, therefore, deny knowledge of Leoncio’s
medical condition and so refuse to pay benefits.
Section 32-A of the POEA-SEC lists cardiovascular disease as a compensable work-
related condition.
Further, in several cases, cardiovascular disease, coronary artery disease, as well as other
heart ailments. were held to be compensable.
POEA-SEC provides as a condition for a known CAD to be compensable that there is
proof that an acute exacerbation was precipitated by the unusual strain of the seafarer’s work.
Having worked as a seafarer for almost two decades and as a Chief Cook, no less, it can
be fairly stated that Leoncio was a “walking time bomb” ready to explode towards the end of his
employment days.
In this instance, on May 25, 2014, Leoncio already felt the onset of an attack,
experiencing heavy chest pains, shortness of breath, of the left portion of his face, and
hypertensive reaction. He again experienced these in June 2014, and so was forced to disembark
for an operation on June 8, 2014.
To be sure, it is more than reasonable to conclude that the risks present in his work
environment precipitated the onset of the acute exacerbation of his heart condition. It is likewise
a matter of judicial notice that seafarers are exposed to varying temperatures and harsh weather
conditions as the ship crossed ocean boundaries.
Worse, they are constantly plagued by homesickness and worry for being physically
separated from their families for the entire duration of their contracts. Undoubtedly, this bears a
great degree of emotional strain while making an effort to perform their jobs well.
BABCOCK-HITACHI [PHILS], INC., VS BABCOCK-HITACHI [PHILS], INC MAKATI
EMPLOYEES UNION
GR NO 156260, MARCH 10, 2005

FACTS:

Babcock-Hitachi (Phils.), Inc., Petitioner, is a manufacturing corporation, with branches

Sometime in December 1997, petitioner, to improve the operating efficiency and coordination
among its various departments, formulated a plan to transfer the Design Department from its
Makati office to Bauan, Batangas.

With this development, petitioner, on February 24, 1999, sent separate notices to Justiniano G.
Iniego, Xavier Aguila and Bonifacio B. Vergara, who occupied Engineer 1 positions at the
Design Department, of their re-assignment and transfer to Bauan, Batangas effective April 1,
1999. This prompted them to claim for their relocation allowance provided by Sections 1 and 2,
Article XXI of the collective bargaining agreement (CBA).3

However, petitioner refused to implement the CBA, claiming that the affected employees are not
entitled to relocation allowance under Policy Statement No. BHPI-G-044A dated October 1,
19964 considering that they are residents of Bauan or its adjacent towns.5

Thus, the affected union members (Justiniano Iniego, et al.), represented by Babcock-Hitachi
(Phils.), Inc., Makati Employees Union, Respondent, filed with the National Conciliation and
Mediation Board (NCMB) a complaint for payment of relocation allowance against petitioner. In
a Submission Agreement dated March 18, 1999, the parties stipulated to submit the case for
voluntary arbitration.

On July 25, 2000, after the parties submitted their pleadings and position papers, the Voluntary
Arbitrator rendered a Decision ordering petitioner to pay respondent's concerned members their
relocation allowances. Petitioner then filed a motion for reconsideration but was denied in a
Resolution dated May 30, 2001.

Thereafter, petitioner filed with the Court of Appeals a Petition for Review with prayer for
issuance of a temporary restraining order and/or writ of preliminary injunction.

On May 14, 2002, the Appellate Court promulgated its Decision affirming the Voluntary
Arbitrator's assailed Decision

ISSUE:
 whether union members are entitled to relocation allowance in light of the CBA between
the parties.

HELD:

To begin with, any doubt or ambiguity in the contract between management and the
union members should be resolved in favor of the latter. This is pursuant to Article 1702 of the
Civil Code which provides: "(I)n case of doubt, all labor legislation and all labor contracts shall
be construed in favor of the safety and decent living for the laborer."6

Pertinent are Sections 1 and 2, Article XXI of the CBA which provide:

"Section 1. The COMPANY shall provide a relocation allowance of ONE THOUSAND

Section 2. Employees can avail this provision provided their transfer is on a permanent
basis or for a duration exceeding one (1) month."

The above provisions state that employees transferred from Makati City to Bauan,
Batangas are entitled to a monthly relocation allowance of P1,500.00, provided their transfer is
permanent or for a period exceeding one month. Such provisions need no interpretation for they
are clear. Contracts which are not ambiguous are to be interpreted according to their literal
meaning and not beyond their obvious intendment.7

In Mactan Workers Union v. Aboitiz,8 we held that "the terms and conditions of a
collective bargaining contract constitute the law between the parties. Those who are
entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed
is not fulfilled, the aggrieved party has the right to go to court for redress."

Finally, we sustain the finding of the Court of Appeals that the policy statement being
invoked by petitioner is not a part of the CBA which is the law between the parties.

Thus, the Court of Appeals did not commit any error when it rendered the assailed
Decision and Resolution, the same being consistent with law and jurisprudence.

WHEREFORE, the petition is DENIED. The assailed Decision dated May 14, 2002 and
Resolution dated November 26, 2002 rendered by the Court of Appeals in CA-G.R. SP No.
65260 are AFFIRMED. Costs against petitioner.
 CALALANNG VS WILLIAMS
GR NO 47800, DECEMBER 2, 1940

FACTS:
The National Traffic Commission, in its resolution of July 17, 1940, resolved to
recommend to the Director of the Public Works and to the Secretary of Public Works
and Communications that animal-drawn vehicles be prohibited from passing along the following
for a period of one year from the date of the opening of the Colgante Bridge to traffic:
1) Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas
Street from 7:30Am to 12:30 pm and from 1:30 pm to 530 pm; and
2) along Rizal Avenue extending from the railroad crossing at Antipolo Street to
Echague Street from 7 am to 11pm
The Chairman of the National Traffic Commission on July 18, 1940 recommended to the
Director of Public Works with the approval of the Secretary of Public Works the adoption of
thethemeasure proposed in the resolution aforementioned in pursuance of the provisions of theCo
mmonwealth Act No. 548 which authorizes said Director with the approval from the
Secretary of the Public Works and Communication to promulgate rules and regulations to
regulate and control the use of and traffic on national roads.
On August 2, 1940, the Director recommended to the Secretary the approval of the
recommendations made by the Chairman of the National Traffic Commission with modifications.
The Secretary of Public Works approved the recommendations on August 10,1940. The Mayor of
Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced the
rules and regulation. As a consequence, all animal-drawn vehicles are not allowed to pass and
pick up passengers in the places above mentioned to the detriment not only of their owners but of
the riding public as well.
Issues:
1) Whether the rules and regulations promulgated by the respondents pursuant to the provisions
of Commonwealth Act NO. 548 constitute an unlawful inference with legitimate business or
trade and abridged the right to personal liberty and freedom of locomotion?
2) Whether the rules and regulations complained of infringe upon the constitutional
precept regarding the promotion of social justice to insure the well-being and economic security
of all the people?
Held:
1) No. The promulgation of the Act aims to promote safe transit upon and avoid obstructions on
national roads in the interest and convenience of the public. In enacting said law, the National
Assembly was prompted by considerations of public convenience and welfare. It was inspired by
the desire to relieve congestion of traffic, which is a menace to the public safety. Public welfare
lies at the bottom of the promulgation of the said law and the state in order to promote the
general welfare may interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subject to all kinds of restraints and burdens in order
to secure the general comfort, health, and prosperity of the State. To this fundamental aims of the
government, the rights of the individual are subordinated. Liberty is a blessing which should not
be made to prevail over authority because society will fall into anarchy. Neither should authority
be made to prevail over liberty because then the individual will fall into slavery. The paradox lies
in the fact that the apparent curtailment of liberty is precisely the very means of insuring its
preserving.
2) No. Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but the
humanization of laws and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least be approximated. Social
justice means the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of society,
through the maintenance of a proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally justifiable,
or extra-constitutionally, through the exercise of powers underlying the existence of all
governments on the time-honored principles of salus populi estsuprema lex.
Social justice must be founded on the recognition of the necessity of interdependence among
divers and diverse units of a society and of the protection that should be equally and evenly
extended to all groups as a combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting health, comfort and quiet of all
persons, and of bringing about “the greatest good to the greatest number.”
 INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) VS QUISUMBING
GR NO 128845, JUNE 1, 2000

FACTS:
Private respondent International School, Inc. (School), pursuant to PD 732, is a domestic
educational institution established primarily for dependents of foreign diplomatic personnel and
other temporary residents. The decree authorizes the School to employ its own teaching and
management personnel selected by it either locally or abroad, from Philippine or other
nationalities, such personnel being exempt from otherwise applicable laws and regulations
attending their employment, except laws that have been or will be enacted for the protection of
employees. School hires both foreign and local teachers as members of its faculty, classifying the
same into two: (1) foreign-hires and (2) local-hires.
The School grants foreign-hires certain benefits not accorded local-hires. Foreign-hires
are also paid a salary rate 25% more than local-hires.
When negotiations for a new CBA were held on June 1995, petitioner ISAE, a legitimate
labor union and the collective bargaining representative of all faculty members of the School,
contested the difference in salary rates between foreign and local-hires. This issue, as well as the
question of whether foreign-hires should be included in the appropriate bargaining unit,
eventually caused a deadlock between the parties.
ISAE filed a notice of strike. Due to the failure to reach a compromise in the NCMB, the
matter reached the DOLE which favored the School. Hence this petition.
ISSUE:
Whether the foreign-hires should be included in bargaining unit of local- hires.
RULING:
NO. The Constitution, Article XIII, Section 3, specifically provides that labor is entitled
to “humane conditions of work.” These conditions are not restricted to the physical workplace –
the factory, the office or the field – but include as well the manner by which employers treat their
employees.
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.
Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages
in order to encourage or discourage membership in any labor organization.
 The Constitution enjoins the State to “protect the rights of workers and promote their
welfare, In Section 18, Article II of the constitution mandates “to afford labor full protection”.
The State has the right and duty to regulate the relations between labor and capital. These
relations are not merely contractual but are so impressed with public interest that labor contracts,
collective bargaining agreements included, must yield to the common good.
However, foreign-hires do not belong to the same bargaining unit as the local-hires.
A bargaining unit is a group of employees of a given employer, comprised of all or less
than all of the entire body of employees, consistent with equity to the employer indicate to be the
best suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.
The factors in determining the appropriate collective bargaining unit are (1) the will of
the employees (Globe Doctrine); (2) affinity and unity of the employees’ interest, such as
substantial similarity of work and duties, or similarity of compensation and working conditions
(Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of
employment status. The basic test of an asserted bargaining unit’s acceptability is whether or not
it is fundamentally the combination which will best assure to all employees the exercise of their
collective bargaining rights.
In the case at bar, it does not appear that foreign-hires have indicated their intention to be
grouped together with local-hires for purposes of collective bargaining. The collective bargaining
history in the School also shows that these groups were always treated separately. Foreign-hires
have limited tenure; local-hires enjoy security of tenure. Although foreign-hires perform similar
functions under the same working conditions as the local-hires, foreign-hires are accorded
certain benefits not granted to local-hires such as housing, transportation, shipping costs, taxes
and home leave travel allowances. These benefits are reasonably related to their status as foreign-
hires, and justify the exclusion of the former from the latter. To include foreign-hires in a
bargaining unit with local-hires would not assure either group the exercise of their respective
collective bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby
GRANTED IN PART.
 TELEVISION AND PRODUCTION EXPONENTS VS SERVANA
JANUARY 28, 2008
FACTS:
Servaña started out as a security for the Agro-Commercial Security Agency (ACSA)
since 1987. The agency had a contract with TV network RPN 9.

On the other hand, Television and Production Exponents, Inc (TAPE). is a company in
charge of TV programming and was handling shows like Eat Bulaga! Eat Bulaga! was
then with RPN 9.

In 1995, RPN 9 severed its relations with ACSA. TAPE retained the services of Servaña
as a security guard and absorbed him.

In 2000, TAPE contracted the services of Sun Shield Security Agency. It then notified
Servaña that he is being terminated because he is now a redundant employee.

Servaña then filed a case for illegal Dismissal. The Labor Arbiter ruled that Servaña’s
dismissal is valid on the ground of redundancy but though he was not illegally dismissed
he is still entitled to be paid a separation pay which is amounting to one month pay for
every year of service which totals to P78,000.00.

TAPE appealed and argued that Servaña is not entitled to receive separation pay for he is
considered as a talent and not as a regular employee; that as such, there is no employee-
employer relationship between TAPE and Servaña. The National Labor Relations
Commission ruled in favor of TAPE. It ruled that Servaña is a program employee.
Servaña appealed before the Court of Appeals.

The Court of Appeals reversed the NLRC and affirmed the LA. The CA further ruled that
TAPE and its president Tuviera should pay for nominal damages amounting to
P10,000.00.

ISSUE:
Whether or not there is an employee-employer relationship existing between TAPE and
Servaña.
HELD:
Yes. Servaña is a regular employee.

In determining Servaña’s nature of employment, the Supreme Court employed the Four
Fold Test:

1. Whether or not employer conducted the selection and engagement of the employee.

Servaña was selected and engaged by TAPE when he was absorbed as a “talent” in 1995.
He is not really a talent, as termed by TAPE, because he performs an activity which is
necessary and desirable to TAPE’s business and that is being a security guard. Further,
the primary evidence of him being engaged as an employee is his employee identification
card. An identification card is usually provided not just as a security measure but to
mainly identify the holder thereof as a bona fide employee of the firm who issues it.

2. Whether or not there is payment of wages to the employee by the employer.

Servaña is definitely receiving a fixed amount as monthly compensation. He’s receiving

3. Whether or not employer has the power to dismiss employee.

The Memorandum of Discontinuance issued to Servaña to notify him that he is a

4. Whether or not the employer has the power of control over the employee.

The bundy cards which showed that Servaña was required to report to work at fixed
hours of the day manifested the fact that TAPE does have control over him. Otherwise,
Servaña could have reported at any time during the day as he may wish.

Therefore, Servaña is entitled to receive a separation pay.

On the other hand, the Supreme Court ruled that Tuviera, as president of TAPE, should
not be held liable for nominal damages as there was no showing he acted in bad faith in
terminating Servaña.

Regular Employee Defined:

One having been engaged to perform an activity that is necessary and desirable to a
company’s business.