SUPREME COURT (FIRST DIVISION) G.R. No. 185255 March 14, 2012 NORKIS DISTRIBUTORS, INC.

AND ALEX D. BUAT, Petitioners, vs. DELFIN S. DESCALLAR, Respondent. VILLARAMA, JR., J.: FACTS: On April 26, 1993, respondent Delfin S. Descallar was assigned at the Iligan City Branch of petitioner Norkis Distributors, Inc., a distributor of Yamaha motorcycles. He became a regular employee on February 1, 1994 and was promoted as Branch Manager on June 30, 1997. He acted as branch administrator and had supervision and control of all the employees. Respondent was also responsible for sales and collection. In a memorandum, petitioners required respondent to explain why he should not be penalized or terminated for being absent without official leave (AWOL) or rendering under-time service on certain dates. Respondent explained that he reported to the office on those dates, but he either went to the bank or followed-up on prospects. As he was still within city limits, he did not file any official leave or travel record. On alleged investigation by Norkis, respondent was not able to prove that he was really in the branch or on official travel. Thus petitioners suspended him for fifteen (15) days without pay. Accordingly, respondent admitted that he used company time for his personal affairs. Several other findings against respondent were noted by the Internal Auditor of the company, such as: 1) refusal to accept redemption payment from customer Gamboa on their deposited motorcycle unit and unauthorized use of said deposited motorcycle unit; 2. Requiring customer Amy Pastor to pay an amount in excess of her account balance; 3. Disbursement of sales commissions to unauthorized persons; 4. Application of sales commission on the down payments of several walk-in customers. It is also alleged that in a cash count conducted, a shortage of P800 in the companys TNT fund was discovered. Likewise, an irregularity was found in the disbursement of sales commissions amounting to P1,700. These amounts were charged equally to the accounts of respondent and a certain Lanzador. Again, respondent was placed under preventive suspension for fifteen (15) working days without pay. On August 12, 2002, petitioners issued a "Notice to Show Cause" to respondent. Asking him to show cause why he should not be terminated on the ground of the aforementioned accusations and his alleged inefficiency. Consequently, petitioners terminated respondents services for loss of trust and confidence and gross inefficiency. Aggrieved, respondent filed a complaint for illegal suspension and illegal dismissal before the Sub-Regional Arbitration Branch X in Iligan City which rendered a Decision finding respondent to have been illegally dismissed. Thus, ordering respondent NORKIS to pay complainant separation pay equivalent to one (1) month for every year of service plus backwages from the time he was illegally suspended until the promulgation of this decision in the total amount of P169,976.87. Subsequently, petitioners appealed to the NLRC; the latter reversed the Labor Arbiters decision and found respondent to have been validly dismissed. The NLRC, however, upheld the Labor Arbiters finding that petitioners are liable to respondent for unpaid wages but not to awards of back wages, separation pay and even 13th month pay. As Respondents motion for reconsideration was denied, he filed with the CA a petition for certiorari. The CA reinstated with modification the decision of the Labor Arbiter, but deleting the award of 13th month pay and backwages for the period July 8, 2002 to July 23, 2002. On motion for clarification of respondent, the CA issued a Resolution stating that the separation pay and back wages shall be reckoned from the time respondent was illegally suspended until finality of the March 31, 2008 Decision. ISSUE: Whether or not the termination of respondent is lawful on the alleged ground of loss of trust and confidence.

HELD: The termination of respondent is unlawful. Loss of trust and confidence as a ground for termination of an employee under Article 282 of the Labor Code requires that the breach of trust be willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse. The basic premise for dismissal on the ground of loss of confidence is that the employees concerned hold a position of trust and confidence. It is the breach of this trust that results in the employers loss of confidence in the employee. Here, there is no question that as petitioners Branch Manager in Iligan City, respondent was holding a position of trust and confidence. He was responsible for the administration of the branch, and exercised supervision and control over all the employees. He was also in-charge of sales and collection. Petitioners terminated his employment on the ground of loss of trust and confidence for supposedly committing acts inimical to the companys interests. However, in termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid cause and failure to do so would necessarily mean that the dismissal was illegal. Our review of the records of this case reveals that the CA correctly held that petitioners failed to discharge this burden. In terminating respondents services, petitioners relied on several grounds which were clarified by the respondent himself with supporting evidence and which were not rebutted by the petitioners: 1) With regards to respondents refusal to accept redemption payment from Gamboa, it was proven in the Monthly Inventory Report that the motorcycle unit had already been repossessed by the company due to Gamboas failure to settle her account. And the motorcycle already having been repossessed, it could also be sold to any person who might like to buy it including respondents nephew; 2) as to requiring Pastor to pay an amount in excess of her account balance, a closer look at the audit report conducted by the internal auditor of petitioner Norkis, Joelito L. Florenosos, would show that there was no over-collection; 3) as to disbursement of sales commissions to unauthorized persons, like Garry Bellen, it was shown that Bellen is a legitimate Personalized Sales Representative of Norkis Distributors, as evidenced by the contract they signed; and as to 4) petitioners argument that respondent failed to reach his monthly sales quota, respondent asserted that certain factors were to be considered for the low sales performance in their branch such as the existence of other competitors which offered low down payments, low monthly installments, and other promotional items. Respondent also emphasized that the customers capacity to pay had been affected by the financial crisis at the time, thus making it more difficult to collect from them. To our mind, the failure to reach the monthly sales quota cannot be considered an intentional and unjustified act of respondent amounting to a willful breach of trust on his part that would call for his termination based on loss of confidence. This is simply not the willful breach of trust and confidence contemplated in Article 282(c) of the Labor Code. Indeed, the low sales performance could be attributed to several factors which are beyond respondents control. To be a valid ground for an employees dismissal, loss of trust and confidence must be based on a willful breach. To repeat, a breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse. Petitioners having failed to establish by substantial evidence any valid ground for terminating respondents services, we uphold the finding of the Labor Arbiter and the CA that respondent was illegally dismissed. WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated March 31, 2008 and the Resolution dated October 24, 2008 of the Court of Appeals in CA-G.R. SP No. 00363 are AFFIRMED.

SUPREME COURT (THIRD DIVISION) G.R. No. 174792 March 7, 2012 WILFREDO ARO, et al., Petitioners, vs. NLRC, Fourth Division and Benthel Development Corporation, Respondents. PERALTA, J. FACTS: Several employees of private respondent Benthel Development Corporation, including the petitioners, filed a Complaint for illegal dismissal with various money claims and prayer for damages against the latter, in the NLRC Arbitration Branch. Thereafter, Labor Arbiter Ernesto F. Carreon rendered a decision finding private respondent guilty of illegal dismissal and ordering it to pay its thirty-six (36) employees P446,940.00 as separation pay. The employees, including the petitioners herein, appealed from the said decision. The NLRC, on January 12, 1999, affirmed the decision of the Labor Arbiter with the modification that private respondent pay backwages computed from the respective dates of dismissal until finality of the decision. Private respondent, unsatisfied with the modification made by the NLRC, filed a motion for reconsideration with the contention that, since it has been found by the Labor Arbiter and affirmed in the assailed decision that the employees were project employees, the computation of backwages should be limited to the date of the completion of the project and not to the finality of the decision. The NLRC, however, denied the motion ruling that private respondent failed to establish the date of the completion of the project. Note: The following facts constitute the procedural remedies taken by the parties (though they may not be of much significance to the issue at hand) Aggrieved by the above-decision of NLRC, private respondent filed a Petition for Certiorari with the CA and subsequently a Petition for Review on Certiorari with the SC, but both were dismissed for non-payment of docket fees, insufficiency of form and for being filed out of time. The employees, including the petitioners, upon the finality of the SCs resolution, filed a Motion for Execution before the Labor Arbiter of the January 12, 1999 decision. Pending motion for execution, fifteen (15) employees settled amicably with the private respondent. Thus, the Labor Arbiter issued an Order for the issuance of a writ of execution only for the payment of the claims of the twenty-one (21) remaining employees. Private respondent appealed to NLRC contending that the computation for backwages must be only until the completion of the project and not until the finality of the decision. NLRC affirmed the Order of Labor Arbiter but reduced the total amount. This prompted private respondent to file motion for reconsideration but was denied by the public respondent, but not before the admittance of the affidavits of withdrawal, release/waiver and quitclaim executed by another group of fourteen (14) employees, leaving unresolved only the claims of the petitioners herein. Thus, in the resolution of the private respondent's motion for reconsideration, the award was reduced. As a recourse, private respondent filed a petition for certiorari with the CA, which granted the petition, therefore, annulling and setting aside the decision and resolution of the NLRC as to the award for backwages and remanded the case to the same public respondent for the proper computation of the backwages due to each of the petitioners herein. ISSUE: Whether herein petitioners are project employees and therefore entitled only to full backwages, computed from the date of the termination of their employment until the actual completion of the work, not up to the finality of the decision. HELD: Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee," thus:

Article 280. Regular and Casual Employment The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be REGULAR where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a SPECIFIC PROJECT OR UNDERTAKING the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. In Hanjin Heavy Industries and Construction Co. Ltd. v. Ibaez, it was held that the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees" is whether or not the project employees were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project. In the case at bar, this Court agrees with the findings of the CA that petitioners were project employees. It is not disputed that petitioners were hired for the construction of the Cordova Reef Village Resort in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners' employment was to carry out a specific project. We therefore cannot fathom how the public respondent could have ordered backwages up to the finality of its decision when, as project employees, private respondents are only entitled to payment of the same until the date of the completion of the project. It is settled that, without a valid cause, the employment of project employees cannot be terminated prior to expiration. Otherwise, they shall be entitled to reinstatement with full backwages. However, if the project or work is completed during the pendency of the ensuing suit for illegal dismissal, the employees shall be entitled only to full backwages from the date of the termination of their employment until the actual completion of the work. Therefore, being project employees, petitioners are only entitled to full backwages, computed from the date of the termination of their employment until the actual completion of the work. Illegally dismissed workers are entitled to the payment of their salaries corresponding to the unexpired portion of their employment where the employment is for a definite period. In this case, as found by the CA, the Cordova Reef Village Resort project had been completed in October 1996 and private respondent herein had signified its willingness, by way of concession to petitioners, to set the date of completion of the project as March 18, 1997; hence, the latter date should be considered as the date of completion of the project for purposes of computing the full backwages of petitioners. WHEREFORE, the Petition for Review of petitioners Wilfredo Aro, Ronilo Tirol, Jose Pacaldo, Primitivo Casquejo and Marcial Abgo is hereby DENIED. Consequently, the Decision dated March 7, 2006 and Resolution dated July 27, 2006 of the Court of Appeals are hereby AFFIRMED in toto.

SUPREME COURT (EN BANC) G.R. No. 179652 March 6, 2012 PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO), Petitioner, vs. THE SECRETARY OF DOLE, THE REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, Respondents. VELASCO, JR., J.: FACTS: Private respondent Jandeleon Juezan filed a complaint against petitioner with the DOLE Regional Office No. VII, Cebu City, for illegal deduction, nonpayment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG and Philhealth. The DOLE Regional Director found that private respondent was an employee of petitioner, and was entitled to his money claims. Petitioner sought reconsideration of the Directors Order, but failed. When the matter was brought before the CA, it was held that the DOLE Secretary had jurisdiction over the matter, as the jurisdictional limitation imposed by Article 129 of the Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code had been repealed by Republic Act No. (RA) 7730. Elevating the issue to the SC, the latter reversed and set aside the decision of the CA, and the complaint against petitioner was dismissed. The SC found that there was no employer-employee relationship between petitioner and private respondent. Further, it was held that while the DOLE may make a determination of the existence of an employer-employee relationship, this function could not be co-extensive with the visitorial and enforcement power provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The National Labor Relations Commission (NLRC) was held to be the primary agency in determining the existence of an employer-employee relationship. From this Decision, the Public Attorneys Office (PAO) filed a Motion for Clarification of Decision to clarify the issue as to when the visitorial and enforcement power of the DOLE be not considered as co-extensive with the power to determine the existence of an employer-employee relationship. The DOLE sought clarification as well, as to the extent of its visitorial and enforcement power. The Court treated such as a second motion for reconsideration, granting said motion and reinstating the petition. RA 7730, or an Act Further Strengthening the Visitorial and Enforcement Powers of the Secretary of Labor, allows the DOLE Secretary to exercise its visitorial and enforcement power for claims beyond PhP 5,000 provided there is an existing employer-employee relationship. It is clear and beyond debate that an employeremployee relationship must exist for the exercise of the visitorial and enforcement power of the DOLE. The question now arises, may the DOLE make a determination of whether or not an employer-employee relationship exists, and if so, to what extent? ISSUE: Whether or not the DOLEs determination of the existence of an employer-employee relationship is restricted in that: a) the determination of the existence of an employer-employee relationship is still primarily within the power of the NLRC, that any finding by the DOLE is merely preliminary; b) the determination of the existence of an employer-employee relationship cannot be co-extensive with the visitorial and enforcement power of the DOLE. HELD: No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee relationship. No procedure was laid down where the DOLE would only make a preliminary finding, that the power was primarily held by the NLRC. The law did not say that the DOLE would first seek the NLRCs determination of the existence of an employer-employee relationship, or that should the existence of the employer-employee relationship be disputed, the DOLE would refer the

matter to the NLRC. The DOLE must have the power to determine whether or not an employer-employee relationship exists, and from there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employer-employee relationship in the exercise of its visitorial and enforcement power, subject to judicial review, not review by the NLRC. In summary, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court. In the present case, the finding of the DOLE Regional Director that there was an employer-employee relationship has been subjected to review by this Court, with the finding being that there was no employer-employee relationship between petitioner and private respondent, based on the evidence presented. Private respondent presented self-serving allegations as well as self-defeating evidence. The findings of the Regional Director were not based on substantial evidence, and private respondent failed to prove the existence of an employer-employee relationship. The DOLE had no jurisdiction over the case, as there was no employer-employee relationship present. Thus, the dismissal of the complaint against petitioner is proper. WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby AFFIRMED, with the MODIFICATION that in the exercise of the DOLEs visitorial and enforcement power, the Labor Secretary or the latters authorized representative shall have the power to determine the existence of an employeremployee relationship, to the exclusion of the NLRC.

SUPREME COURT - FIRST DIVISION G.R. No. 184885 March 7, 2012 ERNESTO G. YMBONG, Petitioner, vs. ABS-CBN BROADCASTING CORPORATION, SY AND LUZON, Respondents. VILLARAMA, JR., J. FACTS: Ernesto Ymbong worked for ABS-CBN since 1993 at its regional station in Cebu as a television talent and later extended to radio when ABS-CBN launched its AM station DYAB, being a drama and voice talent, spinner, scriptwriter and public affairs program anchor. Like Ymbong, Leandro Patalinghug also worked for ABS-CBN as talent, director and scriptwriter for various radio programs aired over DYAB. On January 1, 1996, the ABS-CBN Head Office issued Policy No. HR-ER-016 or the "Policy on Employees Seeking Public Office" which states in brief that Any employee who intends to run for any public office position, must file his/her letter of resignation; and that any employee who intends to join a political group/party or even with no political affiliation but who intends to openly and aggressively campaign for a candidate or group of candidates must file a request for leave of absence subject to managements approval. In view of the May 1998 elections, Dante Luzon, Assistant Station Manager of DYAB issued a memorandum, which seemingly contravenes Policy No. HR-ER-016 as it states: any employee/talent who wants to run for any position in the coming election will have to file a leave of absence the moment he/she files his/her certificate of candidacy. However, Luzon admits that upon double-checking of the exact text of the policy and subsequent confirmation with the ABS-CBN Head Office, he saw that the policy actually required suspension for those who intend to campaign for a political party or candidate and resignation for those who will actually run in the elections. Subsequently, Ymbong informed Luzon that he would leave radio for 2 months as he would campaign for the administration ticket. It was only after the elections that they found out that Ymbong actually ran for public office himself. As regards Patalinghug, he formally submitted a letter of resignation as he is to run as councilor for Naga, Cebu. Both Ymbong and Patalinghug lost in the elections and they both tried to come back to ABS-CBN Cebu but Luzon informed them that they cannot work there anymore because of company policy. Ymbong filed an illegal dismissal complaint against ABS-CBN, Luzon and DYAB Station Manager Veneranda Sy. He argued that the ground cited by ABS-CBN for his dismissal was not among those enumerated in the Labor Code and that the company policy violates his constitutional right to suffrage. Patalinghug likewise filed an illegal dismissal complaint. ABS-CBN moved for the dismissal of the complaints arguing that there is no employer-employee relationship between the company and Ymbong and Patalinghug; stating that they are not employees but talents as evidenced by their talent contracts. The Labor Arbiter found the dismissal of Ymbong and Patalinghug illegal; directing respondent ABS-CBN to reinstate complainants to their former positions without loss of seniority rights plus the payment of backwages. He further held that there exists an employer-employee relationship between ABS-CBN and Ymbong and Patalinghug considering the stipulations in their appointment letters/talent contracts imposing conditions in the performance of their work, specifically on attendance and punctuality, which effectively placed them under the control of ABS-CBN. The Labor Arbiter likewise ruled that although the subject company policy is reasonable and not contrary to law, the same was not made known to Ymbong and Patalinghug and in fact was superseded by another one embodied in the March 25, 1998 Memorandum issued by Luzon. Thus, there is no valid or authorized cause in terminating Ymbong and Patalinghug from their employment. ABS-CBN appealed to NLRC which subsequently modified the labor arbiters decision ordering respondent ABS-CBN to reinstate Ymbong and to pay his full

backwages computed from 15 September 1998 up to the time of his actual reinstatement. The NLRC also held that ABS-CBN had control over Ymbong and Patalinghug, thereby proving the existence of an employer-employee relationship between them. As to the issue of whether they were illegally dismissed, the NLRC treated their cases differently. As to Patalinghug, it found that he voluntarily resigned when he submitted his resignation letter. As to Ymbong, however, the NLRC ruled otherwise. It ruled that the March 25, 1998 Memorandum merely states that an employee who seeks any elected position in the government will only merit the temporary suspension of his services. It held that under the principle of social justice, the March 25, 1998 Memorandum shall prevail and ABS-CBN is estopped from enforcing the September 14, 1998 memorandum issued to Ymbong stating that his services had been automatically terminated when he ran for an elective position. ABS-CBN filed a petition for certiorari before the CA. The CA reversed and set aside the March 8, 2004 Decision and June 21, 2004 Resolution of the NLRC. The CA declared Ymbong resigned from employment and not to have been illegally dismissed. The award of full back wages in his favor was deleted accordingly. The CA likewise held that the subject company policy is the controlling guideline and therefore, Ymbong should be considered resigned from ABS-CBN. While Luzon has policy-making power as assistant radio manager, he had no authority to issue a memorandum that had the effect of repealing or superseding a subsisting policy. The CA concluded that there is no illegal dismissal to speak of in the instant case as Ymbong is considered resigned when he ran for an elective post pursuant to the subject company policy. ISSUES: 1) Whether or not Policy No. HR-ER-016 is valid. 2) Whether or not Policy No. HR-ER-016 was superseded by the March 25, 1998 Memorandum 3) Whether or not Ymbong is deemed resigned when he ran for councilor. . HELD: 1) Policy No. HR-ER-016 is valid. ABS-CBN had a valid justification for Policy No. HR-ER-016. Its rationale is embodied in the policy itself, to wit: it is to the best interest of the company to continuously remain apolitical. While it encourages and supports its employees to have greater political awareness and for them to exercise their right to suffrage, the company, however, prefers to remain politically independent and unattached to any political individual or entity. SC held that so long as a companys management prerogatives are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them. In the instant case, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and credibility and freeing itself from any appearance of impartiality so that the confidence of the viewing and listening public in it will not be in any way eroded. To note, Republic Act No. 9006, otherwise known as the "Fair Election Act." Section 6.6 enunciates: Any mass media columnist, commentator, announcer, reporter, on-air correspondent or personality who is a candidate for any elective public office or is a campaign volunteer for or employed or retained in any capacity by any candidate or political party shall be deemed resigned, if so required by their employer, or shall take a leave of absence from his/her work as such during the campaign period. 2) Policy No. HR-ER-016 was not superseded by the March 25, 1998 Memorandum

The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of ABS-CBN, has policy-making powers in relation to his principal task of administering the networks radio station in the Cebu region, the exercise of such power should be in accord with the general rules and regulations imposed by the ABS-CBN Head Office to its employees. Having been issued beyond the scope of his authority, the March 25, 1998 Memorandum is therefore void and did not supersede Policy No. HR-ER-016. Also worth noting is that Luzon in his Sworn Statement admitted the inaccuracy of his recollection of the company policy when he issued the March 25, 1998 Memorandum. 3) Ymbong is deemed resigned when he ran for councilor. Ymbongs overt act of running for councilor of Lapu-Lapu City is tantamount to resignation on his part. He was separated from ABS-CBN not because he was dismissed but because he resigned. Since there was no termination to speak of, the requirement of due process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not duty-bound to ask him to explain why he did not tender his resignation before he ran for public office as mandated by the subject company policy. In addition, we do not subscribe to Ymbongs claim that he was not in a position to know which of the two issuances was correct. Ymbong most likely than not, is fully aware that the subsisting policy is Policy No. HR-ER-016 and not the March 25, 1998 Memorandum.