Labor Set 11 Complete

LABOR II | ATTY.
DANTE CADIZ
1. Cabigting vs SMFI, 605 SCRA 14 2. Herida vs F & C Pawnshop, 585 SCRA 395 3. HEPI vs SAMASAH, 588 SCRA 497 4. Sta Lucia vs Sec, 596 SCRA 92 5. Miranda vs Asian Terminal, 590 SCRA 588 6. National Union vs Sec, 594 SCRA 767 7. M + W Zander vs Enriquez, 588 SCRA 590 8. Marino vs Gamilla, 592 SCRA 83 9. G. Holdins vs. National Mines, 604 SCRA 73 10. School of Holy Spirit vs Taguiam, July 14, 2008 CABIGTING V. SMFC G.R. No. 167706 5 NOVEMBER 2009 DOCTRINE: FACTS: Cabigting was hired as a receiver/ issuer at the San Miguel Corporation, Feeds and Livestock Division (B-Meg) in 1984 and after years of service, he was promoted as inventory controller. In 2000, San Miguel Foods (SMF) sent petitioner a letter informing him that his position as sales office coordinator under its logistic department has been declared redundant. Simultaneously, SMF terminated the services of Cabigting and offered him an early retirement package. Thereafter, he was included in the list of retrenched employees (for reason of redundancy) submitted by respondent to the DOLE. Cabigting was surprised by the letter because he was not a sales office coordinator, and yet he was being terminated as such. He refused to avail of the early retirement package. Prior to his termination in 2000, he was an inventory controller, performing at the same time the function of a warehouseman. He was also an active union officer but upon his termination, was only a member thereof. With the support of his union, petitioner filed a Complaint questioning his termination primarily because he was not a sales office coordinator, but an inventory controller, performing the functions of both an inventory controller and a warehouseman. In reply, SMF reiterated its declaration that his position as sales office coordinator was redundant as a result of SMFs effort to streamline its operations. According to it, Cabigting was supposed to be separated from employment (effective 1997) due to the cessation of business of the B-Meg Plant. However, upon his request for redeployment to another position, he was accommodated and was designated as sales coordinator from December 1997 to November 1998, even without rendering actual work as sales coordinator. SMF claimed that the same was done on the assumption that Cabigting would replace Mr. del Rosario, Sales Coordinator of respondents Luzon Operations Center, upon the latters impending retirement and for the sole purpose of justifying his inclusion in the payroll. SMF averred, however, that the position of Mr. del Rosario as sales coordinator was abolished due to redundancy as a result of its streamlining efforts. LA: Cabigting was illegally dismissed. He is entitled to backwages, separation pay in lieu of reinstatement and attys fees. NLRC: Affirmed LAs decision but ordered the reinstatement of Cabigting to his previous post, without loss of seniority rights. CA: Affirmed LAs and NLRCs decision but reversed the order of reinstatement on the ground of strained relations ISSUE: W/N strained relations bar Cabigtings reinstatement. RULING: NO. The rule is that an illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. In Globe-Mackay Cable v. NLRC, the SC discussed the limitations and qualifications for the application of the strained relations principle, it held that: In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise, an employee who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. According to C.J. Puno in his dissenting opinion in one case, in order for the doctrine of strained relations to apply, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. It bears to stress that reinstatement is the rule and, for the exception of strained relations to apply, it should be proved that it is likely that if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of the
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AGUILA| CARIO | CONSUNJI| ESPIRITU | LUMANOG | MAGPANTAY | MANUEL | RELLOSA | SOLLANO || ALCANTARA | CAMIA| DEVESA | EVANGELISTA | PRESBITERO | SANTOS
LABOR II | ATTY. DANTE CADIZ

employee concerned. In this case, both the LA and the CA failed to state the basis for their finding that a strained relationship exists. The filing of the complaint by petitioner cannot be used as a basis for strained relations. As a rule, no strained relations should arise from a valid and legal act asserting ones right. The doctrine of strained relations has been made applicable to cases where the employee decides not to be reinstated and demands for separation pay. The same, however, does not apply to this case, as Cabigting is asking for his reinstatement despite his illegal dismissal. Lastly, the position of inventory controller and warehouseman is still existing up to date. Cabigting has been an inventory controller for so many years, and there should be no problem in ordering the reinstatement with facility of a laborer, clerk, or other rank-and-file employee. In conclusion, it bears to stress that it is human nature that some hostility will inevitably arise between parties as a result of litigation, but the same does not always constitute strained relations in the absence of proof or explanation that such indeed exists. HERIDA v. F & C PAWNSHOP GR No. 172601 16 April 2009 DOCTRINE: To determine the validity of the transfer of employees, the employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee, and that it does not involve a demotion in rank or a diminution of his salaries, privileges and other benefitsshould the employer fail to overcome this burden of proof, the employees transfers shall be tantamount to constructive dismissal. FACTS: Petitioner Aileen G. Herida was an employee of respondent F & C Pawnshop and Jewelry Store owned by respondent Marcelino Florete, Jr. She was hired as a sales clerk and eventually promoted as an appraiser in the Bacolod City Branch. On August 1, 1998, management issued an office memorandum directing petitioner to report to the Guanco Branch in Iloilo City. As petitioner refused to follow the directive, she was preventively suspended from work on August 10, 1998 for a period of 15 days effective August 7, 1998. She was also directed to report to her new assignment on August 24, 1998. On August 10, 1998, petitioner filed a complaint for illegal dismissal, underpayment of wages, non-payment of separation pay, 13th month pay, as well as for payment of moral and exemplary damages and attorneys fees. On August 26, 1998, management informed petitioner that it will conduct an investigation on September 7, 1998 which petitioner failed to attend. In a letter dated September 7, 1998, management terminated her services on the grounds of willful disobedience, insubordination and abandonment of work as well as gross violation of company policy. The Labor Arbiter dismissed petitioners complaint for lack of merit. The Labor Arbiter ruled that petitioner was not dismissed from her job and that she deliberately refused to obey managements directive for her to report to the Iloilo City Branch. The Labor Arbiter noted that petitioner filed the complaint as a retaliatory act to secure an award of separation pay. The NLRC affirmed the Labor Arbiters finding that there was no illegal dismissal. However, due to petitioners long service with respondents, the NLRC awarded her separation pay as well as service incentive leave pay. Both parties filed their respective MRs, which the NLRC partially granted by deleting the award for service incentive leave pay. Petitioner filed a petition for certiorari with the Court of Appeals. The CA dismissed the petition and upheld managements prerogative to transfer an employee from one office to another within the business establishment provided there is no demotion in rank or diminution in salary, benefits and other privileges. Petitioners refusal to obey the transfer therefore constituted willful disobedience of a lawful order of her employer which was a just cause for her dismissal. Hence, petitioner filed an appeal to the SC. Petitioner: Transfer was never discussed by the parties at the start of her employment. Thus, it should only be done with her consent. The transfer was unnecessary, inconvenient and prejudicial. Respondent: Petitioners transfer was made in good faith and in compliance with managements policy to reshuffle or transfer its employees. Petitioner will be given transportation and lodging allowance, hence, she will not incur any additional expense. ISSUES: Whether petitioners transfer from the Bacolod City Branch to the Iloilo City Branch was valid. YES RULING: YES. Jurisprudence recognizes the exercise of management prerogative to transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. To determine the validity of the transfer of employees, the employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employees transfer shall be tantamount to constructive dismissal. As respondents creditably explained, and as admitted by petitioner herself, respondents have standing policies that an employee must be single at the time of employment and must be
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willing to be assigned to any of its branches in the country. Petitioners contention that upon getting married, she no longer bound herself to be assigned to any of respondents branches in the country is preposterous. Just because an employee gets married does not mean she can already renege on a commitment she willingly made at the time of her employment particularly if such commitment does not appear to be unreasonable, inconvenient, or prejudicial to her. Respondents claimed that travel time from the Bacolod City Branch to the Iloilo City Branch will only take about an hour by boat and that they were even willing to defray petitioners transportation and lodging expenses. Petitioner never disputed these matters. There is no showing either that petitioners transfer was only being used by respondents to camouflage a sinister scheme of management to rid itself of an undesirable worker in the person of petitioner. Objection to the transfer being grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer. Such being the case, petitioner cannot adamantly refuse to abide by the order of transfer without exposing herself to the risk of being dismissed. Hence, her dismissal was for just cause in accordance with Article 282(a) of the Labor Code. Consequently, petitioner is not entitled to reinstatement or separation pay and backwages. Hotel Enterprises of the PH Inc. (HEPI) v SAMASAH GR 165756 5 June 2009 DOCTRINE: Where a union believes that an employer committed ULP and the surrounding circumstances warranted such belief in good faith, the resulting strike may be considered legal although, subsequently, such allegations of unfair labor practices were found to be groundless. FACTS: SAMASAH is the certified collective bargaining agent of the rank-and-file employees of the Hyatt Regency Manila, a hotel owned by HEPI. HEPIs hotel business suffered a slump due to the local and international economic slowdown aggravated by the 9/11 tragedy in the US. From a gross operating profit of 43 million in 2000, HEPI incurred gross operating loss of 16 million in 2001 (based on SGV financial report). The union filed a notice of strike due to a bargaining deadlock before the NCMB. HEPI submitted its economic proposals for the rank-and-file employees. The proposal included manning and staffing standards for the 248 regular rank-and-file employees. The Union accepted the economic proposals. Hence, a new CBA was signed, adopting the manning standards for the 248 rank-and-file employees. Subsequently, HEPI decided to implement a downsizing scheme after studying the operating costs of its different divisions to determine the areas where it could obtain significant savings. It found that the hotel could save on costs if certain jobs, such as engineering services, courier services, janitorial and laundry services, and operation of the employees cafeteria, which by their nature were contractable pursuant to existing laws and jurisprudence, were abolished and contracted out to independent job contractors. After evaluating the hotels manning guide, the following positions were identified as redundant or in excess of what was required for the hotels actual operation given the prevailing poor business condition, housekeeping attendant-linen; tailor; room attendant; messenger/mail clerk; and telephone technician. The effect was to be a reduction of the hotels rank-and file employees from the agreed number of 248 down to just 150 but it would generate estimated savings of around 9 million per year. HEPI met with respondent Union to formally discuss the downsizing program. The Union opposed the downsizing plan because no substantial evidence was shown to prove that the hotel was incurring heavy financial losses, and for being violative of the CBA, more specifically the manning/staffing standards agreed upon by both parties. In a financial analysis made by the Union based on Hyatts financial statements submitted to SEC, it noted that the hotel posted a positive profit margin with respect to its gross operating and net incomes, even in 2001. The Union, through a letter, informed the management of its opposition to the scheme and proposed instead several cost-saving measures. Despite its opposition, a list of the positions declared redundant and to be contracted out was given by the management to the Union. Notices of termination were, likewise, sent to 48 employees whose positions were to be retrenched or declared as redundant. A notice of termination was also submitted by the management to the DOLE indicating the names, positions, addresses, and salaries of the employees to be terminated. Thereafter, the hotel management engaged the services of independent job contractors to perform the following services: janitorial (previously, stewarding and public area attendants; laundry; sundry shop; cafeteria; and engineering. The Union filed a notice of strike based ULP against HEPI. A strike vote was conducted with majority in the bargaining unit voting in favor of the strike. Conciliation proceedings were held but to no avail. The union went on strike. A petition to declare the strike illegal was filed by HEPI with the LA. The Secretary certified the labor dispute to the NLRC for Compulsory arbitration and directed the striking workers, except the 48 workers earlier terminated, to return to work within 24 hrs. Union members thus returned to work. LA ruled strike was valid. NLRC reversed and ruled strike was illegal, suspended all Union officers and dismissed the ULP charge against HEPI. The Union filed a petition for certiorari with the CA. CA reversed the resolution of the NLRC and reinsted the decision of the LA which declared the strike valid. The CA also ordered the reinstatement of the 48 terminated employees on account of the hotel managements illegal redundancy and retrenchment scheme and the payment of their backwages from the time they were illegally dismissed until their actual reinstatement. ISSUES: w/n the downsizing program valid YES w/n the downsizing scheme preclude petitioner from availing the services of contractual and agency-hired employees NO w/n strike legal YES (because of good faith of striking employees even though strike was technically groundless)

RULING: (remember requisites of retrenchment and redundancy, di ko na linagay para deins na humaba alam naman natin ano mga un) HEPI justifies the downsizing scheme on the ground of serious business losses it suffered in 2001. Some positions had to be declared redundant to cut losses. To substantiate its claim, petitioner presented a financial report submitted by SGV, an independent external auditing firm. The union, in its analysis of the financial statements failed to consider provisions for hotel rehabilitation as well as replacement of and additions to the hotels furnishings and equipments. The hotel was already operating not only on a slump in income, but on a huge deficit as well. In short, while the hotel did earn, its earnings were not enough to cover its expenses and other liabilities; hence, the deficit. With the local and international economic conditions equally unstable, belt-tightening measures logically had to be implemented to forestall eventual cessation of business. Our labor laws only allow retrenchment or downsizing as a valid exercise of management prerogative if all other else fail. But in this case, petitioner did implement various cost-saving measures and even transferred some of its employees to other viable positions just to avoid the premature termination of employment of its affected workers. It was when the same proved insufficient and the amount of loss became certain that petitioner had to resort to drastic measures In any event, we have held that an employers good faith in implementing a redundancy program is not necessarily destroyed by availment of the services of an independent contractor to replace the services of the terminated employees. The reduction of the number of workers in a company made necessary by the introduction of the services of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. With petitioners downsizing scheme being valid, and the availment of contractual and agencyhired employees legal, the strike staged by officers and members of the Union is, perforce, illegal pero. Accordingly, the requisites for a valid strike are: (a) a notice of strike filed with the DOLE 30 days before the intended date thereof or 15 days in case of ULP; (b) a strike vote approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose; and (c) a notice to the DOLE of the results of the voting at least seven (7) days before the intended strike. The requirements are mandatory and failure of a union to comply therewith renders the strike illegal. In this case, respondent fully satisfied the procedural requirements prescribed by law. Substantively, however, there appears to be a problem. A valid and legal strike must be based on strikeable grounds, because if it is based on a non-strikeable ground, it is generally deemed an illegal strike. Corollarily, a strike grounded on ULP is illegal if no acts constituting ULP actually exist. As an exception, even if no such acts are committed by the employer, if the employees believe in good faith that ULP actually exists, then the strike held pursuant to such belief may be legal. As a general rule, therefore, where a union believes that an employer committed ULP and the surrounding circumstances warranted such belief in good faith, the resulting strike may be considered legal although, subsequently, such allegations of unfair labor practices were found to be groundless. Here, respondent Union went on strike in the honest belief that petitioner was committing ULP after the latter decided to downsize its workforce contrary to the staffing/manning standards adopted by both parties under a CBA forged only 4 short months earlier. The belief was bolstered when the management hired 100 contractual workers to replace the 48 terminated regular rank-and-file employees who were all Union members. Indeed, those circumstances showed prima facie that the hotel committed ULP. Thus, even if technically there was no legal ground to stage a strike based on ULP, since the attendant circumstances support the belief in good faith that petitioners retrenchment scheme was structured to weaken the bargaining power of the Union, the strike, by exception, may be considered legal. Sta. Lucia East Commercial Corporation v. Secretary of Labor G.R. No. 162355 14 August 2009 DOCTRINE: FACTS: The Confederated Labor Union of the Philippines (CLUP) instituted a petition for certification election among the regular rank-and-file employees of Sta. Lucia East Commercial Corporation (SLECC) and its Affiliates for CLUP-Sta. Lucia East Commercial Corporation and its Affiliates Workers Union (CLUP-SLECC and its Affiliates). The Med-Arbiter dimissed the petition due to the bargaining unit being inappropriate. CLUP-SLECC and its Affiliates initially appealed the decision, but later on withdrew the appeal. Subsequently, CLUP-SLECC and its Affiliates reorganized itself and re-registered as CLUP-Sta. Lucia East Commercial Corporation Workers Association (CLUP-SLECCWA), limiting its membership to rank-and-file employees of Sta. Lucia East Commercial Corporation. CLUP-SLECCWA files a petition for direct certification with the Med-Arbiter, claiming that no certification election has been held among the employees of SLECC and that the existing labor union of SLECC has not been recognized as the exclusinve bargaining agent of the employees. SLECC filed a motion to dismiss, alleging that it has voluntarily recognized the other union as the exlusive bargaining agent of its employees and that they are already conducting collective bargaining negotiations. CLUP-SLECCWA filed an opposition to the motion to dismiss assailing the validity of the voluntary recognition and consequent negotiations. In the meantime, SLECC and the other union agreed to a CBA. The Med-Arbiter dismissed the petition for direct certification. It held that the prior voluntary recognition and the duly registered CBA bars the filing of a petition for direct certification (contract-bar rule). CLUP-SLECCWA appealed to the Secretary of Labor.

The Secretary of Labor ruled against the voluntary recognition of the other union. The Secretary held that the existence of CLUP-SLECC and its Affiliates Workers Union at the time meant that voluntary recognition could not take place. SLECC filed a motion for reconsideration, which was denied. SLECC then filed a petition for certiorari with the CA. The CA affirmed the ruling of the Secretary. It ruled that the voluntary recognition was void since at the time CLUP-SLECC and its Affiliates Workers Union. Thus, it could not bar the petition for certification of CLUP-SLECCWA. ISSUE: WON the voluntary recognition was done while a legitimate labor organization existed in the bargaining unit. RULING: Yes. The Labor Code defines a legitimate labor organization as a union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concernign terms and condition of employment. The DOLE or the BLR shall issue a certificate to the union upon compliance with all the documentary requirements and the union acquires legal personality at this point. On the other, a bargaining unit is a group of employees of a given employer comprised of all or less than all fo the entire body of employees, consistent with equity to the employer, indicated 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 to consider in determining the appropriate collective bargaining unit are: (a) the will of the employees (Globe Doctrine); (b) affinity and unity fo the employees interest (Substantial Mutual Interests Rule); (c) prior collective bargaining history; and (d) similarity of employment status. Nevertheless, the employees in two corporations cannot be treated as a single bargaining unit, even if the two businesses are related. The problem of CLUP-SLECC and its Affiliates Workers Union was that it represented a nonappropriate bargaining unit. However, the inclusion in the union of disqualified employees is not among the grounds for cancellation of registration, unless such inclusion is due to misrepresentation, false statements, or fraud. Thus, CLUP-SLECC and its Affiliates Workers Union is a legitimate labor union since it was validly issued a certificate of registration. Its legitimacy cannot be attacked collaterally. What SLECC should have done was to file a petition for cancellation of certificate of registration and not to immediately commence voluntary recognition of the other union. It must be stressed that an employer may voluntarily recognize the representation status of a union in unorganized establishments. Since SLECC was not unorganized at the time, its voluntary recognition of the other union, the consequent negotiations, and the registration of a CBA are all void and cannot bar CLUP-SLECCWA petition for certification election. MIRANDA v. ASIAN TERMINALS G.R. No. 174316 June 23, 2009 DOCTRINE: A cursory look at the responsibilities of a shop steward leads to the conclusion that it is a position within the union, and not within the company. Since the Shop Steward is a union position, the controversy surrounding his recall from his position as Shop Steward becomes a dispute within the union. FACTS: Petitioner was employed by respondent as Checker I and a member of the company union. On April 1992, petitioner was then the VP of the union and appointed to the position of Shop Steward which is a union position under the payroll of the company. The CBA between the union and company provided for the appointment of a Shop Steward from among the union members upon recommendation of the union president. The Shop Steward is a field representative of both the company and the union and acts as an independent arbiter of all complaints brought to his attention. On December 1993, the union president wrote a letter to the petitioner regarding his recall as a Shop Steward due to loss of trust and confidence. After investigation, the company recommends the recall of the petitioner as Shop Steward and reversion to his former position as Checker I in accordance with CBA. Petitioner filed a complaint with the DOLE. In an order, the Med Arbiter ordered the reinstatement of petitioner as Shop Steward. The order of MedArbiter was affirmed by the Secretary of Labor. Petitioner again filed a complaint with Med-Arbiter involving money claims in the form of allowances, etc. The complaint was dismissed for lack of jurisdiction. Petitioner filed a series of complaints with NLRC one of which is for ULP which later amended to illegal demotion. The LA dismissed the complaint for lack of cause of action. While the cases filed were pending, a second complaint for ULP was filed, the LA dismissed the same for lis pendencia. On third complaint, the same is dismissed for res judicata. Petitioner appealed the decision to NLRC which NLRC remanded the case. Upon remand, the LA ruled that the demotion was for cause but was effected without observance of procedural due process and ordered the respondent to pay petitioner indemnity. Confusion followed, petitioner filed a motion to be reinstated to the position of Shop Steward which was resolved in his favor. Respondent filed a Petition for Prohibition, Issuance of TRO and/or Writ of Permanent Injunction claiming that petitioner should be reinstated to his previous position of Checker I. The NLRC issued a TRO. Petitioner filed a petition before the CA. The CA took note of the reinstatement of the petitioner to the position of Checker I. Hence, this petition. ISSUE: WON the petitioner should be remanded to the position of Shop Steward. NO RULING: Since the Shop Steward is a union position, the controversy surrounding his recall from his position as Shop Steward becomes a dispute within the union. As Internal Union Dispute or intra-union conflict refers to a conflict within or inside a labor union. It includes all
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disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, including any violation of the rights and conditions of union membership provided for in the Code. Article 226 of the Labor Code of the Philippines vests on the Bureau of Labor Relations and the Labor Relations Division jurisdiction to act on all inter-union or intra-union conflicts. The Med Arbiter, as affirmed by the Secretary of Labor, ruled that there was neither cause nor due process in the recall of the petitioner from the position of union Shop Steward. He found that the claim of loss of trust and confidence due to the petitioners alleged absenteeism was not substantiated and that the recall was not approved by the Board of Directors of the union, as required by the APCWU Constitution and By-Laws. Notwithstanding the determination of the Med-Arbiter, as affirmed by the Secretary of Labor, that the petitioner should be reinstated to the position of Shop Steward, which is binding on this Court, the petitioner could not be reinstated to the position of Shop Steward because his eventual separation from respondent ATI made reinstatement unfeasible. Employment with respondent ATI and membership in the union are required in order to occupy the position of Shop Steward. But the petitioner is neither a member of the union nor employed with respondent ATI. He was already retrenched from respondent ATI since October 21, 2001, and his retrenchment was finally settled through the execution of a Quit Claim and Release which was executed before the Second Division of the NLRC. The Petition therefore is dismissed for being moot and academic. ERIC DELA CRUZ and RAUL LACUATA v. COCA-COLA BOTTLERS PHILS. G.R. No. 180465 July 31, 2009 DOCTRINE: Producing altered documents (in this case, a police report and medical certificate) is an act inimical to an employers interests. Such act is considered a work-related willful breach of the trust and confidence reposed in him by his employer. It is a valid ground for dismissal. FACTS: In August 2000, Raymund Sales, a salesman of Coca-Cola Bottlers Phiippines figured in an accident while driving the companys motor vehicle, which he was then not authorized to use. He was hospitalized in Lorma Medical Center in San Fernando, La Union where he was observed to have been under the influence of liquor at the time of the accident, as indicated in the police blotter of the incident. However, Coca Cola later disovered that Sales coemployees secured a police report and medical certificate, which omitted the statement that Sales was under the influence of liquor. After an initial investigation, Coca Cola issued separate memoranda to its Sales Supervisor Espina and herein petitioners Sales Delivery Supervisor Lacuata and Sales Supervisor dela Cruz requiring them to explain why no disciplinary action should be taken against them for (1) producing the abovementioned police report and medical certificate and (2) for using the name of the General Manager in producing such reports, which violated the Employees Code of Disciplinary Rules and Regulations vis--vis Article 282 of the Labor Code. Explanation given: Petitioner Dela Cruz: All he did was to send a text message to Coca Colas refrigeration foreman asking for a copy of the police report. Petitioner Lacuata: He just picked up the medical certificate from the hospital. He had no participation in the preparation of the documents. Espina: He denied any participation in the alteration of the documents. Further investigation showed that the 3 employees conspired to have an altered report. Consequently, they were dismissed from employment, prompting them to file separate complaints for illegal suspension and dismissal against Coca Cola. LA: Dela Cruz: Illegally dismissed. Ordered reinstatement and payment of backwages, 13th month pay, attorneys fees and moral damages. Lacuata: Found at fault in doing nothing to stop Espina from obtaining false police and medical reports. Therefore, Coca Cola was justified in losing trust and confidence in him. Coca Cola was ordered to pay him backwages, 13th month pay and separation pay. Espina: complaint dismissed for lack of merit.
NLRC: Affirmed the LAs decision but deleted the award of moral damages in favor of dela Cruz. CA: Validly dismissed. Hence, the present petition for review. ISSUE: W/N Lacuata should be awarded backwages and separation pay. (NO) Petitioners argument: For loss of trust and confidence to be a ground for termination of employment, it must (1) willful and (2) connected with the employees work. RULING: No. An award of back wages and separation pay is justified only if there is a finding of illegal dismissal. Since petitioners were supervisory employees and were thus covered by the trust and confidence rule, the CA correctly overturned the ruling of the NLRC and the LA. In addressing the petitioners argument, the SC quoted the CAs decision. According to the CA: The records of the case are rife with proof that the supervisors committed acts which are inimical to the interests and stability, not only of management, but of the company itself. They did so, through deceitful means and methods. The detailed account of what transpired between August 12 to 16, 2002 by Asuncion, Calderon, the witnesses
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and the supervisors themselves were not only substantial proof of the grave infraction committed by them but indubitable proof of their anomalous acts. By obtaining an altered police report and medical certificate, petitioners deliberately attempted to cover up the fact the Sales was under the influence of liquor at the time of the accident. In doing so, they committed acts inimical to Coca Colas interests. They thus committed a work-related willful breach of the trust and confidence reposed in them. M+W ZANDER V. ENRIQUEZ G.R. No. 169173 5 June 2009 DOCTRINE: NOTE: AM = administration manager EAGM = executive assistant to the GM *facts heavy. bwiset Facts: Enriquez was hired on probationary basis as the Administration Manager and Executive Assistant to the General Manager (AM and EAGM) of M+W Zander Philippines, Inc. (M+W Zander), a multi-national corp. engaged in construction and facilities management. She was later confirmed as a permanent employee. As AM, her responsibilities include taking charge of the management of administrative personnel assigned to the head office, as well as the security of the company staff and premises and the implementation of company rules. As EAGM, she was in charge of scheduling, monitoring and tracking all the General Managers appointments and personal finances and serving as the liaison among the General Manager, the Division Heads, the Administrative Staff and external contacts. In 2002, M+W Zander relieved its current GM, appointed Mr. Wiltschek as the replacement. A Letter of Appeal was signed by 29 employees of M+W Zander, opposing the appointment of Wiltschek for his abusive behavior. A day after the Letter of Appeal was released, a number of employees did not report to work. M+W Zander alleged that after the announcement of Wiltschek as the new GM, Enriquez actively solicited signatures for the letter opposing the appointment of Wiltschek. It claimed that Enriquez used her influence and moral ascendancy to coerce several employees into signing the letter of appeal. Tecson stated that he received a call from Enriquez in his mobile phone telling him not to report to work since other employees will not report to work and that he should just file for a sick leave since they were doing the same. Tecson said he was already on his way to the office and refused to follow Enriquez. M+W Zander sent a Notice to Enriquez, requiring her to explain within 48 hours why no disciplinary action should be taken against her for willful breach of trust and using her authority and/or influence as AM of M+W Zander over her subordinates to stage a no work day on February 1, 2002. It was indicated that willful breach of trust has a corresponding penalty of dismissal. Meanwhile, she was placed under preventive suspension for 15 working days. Enriquez denied that she used her authority and/or influence as AM and EAGM to compel her co-employees to stage the illegal work stoppage. She also denied that she performed any act to disrupt the vital operations of the company. She said that when she arrived at work on February 2, 2002, she was given a notice of suspension for 15 days and was instructed to leave the premises without being given an explanation. Her personal belongings were inspected and she was escorted out of the premises like a criminal. She also said that her colleagues were given an order that if she is seen in the premises of the company, the administration should be informed immediately and that in no case should respondent be allowed to enter the premises of the company except if she is with an authorized escort of the petitioner company. An administrative hearing was conducted where Sales Engineer Rivera admitted before the investigating panel that he was the one who instigated the no work day on February 1, 2002, but he was not charged by Zander. Out of the eight subordinates who gave their statements during the administrative investigation, it was only Stanley Mosende who stated that he was influenced by Enriquez not to report for work. On March 1, 2002, a Notice of Termination was received by Enriqeuz informing her that her services as AM and EAGM of M+W Zander are terminated effective the same day. She was found liable for willful breach of trust and confidence in using her authority and/or influence as Administrative Manager of M+W Zander Philippines over her subordinate to stage a no work day last February 1, 2002. Enriquez filed a Complaint for illegal dismissal. She alleged that M+W Zander based her termination on mere speculation since there were a number of employees who reported to work despite signing the letter of appeal, and the company still continued its operations that day. LA: Enriquez was illegally dismissed. Reinstatement without loss of seniority rights and privileges was ordered. Moral and Exemplary damages and attys fees were also awarded. NLRC reversed the decision of the LA. CA reversed NLRCs decision and upheld that of the LA. ISSUES: 1. W/N there was illegal dismissal
AGUILA| CARIO | CONSUNJI| ESPIRITU | LUMANOG | MAGPANTAY | MANUEL | RELLOSA | SOLLANO || ALCANTARA | CAMIA| DEVESA | EVANGELISTA | PRESBITERO | SANTOS 7

2. 3. W/N moral and exemplary damages and attys fees should be awarded W/N Wiltschek should be personally liable together with M+W Zander The act of influencing a single subordinate (Mosende) not to report to work is insufficient to merit the harsh and grave penalty of dismissal. While 29 other employees signed the Letter of Appeal, and several employees joined the alleged work stoppage, it was only respondent who was singled out and dismissed. Her termination cannot be based on mere speculation and base her dismissal on unclear and nebulous reasons, especially where a less punitive penalty would suffice. The penalty must be commensurate with the act, conduct or omission imputed to the employee. 2. There is sufficient basis to award moral damages and attys fees because the manner in which Enriquez was treated upon the companys suspicion of her involvement in drafting and in circulating the letter of appeal and the alleged staging of the no work day is contrary to good morals because it caused unnecessary humiliation to respondent. 3. Wiltschek is not liable. It has not been proven that Wiltschek was impleaded in his capacity as General Manager of petitioner corporation and there appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of respondent. His act, therefore, was within the scope of his authority and was a corporate act for which he should not be held personally liable for. Marino vs Gamilla G.R. No. 132400 January 31, 2005 DOCTRINE: FACTS: Sometime in May 1986, the UST Faculty Union (USTFU) entered into an initial CBA with the University of Santo Tomas (UST) wherein UST undertook to provide USTFU with a free office space at Room 302 of its Health Center Building. On 21 September 1996, the officers and directors of USTFU scheduled a general membership meeting on 5 October 1996 for the election of the union officers. However, respondent Gamilla and some faculty members filed a Petition with the Med-Arbitration Unit of the DOLE seeking to stop the holding of the USTFU election. Meanwhile, Rev. Fr. Rodel Aligan, O.P., SecGen of the UST, issued a Memorandum to the Deans, Regents, Principals and Heads of Departments regarding the holding of a faculty convocation. On 4 October 1996, Med-Arbiter Tomas Falconitin issued a TRO, enjoining the holding of the election of the USTFU officers and directors. However, denying the TRO they themselves sought, Gamilla and some of the faculty members present in the faculty convocation proceeded with the election of the USTFU officers. On the other hand, the scheduled election for 5 October 1996 did not push through by virtue of the TRO. In the succeeding week, petitioners filed with the DOLE a petition for prohibition, injunction,
RULING: 1. Yes. Certain guidelines must be observed for the employer to terminate an employee for loss of trust and confidence. The 1st requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be one holding a position of trust and confidence. There are two classes of positions of trust: managerial employees and fiduciary rank-and-file employees. Managerial employees are defined as those vested with the powers or prerogatives to lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. The fiduciary rank-and-file employees consist of cashiers, auditors, property custodians, etc., or those who, in the normal exercise of their functions, regularly handle significant amounts of money or property. They are routinely charged with the care and custody of the employers money or property, and are thus classified as occupying positions of trust and confidence. In this case, Enriquez was employed as the AM and EAGM. The position of an AM may be properly considered as a managerial position, being a head of administrative assistants of other divisions, and because of the performance of work directly related to management policies and company rules. The 2nd requisite of terminating an employee for loss of trust and confidence is that there must be an act that would justify the loss of trust and confidence. To be a valid cause for dismissal, the loss of confidence must be based on a willful breach of trust and founded on clearly established facts. In this case, it was not established that respondent used her authority to influence her subordinates to stage a no work day; and assuming that she performed this act as alleged by petitioners, it does not satisfy the jurisprudential requirements for valid termination due to loss of trust and confidence. Loss of trust and confidence stems from a breach of trust founded on a dishonest, deceitful or fraudulent act. She did not commit any act which was dishonest or deceitful. She did not use her authority as the AM to misappropriate company property nor did she abuse the trust reposed in her by petitioners with respect to her responsibility to implement company rules. The most that can be attributed to respondent is that she influenced a single subordinate, without exerting any force or making any threats, not to report to work. This does not constitute dishonest or deceitful conduct which would justify the conclusion of loss of trust and confidence.

with prayer for preliminary injunction and temporary restraining order,seeking to invalidate the election held. Two months later, UST and USTFU, represented by Gamilla and his coofficers, entered into a CBA for a period of five (5) years from 1 June 1996 up to 31 May 2001. The CBA was ratified on 12 December 1996. In another front, the Med-Arbiter issued a TRO dated 11 December 1996, enjoining Gamilla and his fellow officers to cease and desist from performing any and all acts pertaining to the duties and functions of the officers and directors of USTFU. On 27 January 1997, at around 11:00 a.m., respondents Gamilla, Cardenas and Aseron, with some other persons, served a letter of even date on petitioners Mario and Alamis, demanding that the latter vacate the premises located at Room 302, Health Center Building, USTthe Office of USTFU. However, only the office messenger was in the office at the time. After coercing the office messenger to step out of the office, Gamilla and company padlocked the door leading to the unions office. Petitioners filed with the RTC of Manila a Complaint for injunction and damages with a prayer for preliminary injunction and temporary restraining order over the use of the USTFU office. Hearing on the application for TRO before the trial court, respondents through a consolidated motion to dismiss sought the dismissal of the complaint on the ground of forum-shopping and prayed that the trial court suspend the application for injunctive relief until it shall have resolved the motion to dismiss. On the same date, Med-Arbiter rendered a decision,declaring the 4 October 1996 election and its results null and void ab initio. The decision was appealed to the BLR which affirmed the same. Respondents brought the matter to this Court via a special civil action for certiorari.The Court promulgated its decision,dismissing the petition. On 3 March 1997, the RTC issued the assailed order, "requiring defendants their representatives and agents or other persons acting in their behalf to remove the padlocks on the door of the UST Faculty Union office located at Room 302, Health Center Bldg., UST, Espaa, Manila and to refrain from preventing/disturbing in any manner whatsoever the plaintiffs in entering the said premises.In the meantime, defendants are hereby ordered to submit their answer to the complaint within fifteen days from receipt hereof." After petitioners as plaintiffs therein had posted the requisite bond, the RTC issued a writ of preliminary mandatory injunction. Respondents filed a Petition for Certiorari before the CA, claiming that the orders were void ab initio for lack of jurisdiction and on the ground that they were issued in violation of due process of law. The Court of Appeals stated that the basic issue of the case was whether the RTC of Manila had jurisdiction over the subject matter. It agreed with respondents disquisition that petitioners cause of action in the complaint before the trial court is inextricably linked and intertwined with the issue of who are the legitimate officers of the USTFU, which issue was then being litigated before the DOLE. The appellate court held that Civil Case No. 97-81928 and Case No. NCR-OD-M-9610-016 appear to be the same, with the observation that the civil case merely grew out from the labor case. It also cited the prohibition against the issuance of injunction in any case involving or growing out of a labor dispute, unless otherwise provided by law. It added that it would have been more appropriate for the RTC to determine whether it had jurisdiction over the subject case before issuing the assailed orders. Petitioners Motion for Reconsideration was denied. Hence, this petition. ISSUES: 1. WON the RTC has jurisdiction to issue the order granting injunction. No. 2. WON claim for damages may be filed with the RTC. Yes. RULING: There is merit in the petition but only in part. 1. Jurisdiction over a subject matter is conferred by law and determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. Central to the assailed decision of the Court of Appeals is its adoption of respondents argument that the issue in Civil Case No. 97-81928 is inextricably linked and intertwined with the issue as to who are the lawful officers of the USTFU, which is within the exclusive jurisdiction of the Secretary of Labor; and that the use of the union office is a mere incident of the labor dispute. Another reason that militates against the trial courts assumption of jurisdiction over the case is Article 254 of the Labor Code that states: Art. 254. Injunction prohibited.No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Articles 218 and 264 of this Code. As pointed out by petitioners, the Court of Appeals erroneously categorized the instant matter as a labor dispute. Such labor dispute includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee. Jurisdiction over labor disputes, including claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations is vested in Labor Arbiters and the National Labor Relations Commission (NLRC). On the other hand, an intra-union dispute refers to any conflict between and among union members. It encompasses all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, not excepting cases arising from chartering or affiliation of labor organizations or from any violation of the rights and conditions of union membership provided for in the Labor Code.In contrast, an inter-union dispute refers to any conflict between and among legitimate labor organizations involving questions of representation for purposes of collective bargaining; it includes all
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other conflicts which legitimate labor organizations may have against each other based on any violations of their rights as labor organizations.Like labor disputes, jurisdiction over intraunion and inter-union disputes does not pertain to the regular courts. It is vested in the Bureau of Labor Relations Divisions in the regional offices of the Department of Labor. Case No. NCR-OD-M-9610-016 entitled Eduardo J. Mario, Jr., et al. v. Gil Gamilla, et al. before the BLR is neither a labor nor an inter-union dispute. It is clearly an intra-union dispute. The case before the trial court, Civil Case No. 97-81928 entitled Eduardo J. Mario, Jr. et al. v. Gil Gamilla, et al., on the other hand, is a simple case for damages, with an accompanying application for injunction. The complaint essentially bears the following allegations: that despite an outstanding temporary restraining order prohibiting the holding of an election of officers, respondent Gamilla and others proceeded to hold a purported election; that there was a case pending before the DOLE questioning the validity of the supposed election; and, that respondent Gamilla with two other persons compelled the office messenger to vacate the premises of the USTFU office, and thereafter padlocked the room. Petitioners alleged respondents act of padlocking the office was without lawful basis, and had prevented them from entering the office premises, thereby denying them access to personal effects, documents and records needed in the on-going cases both in the DOLE and in the complaint a quo, and ultimately precluding the union from serving its members. Fundamentally, the civil case a quo seeks two relief one is for the removal of the padlocks on the office door and restraining respondents from blocking petitioners access to the premises, while the other is for the recovery of moral and exemplary damages. Prior to the institution of the civil case, petitioners filed before the Med-Arbitration Unit of the DOLE-NCR a petition for prohibition, injunction with a prayer for preliminary injunction and temporary restraining order against herein respondents for the latters assumption of office as elected USTFU officers. The propriety of padlocking the unions office, the relief sought by the petitioner in the civil case, is interwoven with the issue of legitimacy of the assumption of office by the respondents in light of the violation of the unions constitution and by-laws, which was then pending before the Med-Arbiter. Necessarily, therefore, the trial court has no jurisdiction over the case insofar as the prayer for the removal of the padlocks and the issuance of an injunctive writ is concerned. It is a settled rule that jurisdiction, once acquired, continues until the case is finally terminated. The petition with the Med-Arbiter was filed ahead of the complaint in the civil case before the RTC. As such, when the petitioners filed their complaint a quo, jurisdiction over the injunction and restraining order prayed for had already been lodged with the MedArbiter. The removal of padlocks and the access to the office premises is necessarily included in petitioners prayer to enjoin respondents from performing acts pertaining to union officers and on behalf of the union. In observance of the principle of adherence of jurisdiction, it is clear that the RTC should not have exercised jurisdiction over the provisional reliefs prayed for in the complaint. A review of the complaint shows that petitioners disclosed the existence of the petition pending before the Med-Arbiter and even attached a copy thereof. The trial court was also aware of the decision of the Med-Arbiter. Still, it continued the hearing on the application for injunction and eventually issued the assailed orders. At this juncture, the Court notes that a key question in this case has already been settled by the Court in its decision in UST Faculty Union, et al. v. Bitonio, Jr., et al. In that case, it was ruled that the 04 October 1996 election was void for having been conducted in violation of the unions constitution and by-laws. Nevertheless, the complaint a quo could not have validly proceeded at the time of its filing of the said case due to petitioners lack of cause of action. 2. Art. 226 of the Labor Code provides, thus: Xxx The BLR and the LRD in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations.. xxx Thus, unlike the NLRC which is explicitly vested with the jurisdiction over claims for actual, moral, exemplary and other forms of damages,[54] the BLR is not specifically empowered to adjudicate claims of such nature arising from intra-union or inter-union disputes. In fact, Art. 241 of the Labor Code ordains the separate institution before the regular courts of criminal and civil liabilities arising from violations of the rights and conditions of union membership. The Court has consistently held that where no employer-employee exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes, or any collective bargaining agreement, it is the regional trial court that has jurisdiction. Administrative agencies are tribunals of limited jurisdiction and as such, can exercise only those powers which are specifically granted to them by their enabling statutes. Consequently, matters over which they are not granted authority are beyond their competence. In their complaint in the civil case, petitioners do not seek any relief under the Labor Code but the payment of a sum of money as damages on account of respondents alleged tortuous conduct. The action is within the realm of civil law and, hence, jurisdiction over the case belongs to the regular courts.[58] WHEREFORE, the Petition is hereby GRANTED IN PART. The Decision of the Court of Appeals setting aside the Order dated 3 March 1997 and the writ of preliminary mandatory injunction dated 5 March 1997 is hereby AFFIRMED. The case is REMANDED to the trial court for further proceedings in accordance with this Decision. No costs. G HOLDINGS, INC. vs. NATIONAL MINES AND ALLIED WORKERS UNION Local 103 (NAMAWU) G.R. No. 160236 October 16, 2009 DOCTRINE:
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FACTS: G Holdings, Inc. (GHI), is a domestic corporation primarily engaged in the business of owning and holding shares of stock of different companies. National Mines and Allied Workers Union Local 103 (NAMAWU), was the exclusive bargaining agent of the rank and file employees of Maricalum Mining Corporation (MMC), an entity operating a copper mine and mill complex at Sipalay, Negros Occidental. MMC was incorporated by the DBP and the PNB on October 1984, on account of their foreclosure of Marinduque Mining and Industrial Corporations assets. MMC started its commercial operations in August 1985. Later, DBP and PNB transferred it to the National Government for disposition or privatization because it had become a non-performing asset. On October 1992, pursuant to a Purchase and Sale Agreement executed between GHI and Asset Privatization Trust (APT), the former bought 90% of MMCs shares and financial claims. These financial claims were converted into three Promissory Notes issued by MMC in favor of GHI totaling P500M and secured by mortgages over MMCs properties. As collateral security, MMC constituted mortgage over certain parcels of land, chattel mortgage over assets and personal properties and mortgages over assets listed in APT Specific Catalogue GC-031. Upon the signing of the Purchase and Sale Agreement and upon the full satisfaction of the stipulated down payment, GHI immediately took physical possession of the mine site and its facilities, and took full control of the management and operation of MMC. Almost 4 years thereafter, or on August 1996, a labor dispute (refusal to bargain collectively and unfair labor practice) arose between MMC and NAMAWU, with the latter eventually filing with the NCMB a notice of strike. Then Labor Secretary, now Associate Justice of this Court, Leonardo A. Quisumbing, later assumed jurisdiction over the dispute and ruled in favor of NAMAWU. In his Order (Quisumbing Order), Secretary Quisumbing declared that the lay-off (of workers) implemented on May 1996 and October 1996 was illegal and that MMC committed unfair labor practice. He then ordered the reinstatement of the laid-off workers, with payment of full backwages and benefits, and directed the execution of a new CBA incorporating the terms and conditions of the previous CBA providing for an annual increase in the workers daily wage. In two separate casesG.R. Nos.133519 and 138996filed with this Court, we sustained the validity of the Quisumbing Order, which became final and executory on January 2000. On May 2001, then Acting DOLE Secretary, now also an Associate Justice of this Court, Arturo D. Brion, on motion of NAMAWU, directed the issuance of a partial writ of execution (Brion Writ), and ordered the DOLE sheriffs to proceed to the MMC premises for the execution of the same. Much later, in 2006, this Court, in G.R. Nos. 157696-97, entitled Maricalum Mining Corporation v. Brion and NAMAWU, affirmed the propriety of the issuance of the Brion Writ. The Brion Writ was not fully satisfied because MMCs resident manager resisted its enforcement. On motion of NAMAWU, then DOLE Secretary Patricia A. Sto. Tomas ordered the issuance of the Alias Writ of Execution and Break-Open Order (Sto. Tomas Writ). On October 2002, the respondent acting sheriffs, the members of the union, and several armed men implemented the Sto. Tomas Writ, and levied on the properties of MMC located at its compound in Sipalay, Negros Occidental. On October 2002, GHI filed with the RTC of Kabankalan City, Negros Occidental, Special Civil Action for Contempt with Prayer for the Issuance TRO and Writ of Preliminary Injunction and to Nullify the Sheriffs Levy on Properties. GHI contended that the levied properties were the subject of a Deed of Real Estate and Chattel Mortgage, dated September 5, 1996 executed by MMC in favor of GHI to secure the aforesaid P550M promissory notes; that this deed was registered on February 24, 2000; and that the mortgaged properties were already extrajudicially foreclosed in July 2001 and sold to GHI as the highest bidder on December 2001, as evidenced by the Certificate of Sale dated December 4, 2001. The trial court issued ex parte a TRO effective for 72 hours, and set the hearing on the application for a writ of injunction. Subsequently, the trial court ordered the issuance of a Writ of Injunction (issued on October 18, 2002) enjoining the DOLE sheriffs from further enforcing the Sto. Tomas Writ and from conducting any public sale of the levied-on properties, subject to GHIs posting of a P5M bond. Resolving, among others, NAMAWUs separate MR of the injunction order and for the dismissal of the case, the RTC denied NAMAWU's MR. Respondents Motion to Dismiss as embodied in its Opposition to TRO and Issuance of Writ of Preliminary Injunction with Motion to Dismiss and Suspend Period to File Answer was likewise DENIED. Aggrieved, NAMAWU filed with the CA a petition for certiorari under Rule 65. CA set aside the RTC issuances and directed the immediate execution of the Sto. Tomas Writ. Hence this petition. ISSUE: W/N RTC properly issued the writ of injunction to prevent the enforcement of the Sto.Tomas Writ. The resolution of this principal issue, however, will necessitate a ruling on the following key and interrelated questions: 1. 2. Whether the mortgage of the MMCs properties to GHI was a sham; Whether there was an effective levy by the DOLE upon the MMCs real and personal properties; and Whether it was proper for the CA to pierce the veil of corporate fiction between MMC and GHI.
3.
RULING: Before we delve into an extended discussion of the foregoing issues, it is essential to
AGUILA| CARIO | CONSUNJI| ESPIRITU | LUMANOG | MAGPANTAY | MANUEL | RELLOSA | SOLLANO || ALCANTARA | CAMIA| DEVESA | EVANGELISTA | PRESBITERO | SANTOS 11

take judicial cognizance of cases intimately linked to the present controversy which had earlier been elevated to and decided by this Court. Judicial Notice. Judicial notice must be taken by this Court of its Decision in Maricalum Mining Corporation v. Hon. Arturo D. Brion and NAMAWU, in which we upheld the right of herein private respondent, NAMAWU, to its labor claims. Upon the same principle of judicial notice, we acknowledge our Decision in Republic of the Philippines, through its trustee, the Asset Privatization Trust v. G Holdings, Inc., in which GHI was recognized as the rightful purchaser of the shares of stocks of MMC, and thus, entitled to the delivery of the company notes accompanying the said purchase. These company notes, 3 PNs, were part of the documents executed in 1992 in the privatization sale of MMC by the Asset Privatization Trust (APT) to GHI. Each of these notes uniformly contains stipulations establishing and constituting in favor of GHI mortgages over MMCs real and personal properties. The stipulations were subsequently formalized in a separate document denominated Deed of Real Estate and Chattel Mortgage on September 5, 1996 and registered on February 4, 2000. We find both decisions critically relevant to the instant dispute. In fact, they should have guided the courts below in the disposition of the controversy at their respective levels. To repeat, these decisions respectively confirm the right of NAMAWU to its labor claims and affirm the right of GHI to its financial and mortgage claims over the real and personal properties of MMC, as will be explained below. The assailed CA decision apparently failed to consider the impact of these two decisions on the case at bar. Thus, we find it timely to reiterate that: courts have also taken judicial notice of previous cases to determine whether or not the case pending is a moot one or whether or not a previous ruling is applicable to the case under consideration. However, the CA correctly assessed that the authority of the lower court to issue the challenged writ of injunction depends on the validity of the third partys (GHIs) claim of ownership over the property subject of the writ of execution issued by the labor department. Accordingly, the main inquiry addressed by the CA decision was whether GHI could be treated as a third party or a stranger to the labor dispute, whose properties were beyond the reach of the Writ of Execution dated December 18, 2001. In this light, all the more does it become imperative to take judicial notice of the two cases, as they provide the necessary perspective to determine whether GHI is such a party with a valid ownership claim over the properties subject of the writ of execution. Having recognized these crucial Court rulings, situating the facts in proper perspective, we now proceed to resolve the questions identified above. The mortgage was not a sham. Republic etc. v. G Holdings, Inc. acknowledged the existence of the Purchase and Sale Agreement between the APT and the GHI. It may be remembered that APT acquired the MMC from the PNB and the DBP. Then, in compliance with its mandate to privatize government assets, APT sold the aforesaid MMC shares and notes to GHI. To repeat, this Court has recognized this Purchase and Sale Agreement in Republic, etc., v. G Holdings, Inc. The participation of the Government, through APT, in this transaction is significant. Because the Government had actively negotiated and, eventually, executed the agreement, then the transaction is imbued with an aura of official authority, giving rise to the presumption of regularity in its execution. This presumption would cover all related transactional acts and documents needed to consummate the privatization sale, inclusive of the Promissory Notes. It is obvious, then, that the Government, through APT, consented to the establishment and constitution of the mortgages on the assets of MMC in favor of GHI, as provided in the notes. Accordingly, the notes (and the stipulations therein) enjoy the benefit of the same presumption of regularity accorded to government actions. Given the Government consent thereto, and clothed with the presumption of regularity, the mortgages cannot be characterized as sham, fictitious or fraudulent. It is difficult to conceive that these mortgages, already existing in 1992, almost four (4) years before NAMAWU filed its notice of strike, were a fictitious arrangement intended to defraud NAMAWU. After all, they were agreed upon long before the seeds of the labor dispute germinated. Apparently, the move to execute a formal document denominated as the Deed of Real Estate and Chattel Mortgage came about after the decision of the RTC of Manila in Civil Case No. 9576132 became final in mid-1996. It is undeniable that the Deed of Real Estate and Chattel Mortgage was formally documented two weeks after NAMAWU filed its notice of strike against MMC on August 23, 1996. However, this fact alone cannot give rise to an adverse inference for two reasons. First, as discussed above, the mortgages had already been established and constituted as early as October 2, 1992 in the Promissory Notes, showing the clear intent of the parties to impose a lien upon MMCs properties. Second, the mere filing of a notice of strike by NAMAWU did not, as yet, vest in NAMAWU any definitive right that could be prejudiced by the execution of the mortgage deed. The fact that MMCs obligation to GHI is not reflected in the formers financial statementsa circumstance made capital of by NAMAWU in order to cast doubt on the validity of the mortgage deedis of no moment. By itself, it does not provide a sufficient basis to invalidate this public document. Besides, the failure of the mortgagor to record in its financial statements its loan obligations is surely not an essential element for the validity of mortgage agreements, nor will it independently affect the right of the mortgagee to foreclose. The execution of the subsequent Deed of Real Estate and Chattel Mortgage on September 5, 1996 was simply the formal documentation of what had already been agreed in the seminal transaction (the Purchase and Sale Agreement) between APT and GHI. It should not be viewed in isolation, apart from the original agreement of October 2, 1992. And it cannot be denied that this original agreement was supported by an adequate consideration. The APT was even ordered by the court to deliver the shares and financial notes of MMC in exchange for the payments that GHI had made. It was also about this time, in 1996, that NAMAWU filed a notice of strike to protest nonpayment of its rightful labor claims. But, as already mentioned, the outcome of that labor dispute was yet unascertainable at that time, and NAMAWU could only have hoped for, or speculated about, a favorable ruling. We cannot see how NAMAWUs right was prejudiced by
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the Deed of Real Estate and Chattel Mortgage, or by its delayed registration, when substantially all of the properties of MMC were already mortgaged to GHI as early as October 2, 1992. Given this reality, the Court of Appeals had no basis to conclude that this Deed of Real Estate and Chattel Mortgage, by reason of its late registration, was a simulated or fictitious contract. GHIs mortgage rights, constituted in 1992, antedated the Partial Writ of Execution by nearly ten (10) years. GHIs resort to foreclosure was a legitimate enforcement of a right to liquidate a bona fide debt. It was a reasonable option open to a mortgagee which, not being a party to the labor dispute between NAMAWU and MMC, stood to suffer a loss if it did not avail itself of the remedy of foreclosure. The well-settled rule is that a mortgage lien is inseparable from the property mortgaged. While it is true that GHIs foreclosure of MMCs mortgaged properties may have had the effect to prevent satisfaction of the judgment award against the specific mortgaged property that first answers for a mortgage obligation ahead of any subsequent creditors, that same foreclosure does not necessarily translate to having been effected to prevent satisfaction of the judgment award against MMC. Likewise, we note the narration of subsequent facts contained in the Comment of the Office of the Solicitor General. Therein, it is alleged that after the Partial Writ of Execution was issued on May 9, 2001, a motion for reconsideration was filed by MMC; that the denial of the motion was appealed to the CA; that when the appeal was dismissed by the CA on January 24, 2002, it eventually became the subject of a review petition before this Court, docketed as G.R. No. 157696; and that G.R. No. 157696 was decided by this Court only on February 9, 2006. This chronology of subsequent events shows that February 9, 2006 would have been the earliest date for the unimpeded enforcement of the Partial Writ of Execution, as it was only then that this Court resolved the issue. This happened four and a half years after July 31, 2001, the date when GHI foreclosed on the mortgaged properties. Thus, it is not accurate to say that the foreclosure made on July 31, 2001 was effected [only] to prevent satisfaction of the judgment award. Thus, we must reject the conclusion of the CA that the Deed of Real Estate and Chattel Mortgage executed in 1996 was a simulated transaction. On the issue of whether there had been an effective levy upon the properties of GHI. Since the properties were already mortgaged to GHI, the only interest remaining in the mortgagor was its right to redeem said properties from the mortgage. The right of redemption was the only leviable or attachable property right of the mortgagor in the mortgaged real properties. We have held that The main issue in this case is the nature of the lien of a judgment creditor, like the petitioner, who has levied an attachment on the judgment debtors (CMI) real properties which had been mortgaged to a consortium of banks and were subsequently sold to a third party, Top Rate. xxxx The sheriffs levy on CMIs properties, under the writ of attachment obtained by the petitioner, was actually a levy on the interest only of the judgment debtor CMI on those properties. Since the properties were already mortgaged to the consortium of banks, the only interest remaining in the mortgagor CMI was its right to redeem said properties from the mortgage. The right of redemption was the only leviable or attachable property right of CMI in the mortgaged real properties. The sheriff could not have attached the properties themselves, for they had already been conveyed to the consortium of banks by mortgage (defined as a conditional sale), so his levy must be understood to have attached only the mortgagors Respondent sheriff wrongfully levied upon the mortgaged taxicabs and erroneously took possession of them. He could have levied only upon the right or equity of redemption pertaining to the Manila Yellow Taxicab Co., Inc. as chattel mortgagor and judgment debtor, because that was the only leviable or attachable property right of the company in the mortgaged taxicabs. After a chattel mortgage is executed, there remains in the mortgagor a mere right of redemption" remaining interest in the mortgaged propertythe right to redeem it from the mortgage. There appears in the record a factual contradiction relating to whether the foreclosure by GHI on July 13, 200163 over some of the contested properties came ahead of the levy thereon, or the reverse. NAMAWU claims that the levy on two trucks was effected on June 22, 2001,64 which GHI disputes as a misstatement because the levy was attempted on July 18, 2002, and not 2001 What is undisputed though is that the mortgage of GHI was registered on February 4, 2000, well ahead of any levy by NAMAWU. Prior registration of a lien creates a preference, as the act of registration is the operative act that conveys and affects the land, even against subsequent judgment creditors, such as respondent herein. Its registration of the mortgage was not intended to defraud NAMAWU of its judgment claims, since even the courts were already judicially aware of its existence since 1992. Thus, at that moment in time, with the registration of the mortgage, either NAMAWU had no properties of MMC to attach because the same had been previously foreclosed by GHI as mortgagee thereof; or by virtue of the DOLEs levy to enforce NAMAWUs claims, the latters rights are subject to the notice of the foreclosure on the subject properties by a prior mortgagees right. GHIs mortgage right had already been registered by then, and it is basic that mortgaged properties answer primarily for the mortgaged credit, not for the judgment credit of the mortgagors unsecured creditor. On the issue of piercing the veil of corporate fiction. In our disquisition above, we have shown that the CAs finding that there was a simulated mortgage between GHI and MMC to justify a wrong or protect a fraud has struggled vainly to find a foothold when confronted with the ruling of this Court in Republic v. G Holdings, Inc. The negotiations between the GHI and the Governmentthrough APT, dating back to 1992 culminating in the Purchase and Sale Agreement, cannot be depicted as a contrived transaction. In fact, in the said Republic, etc., v. G Holdings, Inc., this Court adjudged that
13

GHI was entitled to its rightful claimsnot just to the shares of MMC itself, or just to the financial notes that already contained the mortgage clauses over MMCs disputed assets, but also to the delivery of those instruments. Certainly, we cannot impute to this Courts findings on the case any badge of fraud. Thus, we reject the CAs conclusion that it was right to pierce the veil of corporate fiction, because the foregoing circumstances belie such an inference. Furthermore, we cannot ascribe to the Government, or the APT in particular, any undue motive to participate in a transaction designed to perpetrate fraud. Accordingly, we consider the CA interpretation unwarranted. We also cannot agree that the presumption of fraud in Article 1387 of the Civil Code relative to property conveyances, when there was already a judgment rendered or a writ of attachment issued, authorizes piercing the veil of corporate identity in this case. We find that Article 1387 finds less application to an involuntary alienation such as the foreclosure of mortgage made before any final judgment of a court. We thus hold that when the alienation is involuntary, and the foreclosure is not fraudulent because the mortgage deed has been previously executed in accordance with formalities of law, and the foreclosure is resorted to in order to liquidate a bona fide debt, it is not the alienation by onerous title contemplated in Article 1387 of the Civil Code wherein fraud is presumed. Since the factual antecedents of this case do not warrant a finding that the mortgage and loan agreements between MMC and GHI were simulated, then their separate personalities must be recognized. To pierce the veil of corporate fiction would require that their personalities as creditor and debtor be conjoined, resulting in a merger of the personalities of the creditor (GHI) and the debtor (MMC) in one person, such that the debt of one to the other is thereby extinguished. But the debt embodied in the 1992 Financial Notes has been established, and even made subject of court litigation (Civil Case No. 95-76132, RTC Manila). This can only mean that GHI and MMC have separate corporate personalities. Neither was MMC used merely as an alter ego, adjunct, or business conduit for the sole benefit of GHI, to justify piercing the formers veil of corporate fiction so that the latter could be held liable to claims of third-party judgment creditors, like NAMAWU. In Concept Builders, Inc. v. National Labor Relations Com-mission, we laid down the test in determining the applicability of the doctrine of piercing the veil of corporate fiction, to wit: 1. Control, not mere majority or complete control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own. 2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or dishonest and, unjust act in contravention of plaintiffs legal rights; and, 3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. x x x x Time and again, we have reiterated that mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not, by itself, a sufficient ground for disregarding a separate corporate personality. It is basic that a corporation has a personality separate and distinct from that composing it as well as from that of any other legal entity to which it may be related. Clear and convincing evidence is needed to pierce the veil of corporate fiction. In this case, the mere interlocking of directors and officers does not warrant piercing the separate corporate personalities of MMC and GHI. Not only must there be a showing that there was majority or complete control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked, so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own. The mortgage deed transaction attacked as a basis for piercing the corporate veil was a transaction that was an offshoot, a derivative, of the mortgages earlier constituted in the Promissory Notes dated October 2, 1992. But these Promissory Notes with mortgage were executed by GHI with APT in the name of MMC, in a full privatization process. It appears that if there was any control or domination exercised over MMC, it was APT, not GHI, that wielded it. Neither can we conclude that the constitution of the loan nearly four (4) years prior to NAMAWUs notice of strike could have been the proximate cause of the injury of NAMAWU for having been deprived of MMCs corporate assets. On the propriety of injunction to prevent execution by the NLRC on the properties of thirdparty claimants It is settled that an RTC can validly issue a Temporary Restraining Order (TRO) and, later, a writ of preliminary injunction to prevent enforcement of a writ of execution issued by a labor tribunal on the basis of a third-partys claim of ownership over the properties levied upon. While, as a rule, no temporary or permanent injunction or restraining order in any case involving or growing out of a labor dispute shall be issued by any courtwhere the writ of execution issued by a labor tribunal is sought to be enforced upon the property of a stranger to the labor dispute, even upon a mere prima facie showing of ownership of such claimanta separate action for injunctive relief against such levy may be maintained in court, since said action neither involves nor grows out of a labor dispute insofar as the third party is concerned. Instructively, National Mines and Allied Workers Union v. Vera Petitioners reliance on the provision of Art. 254 of the New Labor Code (herein earlier quoted) which prohibits injunctions or restraining orders in any case involving or growing out of a labor dispute is not well-taken. This has no application to the case at bar. Civil Case No. 2749 is one which neither involves nor grows out of a labor dispute. What involves or grows out of a labor dispute is the NLRC case between petitioners and the judgment debtor, Philippine Iron Mines. The private respondents are not parties to the said NLRC case. Civil Case No. 2749 does not put in issue either the fact or validity of the proceeding in the NLRC case nor the decision therein rendered, much less the writ of execution issued thereunder. It does not seek to enjoin the execution of the decision against the properties of the judgment debtor. What is sought to be tried in Civil Case No. 2749 is whether the NLRCs decision and writ of execution, above mentioned, shall be permitted to be satisfied against properties of
14

private respondents, and not of the judgment debtor named in the NLRC decision and writ of execution. Such a recourse is allowed under the provisions of Section 17, Rule 39 of the Rules of Court. To sustain petitioners theory will inevitably lead to disastrous consequences and lend judicial imprimatur to deprivation of property without due process of law. Simply because a writ of execution was issued by the NLRC does not authorize the sheriff implementing the same to levy on anybodys property. To deny the victim of the wrongful levy, the recourse such as that availed of by the herein private respondents, under the pretext that no court of general jurisdiction can interfere with the writ of execution issued in a labor dispute, will be sanctioning a greater evil than that sought to be avoided by the Labor Code provision in question. Certainly, that could not have been the intendment of the law creating the NLRC. For well-settled is the rule that the power of a court to execute its judgment extends only over properties unquestionably belonging to the judgment debtor. Likewise, since the third-party claimant is not one of the parties to the action, he cannot, strictly speaking, appeal from the order denying his claim, but he should file a separate reivindicatory action against the execution creditor or the purchaser of the property after the sale at public auction, or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff. A separate civil action for recovery of ownership of the property would not constitute interference with the powers or processes of the labor tribunal which rendered the judgment to execute upon the levied properties. The property levied upon being that of a stranger is not subject to levy. Thus, a separate action for recovery, upon a claim and prima facie showing of ownership by the petitioner, cannot be considered as interference. Upon the findings and conclusions we have reached above, petitioner is situated squarely as such third-party claimant. The questioned restraining order of the lower court, as well as the order granting preliminary injunction, does not constitute interference with the powers or processes of the labor department. The registration of the mortgage document operated as notice to all on the matter of the mortgagees prior claims. Official proceedings relative to the foreclosure of the subject properties constituted a prima facie showing of ownership of such claimant to support the issuance of injunctive reliefs. As correctly held by the lower court: The subject incidents for TRO and/or Writ of Injunction were summarily heard and in resolving the same, the Court believes, that the petitioner has a clear and unmistakable right over the levied properties. The existence of the subject Deed of Real Estate and Chattel Mortgage, the fact that petitioner initiated a foreclosure of said properties before the Clerk of Court and Ex-Officio Sheriff, RTC Branch 61, Kabankalan City on July 13, 2001, the fact that said Ex-Officio Sheriff and the Clerk of Court issue a Notice of Foreclosure, Possession and Control over said mortgaged properties on July 19, 2001 and the fact that a Sheriffs Certificate of Sale was issued on December 3, 2001 are the basis of its conclusion. Unless said mortgage contract is annulled or declared null and void, the presumption of regularity of transaction must be considered and said document must be looked [upon] as valid. Notably, the Office of the Solicitor General also aptly observed that when the respondent maintained that the Deed of Real Estate and Chattel mortgage was entered into in fraud of creditors, it thereby admitted that the mortgage was not void, but merely rescissible under Article 1381(3) of the Civil Code; and, therefore, an independent action is needed to rescind the contract of mortgage. We, however, hold that such an independent action cannot now be maintained, because the mortgage has been previously recognized to exist, with a valid consideration, in Republic, etc., v. G Holdings, Inc. A final word The Court notes that the case filed with the lower court involves a principal action for injunction to prohibit execution over properties belonging to a third party not impleaded in the legal dispute between NAMAWU and MMC. We have observed, however, that the lower court and the CA failed to take judicial notice of, or to consider, our Decisions in Republic, etc., v. G Holdings, Inc., and Maricalum Mining Corporation v. Brion and NAMAWU, in which we respectively recognized the entitlement of GHI to the shares and the company notes of MMC (under the Purchase and Sale Agreement), and the rights of NAMAWU to its labor claims. At this stage, therefore, neither the lower court nor the CA, nor even this Court, can depart from our findings in those two cases because of the doctrine of stare decisis. From our discussion above, we now rule that the trial court, in issuing the questioned orders, did not commit grave abuse of discretion, because its issuance was amply supported by factual and legal bases. We are not unmindful, however, of the fact that the labor claims of NAMAWU, acknowledged by this Court in Maricalum, still awaits final execution. As success fades from NAMAWUs efforts to execute on the properties of MMC, which were validly foreclosed by GHI, we see that NAMAWU always had, and may still have, ample supplemental remedies found in Rule 39 of the Rules of Court in order to protect its rights against MMC. These include the examination of the judgment obligor when judgment is unsatisfied, the examination of the obligors of judgment obligors,83 or even the resort to receivership. While, theoretically, this case is not ended by this decision, since the lower court is still to try the case filed with it and decide it on the merits, the matter of whether the mortgage and foreclosure of the assets that are the subject of said foreclosure is ended herein, for the third and final time. So also is the consequential issue of the separate and distinct personalities of GHI and MMC. Having resolved these principal issues with certainty, we find no more need to remand the case to the lower court, only for the purpose of resolving again the matter of whether GHI owns the properties that were the subject of the latters foreclosure. SCHOOL OF HOLY SPIRIT vs. TAGUIAM G.R. No. 165565 14 July 2008 DOCTRINE:
15

FACTS: Corazon P. Taguiam, the Class Adviser of Grade 5-Esmeralda of the School of the Holy Spirit of Quezon City. In 2000, the school allowed her class to hold a year-end celebration at the school grounds and they were authorized to use the swimming pool upon request of the class president. In this connection, Taguiam distributed the parents/guardians permit forms to the pupils. Chiara Mae Federicos permit form was unsigned, but Taguiam allowed her to join the activity assuming that she was allowed by her mother to join the activity since her mother personally brought her to the school with her packed lunch and swimsuit. Before the activity started, respondent warned the pupils who did not know how to swim to avoid the deeper area. However, while the pupils were swimming, two of them sneaked out. Taguiam went after them to verify where they were going, however, while she was away, Chiara Mae drowned. When Taguiam returned, the maintenance man was already administering cardiopulmonary resuscitation on Chiara Mae. She was still alive when she was rushed to the General Malvar Hospital but she was pronounced dead on arrival. Holy Spirit issued a Notice of Administrative Charge to Respondnet Taguiam for alleged gross negligence and required her to submit her written explanation. They conducted a clarificatory hearing which respondent attended. Respondent also submitted her Affidavit of Explanation. Subsequently, petitioners dismissed respondent on the ground of gross negligence resulting to loss of trust and confidence. Meanwhile, Chiara Maes parents filed a P7 Million damage suit against the school and Taguiam. They also filed against respondent Taguiam a criminal complaint for reckless imprudence resulting in homicide. Taguiam in turn filed a complaintagainst the school and/or Sr. Crispina Tolentino for illegal dismissal, with a prayer for reinstatement with full backwages and other money claims, damages and attorneys fees. Labor Arbiter1: dismissed the case; declared that respondent was validly terminated for gross neglect of duty. The Labor Arbiter concluded that although respondents negligence was not habitual, the same warranted her dismissal since death resulted therefrom. NLRC: affirmed the dismissal of the complaint. Court of Appeals, ruled in Taguiams favor (reversed LA and NLRC) holding that there was insufficient proof that respondents negligence was both gross and habitual. The Court of Appeals disposed, thus: ISSUE: whether respondents dismissal on the ground of gross negligence resulting to loss of trust and confidence was valid? Yes; valid RULING: Court found that respondent had been grossly negligent but not habitual. However, cause is sufficient to terminate Under Article 282 of the Labor Code, gross and habitual neglect of duties is a valid ground for an employer to terminate an employee. Doctrine 1: Gross negligence implies a want or absence of or a failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Habitual neglect implies repeated failure to perform ones duties for a period of time, depending upon the circumstances. On gross negligence:it is undisputed that Chiara Maes permit form was unsigned. Yet, respondent allowed her to join the activity because she assumed that Chiara Maes mother has allowed her to join it by personally bringing her to the school with her packed lunch and swimsuit. 2 (2) it was her responsibility as Class Adviser to supervise her class in all activities sanctioned by the school. Thus, she should have coordinated with the school to ensure that proper safeguards, such as adequate first aid and sufficient adult personnel, were present during their activity As it turned out, since respondent was the only adult present, majority of the pupils were left unsupervised when she followed the two pupils who sneaked out. In the light of the odds involved, respondent should have considered that those who sneaked out could not have left the school premises since there were guards manning the gates. Those who stayed at the pool were put at greater risk, when she left them unattended by an adult. Notably, respondents negligence, although gross, was not habitual. In view of the considerable resultant damage, however, we are in agreement that the cause is sufficient to dismiss respondent. Doctrine2: GR- neglect of duties must be both gross and habitual Exceptions (Cases where SC departed from the GR: 1. In PAL v. NLRC, we ruled that PAL cannot be legally compelled to continue with the employment of a person admittedly guilty of gross negligence in the performance of his duties although it was his first offense. In that case, we noted that a mere delay on PALs flight schedule due to aircraft damage entails problems like hotel accommodations for its
He opined that Chiara Mae drowned because respondent had left the pupils without any adult supervision. He also noted that the absence of adequate facilities should have alerted respondent before allowing the pupils to use the swimming pool.
The purpose of a permit form is precisely to ensure that the parents have allowed their child to join the school activity involved. Respondent cannot simply ignore this by resorting to assumptions. Respondent admitted that she was around when Chiara Mae and her mother arrived. She could have requested the mother to sign the permit form before she left the school or at least called her up to obtain her conformity.
16

passengers, re-booking, the possibility of law suits, and payment of special landing fees not to mention the soaring costs of replacing aircraft parts. Fuentes v. NLRC - held that it would be unfair to compel Philippine Banking Corporation to continue employing its bank teller. In that case, although the tellers infraction was not habitual, a substantial amount of money was lost. The deposit slip had already been validated prior to its loss and the amount reflected thereon is already considered as current liabilities in the banks balance sheet. Indeed, the sufficiency of the evidence as well as the resultant damage to the employer should be considered in the dismissal of the employee. In this case, the damage went as far as claiming the life of a child. Appeals to reverse and set aside the resolution of the NLRC. WHEREFORE, the petition is GRANTED. The assailed Decision dated June 7, 2004 of the Court of Appeals in CA-G.R. SP No. 81480 is SET ASIDE. The Resolution dated September 20, 2002 of the National Labor Relations Commission in NLRC NCR CA No. 031627-02 is REINSTATED. No pronouncement as to costs.SO ORDERED.
2.
3.
As a result of gross negligence in the present case, petitioners lost its trust and confidence in respondent. Loss of trust and confidence to be a valid ground for dismissal must be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Otherwise stated, it must rest on substantial grounds and not on the employers arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. It should be genuine and not simulated; nor should it appear as a mere afterthought to justify earlier action taken in bad faith or a subterfuge for causes which are improper, illegal or unjustified. It has never been intended to afford an occasion for abuse because of its subjective nature. There must, therefore, be an actual breach of duty committed by the employee which must be established by substantial evidence. As a teacher who stands in loco parentis to her pupils, respondent should have made sure that the children were protected from all harm while in her company. Respondent should have known that leaving the pupils in the swimming pool area all by themselves may result in an accident. A simple reminder not to go to the deepest part of the pool was insufficient to cast away all the serious dangers that the situation presented to the children, especially when respondent knew that Chiara Mae cannot swim. Dismally, respondent created an unsafe situation which exposed the lives of all the pupils concerned to real danger. This is a clear violation not only of the trust and confidence reposed on her by the parents of the pupils but of the school itself. Finally, we note that based on the criminal complaint filed by Chiara Maes parents, the Assistant City Prosecutor found probable cause to indict respondent for the crime of reckless imprudence resulting in homicide. 3 There being a clear showing that respondent was culpable for gross negligence resulting to loss of trust and confidence, her dismissal was valid and legal. It was error for the Court of
3 The Assistant City Prosecutor held that respondent should have foreseen the danger lurking in the waters. By leaving her pupils in the swimming pool, respondent displayed an inexcusable lack of foresight and precaution.3[28] While this finding is not controlling for purposes of the instant case, this only supports our conclusion that respondent has indeed been grossly negligent. AGUILA| CARIO | CONSUNJI| ESPIRITU | LUMANOG | MAGPANTAY | MANUEL | RELLOSA | SOLLANO || ALCANTARA | CAMIA| DEVESA | EVANGELISTA | PRESBITERO | SANTOS 17

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