C O NT E N T S

I.
II.

APPLICABLE LAWS
GENERAL PRINCILPES
Singer Sewing Machine vs. NLRC 193 SCRA 271
Manila Golf Club vs. IAC 237 SCRA 207
Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [96]
Carungcong vs. Sunlife, 283 SCRA 319
Ramos vs. CA, 380 SCRA 467
Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004
Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]
Phil. Global Communication vs. De Vera, 459 SCRA 260 [2005]
ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006
Francisco vs. NLRC, 500 SCRA 690 [06]
Nogales et al., vs. Capitol Medical Center et al., G.R. No. 142625, December 19, 2006
Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007
Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008
Escasinas et al., vs. Shangri-la Mactan Island Resort et al., G.R. No. 178827, March 4, 2009
Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc, G.R. No. 167622, January 25, 2011
Atok Big Wedge Company vs. Gison, G.R. No. 169510, August 8, 2011
Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426, August 15, 2011
Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084, September 14, 2011
Lirio vs. Genovia, G.R. No. 169757, November 23, 2011
Jao vs. BCC Products Sales Inc. G.R. No. 163700, April 18, 2012
Legend Hotel (Manila) vs. Realuyo G.R. No. 153511, July 18, 2012
The New Philippine Skylanders, Inc., vs. Dakila, G.r. No. 199547, Sept. 24, 2012
Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March 12, 2014
Royal Homes Marketing Corporation, G.R. No. 195190, July 28, 2014

III.

SECURITY OF TENURE
ALU-TUCP vs. NLRC, 234 SCRA 678 [1994]
Cosmos Bottling Corp., vs. NLRC, 255 SCRA 358 [1996]
Purefoods vs. NLRC, 283 SCRA 136 [1997]
Phil. Fruit & Vegetable Industries vs. NLRC, 310 SCRA 680 [1999]
Philips Semiconductor vs. Fardiquela, G.R. No. 141717, April 14, 2004
Alcira vs. NLRC, G.R. No. 149859, June 9, 2004
Mitsubishi Motors Phils vs. Chrysler Phil Labor Union G.R. No. 148738, June 29, 2004
Pangilinan vs. General Milling Co., G.R. No. 149329, July 2, 2004
Hacienda Bino/Hortencia Stark vs. Cuenca, G.R. No. 150478, April 15, 2005,
Phil. Global Communication vs. De Vera, G.R. No. 157214, June 7, 2005
Lacuesta vs. Ateneo De Manila, G.R. No. 152777, December 9, 2005
Poseidon Fishing/Terry De Jesus vs. NLRC, G.R. No. 168052, February 20, 2006
Cebu Metal Corp., vs. Saliling, G.R. No. 154463, September 5, 2006
Liganza vs. RBL Shipyard Corp., G.R. No. 159862, October 17, 2006 citing Maraguinot
Fabeza vs. San Miguel Corp., G.R. No. 150658, February 9, 2007 citing Brent School
Soriano vs. NLRC, G.R. No. 165594, April 23, 2007,
Caseres vs. Universal Robina Sugar Milling Corp., et al., G.R. No. 159343, September 28, 2007
Pier 8 Arrastre & Stevedoring Services Inc., vs. Boclot, G.R. No. 173849, September 28, 2007
Pacquing vs. Coca-Cola Bottlers Phils., Inc. G.R. No. 157966, January 31, 2008, citing Magsalin vs. National Organization of Workingmen,
G.R. No. 148492, May 9, 2003
Agusan Del Norte Electric Cooperative vs. Cagampang, G.R. No. 167627, October 10, 2008
William Uy Construction Corp et al., vs. Trinidad G.R. No. 183250, March 10, 2010
Dacuital et al., vs. L.M. Camus Engineering Corp. GR No. 176748, Sept. 1, 2010
Millennium Erectors Corp. vs. Magallanes, GR No. 184362, Nov. 15, 2010
Exodus International Construction Corp., vs. Biscocho, et al., G.R. No. 166109, Feb, 23, 2011
Leyte Geothermal Power Progressive Employees Union vs. PNOC G.R. No. 170351, March 30, 2011
St. Paul College Quezon City vs. Ancheta II, G.R. No. 169905, September 7, 2011
Lynvil Fishing Enterprises vs. Ariola, et al., G.R. No. 181974, February 1, 2012
D.M. Consunji Inc vs. Jamin, G.R. No. 192514, April 18, 2012, citing Maraguinot
Gapayao vs. Fulo et al., G.R. No. 193493, June 13, 2013
Concrete Solutions Inc. et al., vs. Cabusas, G.R. No. 177812, June 19, 2013
D.M. Consunji vs. Bello, G.R. No. 159371, July 29, 2013
Colegio Del Santisimo Rosario et al., vs. Rojo, G.R. No. 170388, Sept. 4, 2013

Herrera-Manaois vs. St. Scholasticas College, GR No. 188914, December 11, 2013
Universal Robina Sugar Milling Corp., vs. Acibo et al., GR No. 186439, January 15, 2014
Noblejas v. IMAPI, G.R. No. 207888, June 09, 2014
Omni hauling Services Inc. et al., vs. Tortoles, GR No. 199388, Sept. 3, 2014
Hacienda Leddy v. Villegas
IV.

MANAGEMENT PREROGATIVE
Dosch vs. NLRC, 123 SCRA 296 [1983]
PT&T vs. Court of Appeals, G.R. No. 152057, September 29, 2003
Mendoza vs. Rural Bank of Lucban, G.R. No. 155421, July 7, 2004
Duncan Association of Detailman vs. Glaxo Wellcome Phils., G.R. No. 162994, Sept. 17, 2004
PLDT vs. Paquio, G.R. No. 152689, October 12, 2005
Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
Rivera vs. Solidbank, G.R. No. 163269, April 19, 2006
Tiu vs. Platinum Plans, Inc. G.R. No. 163512, February 28, 2007
Duldulao vs. Court of Appeals, G.R. No. 164893, March 1, 2007
Almario vs. Phil Airlines, G.R. No. 170928, September 11, 2007
Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
Manila Electric Co. et al., vs. Lim, GR No. 184769, Oct. 5, 2010
Bello vs. Bonifacio Security Services G.R. No. 188086, Aug. 3, 2011
Alert Security and Investigation Agency vs. Pasawilan, G.R. No. 182397, September 14, 2011
Manila Pavilion Hotel vs. Delada, G.r. No. 189947, January 25, 2012
Barba vs. Liceo De Cagayan University, G.R. No. 193857, November 28, 2012
Best Wear Garments vs. De Lemos, G.R. No. 191281, December 5, 2012
Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc, G.R. No. 198783, April 15, 2013
Peckson vs. Robinsons Supermarket Corp. G.R. No. 198534, July 3, 2013

V.

TERMINATION OF EMPLOYMENT
Retuya vs. NLRC, G.R. No. 148848, August 5, 2003, citing 1996 Bustamante
Agabon vs. NLRC, G.R. No. 158693, November 17, 2004
Jaka Food Processing vs. Pacot, G.R. No. 151378, March 28, 2005
Mauricio vs. NLRC, G.R. No. 164635, November 17, 2005
Industrial Timber Corp., vs. Ababon, G.R. No. 164518, January 25, 2006 and March 28, 2006
Equitable Bank vs. Sadac, G.R. No. 164772, June 8, 2006
Heirs of Sara Lee vs. Rey, G.R. No. 1499013, August 31, 2006
Galaxi Steel Workers Union vs. NLRC, G.R. No. 165757, October 17, 2006
Sy vs. Metro Bank, G.R. No. 160618, November 2, 2006
King of Kings Transport vs. NLRC, G.R. No. 166208, June 29, 2007
Asian Terminal vs. NLRC, G.R. No. 158458, December 19, 2007
Smart Communications vs. Astorga, G.R. No. 148142, January 28, 2008
RB Michael Press vs. Galit, G.R. No. 153510, February 13, 2008
School of the Holy Spirit of Q.C. vs. Taguiam, G.R. No. 165565, July 14, 2008
Flight Attendants and Steward Association of the Phils vs. PAL, G.R. No. 178083, July 22, 2008
John Hancock Life Insurance Corp. vs. Davis, G.R. No. 169549, Sept. 3, 2008
Yrasuegui vs. Phil Airlines, G.R. No. 168081, Oct 17, 2008
Garcia vs. PAL, G.R. No. 164856, Jan. 20, 2009
Perez et al., vs., Phil Telegraph & Telephone Company et al., G.R. No. 152048, April 7, 2009
Telecommunications Distributors Specialists Inc., et al., vs. Garriel, GR No. 174981, May 25, 2009
Martinez vs. B& B Fish Broker, GR No. 179985, Sept 18, 2009
Plantation Bay Resort and Spa, et al. vs. Dubrico, G.R. No. 182216, December 4, 2009
Fulache, et al. vs. ABS-CBN Broadcasting Corp., G.R. No. 183810, January 21, 2010
Ancheta vs. Destiny Financial Plans Inc et al., GR No. 179702, Feb 16, 2010
Javellana, Jr. vs. Belen, G.R. Nos. 181913 & 182158, March 5, 2010,
WPP Marketing Communications Inc., et al., vs. Galera, G.R. No. 169207, March 25, 2010
Maribago Bluewater Beach Resort vs. Dual, GR No. 180660, July 20, 2010
Artificio vs. NLRC et al., GR No. 172988, July 26, 2010
Nacague vs. Sulpicio Lines Inc. GR. No. 172589, August 8, 2010
St. Marys Academy of Dipolog City vs. Palacio, GR No. 164913, Sept 8, 2010
PLDT vs. Teves, GR No. 143511, Nov. 15, 2010
Shimizu Phils Contractors Inc., vs. Callanta, GR No. 165923, Sept. 29, 2010
Manila Mining Corp. Employees Association-FFW vs. Manila Mining Corp. GR No. 178222-23, Sept. 29, 2010
Robinsons Galleria/Robinsons Supermarket Corp., vs. Ranchez, G.R. No. 177937, January 19, 2011

University of the Immaculate Concepcion et al., vs. NLRC, et al., G.R. No. 181146, January 26, 2011
Hospital Management Services Inc vs. Hospital Management Services Inc-Medical Center Manila Employees Asso. GR No. 176287, Jan.
31, 2011
Culili vs. Eastern Telecommunications Phils et al., GR No. 165381, Feb. 9, 2011
Plastimer Industrial Corp., vs. Gopo et al., G.R. No. 183390, Feb. 16, 2011
Lopez vs. Alturas Group of Companies, G.R. No. 191008, April 11, 2011
Apacible vs. Multimed Industries Inc. G.R. No. 178903, May 30, 2011
Barroga vs. Data Center College G.R. No. 174158, June 27, 2011
Lopez vs. Keppel Bank Phils, G.R. No. 176800, September 5, 2011
St. Paul College Quezon City et al., vs. Ancheta II, G.R. No. 169905, Sept. 7, 2011
Jumuad vs. Hi-Flyer Food, G.R. No. 187887, Sept. 7, 2011
Nissan Motor Phils vs. Angelo, G.R. No. 164181, Sept. 14, 2011
Phil. National Bank vs. Padao, G.r. No. 180849, November 16, 2011
Tamsons Enterprises Inc. vs. Court of Appeals, G.r. No. 192881, November 16, 2011
Concepcion vs. Minex Import Corp. G.R. No. 153569, January 24, 2012, En banc
Morales vs. Harbour Centre Port Terminal Inc. G.R. No. 174208, January 25, 2012
Mansion Printing Center vs. Bitara, Jr. G.R. No. 168120, January 25, 2012
Manila Electric Co. vs. Beltran, G.R. No. 173774, January 30, 2012
Bank of Lubao vs. Manabat et al., G.R. No. 188722, February 1, 2012
Canadian Opportunities Unlimited vs. Dalangin, Jr. G.R. No. 172223, February 6, 2012
Manila Electric Co., vs. Gala, G.R. No. 191288 & 191304, March 7, 2012
Aro et al., vs. NLRC et al., G.R. No. 174792, March 7, 2012
Ymbong vs. ABS-CBN Broadcasting Corp. G.R. No. 184885, March 7, 2012
Blue Sky Trading Co. vs. Blas et al., G.R. No. 190559, March 7, 2012
International Management Services vs. Logarta, G.R. No. 163657, April 18, 2012
Jiao et al., vs. NLRC, G.R. No. 182331, April 18, 2012
Realda vs. New Age Graphics Inc. G.R. No. 192190, April 25, 2012
Kakampi & Its members Panuelosbvs. Kingspoint Express & Logistics, G.R. No. 194813, April 25, 2012
Waterfront Cebu City Hotel vs. Jimenez et al., G.R. No. 174214, June 13, 2012
Ramirez et al., vs. Mar Fishing Co Inc. et al., G.R. No. 168208, June 13, 2012
Prudential Guarantee & Assurance Employee Labor Union vs. NLRC G.R. No. 185335, June 13, 2012
Paulino vs. NLRC, et al., G.R. No. 176184, June 13, 2012
Manila Electric co., vs Dejan, G.r. No. 194106, June 18, 2012
Apo Cement Corp., vs. Baptisma, G.R. No. 176671, June 20, 2012
Cosmos Bottling Corp., vs. Fermin, G.R. No. 193676, June 20, 2012
Reyes-Ravel vs. Philippine Luen Thai Holdings Corp., G.R. No. 174893, July 11, 2012
Verdadero vs. Barney Autolines Group of Companies Transport Inc., G.R. No. 195428, August 29, 2012
Naranjo et al., vs. Biomedica Health Care Inc. et al., G.R. No. 193789, September 19, 2012
The New Philippine Skylanders Inc. vs. Dakila, G.R. No. 199547, September 24, 2012
Morales vs. Metropolitan Bank G.R. No. 182475, November 21, 2012
Mirant Phils Corp. vs. Sario, G.R. No. 197598, November 21, 2012
Kakampi and Its Members Panuelos vs. Kingspoint Express & Logistics, G.R. No. 194813, April 25, 2012
Sampaguita Auto Transport Corp. vs. NLRC et al., G.r. No. 197384, January 30, 2013
Philippine holdings Inc. vs. Episcope, G.R. No. 192826, February 27, 2013
The Orchard Golf & Country Club vs. Francisco, G.R. No. 178125, March 13, 2013
Torres vs. Rural Bank of san Juan Inc. et al., G.R. No. 184520, March 13, 2013
The Orchard Golf & Country Club vs. Francisco, G.R. No. 178125, March 15, 2013
Banares vs. Tabaco Womens Transport Service Cooperative, G.R. No. 197353, April 1, 2013
Reyes, et al., vs. RP Guardians security Agency Inc. G.R. No. 193756, April 10, 2013
Celdran vs. Forza Integrated Services et al., G.R. No. 189460, June 5, 2013, Res.
Surigao Del Norte Electric Cooperative Inc. vs. Gonzaga, G.R. No. 187722, June 10, 2013
Univac Developments Inc. vs. Soriano, G.R. No. 182072, June 19, 2013
Unilever Phils vs. Rivera, G.R. No. 201701, June 3, 2013
Samr-med Distribution vs. NLRC, et al., G.R. No. 162385, July 15, 2013
Naranjo et al, vs. Biomedica Health Care Inc. G.R. No. 193789, Sept. 19, 2012
Manila Jockey Club Inc. vs. Trajano, G.R. No. 160982, June 26, 2013
Fianza vs. NLRC et al., G.R. No. 163061, June 26, 2013
Pasos vs. Phil National Construction Corp. G.R. No. 192394, July 3, 2013
Universal Robina Corp et al., v. Castillo G.R. No. 189686, July 10, 2013
Martinez vs. Central Pangasinan Electric Cooperative, G.R. No. 192306, July 15, 2013
Zuellig Pharma Corp vs. Sibal et al., G.R. No. 173587, July 15, 2013
Zuellig Freight & Cargo System vs. NLRC, G.R. No. 157900, July 22, 2013
Abbott Laboratrories Phils et al., vs. Alcaraz, G.R. No. 192571, July 23, 2013 En banc
Manila Polo Club Employees Union vs. Manila Polo Club, G.R. No. 172846, July 24, 2013
Canedo vs. Kampilan Security & Detective Agency Inc. et al., G.R. No. 179326, July 31, 2013
Ang vs. San Joaquin Jr et al., G.R. No. 185549, Aug. 7, 2013

Sanoh Fulton Phils Inc. et al., vs. Bernardo et al., G.R. No. 187214, Aug. 14, 2013
Daabay vs.Coca-Cola Bottlers Phils G.R. No. 199890, Aug. 19, 2013
MZR Industries et al., vs. Colambot, G.R. No. 179001, Aug. 28, 2013
IntegratedMicorelctronics Inc. vs. Pionella, G.R. No. 200222, Aug. 28, 2013
Asia Brewery Inc. vs. Tunay na Pagkakaisa ng Manggagawa sa Asia, G.R. No. 171594-96, Sept. 18, 2013
Hormillosa vs. Coca-Cola Bottlers Phils GR No. 198699, October 9, 2013
Abbott Laboratories Phils., et al., vs. Alcaraz, GR No. 192571, April 22, 2013, En banc; see also Resolution, dated April 22, 2014
Gemina Jr vs. Bankwise Inc. et al. GR No. 175365, October 23, 2013
Baguio Central University vs. Gallente, GR No. 188267, December 2, 2013
Sangwoo Phils Inc. et al., vs. Sangwoo Phils Inc Employees Union GR No. 173154, December 9, 2013
International School Manila et al., vs. International School Alliance of Educators et al., GR No. 167286, February 5, 2014
Dreamland Hotel Resort vs. Johnson, GR No. 191455, March 12, 2014
Castillo et al., vs. Prudentialife Plans Inc., GR No. 196142, March 26, 2014
Unibersidad De Sta Isabel vs. Sambajon, Jr. GR No. 196280 & 196286, April 2, 2014
Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014
Wenphil Corp., vs. Abing, et al., GR No. 207983, April 7, 2014
Arabit et al., vs. Jardine Pacific Finance Inc. GR No. 181719, April 21, 2014
Mirant (Philippines) Corp., et al., vs. Caro, GR No. 181490, April 23, 2014
Flight Attendants and Steward Assoc. of the Phils. Vs. Phil. Airlines; G.R. No. 178083. July 23, 2008
LIBCAP MARKETING CORP., JOHANNA J. CELIZ, and MA. LUCIA G. MONDRAGON, Petitioners, vs. LANNY JEAN B. BAQUIAL,
Ampeloquio vs. Jaka Distribution Inc. GR No. 196936, July 2, 2014
CONRADO A. LIM, Petitioner, v. HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY BUNAG AND NELSON CAMILLER,
Respondents., G.R. No. 201483, August 04, 2014
BENSON INDUSTRIES EMPLOYEES UNION-ALU-TUCP AND/OR Vilma Genon et al., vs BENSON INDUSTRIES, INC.
Montinola vs. Philippine Airlines, GR No. 198656, Sept. 8, 2014
VI.

SUSPENSION OF BUSINESS OPERATIONS

JPL Marketing Promotion vs. Court of Appeals, G.R. No. 151966, July 8, 2005
Pido vs. NLRC, G.R. No. 169812, February 23, 2007
Megaforce Security & Allied Services vs. Lactao, G.R. No. 160940, July 21, 2008
National Mines and Allied Workers Union vs. Marcopper Mining Corp., G.R. No. 174641, Nov. 11, 2008
Eagle Star Security Services Inc., vs. Mirando, et al., GR No. 179512, July 30, 2009
Nationwide Security & Allied Services vs. Valderama, G.R. No. 186614, Feb. 23, 2011
Nippon Housing Phils vs. Leynes, G.R. No. 177816, August 3, 2011
Mindanao Terminal & Brokerage Service Inc et al., vs. Nagkahiusang Mamumuo sa Minterbro-Southern Phils Federation of Labor, G.R.
No. 174300, December 5, 2012
Leopard Security and Investigation Agency vs. Quitoy et al., G.R. No. 186344, February 28, 2013
SKM Art Craft Corp., vs. Bauca, et al., GR No. 171282, November 27, 2013
Navotas Shipyard Corp., vs. Montallana et al., GR No. 190053, March 24, 2014
Emeritus Security & Maintenance Systems Inc., vs. Dailig, GR No. 204761, April 2, 2014
CRISPIN B. LOPEZ, Petitioner, v. IRVINE CONSTRUCTION CORP. AND TOMAS SY SANTOS,Respondents.
EXOCET SECURITY AND ALLIED SERVICES CORPORATION and/or MA. TERESA MARCELO, VS ARMANDO D. SERRANO GR NO
198538, Sept. 29, 2014

VII. DISEASE AS A GROUND FOR TERMINATION

Sy vs. Court of Appeals, G.R. No. 142293, February 27, 2003
Manly Express vs. Payong, G.R. No. 167462, October 25, 2005
Duterte vs. Kingswood Trading Co., G.R. No. 160325, October 4, 2007
Villaruel vs. Yeo Han Guan G.R. No. 169191, June 1, 2011
Deoferio vs. Intel Technology Phils., GR No. 202996, June 18, 2014
VIII. OTHER CAUSES OF SEVERANCE OF EMPLOYMENT
Pantranco North Express vs. NLRC, 259 SCRA 161 [1996]
Phil. Airlines vs. Airline Pilots Asso. Of Phils., G.R. No. 143686, January 15, 2002
Cainta Catholic School vs. Cainta Catholic School Employees Union, G.R. No. 151021, May 4, 2006
Jaculbe vs. Silliman University, G.R. No. 156934, March 16, 2007
Globe Telecom vs. Crisologo, G.R. No. 17644, August 10, 2007
BMG Records Phils et al., vs. Aparecio, et al., G.R. No. 153290, September 5, 2007, citing Phil Today vs. NLRC, 267 SCRA 202 [1996]
Blue Angel Manpower and Security Services vs. CA, G.R. No. 161196, July 28, 2008
Guerzon Jr et al vs. Pasig Industries Inc., et al., G.R. No. 170266, Sept. 12, 2008
Suarez Jr. et al., vs. National Steel Corp., G.R. No. 150180, Oct. 17, 2008
Goodrich Mfg Corp vs. Ativo et al., GR No. 188002, Feb. 1, 2010

Korean Air Co Ltd vs. Yuson, GR No. 170369, June 16, 2010
Cercado vs. Uniprom Inc. GR No. 188154, Oct. 13, 2010
Bilbao vs. Saudi Arabian Airlines, G.R. No. 183915, December 14, 2010
San Miguel Properties vs. Gucaban, G.R. No. 153982, July 18, 2011
Skippers United Pacific vs. Doza et al., G.R. No. 175558, February 8, 2012
Auza, Jr. et al., vs. Mol Phils Inc. G.R. No. 175481, November 21, 2012
Gan vs. Galderma Philippines, Inc. G.R. No. 177167, January 17, 2013
Padillo vs. Rural Bank of Nabunturan Inc. G.R. No. 199338, January 21, 2013
Intel Technology Phils Inc. vs. NLRC et al., GR No. 200575, February 5, 2014
Sutherland & Global Services Phils Inc., vs. Labrador, GR No. 193107, March 24, 2014
Chiang Kai Shek College et al., vs. Torres, GR No. 189456, April 2, 2014
IX.

PRESCRIPTION OF CLAIMS
Ludo & Luym vs. Saornido, G.R. No. 140960, January 20, 2003
Degamo vs. Avant Lard Shipping Lines, G.R. No. 154460, November 22, 2005
Intercontinental Broadcasting Corp., vs. Panganiban, G.R. No. 151407, February 6, 2007
Far East Agricultural Supply vs. Lebatigue, G.R. No. 162813, February 12, 2007
Victory Liner vs. Race, G.R. No. 164820, March 28, 2007
J.K Mercado & Sons Agricultural Enterprises vs. Hon. Sto. Tomas, G.R. No. 158084, Aug. 29, 2008
Reyes vs. NLRC, CCBPI, G.R. No. 180551, Feb. 10, 2009
LWV Construction Corp., vs. Dupo, GR No. 172342, July 13, 2009
PLDT vs. Pingol, GR No. 182622, Sept. 8, 2010
Medline Management Inc. vs. Roslinda, GR No. 168715, Sept. 15, 2010
University of East vs. University of East Employees Asso. G.r. No. 179593, September 14, 2011

X.

JURISDICTION OF THE LABOR ARBITER

Tolosa vs. NLRC, G.R. No. 149578, April 10, 2003
Austria vs. NLRC, 312 SCRA 413
Eviota vs. Court of Appeals, 407 SCRA 394
Dynamic Signmaker Outdoor Advertising Services vs. Potongan, G.R. No. 156589, June 27, 2005
Metromedia Times Corp., vs. Pastorin, G.R. No. 154295, July 29, 2005
Yusen Air & Sea Service Phils vs. Villamor, G.R. No. 154942, August 16, 2005
Duty Free Phils., vs. Mojica, G.R. No. 166365, September 30, 2005
Easycall Communication Phils., vs. King, G.R. No. 145901, December 15, 2005
San Miguel Foods Inc., vs. San Miguel Corp Employees Union-PTGWO, G.R. No. 168569, October 5, 2007
Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No. 1577745, October 19, 2007
Garcia vs. Eastern Telecommunications Phils., et al., GR No. 173115 & 173163-64, April 16, 2009
Halaguena et al., vs. Phil Airlines GR No. 172013, Oct 2, 2009
Okol vs. Slimmers World International, et al., G.R. No. 160146, December 11, 2009
Hugo et al., vs. Light Rail Transit Authority, G.R. No. 181866, March 18, 2010
Matling Industrial and Commercial Corp et al., vs. Coros, GR No. 157802, Oct. 13, 2010
Manila Electric Co. et al., vs. Lim, GR No. 184769, Oct. 5, 2010
Hongkong and Shanghai Banking Corp., vs. Sps. Broqueza, GR No. 178610, Nov. 17, 2010
Real vs. Sangu Phils., Inc., et al., G.R. No. 168757, January 19, 2011
Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012
Ace Navigation Co. Inc. et al., vs. Fernandez, G.R. No. 197309, October 10, 2012
Cosare vs. Broadcom Asia, Inc. GR No. 201298, February 5, 2014,
Amecos v. Lopez

XI.

2011 NLRC RUES OF PROCEDURE

Mindanao Times Corp vs. Confesor, GR No. 183417, Feb. 5, 2010
College of the Immaculate Concepcion vs. NLRC et al., G.R. No. 167563, March 22, 2010
Oriental Shipmanagement Co. vs. Bastol, GR No. 186280, June 29, 2010
Millennium Erectors Corp. vs. Magallanes, GR No. 184362, Nov> 15, 2010
Islriz Trading/Lu vs. Capada et al., G.R. No. 168501, January 31, 2011
Panlilio et al., vs. RTC Br. 51, City of Manila, G.R. No. 173846, Feb. 2, 2011
Ando vs. Campo, G.R. No. 184007, Feb. 16, 2011
Exodus International Construction Corp., vs. Biscocho, et al., G.R. No. 166109, Feb, 23, 2011
Pfizer Inc., et al., vs. Velasco, G.R. No. 177467, March 9, 2011
Luna vs. Allado Construction, G.R. No. 175251, May 30, 2011
Banahaw Broadcasting vs. Pacana III et al., G.R. No. 171673, May 30, 2011
Social Security Commission vs. Rizal Poulty et al., G.R. No. 167050, June 1, 2011
University Plans Inc. vs. Solano, G.R. No. 170416, June 22, 2011

BPI Employees Union-Metro manila vs. Bank of the Phil Islands, G.R. No. 178699, September 21, 2011
DUP Sound Phils vs. Court of Appeals, G.R. No. 168317, November 21, 2011
Aujero vs. Phil Communications Satellite Corp. G.R. No. 193484, January 18, 2012
Sarona vs. NLRC G.R. No. 185280, January 18, 2012
Salenga et al., vs. Court of Appeals, G.R. No. 174941, February 1, 2012
Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012
3rd Alert Security & Detective Services Inc. vs. Navia, G.r. No. 200653, June 13, 2012
Radio Philippines Network Inc et al., vs. Yap et al., G.R. No. 187713, August 1, 2012
Gonzales vs. Solid Cement Corp., G.R. No. 198423, October 23, 2012
Martos et al., vs. New San Jose Builders, G.R. No. 192650, October 24, 2012
Loon et al., vs. Power Master Inc. et al., GR No. 189404, December 11, 2013
Lepanto Consolidated Mining Corp., vs. Icao, GR No. 196047, January 15, 2014
Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012
Co Say Coco Products Phils Inc., vs. Baltasar, et al., GR No. 188828, March 5, 2014
Olores vs. Manila Doctors College et al., GR No. 201663, March 31, 2014
Bergonio et al., vs. South east Asian Airlines, GR No. 195227,.April 21, 2014
Arabit et al., vs. Jardine Pacific Finance Inc. GR No. 181719, April 21, 2014
Mirant (Phils) Corp., vs. Caro, GR No. 181490, April 23, 2014
McBurnie vs. Ganzon et al., GR Nol. 178034 & 178117 & 186984-85, Oct. 17, 2013, En banc
CRISANTO F. CASTRO, JR. vs. ATENEO DE NAGA UNIVERSITY, GR No. 175293
Phil. Touristers Inc et al., vs. Mas Transit Workers Union-ANGLO-KMU GR No. 201237, Sept. 3, 2014

I.
II.

THE APPLICABLE LAWS

GENERAL PRINCIPLES

Singer Sewing Machine vs. NLRC

G.R. No. 91307 January 24, 1991
FACTS:
Singer Machine Collectors Union-Baguio (SIMACUBA), the respondent union, filed a petition for direct certification as the sole and exclusive bargaining
agent of all collectors of the Singer Sewing Machine Company, Baguio City branch (hereinafter referred to as "the Company").
The Company opposed the petition mainly on the ground that the union members are actually not employees but are independent contractors as
evidenced by the collection agency agreement which they signed. The respondent Med-Arbiter, finding that there exists an employer-employee
relationship between the union members and the Company, granted the petition for certification election. On appeal, Secretary of Labor Franklin M.
Drilon affirmed it.
ISSUE:
Whether or not there exists an employee-employer relationship between the parties.
RULING:
SC ruled in favor of petitioner. Private respondents are independent contractors, not employees. As such, they cannot enter into a collective bargaining
agreement with the petitioner.
The present case mainly calls for the application of the control test, which if not satisfied, would lead us to conclude that no employer-employee
relationship exists. Hence, if the union members are not employees, no right to organize for purposes of bargaining, nor to be certified as such
bargaining agent can ever be recognized. The following elements are generally considered in the determination of the employer-employee relationship;
"(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's
conduct although the latter is the most important element".
The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all
collecting agents are employees and neither are all collecting agents independent contractors. The collectors could fall under either category depending
on the facts of each case.
A thorough examination of the facts of the case leads us to the conclusion that the existence of an employer-employee relationship between the
Company and the collection agents cannot be sustained. The plain language of the agreement reveals that the designation as collection agent does not
create an employment relationship and that the applicant is to be considered at all times as an independent contractor.
The Court finds that since private respondents are not employees of the Company, they are not entitled to the constitutional right to join or form a labor
organization for purposes of collective bargaining. Accordingly, there is no constitutional and legal basis for their "union" to be granted their petition for
direct certification.
Manila Golf Club vs. IAC
G.R. No. 64948 September 27, 1994
FACTS:
This is originally filed with the Social Security Commission (SSC) via petition of 17 persons who styled themselves as Caddies of Manila Golf and
Country Club-PTCCEA for the coverage and availment of benefits of the Social Security Act as amended, PTCCEA (Philippine Technical, Clerical,
Commercial Employees Association) a labor organization where which they claim for membership.
The same time two other proceedings were filed and pending. These are certification election case filed by PTCCEA on behalf of the same caddies of
Manila Golf and Country club which was in favor of the caddies and compulsory arbitration case involving PTCCEA and Manila Golf and Country Club
which was dismissed and ruled that there was no employer-employee relationship between the caddies and the club.
ISSUE:
Whether or not persons rendering caddying services for members of golf clubs and their guests in said clubs' courses or premises are the employees of
such clubs and therefore within the compulsory coverage of the Social Security System (SSS).
RULING:
SC ruled in favor of the petitioner. Llamar is not an employee of the Manila Golf and Country Club, Inc. The club is under no obligation to report him for
compulsory coverage to the SSS.
In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the
premises and grounds of whatever club they do work in. They work for the club to which they attach themselves on sufferance but, on the other hand,
also without having to observe any working hours, free to leave anytime they please, to stay away for as long they like.

These considerations clash frontally with the concept of employment. It can happen that a caddy who has rendered services to a player on one day
may still find sufficient time to work elsewhere. Under such circumstances, the caddy may leave the premises and to go to such other place of work that
he wishes. These are things beyond the control of the petitioner.

Encyclopedia Britanica vs. NLRC

G.R. No. 87098 November 4, 1996
FACTS:
Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia Britannica and was in charge of selling petitioner's
products through some sales representatives. As compensation, private respondent received commissions from the products sold by his agents. He
was also allowed to use petitioner's name, goodwill and logo. It was, however, agreed upon that office expenses would be deducted from private
respondent's commissions. Petitioner would also be informed about appointments, promotions, and transfers of employees in private respondent's
district.
Limjoco resigned from office to pursue his private business. Then on October 30, 1975, he filed a complaint against petitioner Encyclopaedia Britannica
with the Department of Labor and Employment, claiming for non-payment of separation pay and other benefits, and also illegal deduction from his sales
commissions.
ISSUE:
Whether or not there exists an employer-employee relationship between the parties.
RULING:
SC ruled that Limjoco was not an employee of the petitioner company. He was merely an agent or an independent dealer of the petitioner.
The records of the case at bar showed that there was no such relationship. He was free to conduct his work and he was free to engage in other means
of livelihood. At the time he was connected with the petitioner company, private respondent was also a director and later the president of the Farmers'
Rural Bank. Had he been an employee of the company, he could not be employed elsewhere and he would be required to devote full time for petitioner.
If private respondent was indeed an employee, it was rather unusual for him to wait for more than a year from his separation from work before he
decided to file his claims.

Carungcong vs. Sunlife

G.R. No. 118086 December 15, 1997
FACTS:
Susan Carungcong began her career in the insurance industry in 1974 as an agent of Sun Life Assurance Company of Canada. She signed an Agent
Agreement with Sun Life. In virtue of which she was designated the latters agent to solicit applications for its insurance and annuity policies.
This contract was superseded some five years later when she signed two (2) new agreements. The first, denominated Career Agents or Unit Managers
Agreement, dealt with such matters as the agents commissions, his obligations, limitations on his authority, and termination of the agreement by death,
or by written notice with or without cause. The second was titled, Managers Supplementary Agreement. It explicitly described as a further agreement.
Carungcong and Sun Life executed another Agreement named New Business Manager with the function generally to manage a New Business Office
established. This latest Agreement stressed that the New Business Manager in performance of his duties defined herein, shall be considered an
independent contractor and not an employee of Sun Life, and that under no circumstance shall the New Business Manager and/or his employees be
considered employees of Sun Life.
Ms. Eleizer Sibayan, Manager of Sun Lifes Internal Audit Department, commenced an inquiry into the special fund availments of Carungcong and other
New Business Managers. Respondent Lance Kemp, had been receiving reports of anomalies in relation thereto from unit managers and agents.
Thereafter, on January 1990, Carungcong was confronted with and asked to explain the discrepancies set out in Sibayans report. She was given a
letter signed by Metron V. Deveza, CLU, Director, Marketing, which advised of the termination of her relationship with Sun Life.
Carungcong promptly instituted proceedings for vindication in the Arbitration Branch of the National Labor Relations Commissions on January 16, 1990.
There she succeeded in obtaining a favorable judgment. Labor Arbiter found that there existed an employer-employee relationship between her and
Sun Life. On appeal, the National Labor Relations Commission reversed the Arbiters judgment. It affirmed that no employment relationship existed
between Carungcong and Sun Life.
ISSUE:
Whether or not there exists an employer-employee relationship between the parties.
RULING:
SC held that Carungcong is not an employee of Sun Life Co. She was an independent contractor.
Noteworthy is that this last agreement which emphasized, like the Career Agents or Unit Managers Agreement first signed by her, that in performance

of her duties defined herein. Carungcong would be considered an independent contractor and not an employee of Sun Life, and that under no
circumstance shall the New Business Manager and/or his employees be considered employees of Sun Life.
Carungcong is an independent contractor. It was indicated in the very face of the contract. The rules and regulations of the company is not sufficient to
establish an employer-employee relationship. It does not necessarily create any employer-employee relationship where the employers controls have to
interfere in the methods and means by which employee would like employ to arrive at the desired results.
Carungcong admitted that she was free to work as she pleases, at the place and time she felt convenient for her to do so. She was not paid to a fixed
salary and was mainly paid by commissions depending on the volume of her performance.

Ramos vs. CA
G.R. No. 124354; April 11, 2002
FACTS:
Petitioner Erlinda Ramos, after seeking professional medical help, was advised to undergo an operation for the removal of a stone in her gall
bladder (cholecystectomy). She was referred to Dr. Hosaka, a surgeon, who agreed to perform the operation on her. The operation was
scheduled for June 17, 1985 at 9:00 in the morning at private respondent De Los Santos Medical Center (DLSMC). Since neither petitioner
Erlinda nor her husband, petitioner Rogelio, knew of any anesthesiologist, Dr. Hosaka recommended to them the services of Dr. Gutierrez. On
the following day, she was ready for operation as early as 7:30 am. Around 9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio wanted to
pull out his wife from the operating room. Dr. Hosaka finally arrived at 12:10 pm more than 3 hours of the scheduled operation.
Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish discoloration in her left hand. At 3 pm, Erlinda was being wheeled to
the Intensive care Unit and stayed there for a month. Since the ill-fated operation, Erlinda remained in comatose condition until she died.
The family of Ramos sued them for damages.
ISSUE:
Whether or not there exists an employer-employee relationship between the medical center and Drs. Hosaka and Guiterrez.
RULING:
SC ruled that there was no employee-employer relationship between de Los Santos Medical Center and Drs. Hosaka and Gutierrez.
After a careful consideration of the arguments raised by DLSMC, the Court finds that respondent hospitals position on this issue is meritorious. There is
no employer-employee relationship between DLSMC and Drs. Gutierrez and Hosaka which would hold DLSMC solidarily liable for the injury suffered by
petitioner Erlinda under Article 2180 of the Civil Code.
As explained by respondent hospital, that the admission of a physician to membership in DLSMCs medical staff as active or visiting consultant is first
decided upon by the Credentials Committee. Neither is there any showing that it is DLSMC which pays any of its consultants for medical services
rendered by the latter to their respective patients. Moreover, the contract between the consultant in respondent hospital and his patient is separate and
distinct from the contract between respondent hospital and said patient. The first has for its object the rendition of medical services by the consultant to
the patient, while the second concerns the provision by the hospital of facilities and services by its staff such as nurses and laboratory personnel
necessary for the proper treatment of the patient.
The hospital does not hire consultants but it accredits and grants him the privilege of maintaining a clinic and/or admitting patients. It is the patient who
pays the consultants. The hospital cannot dismiss the consultant but he may lose his privileges granted by the hospital. The hospitals obligation is
limited to providing the patient with the preferred room accommodation and other things that will ensure that the doctors orders are carried out.

Sonza vs. ABS-CBN

G.R. No. 138051; June 10, 2004
FACTS:
Respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement ("Agreement") with the Mel and Jay Management and
Development Corporation ("MJMDC"). ABS-CBN was represented by its corporate officers while MJMDC was represented by SONZA, as President and
General Manager, and Carmela Tiangco ("TIANGCO"), as EVP and Treasurer. Referred to in the Agreement as "AGENT," MJMDC agreed to provide
SONZAs services exclusively to ABS-CBN as talent for radio and television.
ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year and P317,000 for the second and third year of the
Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month. SONZA filed a complaint against ABS-CBN before the
Department of Labor and Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation
pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan ("ESOP").
ISSUE:
Whether Jay Sonza is an employee of ABS-CBN or an independent contractor.

RULING:
SC ruled that Sonza is an independent contractor.
Selection and Engagement of Employees. Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish
them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique
skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired him through its personnel
department just like any other employee.
Payment of Wages. All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBNs
employee, there would be no need for the parties to stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay"20 which the law
automatically incorporates into every employer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not because of an
employer-employee relationship. SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary
that they indicate more an independent contractual relationship rather than an employer-employee relationship.
Power of Dismissal. During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as "AGENT and Jay Sonza shall faithfully
and completely perform each condition of this Agreement."24 Even if it suffered severe business losses, ABS-CBN could not retrench SONZA because
ABS-CBN remained obligated to pay SONZAs talent fees during the life of the Agreement. This circumstance indicates an independent contractual
relationship between SONZA and ABS-CBN.
Power of Control. Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The control test
is the most important test our courts apply in distinguishing an employee from an independent contractor.29 This test is based on the extent of control
the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The
converse holds true as well the less control the hirer exercises, the more likely the worker is considered an independent contractor.30

Lazaro vs. Social Security Commission

G.R. No. 138254; July 30, 2004
FACTS:
Private respondent Rosalina M. Laudato ("Laudato") filed a petition before the SSC for social security coverage and remittance of unpaid monthly social
security contributions against her three (3) employers. Among the respondents was herein petitioner Angelito L. Lazaro ("Lazaro"), proprietor of Royal
Star Marketing ("Royal Star"), which is engaged in the business of selling home appliances. Laudato alleged that despite her employment as sales
supervisor of the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for
compulsory coverage or remit Laudato's social security contributions.
ISSUE:
Whether or not there exists an employee-employer relationship between Laudato and Royal Star Marketing.
RULING:
SC ruled that there exists such relationship between the parties.
It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants
the application of the "control test," that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of
the work done, but also as to the means and methods by which the same is accomplished.
Suffice it to say, the fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. The
relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of
the work to be done but also as to the means and methods by which the same is to be accomplished.
Phil. Global Comm. vs. De Vera
G.R. No. 157214; June 7, 2005
FACTS:
Philippine Global Communications inc. is a corporation engaged in the business of communication services and allied activities while Ricardo de Vera is
a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. The controversy rose when petitioner terminated his
engagement.
In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized the respondents proposal in a document denominated as
retainership contract which will be for a period of one year, subject to renewal and clearly stated that respondent will cover the retainership the company
previously with Dr. Eulau. The agreement went until 1994, in the years 1995-1996, it was renewed verbally. The turning point of the parties relationship
was when petitioner, thru a letter bearing the subject TERMINATION RETAINERSHIP CONTRACT, informed Dr. de Vera of its decision to discontinue
the latters retainer contract because the management has decided that it would be more practical to provide medical services to its employees through
accredited hospitals near the company premises.
On January 1997, de Vera fileda complaint for illegal dismissal before the NLRC, alleging that he had been actually employed by the company as its
company physician since 1991. The commission rendered decision in favor of Philcom and dismissed the complaint saying that de Vera was an

10

independent contractor. On appeal to NLRC, it reversed the decision of the Labor Arbiter stating that de Vera is a regular employee and directed the
company to reinstate him. Philcom appealed to the CA where it rendered decision deleting the award but reinstating de Vera. Philcom filed this petition
involving the difference of a job contracting agreements from employee-employer relationship.
ISSUE:
Whether or not there exists an employee-employer relationship between the parties.
RULING:
SC ruled that there was no such relationship existing between Dr. de Vera and Phil. Com.
The elements of an employer-employee relationship are wanting in this case. The record are replete with evidence showing that respondent had to bill
petitioner for his monthly professional fees. It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill
his employer to receive his salary.
The power to terminate the parties relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause.
Remarkably absent is the element of control whereby the employer has reserved the right to control the employee not only as to the result of the work
done but also as to the means and methods by which the same is to be accomplished.
Petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. In fine, the
parties themselves practically agreed on every terms and conditions of the engagement, which thereby negates the element of control in their
relationship.

ABS-CBN vs. Nazareno

G.R. No. 164156; September 26, 2006
FACTS:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of television and radio
stations, whose operations revolve around the broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise
utilizes the airtime it generates from its radio and television operations. It has a franchise as a broadcasting company, and was likewise issued a license
and authority to operate by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at
the news and public affairs, for various radio programs in the Cebu Broadcasting Station. On December 19, 1996, petitioner and the ABS-CBN Rankand-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to December 11,
1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.
In October 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium
Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter rendered
judgment in favor of the respondents, and declared that they were regular employees of petitioner as such, they were awarded monetary benefits.
NLRC affirmed the decision of the Labor Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it.
ISSUE:
Whether or not the respondents were considered regular employees of ABS-CBN.

RULING:
SC ruled that Production Assistants (Pas) are regular workers. Thus, they are entitled to the benefits in the CBA between ABS-CBN and its rank-and-file
employees.
It was held that where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the work is
continuous or intermittent, the employment is considered regular as long as the activity exists, the reason being that a customary appointment is not
indispensable before one may be formally declared as having attained regular status.
The Court states that the primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in
the usual business or trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the
scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is
not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such
activity exists.
Additionally, respondents cannot be considered as project or program employees because no evidence was presented to show that the duration and
scope of the project were determined or specified at the time of their engagement. In the case at bar, however, the employer-employee relationship
between petitioner and respondents has been proven. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity
status was required from them because they were merely hired through petitioners personnel department just like any ordinary employee.
Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship. Respondents are

11

highly dependent on the petitioner for continued work. The degree of control and supervision exercised by petitioner over respondents through its
supervisors negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer,
does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent
contractor. As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner under the CBA . Besides,
only talent-artists were excluded from the CBA and not production assistants who are regular employees of the respondents. Moreover, under Article
1702 of the New Civil Code: In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of
the laborer.
Francisco vs. NLRC
G.R. No. 170087; August 31, 2006
FACTS:
Angelina Francisco was hired by Kasei Corporation during the incorporation stage. She was designated as accountant and corporate secretary and was
assigned to handle all the accounting needs of the company. She was also designated as Liason Officer to the City of Manila to secure permits for the
operation of the company.
In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of all employees and perform management
administration functions. In 2001, she was replaced by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was
until September. She asked for her salary but was informed that she was no longer connected to the company. She did not anymore report to work
since she was not paid for her salary. She filed an action for constructive dismissal with the Labor Arbiter.
ISSUE:
Whether or not there was an employer-employee relationship.
RULING:
SC held that there was such relationship. Francisco was constructively dismissed. To ascertain if such relationship exists, the Court used two-tiered test
control test and economic reality test.
The court held that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally, courts
have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing
between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to
the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.
The court observed the need to consider the existing economic conditions prevailing between the parties, in addition to the standard of right-of-control
like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship based on
an analysis of the totality of economic circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as:
(1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment
and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative,
skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between
the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business.
The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of
business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and
supervision of Seiji Kamura, the corporations Technical Consultant. It is therefore apparent that petitioner is economically dependent on respondent
corporation for her continued employment in the latters line of business.
There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by the company for
compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function involved
accounting and tax services rendered to Respondent Corporation on a regular basis over an indefinite period of engagement. Respondent Corporation
hired and engaged petitioner for compensation, with the power to dismiss her for cause. More importantly, Respondent Corporation had the power to
control petitioner with the means and methods by which the work is to be accomplished.
Nogales et. al. vs. Capitol Medical Center et. al.
G.R. No. 142625; December 19, 2006
FACTS:
Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then 37 years old, was under the exclusive prenatal care of Dr. Oscar Estrada
("Dr. Estrada") beginning on her fourth month of pregnancy or as early as December 1975. Around midnight of 25 May 1976, Corazon started to
experience mild labor pains prompting Corazon and Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After examining Corazon, Dr.
Estrada advised her immediate admission to the Capitol Medical Center ("CMC"). t 6:13 a.m., Corazon started to experience convulsionsAt 6:22 a.m.,

12

Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby. In the process, a 1.0 x 2.5 cm. piece of cervical tissue was allegedly
torn.At 6:27 a.m., Corazon began to manifest moderate vaginal bleeding which rapidly became profuse. Corazon died at 9:15 a.m. The cause of death
was "hemorrhage, post partum.
ISSUE:
Whether or not the Capitol Medical Center is solidarily liable.
RULING:
SC held CMC solidarily liable together with Dr. Estrada. The doctrine of apparent authority was used to make CMC vicariously liable even if Dr.
Estrada is an independent contractor.
Private hospitals, hire, fire and exercise real control over their attending and visiting "consultant" staff. The basis for holding an employer solidarily
responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts
but also for those of others based on the former's responsibility under a relationship of patria potestas.
In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an exception to this principle. The
hospital may be liable if the physician is the "ostensible" agent of the hospital. This exception is also known as the "doctrine of apparent authority.
For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that: (1) the hospital, or its agent, acted in a manner that would
lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital; (2) where the acts
of the agent create the appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquiesced in them; and (3) the
plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence. In the instant case, CMC impliedly
held out Dr. Estrada as a member of its medical staff. Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the
Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC.

Coca-Cola Bottlers Phils. vs. Dr. Climaco

G.R. No. 146881; February 5, 2007
FACTS:
Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of retainer agreement. The agreement states that there is no employeremployee relationship between the parties. The retainer agreement was renewed annually. The last one expired on Dec. 31, 1993. Despite of the nonrenewal of the agreement, respondent continued to perform his functions as company doctor until he received a letter in March 1995 concluding their
retainer agreement.
Respondent filed a complaint before the NLRC seeking recognition as a regular employee of the petitioner company and prayed for the payment of all
benefits of a regular employee. In the decision of the Labor Arbiter, the company lacked control over the respondents performance of his duties.
Respondent appealed where it rendered that no employer-employee relationship existed between the parties.
The CA ruled that an employer-employee relationship existed.
ISSUE:
Whether or not there exists an employer-employee relationship between the parties.
RULING:
SC ruled that there is no such relationship between the parties.
The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct, or the socalled control test, considered to be the most important element.
The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this case show that no employer-employee relationship
exists between the parties. The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control
the means and methods by which respondent performed his assigned tasks. In addition, the Court finds that the schedule of work and the requirement
to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement.
Considering that there is no employer-employee relationship between the parties, the termination of the Retainership Agreement, which is in
accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent.

Calamba Medical Center vs. NLRC et. al.

G.R. No. 176484; November 25, 2008
FACTS:
The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of medical doctors-spouses Ronaldo Lanzanas (Dr.
Lanzanas) and Merceditha Lanzanas (Dr. Merceditha) in March 1992 and August 1995, respectively, as part of its team of resident physicians.

13

Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. It appears that
resident physicians were also given a percentage share out of fees charged for out-patient treatments, operating room assistance and discharge
billings, in addition to their fixed monthly retainer.
The work schedules of the members of the team of resident physicians were fixed by petitioner's medical director Dr. Raul Desipeda (Dr. Desipeda).
And they were issued identification cards by petitioner and were enrolled in the Social Security System (SSS). Income taxes were withheld from them.
Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital, inadvertently overheard a telephone conversation of respondent Dr.
Lanzanas with a fellow employee, Diosdado Miscala, through an extension telephone line. Apparently, Dr. Lanzanas and Miscala were discussing the
low "census" or admission of patients to the hospital.
Dr. Trinidad issued to Dr. Lanzanas a memorandum asking her to explain within 24 hours why no disciplinary action should be taken against him.
Pending investigation, he was placed under a 30-day preventive suspension.
Inexplicably, petitioner did not give respondent Dr. Merceditha, who was not involved in the said incident, any work schedule after sending her husband
Dr. Lanzanas the memorandum, nor inform her the reason therefor, albeit she was later informed by the Human Resource Department (HRD) officer
that that was part of petitioner's cost-cutting measures.
Dr. Lanzanas filed a complaint for illegal suspension before the National Labor Relations Commission (NLRC)-Regional Arbitration Board (RAB) IV. Dr.
Merceditha subsequently filed a complaint for illegal dismissal.
ISSUE:
Whether or not there exists an employer-employee relationship between petitioner and the spouses-respondents.
Whether or not the spouses-respondents were legally dismissed.
RULING:
SC held that there exists such relationship. The spouses-respondents were illegally dismissed.
On the first issue
Under the "control test," an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of
the process by which the physician is to accomplish his task.
As priorly stated, private respondents maintained specific work-schedules, as determined by petitioner through its medical director, which consisted of
24-hour shifts totaling forty-eight hours each week and which were strictly to be observed under pain of administrative sanctions.
That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or any
department or ward for that matter, respondents' work is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval
or consent of petitioner or its medical director, no operations can be undertaken in those areas. For control test to apply, it is not essential for the
employer to actually supervise the performance of duties of the employee, it being enough that it has the right to wield the power.
On the second issue
Petitioner thus failed to observe the two requirements,before dismissal can be effected notice and hearing which constitute essential elements of
the statutory process; the first to apprise the employee of the particular acts or omissions for which his dismissal is sought, and the second to inform the
employee of the employer's decision to dismiss him. Non-observance of these requirements runs afoul of the procedural mandate.
The termination notice sent to and received by Dr. Lanzanas on April 25, 1998 was the first and only time that he was apprised of the reason for his
dismissal. He was not afforded, however, even the slightest opportunity to explain his side. His was a "termination upon receipt" situation. While he was
priorly made to explain on his telephone conversation with Miscala, he was not with respect to his supposed participation in the strike and failure to
heed the return-to-work order.
As for the case of Dr. Merceditha, her dismissal was worse, it having been effected without any just or authorized cause and without observance of due
process. In fact, petitioner never proferred any valid cause for her dismissal except its view that "her marriage to [Dr. Lanzanas] has given rise to the
presumption that her sympath[y] [is] with her husband; [and that when [Dr. Lanzanas] declared that he was going to boycott the scheduling of their
workload by the medical doctor, he was presumed to be speaking for himself [and] for his wife Merceditha."
Escasinas et. al. vs. Shangri-la
G.R. No. 178827; March 4, 2009
FACTS:
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R.
Pepito (respondent doctor) to work in her clinic at respondent Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a retained
physician.
In late 2002, petitioners filed with the NLRC a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential
and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that
petitioners were not its employees but of respondent doctor whom it retained via Memorandum of Agreement (MOA) pursuant to Article 157 of the
Labor Code, as amended. Respondent doctor for her part claimed that petitioners were already working for the previous retained physicians of Shangrila before she was retained by Shangri-la; and that she maintained petitioners services upon their request.
ISSUE:
Whether or not there was an employee-employer relationship between Shangri-La and the petitioners.

14

Whether or not Dr. Pepito is an independent contractor

RULING:
SC ruled that there no such relationship. The petitioners are under the direct supervision of Dr. Pepito, an independent contractor.
On the first issue
The resolution of the case hinges, in the main, on the correct interpretation of Art. 157 vis a vis Art. 280 and the provisions on permissible job
contracting of the Labor Code, as amended. Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to furnish
its employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should
provide or make available such medical and allied services to its employees, not necessarily to hire or employ a service provider. The term full-time in
Art. 157 cannot be construed as referring to the type of employment of the person engaged to provide the services, for Article 157 must not be read
alongside Art. 280[9] in order to vest employer-employee relationship on the employer and the person so engaged. The phrase services of a full-time
registered nurse should thus be taken to refer to the kind of services that the nurse will render in the companys premises and to its employees, not the
manner of his engagement.
On the second issue
The existence of an independent and permissible contractor relationship is generally established by considering the following determinants: whether
the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the
right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employer's power with respect to the
hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and
labor; and the mode, manner and terms of payment.
Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the
clinic premises and medical supplies for use of its employees and guests do not necessarily prove that respondent doctor lacks substantial capital and
investment. Besides, the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly
related to Shangri-las principal business operation of hotels and restaurants.
Tongko vs. The Manufacturers Life Insurance Co., Inc. November 7, 2008
G.R. No. 167622, November 07, 2008
FACTS:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business.Renato A. Vergel De Dios was,
during the period material, its President and Chief Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1,
1977 by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife. In the Agreement, it is provided that: It is understood and agreed
that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an employer-employee
relationship between the Company and the Agent. The Company may terminate this Agreement for any breach or violation of any of the provisions
hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver, extinguishment,
abandonment, withdrawal or cancellation of the right to terminate this Agreement by the Company shall be construed for any previous failure to exercise
its right under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party fifteen (15) days notice in
writing. In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a Branch Manager. As the CA
found, Tongko's gross earnings from his work at Manulife, consisting of commissions, persistency income, and management overrides. The problem
started sometime in 2001, when Manulife instituted manpower development programs in the regional sales management level. Relative thereto, De
Dios addressed a letter dated November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongkos
Region was the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in
this area.
Other issues were:"Some Managers are unhappy with their earnings and would want to revert to the position of agents." And "Sales Managers are
doing what the company asks them to do but, in the process, they earn less." Tongko was then terminated. Therefrom, Tongko filed a Complaint dated
November 25, 2002 with the NLRC against Manulife for illegal dismissal in the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed
the complaint for lack of an employer-employee relationship. The NLRC's First Division, while finding an employer-employee relationship between
Manulife and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an appeal with the CA. Thereafter, the CA
issued the assailed Decision dated March 29, 2005, finding the absence of an employer-employee relationship between the parties and deeming the
NLRC with no jurisdiction over the case.Hence, Tongko filed this petition.
ISSUES:
1.WON Tongko was an employee of Manulife
2.WON Tongko was illegally dismissed.
RULING:
1. Yes
In the instant case, Manulife had the power of control over Tongko that would make him its employee. Several factors contribute to this conclusion. In
the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that: The Agent hereby agrees to comply with all regulations
and requirements of the Company as herein provided as well as maintain a standard of knowledge and competency in the sale of the Company's

15

products which satisfies those set by the Company and sufficiently meets the volume of new business required of Production Club membership.Under
this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with the regulations and requirements of the company; (2)
maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses.
Among the company regulations of Manulife are the different codes of conduct such as the Agent Code of Conduct, Manulife Financial Code of
Conduct, and Manulife Financial Code of Conduct Agreement, which demonstrate the power of control exercised by the company over Tongko. The fact
that Tongko was obliged to obey and comply with the codes of conduct was not disowned by respondents. Thus, with the company regulations and
requirements alone, the fact that Tongko was an employee of Manulife may already be established. Certainly, these requirements controlled the means
and methods by which Tongko was to achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform administrative duties that establishes his employment with
Manulife. Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of agents, in addition to his other
administrative functions, leads to no other conclusion that he was an employee of Manulife.
2. Yes
In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulife argued that even if Tongko is considered as its employee, his
employment was validly terminated on the ground of gross and habitual neglect of duties, inefficiency, as well as willful disobedience of the lawful orders
of Manulife. Manulife stated: In the instant case, private respondent, despite the written reminder from Mr. De Dios refused to shape up and altogether
disregarded the latter's advice resulting in his laggard performance clearly indicative of his willful disobedience of the lawful orders of his superior. As
private respondent has patently failed to perform a very fundamental duty, and that is to yield obedience to all reasonable rules, orders and instructions
of the Company, as well as gross failure to reach at least minimum quota, the termination of his engagement from Manulife is highly warranted and
therefore, there is no illegal dismissal to speak of. It is readily evident from the above-quoted portions of Manulife's petition that it failed to cite a single
iota of evidence to support its claims. Manulife did not even point out which order or rule that Tongko disobeyed. More importantly, Manulife did not
point out the specific acts that Tongko was guilty of that would constitute gross and habitual neglect of duty or disobedience. Manulife merely
cited Tongko's alleged "laggard performance," without substantiating such claim, and equated the same to disobedience and neglect of duty. Apropos
thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of proving the validity of the termination of employment rests on
the employer. Failure to discharge this evidential burden would necessarily mean that the dismissal was not justified, and, therefore, illegal. The Labor
Code provides that an employer may terminate the services of an employee for just cause and this must be supported by substantial evidence. The
settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality of an
employer's dismissal of an employee, and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient.
Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. Here, Manulife failed to overcome such burden of proof. It must
be reiterated that Manulife even failed to identify the specific acts by which Tongko's employment was terminated much less support the same with
substantial evidence.To repeat, mere conjectures cannot work to deprive employees of their means of livelihood. Thus, it must be concluded
that Tongko was illegally dismissed. Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its employee
is not entitled to such notices. Since we have ruled that Tongko is its employee, however, Manulife clearly failed to afford Tongko said notices. Thus, on
this ground too, Manulife is guilty of illegal dismissal.
Atok Big Wedge Company vs. Gison
G.R. No. 169510 August 8, 2011
FACTS:
Sometime in February 1992, respondent Jesus P. Gison was engaged as part-time consultant on retainer basis by petitioner Atok Big Wedge Company,
Inc. through its then Asst. Vice-President and Acting Resident Manager, Rutillo A. Torres. As a consultant on retainer basis, respondent assisted
petitioner's retained legal counsel with matters pertaining to the prosecution of cases against illegal surface occupants within the area covered by the
company's mineral claims. Respondent was likewise tasked to perform liaison work with several government agencies, which he said was his expertise.
Sometime thereafter, since respondent was getting old, he requested that petitioner cause his registration with the Social Security System (SSS), but
petitioner did not accede to his request. He later reiterated his request but it was ignored by respondent considering that he was only a
retainer/consultant. On February 4, 2003, respondent filed a Complaint with the SSS against petitioner for the latter's refusal to cause his registration
with the SSS.
On the same date, Mario D. Cera, in his capacity as resident manager of petitioner, issued a Memorandum advising respondent that within 30 days
from receipt thereof, petitioner is terminating his retainer contract with the company since his services are no longer necessary.
On September 26, 2003, after the parties have submitted their respective pleadings, Labor Arbiter Rolando D. Gambito rendered a Decision ruling in
favor of the petitioner. Finding no employer-employee relationship between petitioner and respondent, the Labor Arbiter dismissed the complaint for lack
of merit.
On July 30, 2004, the NLRC, Second Division, issued a Resolution affirming the decision of the Labor Arbiter. Respondent filed a Motion for
Reconsideration, but it was denied in the Resolution dated September 30, 2004.
ISSUES:
Whether or not there was an employer-employee relationship.
HELD:
To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold test, to wit: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, or the so-

16

called "control test." Of these four, the last one is the most important. The so-called "control test" is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship
exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to
be used in reaching that end.
Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at bar. Among other things, respondent was not
required to report everyday during regular office hours of petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a
local restaurant. More importantly, petitioner did not prescribe the manner in which respondent would accomplish any of the tasks in which his expertise
as a liaison officer was needed; respondent was left alone and given the freedom to accomplish the tasks using his own means and method.
Respondent was assigned tasks to perform, but petitioner did not control the manner and methods by which respondent performed these tasks. Verily,
the absence of the element of control on the part of the petitioner engenders a conclusion that he is not an employee of the petitioner.
Contrary to the conclusion of the CA, respondent is not an employee, much more a regular employee of petitioner. The appellate court's premise that
regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this
case. In fact, any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latter's
business, even without being hired as an employee. Hence, respondent's length of service and petitioner's repeated act of assigning respondent some
tasks to be performed did not result to respondent's entitlement to the rights and privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for eleven years, he still cannot be considered as a regular
employee of petitioner. Article 280 of the Labor Code, in which the lower court used to buttress its findings that respondent became a regular employee
of the petitioner, is not applicable in the case at bar. Indeed, the Court has ruled that said provision is not the yardstick for determining the existence of
an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for
purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply where the
existence of an employment relationship is in dispute. It is, therefore, erroneous on the part of the Court of Appeals to rely on Article 280 in determining
whether an employer-employee relationship exists between respondent and the petitioner.
Considering that there is no employer-employee relationship between the parties, the termination of respondent's services by the petitioner after due
notice did not constitute illegal dismissal warranting his reinstatement and the payment of full backwages, allowances and other benefits.
Semblante et al., vs. Court of Appeals, et al.
G.R. No. 196426 August 15, 2011
FACTS:
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired by respondents-spouses Vicente and Maria Luisa Loot,
the owners of Gallera de Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of the cockpit sometime in 1993.
As the masiador, Semblante calls and takes the bets from the gamecock owners and other bettors and orders the start of the cockfight. He also
distributes the winnings after deducting the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing
of fighting cocks, determines the fighting cocks' physical condition and capabilities to continue the cockfight, and eventually declares the result of the
cockfight.
They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights held on special holidays. Their
working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the morning depending on the needs of the cockpit. Petitioners
had both been issued employees' identification cards that they wear every time they report for duty. They alleged never having incurred any infraction
and/or violation of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of respondents, and were informed of the
termination of their services effective that date. This prompted petitioners to file a complaint for illegal dismissal against respondents.
Labor Arbiter Julie C. Rendoque found petitioners to be regular employees of respondents as they performed work that was necessary and
indispensable to the usual trade or business of respondents for a number of years. The Labor Arbiter also ruled that petitioners were illegally dismissed,
and so ordered respondents to pay petitioners their backwages and separation pay.
The respondents filed an Appeal during the 10-day appeal period but was unable to post a cash or surety bond. Thus for an unperfected appeal the
NLRC dismissed the same. It was only on October 11, 2006 they were able to post bond dated October 6, 2006. The NLRC ruled on the Motion for
Reconsideration although there was belated filing of the cash or surety bond. The NLRC held in its Resolution of October 18, 2006 that there was no
employer-employee relationship between petitioners and respondents, respondents having no part in the selection and engagement of petitioners, and
that no separate individual contract with respondents was ever executed by petitioners.
ISSUES:
1.
Whether or not the Appeal has been perfected even after a belated filing of the cash or surety bond.
2.
Whether or not there was an employer-employee relationship between the petitioner and respondent.
HELD:
Time and again, however, this Court, considering the substantial merits of the case, has relaxed this rule on, and excused the late posting of, the appeal
bond when there are strong and compelling reasons for the liberality, such as the prevention of miscarriage of justice extant in the case or the special
circumstances in the case combined with its legal merits or the amount and the issue involved. After all, technical rules cannot prevent courts from
exercising their duties to determine and settle, equitably and completely, the rights and obligations of the parties. This is one case where the exception
to the general rule lies.

17

While respondents had failed to post their bond within the 10-day period provided above, it is evident, on the other hand, that petitioners are NOT
employees of respondents, since their relationship fails to pass muster the four-fold test of employment We have repeatedly mentioned in countless
decisions: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct, which is the most important element.
As found by both the NLRC and the CA, respondents had no part in petitioners' selection and management; petitioners' compensation was paid out of
the arriba (which is a percentage deducted from the total bets), not by petitioners; and petitioners performed their functions as masiador and
sentenciador free from the direction and control of respondents. In the conduct of their work, petitioners relied mainly on their "expertise that is
characteristic of the cockfight gambling," and were never given by respondents any tool needed for the performance of their work.
Respondents, therefore, could never have been illegally dismissed since they are not employees of the respondents.

Jose Mel Bernarte vs. Philippine Basketball Association (PBA), Jose Emmanuel Eala, and Perry Martinez
G.R. No. 192084. September 14, 2011
FACTS:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to join the PBA as referees. During the term of Commissioner Eala,
however, changes were made on the terms of their employment. Bernarte, for instance, was not made to sign a contract during the first conference of
the All-Filipino Cup which was from February 23, 2003 to June 2003. It was only during the second conference when he was made to sign a one and a
half month contract for the period July 1 to August 5, 2003. On January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory performance on and off the court. On the other hand, complainant
Guevarra alleges that he was invited to join the PBA pool of referees in February 2001, and signed a contract as a trainee on March 1, 2001. Beginning
2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued a memorandum to Guevarra expressing
dissatisfaction over his questioning on the assignment of referees officiating out-of-town games. Beginning February 2004, he was no longer made to
sign a contract.
Respondents aver that complainants were not illegally dismissed because they were not employees of the PBA.
31 March 2005 Decision, the Labor Arbiter declared petitioner an employee whose dismissal by respondents was illegal, ordering reinstatement of
petitioner and the payment of backwages, moral and exemplary damages, and attorneys fees.
28 January 2008 Decision, the NLRC affirmed the Labor Arbiter's judgment. The Court of Appeals found petitioner an independent contractor since
respondents did not exercise any form of control over the means and methods by which petitioner performed his work as a basketball referee.
ISSUES:
Whether petitioner is an employee of respondents, which in turn determines whether petitioner was illegally dismissed;
Whether the Labor Arbiter's decision has become final and executory for failure of respondents to appeal with the NLRC within the reglementary period
RULING:
SC affirmed CAs decision.
Petitioner failed to present any concrete proof as to how, when and to whom the delivery and receipt of the three notices issued by the post office was
made. The issuance of the notices by the post office is not equivalent to delivery to and receipt by the addressee of the registered mail. There is no
conclusive evidence showing that the post office notices were actually received by respondents, negating petitioner's claim of constructive service of the
Labor Arbiter's decision on respondents. The Postmaster's Certification does not sufficiently prove that the three notices were delivered to and received
by respondents; it only indicates that the post office issued the three notices. The ends of justice will be better served if we resolve the instant case on
the merits rather than allowing the substantial issue of whether petitioner is an independent contractor or an employee linger and remain unsettled due
to procedural technicalities.
We agree with respondents that once in the playing court, the referees exercise their own independent judgment, based on the rules of the game, as to
when and how a call or decision is to be made. Respondents or any of the PBA officers cannot and do not determine which calls to make or not to make
and cannot control the referee when he blows the whistle because such authority exclusively belongs to the referees. Petitioner is required to report for
work only when PBA games are scheduled or three times a week at two hours per game. In addition, there are no deductions for contributions to the
Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees' salaries. These undisputed circumstances buttress the
fact that petitioner is an independent contractor, and not an employee of respondents. For a hired party to be considered an employee, the hiring party
must have control over the means and methods by which the hired party is to perform his work, which is absent in this case. The continuous rehiring by
PBA of petitioner simply signifies the renewal of the contract between PBA and petitioner, and highlights the satisfactory services rendered by petitioner
warranting such contract renewal. The non-renewal of the contract between the parties does not constitute illegal dismissal of petitioner by respondents.
Cesar Lirio vs. Wilmer Genovia
G.R. No. 169757. November 23, 2011
FACTS:
July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal
dismissal, non-payment of commission and award of moral and exemplary damages. He was employed to manage and operate Celkor and to promote

18

and sell the recording studio's services to music enthusiasts and other prospective clients. He received a monthly salary of P7,000.00. They also
agreed that he was entitled to an additional commission of P100.00 per hour as recording technician whenever a client uses the studio for recording,
editing or any related work. He was made to report for work from Monday to Friday from 9:00 a.m. to 6 p.m. On Saturdays, he was required to work
half-day only, but most of the time, he still rendered eight hours of work or more.
Respondent stated that a few days after he started working as a studio manager, petitioner approached him and told him about his project to produce
an album for his 15-year-old daughter. Petitioner asked respondent to compose and arrange songs for Celine and promised that he (Lirio) would draft a
contract to assure respondent of his compensation for such services. Petitioner later informed respondent that he was only entitled to the 20% of the
net profit and that the salaries he received would be deducted from the said 20% net profit share. Respondent objected then petitioner verbally
terminated the formers services and instructed the same not to report for work.
On October 31, 2003, Labor Arbiter Renaldo O. Hernandez rendered a decision, finding that an employer-employee relationship existed between
petitioner and respondent, and that respondent was illegally dismissed.
In a Resolution dated October 14, 2004, the NLRC reversed and set aside the decision of the Labor Arbiter. NLRC held that respondent failed to proved
with substantial evidence that he was selected and engaged by petitioner, that petitioner had the power to dismiss him, and that they had the power to
control him not only as to the result of his work, but also as to the means and methods of accomplishing his work.
On August 4, 2005, the Court of Appeals rendered a decision reversing and setting aside the resolution of the NLRC, and reinstating the decision of the
Labor Arbiter, with modification in regard to the award of commission and damages. The Court of Appeals deleted the award of commission and moral
and exemplary damages as the same were not substantiated.
ISSUE:
Whether there existed an employer-employee relationship between petitioner and respondent, and whether dismissal of respondent is illegal.
RULING:
SC affirmed CAs decision.
It is settled that no particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted. In this case, the documentary evidence presented by respondent to prove that he was an
employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to March 15, 2002) certified correct by petitioner,
which showed that respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the
month) with the corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash vouchers, showing the amounts he
received and signed for in the payrolls. Petitioner failed to prove that his relationship with respondent was one of partnership. Such claim was not
supported by any written agreement.
The Court agrees with the Court of Appeals that the evidence presented by the parties showed that an employer-employee relationship existed between
petitioner and respondent.
In termination cases, the burden is upon the employer to show by substantial evidence that the termination was for lawful cause and validly made.
Article 277 (b) of the Labor Code puts the burden of proving that the dismissal of an employee was for a valid or authorized cause on the employer,
without distinction whether the employer admits or does not admit the dismissal. For an employee's dismissal to be valid, (a) the dismissal must be for a
valid cause, and (b) the employee must be afforded due process. Procedural due process requires the employer to furnish an employee with two written
notices before the latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his dismissal is sought, which
is the equivalent of a charge; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable
opportunity to answer and to be heard on his defense.
Petitioner failed to comply with these legal requirements; hence, the Court of Appeals correctly affirmed the Labor Arbiter's finding that respondent was
illegally dismissed.
Charlie Jao vs BBC Products Sales Inc.
G.R. No. 163700, April 18, 2012
FACTS:
Petitioner offered the following: (a) BCC Identification Card (ID) issued to him stating his name and his position as comptroller, and bearing his picture,
his signature, and the signature of Ty; (b) a payroll of BCC for the period of October 1-15, 1996 that petitioner approved as comptroller; (c) various bills
and receipts related to expenditures of BCC bearing the signature of petitioner; (d) various checks carrying the signatures of petitioner and Ty, and, in
some checks, the signature of petitioner alone; (e) a court order showing that the issuing court considered petitioners ID as proof of his employment
with BCC; (f) a letter of petitioner dated March 1, 1997 to the Department of Justice on his filing of a criminal case for estafa against Ty for non-payment
of wages; (g) affidavits of some employees of BCC attesting that petitioner was their co-employee in BCC; and (h) a notice of raffle dated December 5,
1995 showing that petitioner, being an employee of BCC, received the notice of raffle in behalf of BCC.
But respondent countered the evidences presented by the petitioner by proving that Charlie Jao is not their employee, as SFC had installed petitioner
as its comptroller in BCC to oversee and supervise SFCs collections and the account of BCC to protect SFCs interest; that their issuance of the ID to
petitioner was only for the purpose of facilitating his entry into the BCC premises in relation to his work of overseeing the financial operations of BCC for
SFC; that the ID should not be considered as evidence of petitioners employment in BCC; that petitioner executed an affidavit in March 1996, stating,
among others, that he is a CPA presently employed at SFC.
ISSUE:

19

WON there exist an employee-employer relationship between the petitioner and respondent.
HELD:
The Supreme Court held that there exist no employee-employer relationship between the two based on the affidavits made by the petitioner that he is
an employee of SFC to oversee and supervise SFC's collection.
Moreover, in determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the following incidents,
to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control
the employee on the means and methods by which the work is accomplished. The last element, the so-called control test, is the most important
element.
It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his authority to deliver some 158 checks to SFC.
Considering that he contested respondents challenge by pointing to the existing arrangements between BCC and SFC, it should be clear that
respondents did not exercise the power of control over him, because he thereby acted for the benefit and in the interest of SFC more than of BCC.
In addition, petitioner presented no document setting forth the terms of his employment by BCC. The failure to present such agreement on terms of
employment may be understandable and expected if he was a common or ordinary laborer who would not jeopardize his employment by demanding
such document from the employer, but may not square well with his actual status as a highly educated professional.

Legend Hotel (Manila) vs. Realuyo

GR. No. 153511, July 18, 2012
FACTS:
Respondent was employed in Petitioners hotel from September 1992 to August 9, 1999 as a pianist. On July 9, 1999, Respondent was
informed that his services would no longer be needed as a cost cutting measure of the company. Respondent filed a complaint for alleged unfair labor
practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays, separation pay, service incentive leave pay,
and 13th month pay. He prayed for attorney's fees, moral damages off P100,000.00 and exemplary damages for P100,000.00. Petitioner contends that
there was no employee-employer relationship therefore it does not fall under the ambit of the Labour Code.
The labour arbiter dismissed Respondents complaint agreeing with Petitioner that there was no employee-employer relationship.
Respondent appealed with the NLRC which in turn affirmed the labor arbiters decision. Respondent filed a motion for certiorari in the Court of Appeals
which reversed the decision of the NLRC and granted respondents petition.
ISSUES:
Whether or not there was employee-employer relationship?
And if there was, was there a valid dismissal?
HELD:
a.

b.

Yes there was employee-employer relationship. All four requisites for the existence of employee- employer relationship exist in this case.
The petitioner selects the employee and paid him wages denominated as talent fees and most importantly exercised control over what he
wore and the songs he could play. He also had the power to dismiss as shown in the memorandum given to the employee.
Retrenchment is one of the authorized causes for the dismissal of employees recognized by the Labor Code. It is a management
prerogative resorted to by employers to avoid or to minimize business losses. The Court has laid down the following standards that an
employer should meet to justify retrenchment and to foil abuse, namely:

(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be proved by
sufficient and convincing evidence
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. The
petitioner did not submit evidence of the losses to its business operations and the economic havoc it would thereby imminently sustain. It
only claimed that respondents termination was due to its present business/financial condition. This bare statement fell short of the norm to
show a valid retrenchment. Indeed, not every loss incurred or expected to be incurred by an employer can justify retrenchment. The
employer must prove, among others, that the losses are substantial and that the retrenchment is reasonably necessary to avert such losses.
Thus, by its failure to present sufficient and convincing evidence to prove that retrenchment was necessary, respondents termination due to
retrenchment is not allowed.

20

The New Philippine Skylanders, Inc. vs. Dakila

G.R. No. 199547; September 24, 2012
Facts:
Respondent Dakila was employed by petitioner corporation as early as 1987 and terminated for cause in April 1997 when the corporation was sold. In
May 1997, he was rehired as consultant by the petitioners under a Contract for Consultancy Services dated April 30, 1997.
Thereafter, in a letter dated April 19, 2007, respondent Dakila informed petitioners of his compulsory retirement effective May 2, 2007 and sought for the
payment of his retirement benefits pursuant to the Collective Bargaining Agreement. His request, however, was not acted upon. Instead, he was
terminated from service effective May 1, 2007.
Consequently, respondent Dakila filed a complaint for constructive illegal dismissal, non-payment of retirement benefits, under/non-payment of wages
and other benefits of a regular employee, and damages against petitioners.
On the other hand, petitioners, in their position paper, asserted that respondent Dakila was a consultant and not their regular employee. The latter was
not included in petitioners' payroll and paid a fixed amount under the consultancy contract. He was not required to observe regular working hours and
was free to adopt means and methods to accomplish his task except as to the results of the work required of him. Hence, no employer-employee
relationship existed between them.
The Labor Arbiter declared respondent Dakila to be a regular employee on the basis of the unrebutted documentary evidence showing that he was
under the petitioners' direct control and supervision and performed tasks that were either incidental or usually desirable and necessary in the trade or
business of petitioner corporation for a period of ten years.
Issue:
WON there was a valid dismissal.
Held:
The issue of illegal dismissal is premised on the existence of an employer-employee relationship between the parties herein.Records reveal that both
the LA and the NLRC, as affirmed by the CA, have found substantial evidence to show that respondent Dakila was a regular employee who was
dismissed without cause.
Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages computed from the time he was illegally dismissed. However, considering that respondent Dakila was
terminated on May 1, 2007, or one (1) day prior to his compulsory retirement on May 2, 2007, his reinstatement is no longer feasible. Accordingly, the
NLRC correctly held him entitled to the payment of his retirement benefits pursuant to the CBA. On the other hand, his backwages should be computed
only for days prior to his compulsory retirement which in this case is only a day.
Tesoro et al. vs. Metro Manila Retreaders, Inc. et al.
G.R. No. 171482; March 12, 2014
Facts:
Petitioners used to work as salesmen for respondents Metro Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or Power Tire and Rubber
Corporation, apparently sister companies, collectively called Bandag. Bandag offered repair and retread services for used tires. Bandag developed a
franchising scheme that would enable others to operate tire and retreading businesses using its trade name and service system.
Petitioners quit their jobs as salesmen and entered into separate Service Franchise Agreements (SFAs) with Bandag for the operation of their
respective franchises. Under the SFAs, Bandag would provide funding support to the petitioners subject to a regular or periodic liquidation of their
revolving funds. The expenses out of these funds would be deducted from petitioners sales to determine their incomes.
At first, petitioners managed and operated their respective franchises without any problem. However, they began to default on their obligations to submit
periodic liquidations of their operational expenses in relation to the revolving funds Bandag provided them. Consequently, Bandag terminated their
respective
SFA.
Aggrieved, petitioners filed a complaint for constructive dismissal, nonpayment of wages, incentive pay, 13th month pay and damages against Bandag
with the National Labor Relations Commission (NLRC). Petitioners contend that, notwithstanding the execution of the SFAs, they remained to be
Bandags
employees,
the
SFAs
being
but
a
circumvention
of
their
status
as
regular
employees.
For its part, Bandag pointed out that petitioners freely resigned from their employment and decided to avail themselves of the opportunity to be
independent entrepreneurs under the franchise scheme that Bandag had. Thus, no employeremployee relationship existed between petitioners and
Bandag.
Issue: WON petitioners remained to be Bandags salesmen under the franchise scheme it entered into with them.

21

Held:
No.
When petitioners agreed to operate Bandags franchise branches in different parts of the country, they knew that this substantially changed their former
relationships. They were to cease working as Bandags salesmen, the positions they occupied before they ventured into running separate Bandag
branches.
The tests for determining employeremployee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to control the employee with respect to the means and methods by which the work is to be
accomplished. The last is called the control test, the most important element.
It is pointed out that Bandag continued, like an employer, to exercise control over petitioners work. It points out that Bandag: (a) retained the right to
adjust the price rates of products and services; (b) imposed minimum processed tire requirement (MPR); (c) reviewed and regulated credit applications;
and (d) retained the power to suspend petitioners services for failure to meet service standards.
But uniformity in prices, quality of services, and good business practices are the essence of all franchises. These business constraints are needed to
maintain collective responsibility for faultless and reliable service to the same class of customers for the same prices.
This is not the control contemplated in employeremployee relationships. Control in such relationships addresses the details of day to day work like
assigning the particular task that has to be done, monitoring the way tasks are done and their results, and determining the time during which the
employee
must
report
for
work
or
accomplish
his
assigned
task.
Franchising involves the use of an established business expertise, trademark, knowledge, and training. As such, the franchisee is required to follow a
certain established system. Accordingly, the franchisors may impose guidelines that somehow restrict the petitioners conduct which do not necessarily
indicate control. The important factor to consider is still the element of control over how the work itself is done, not just its end result.
Royale Homes Marketing Corporation vs. Fidel Alcantara
G.R. No. 195190, July 28, 2014(PSO)
Facts:
Respondent works as Marketing Director of the petitioner-corporation who is engaged in a real estate business. In 2003, respondent filed a complaint
for illegal dismissal with the Labor Arbiter. He alleged that he is a regular employee and had been illegally dismissed without any valid or just cause and
prayed for reinstatement without loss of seniority right with payment of backwages and damages. Petitioner on the other hand denied the allegations
and averred that respondent Alcantara is not an employee but merely an independent contractor as evidenced by a contract entered between Royal
Homes and Alcantara.
Issue:
Whether respondent is an independent contractor or an employee of Royal Homes?
Held:
Respondent is an independent contractor. The terms of the contract are clear and leave no doubt as to the intention of the parties. Applying the four-fold
test in determining the existence of employer-employee relationship, the power of control test is lacking. This test among the four, is the most
determinative factor that the other requisites may even be disregarded. Not every form of control is indicative of employer-employee relationship. A
person who performs work for another and is subjected to its rules, regulations and code of ethics does not necessarily become an employee. As long
as the level of control does not interfere with the means and methods of accomplishing the task, the rules imposed by the hiring party on the hired party
does not amount to the labor law concept of control that is indicative of employer-employee relationship.
III.

RIGHT TO SECURITY OF TENURE

ALU-TUCP vs. NLRC

234 SCRA 678 [1994]
Facts:
National Steel Corporation (NSC) employed petitioners in connection with its Five Year Expansion Program. It undertook this program with the end in
view of expanding the volume and increasing the kinds of products that it may offer for sale to the public. Petitioners were then terminated. They filed a
complaint for unfair labor practice, regularization and monetary benefits. Their contention was that they should be considered regular employees
because their jobs are necessary, desirable and work related to NSCs main business which is steel making and that they have rendered service for
more than six years.
Issue: Whether or not petitioners were properly characterized as regular employees rather than project employees.
Held:

22

Petitioners are project employees.

Project employees are those employed for a fixed for a specific project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee. On the other hand, regular employees are legally entitled to remain in the service of their employer until
that service is terminated by one or another of the recognized modes or termination of service under the Labor Code. The principal test for determining
whether an employee is properly characterized as project employees is whether or not the project employees were carrying out a specific project or
undertaking, the duration and the scope of which were specified at the time the employees were engaged for that project.
There are two types of project activities. First is that a project could refer to a particular job or undertaking that is within the regular or usual business of
the employer company, but which is distinct and separate and identifiable as such, from the other undertakings of the company. Such job or undertaking
begins and ends at determined or determinable times. Second is a particular job or undertaking that is not within the regular business of the
corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer.
It must also begin and end at determined or determinable times.
The case at bar falls on the second type of project activity. The carrying out of the Five Year Expansion Program constitutes a distinct undertaking
identifiable from the ordinary business and activity of NSC. Each component project, of course, begins and ends at specified times which had already
been determined by the time petitioners were engaged. During the time petitioners rendered services to NSC, their work was limited to one or another
of the specific component projects which made up the Five Year Expansion Program. They were not hired or assigned to any other purpose.
The services of these project employees may be lawfully terminated at the completion of the project. It is dependent and coterminous with the
completion or termination of the specific undertaking or activity for which the employee was hired which has been pre-determined at the time of the
engagement. Furthermore, the length of service of a project employee is not the controlling test of employment of tenure. The simple fact that the
employment of petitioners as project employees had gone beyond one year does not detract from or legally dissolve their status as project employees.
Whichever type of project employment is found in a particular case, a common basic requisite is that the designation of named employees as "project
employees" and their assignment to a specific project, are effected and implemented in good faith, and not merely as a means of evading otherwise
applicable requirements of labor laws.
Private respondent NSC was not in the business of constructing buildings and installing plant machinery for the general business community, i.e., for
unrelated, third party, corporations. NSC did not hold itself out to the public as a construction company or as an engineering corporation.
The present case therefore strictly falls under definition of 'project employees' on paragraph one of Article 280 of the Labor Code, as amended.
Moreover, it has been held that the length of service of a project employee is not the controlling test of employment tenure but whether or not 'the
employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee'.
Cosmos Bottling Corp., vs NLRC
255 SCRA 358 [1996]
Facts:
Gil C. Castro was employed by Cosmos Bottling Corporation for a specific period. Having satisfactorily served the company for two (2) terms, Castro
was recommended for reemployment with the companys Maintenance Team for the Davao Project, he was re-hired and assigned to the Maintenance
Division of the Davao Project tasked to install the private respondents annex plant machines in its Davao plant. Castros employment was terminated
due to the completion of the special project. Cosmos Bottling Corporation in valid exercise of its management prerogative terminated the services of
some 228 regular employees by reason of retrenchment. For obvious reasons, Castro was not among the list of those regular employees whose
services were terminated by reason of retrenchment or those who voluntarily resigned. Castro filed a complaint for illegal dismissal against Cosmos
Bottling Corporation with the Labor Arbiter contending that being a regular employee, he could not be dismissed without a just and valid cause. The
company alleged that Castro was a mere project employee whose employment was co-terminous with the project for which he was hired.
Issue: WON Castro is a regular employee or was a mere project employee of petitioner Cosmos Bottling Corporation.
Held:
After a careful examination of the records of the case, we find merit in the petition and hold that respondent NLRC gravely abused its discretion when it
rendered the challenged decision finding private respondent a regular employee. Article 280 of the Labor Code which defines regular, project and
casual employment is applicable here. The same reads in full:
Article 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least
one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such actually exists.
The case at bar presents what appears, to our mind, as a typical example of the first type. Petitioner Cosmos Bottling Corporation is a duly organized
corporation engaged in the manufacture, production, bottling, sale and distribution of beverage. In the course of its business, it undertakes distinct

23

identifiable projects as it did in the instant case when it formed special teams assigned to install and dismantle its annex plant machines in various
plants all over the country. These projects are distinct and separate, and are identifiable as such, from its usual business of bottling beverage.
Their duration and scope are made known prior to their undertaking and their specified goal and purpose are fulfilled once the projects are completed.
When private respondent was initially hired for a period of one month and re-hired for another five months, and then subsequently re-hired for another
five months, he was assigned to the petitioner's Maintenance Division tasked with the- installation and dismantling of its annex plant machines.
Evidently, these projects or undertakings, the duration and scope of which had been determined and made known to private respondent at the time of
his employment, can properly be treated as "projects" within the meaning of the "first" kind. Considered as such, the services rendered by private
respondent hired therein for the duration of the projects may lawfully be terminated at the end or completion of the same.
Clearly, therefore, private respondent being a project employee, or to use the correct term, seasonal employee, considering that his employment was
limited to the installation and dismantling of petitioners annex plant machines after which there was no more work to do, his employment legally ended
upon completion of the project.
Pure Foods Corporation vs. NLRC
G.R. No. 122653. December 12, 1997
Facts:
Pure Foods Corporation hired workers numbering 906 (private respondents) to work for a fixed period of five months at its tuna cannery plant. Their
work consisted in the receiving, skinning, loining, packing, and casing-up of tuna fish which were then exported by Pure Foods. Their services were
terminated after the expiration of their respective contracts of employment. They filed before the NLRC a complaint for illegal dismissal against the
petitioner.
Labor Arbiter dismissed the complaint on the ground that the private respondents were mere contractual workers, and not regular employees; hence,
they could not avail of the law on security of tenure. The termination of their services by reason of the expiration of their contracts of employment was,
therefore, justified. The private respondents appealed from the decision to the NLRC. The NLRC rendered a decision holding that the private
respondents and their co-complainants were regular employees.
Issue: WON the employees hired for a definite period (five-month basis) and whose services are necessary and desirable in the usual business or
trade of the employer considered regular employees
Held:
YES.
They are regular employees because they performed work usually necessary or desirable in petitioner's business or trade.
The private respondents could not be regarded as having been hired for a specific project or undertaking. The term "specific project or undertaking"
under Article 280 of the Labor Code contemplates an activity which is not commonly or habitually performed or such type of work which is not done on
a daily basis but only for a specific duration of time or until completion; the services employed are then necessary and desirable in the employer's usual
business only for the period of time it takes to complete the project.
The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work as that performed by those whose
contracts had expired negates petitioner's contention that those workers were hired for a specific project or undertaking only.
On the validity of private respondents' five-month contracts of employment. In the leading case of Brent School, Inc. v. Zamora, which was reaffirmed in
numerous subsequent cases, this Court has upheld the legality of fixed-term employment. It ruled that the decisive determinant in term employment
should not be the activities that the employee is called upon to perform but the day certain agreed upon by the parties for the commencement and
termination of their employment relationship. But, this Court went on to say that where from the circumstances it is apparent that the periods have been
imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals.
Brent also laid down the criteria under which term employment cannot be said to be in circumvention of the law on security of tenure:
1)
2)

The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure
being brought to bear upon the employee and absent any other circumstances vitiating his consent; or
It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance
exercised by the former or the latter.

None of these criteria had been met in the present case. It was really the practice of the company to hire workers on a uniformly fixed contract basis
and replace them upon the expiration of their contracts with other workers on the same employment duration.
This scheme of the petitioner was apparently designed to prevent the private respondents and the other "casual" employees from attaining the status of
a regular employee. It was a clear circumvention of the employees' right to security of tenure and to other benefits like minimum wage, cost-of-living
allowance, sick leave, holiday pay, and 13th month pay. Indeed, the petitioner succeeded in evading the application of labor laws. Also, it saved itself
from the trouble or burden of establishing a just cause for terminating employees by the simple expedient of refusing to renew the employment
contracts.
The five-month period specified in private respondents' employment contracts having been imposed precisely to circumvent the constitutional guarantee
on security of tenure should, therefore, be struck down or disregarded as contrary to public policy or morals . To uphold the contractual arrangement

24

between the petitioner and the private respondents would, in effect, permit the former to avoid hiring permanent or regular employees by simply hiring
them on a temporary or casual basis, thereby violating the employees' security of tenure in their jobs.
Phil. Fruit & Vegetable Industries vs. NLRC
310 SCRA 680
Facts:
Private respondent Philippine Fruit and Vegetable Workers Union-Tupas Local Chapter, for and in behalf of 127 of its members, filed a complaint for
unfair labor practice and/or illegal dismissal with damages against petitioner corporation. Private respondent alleged that many of its complaining
members started working for San Carlos Fruits Corporation which later incorporated into PFVII in January or February 1983 until their dismissal on
different dates in 1985, 1986, 1987 and 1988. They further alleged that the dismissals were due to complainants' involvement in union activities and
were without just cause.
Petitioners argue that PFVII operates on a seasonal basis and the complainants who are members of respondent union are seasonal workers because
they work only during the period that the company is in operation. According to petitioners, its operation starts only in February with the processing of
tomatoes into tomato paste and ceases by the end of the same month when the supply is consumed. It then resumes operations at the end of April or
early May, depending on the availability of supply with the processing of mangoes into purees and ceases operation in June. The severance of
complainants' employment from petitioner corporation was a necessary consequence of the nature of seasonal employment; and since complainants
are seasonal workers as defined by the Labor Code, they cannot invoke any tenurial benefit.
Issue: Whether or not complaining members of the union are regular employees or are seasonal workers whose employment ceased during the offseason due to the non-availability of work.
Held:
Yes.
The complaining members of respondent union are regular employees of PFVII having performed functions which are necessary and desirable in the
usual business of PFVII as provided under the first paragraph of Art. 280 of the Labor Code.
Article 280 of the Labor Code provides:
Regular and Casual Employment.- The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employers, except where the employment has been fixed for a specific project.
An employment shall be deemed to be casual if it is not covered by the preceeding paragraph; provided, that, any employee who has rendered at least
one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such actually exists.
Under above provision, an employment shall be deemed regular where the employee: a) has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; or b) has rendered at least one year of service, whether such service is
continuous or broken, with respect to the activity in which he is employed.
In the case at bar, the work of complainants as seeders, operators, sorters, slicers, janitors, drivers, truck helpers, mechanics and office personnel is
without doubt necessary in the usual business of a food processing company like petitioner PFVII. Complainants' employment has not been fixed for a
specific project or undertaking the completion or termination of which has been determined at the time of their appointment or hiring. Neither is their
employment seasonal in nature. While it may be true that some phases of petitioner company's processing operations is dependent on the supply of
fruits for a particular season, the other equally important aspects of its business, such as manufacturing and marketing are not seasonal. The fact is
that large-scale food processing companies such as petitioner company continue to operate and do business throughout the year even if the availability
of fruits and vegetables is seasonal.
Having determined that private respondents are regular employees under the first paragraph, we need not dwell on the question of whether or not they
had rendered one year of service. This Court has clearly stated in Mercado, Sr. vs. NLRC, that:
The second paragraph of Article 280 demarcates as casual employees, all other employees who do not fall under the definition of the preceding
paragraph. The proviso, in said second paragraph, deems as regular employees those casual employees who have rendered at least one year of
service regardless of the fact that such service may be continuous or broken. Hence, the proviso is applicable only to the employees who are deemed
casuals but not to the project employees nor the regular employees treated in paragraph one of Art. 280.
Philips Semiconductor vs. Fardiquela
G.R. No. 141717, April 14, 2004
Facts:
Aside from contractual employees, the petitioner employs 1,029 regular workers. The employees were subjected to periodic performance appraisal
based on output, quality, attendance and work attitude. One was required to obtain a performance rating of at least 3.0 for the period covered by the
performance appraisal to maintain good standing as an employee.

25

On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of Employment with the petitioner in which she was hired as a production operator
with a daily salary of P118. Her initial contract was for a period of three months up to August 8, 1992, but was extended for two months when she
garnered a performance rating of 3.15. Her contract was again renewed for two months or up to December 16, 1992, when she received a performance
rating of 3.8.After the expiration of her third contract, it was extended anew, for three months, that is, from January 4, 1993 to April 4, 1993. After
garnering a performance rating of 3.4, the respondents contract was extended for another three months, that is, from April 5, 1993 to June 4, 1993.
She, however, incurred five absences in the month of April, three absences in the month of May and four absences in the month of June. Line
supervisor Shirley F. Velayo asked the respondent why she incurred the said absences, but the latter failed to explain her side.
The respondent was warned that if she offered no valid justification for her absences, Velayo would have no other recourse but to recommend the nonrenewal of her contract. The respondent still failed to respond, as a consequence of which her performance rating declined to 2.8. Velayo recommended
to the petitioner that the respondents employment be terminated due to habitual absenteeism, in accordance with the Company Rules and Regulations.
Thus, the respondents contract of employment was no longer renewed.
Issue: Whether or not the respondent was still a contractual employee of the petitioner as of June 4, 1993.
Held:
The two kinds of regular employees under the law are (1) those engaged to perform activities which are necessary or desirable in the usual business or
trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to
the activities in which they are employed.
The primary standard to determine a regular employment is the reasonable connection between the particular activity performed by the employee in
relation to the business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the
employer. If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law
deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business
of the employer. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists.
The law does not provide the qualification that the employee must first be issued a regular appointment or must be declared as such before he can
acquire a regular employee status.In this case, the respondent was employed by the petitioner on May 8, 1992 as production operator. She was
assigned to wirebuilding at the transistor division. There is no dispute that the work of the respondent was necessary or desirable in the business or
trade of the petitioner. She remained under the employ of the petitioner without any interruption since May 8, 1992 to June 4, 1993 or for one (1) year
and twenty-eight (28) days. The original contract of employment had been extended or renewed for four times, to the same position, with the same
chores.
Such a continuing need for the services of the respondent is sufficient evidence of the necessity and indispensability of her services to the petitioners
business. By operation of law, then, the respondent had attained the regular status of her employment with the petitioner, and is thus entitled to security
of tenure as provided for in Article 279 of the Labor Code which reads:
Alcira vs. NLRC
G.R. No. 149859, June 9, 2004
Facts:
Middleby Philippines Corp. hired petitioner as engineering support services supervisor on a probationary basis for six months. On 20 November 1996, a
senior officer of Middleby withheld his time card and did not allow him to work. Alcira filed with the NLRC a complaint for illegal dismissal on the
contention that he had become a regular employee when he was illegally dismissed. In their defense, respondents claim that, during petitioners
probationary employment, he showed poor performance in his assigned tasks, incurred ten absences, was late several times and violated company
rules on the wearing of uniform. Since he failed to meet company standards, petitioners application to become a regular employee was disapproved
and his employment was terminated.
Issue: Whether petitioner was allowed to work beyond his probationary period and was therefore already a regular employee at the time of his alleged
dismissal.
Held:
Petitioner insists that he already attained the status of a regular employee when he was dismissed on November 20, 1996 because, having started
work on May 20, 1996, the six-month probationary period ended on November 16, 1996. According to petitioners computation, since Article 13 of the
Civil Code provides that one month is composed of thirty days, six months total one hundred eighty days. As the appointment provided that petitioners
status was probationary (6 mos.) without any specific date of termination, the 180 th day fell on November 16, 1996. Thus, when he was dismissed on
November 20, 1996, he was already a regular employee. Petitioners contention is incorrect. Our computation of the 6-month probationary period is
reckoned from the date of appointment up to the same calendar date of the 6th month following. In short, since the number of days in each particular
month was irrelevant, petitioner was still a probationary employee when respondent Middleby opted not to regularize him on November 20, 1996.
In the instant case, petitioner cannot successfully say that he was never informed by private respondent of the standards that he must satisfy in order to
be converted into regular status. This runs counter to the agreement between the parties that after five months of service the petitioners performance
would be evaluated. It is only but natural that the evaluation should be made vis--vis the performance standards for the job. Private respondent Trifona
Mamaradlo speaks of such standard in her affidavit referring to the fact that petitioner did not perform well in his assigned work and his attitude was
below par compared to the companys standard required of him.

26

However, even if probationary employees do not enjoy permanent status, they are accorded the constitutional protection of security of tenure. This
means they may only be terminated for just cause or when they otherwise fail to qualify as regular employees in accordance with reasonable standards
made known to them by the employer at the time of their engagement. But this constitutional protection ends on the expiration of the probationary
period. On that date, the parties are free to either renew or terminate their contract of employment. This development has rendered moot the question
of whether there was a just cause for the dismissal of the petitioners. Middleby exercised its option not to renew the contract when it informed petitioner
on the last day of his probationary employment that it did not intend to grant him a regular status.
Although we can regard petitioners severance from work as dismissal, the same cannot be deemed illegal. As found by the labor arbiter, the NLRC and
the Court of Appeals, petitioner (1) incurred ten absences (2) was tardy several times (3) failed to wear the proper uniform many times and (4) showed
inferior supervisory skills. Petitioner failed to satisfactorily refute these substantiated allegations. Taking all this in its entirety, respondent Middleby was
clearly justified to end its employment relationship with petitioner.

Mitsubishi Motors Phils. vs. Chrysler Phil Labor Union

G.R. No. 148738, June 29, 2004
Facts:
Nelson Paras first worked for Mitsubishi Motors Philippines Corporation (MMPC) as a shuttle bus driver from March 19, 1976 to June 16, 1982, when
he resigned to work abroad. After working in Saudi Arabia, he was re-hired as a welder-fabricator at the MMPC tooling shop from October 3, 1994 to
October 31, 1994. On October 29, 1994, his contract was renewed from November 1, 1994 up to March 3, 1995.
Sometime in May of 1996, Paras was re-hired on a probationary basis as a manufacturing trainee at the Plant Engineering Maintenance Department.
He and the new and re-hired employees were given an orientation on May 15, 1996 by Emma P. Aninipot, respecting the company's history, corporate
philosophy, organizational structure, and company rules and regulations, including the company standards for regularization, code of conduct and
company-provided benefits.
Paras started reporting for work on May 27, 1996. He was assigned at the paint ovens, air make-up and conveyors. As part of the MMPC's policy, Paras
was evaluated by his immediate supervisors Lito R. Lacambacal and Wilfredo J. Lopez after six (6) months, and received an average rating. Later,
Lacambacal informed Paras that based on his performance rating, he would be regularized.
However, the Department and Division Managers reviewed the performance evaluation made on Paras. They unanimously agreed, along with Paras'
immediate supervisors, that the performance of Paras was unsatisfactory. As a consequence, Paras was not considered for regularization. On
November 26, 1996, he received a Notice of Termination dated November 25, 1996, informing him that his services were terminated effective the said
date since he failed to meet the required company standards for regularization.
Issue: Whether or not Paras was already a regular employee when he was terminated.
Held:
Yes.
Indeed, an employer, in the exercise of its management prerogative, may hire an employee on a probationary basis in order to determine his fitness to
perform work. Under Article 281 of the Labor Code, the employer must inform the employee of the standards for which his employment may be
considered for regularization. Such probationary period, unless covered by an apprenticeship agreement, shall not exceed six (6) months from the date
the employee started working. The employees services may be terminated for just cause or for his failure to qualify as a regular employee based on
reasonable standards made known to him. Respondent Paras was employed as a management trainee on a probationary basis. During the orientation
conducted on May 15, 1996, he was apprised of the standards upon which his regularization would be based. He reported for work on May 27, 1996.
As per the companys policy, the probationary period was from three (3) months to a maximum of six (6) months.
Applying Article 13 of the Civil Code, the probationary period of six (6) months consists of one hundred eighty (180) days.This is in conformity with
paragraph one, Article 13 of the Civil Code, which provides that the months which are not designated by their names shall be understood as consisting
of thirty (30) days each. The number of months in the probationary period, six (6), should then be multiplied by the number of days within a month, thirty
(30); hence, the period of one hundred eighty (180) days.
As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be excluded and the last day included. Thus, the one
hundred eighty (180) days commenced on May 27, 1996, and ended on November 23, 1996. The termination letter dated November 25, 1996 was
served on respondent Paras only at 3:00 a.m. of November 26, 1996. He was, by then, already a regular employee of the petitioner under Article 281 of
the Labor Code.
The basis for which respondent Paras' services were terminated was his alleged unsatisfactory rating arising from poor performance. It is a settled
doctrine that the employer has the burden of proving the lawfulness of his employee's dismissal. The validity of the charge must be clearly established
in a manner consistent with due process.
Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and habitual neglect of duties.
Gross negligence has been defined to be the want or absence of even slight care or diligence as to amount to a reckless disregard of the safety of

27

person or property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. A careful perusal of the records of this
case does not show that respondent Paras was grossly negligent in the performance of his duties.
In the present case, the immediate supervisor of respondent Paras gave him an average performance rating and found him fit for regularization.
Thereafter, his immediate supervisor and the department head reviewed the said rating, which was duly noted by the personnel manager. However, in a
complete turn around, the petitioner made it appear that after the performance evaluation of respondent Paras was reviewed by the department and
division heads, it was unanimously agreed that the respondent's performance rating was unsatisfactory, making him unfit for regularization.
There is no showing that respondent Paras was informed of the basis for the volte face of the management group tasked to review his performance
rating. His immediate supervisor even told him that he had garnered a satisfactory rating and was qualified for regularization, only to later receive a
letter notifying him that his employment was being terminated.
Considering that respondent Paras was not dismissed for a just or authorized cause, his dismissal from employment was illegal. Furthermore, the
petitioner's failure to inform him of any charges against him deprived him of due process. Clearly, the termination of his employment based on his
alleged unsatisfactory performance rating was effected merely to cover up and "deodorize" the illegality of his dismissal.
Pangilinan vs. General Milling Co.
G.R. No. 149329, July 2, 2004
Facts:
General Milling Corporation is a domestic corporation engaged in the production and sale of livestock and poultry. It is, likewise, the distributor of
dressed chicken to various restaurants and establishments nationwide. As such, it employs hundreds of employees, some on a regular basis and others
on a casual basis, as "emergency workers."
The petitioners were employed by the respondent on different dates as emergency workers at its poultry plant under separate "temporary/casual
contracts of employment" for a period of five months. Most of them worked as chicken dressers, while the others served as packers or helpers. Upon
the expiration of their respective contracts, their services were terminated. They later filed separate complaints for illegal dismissal and non-payment of
holiday pay, 13th month pay, night-shift differential and service incentive leave pay against the respondent.
The petitioners alleged that their work as chicken dressers was necessary and desirable in the usual business of the respondent. They stressed that
based on the nature of their work, they were regular employees of the respondent; hence, could not be dismissed from their employment unless for just
cause and after due notice.
Issue: Whether or not petitioners are regular employees and, thus, cannot be dismissed without just cause and the required due process.
Held:
Article 280 of the Labor Code comprehends three kinds of employees: (a) regular employees or those whose work is necessary or desirable to the
usual business of the employer; (b) project employees or those whose employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal
in nature and the employment is for the duration of the season; and, (c) casual employees or those who are neither regular nor project employees. A
regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as
against those which are undertaken for a specific project or are seasonal. There are two separate instances whereby it can be determined that an
employment is regular: (1) if the particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer;
and, (2) if the employee has been performing the job for at least a year.
In the case of St. Theresas School of Novaliches Foundation vs. NLRC, 43 we held that Article 280 of the Labor Code does not proscribe or prohibit an
employment contract with a fixed period. We furthered that it does not necessarily follow that where the duties of the employee consist of activities
usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of
such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employees duties.
Indeed, in the leading case of Brent School Inc. v. Zamora, 44 we laid down the guideline before a contract of employment may be held as valid, to wit:
. . . [S]tipulations in employment contracts providing for term employment or fixed period employment are valid when the period were agreed upon
knowingly and voluntarily by the parties without force, duress or improper pressure, being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms
with no moral dominance whatever being exercised by the former over the latter.
The records reveal that the stipulations in the employment contracts were knowingly and voluntarily agreed to by the petitioners without force, duress or
improper pressure, or any circumstances that vitiated their consent. Similarly, nothing therein shows that these contracts were used as a subterfuge by
the respondent GMC to evade the provisions of Articles 279 and 280 of the Labor Code. The petitioners were hired as "emergency workers" and
assigned as chicken dressers, packers and helpers at the Cainta Processing Plant. The respondent GMC is a domestic corporation engaged in the
production and sale of livestock and poultry, and is a distributor of dressed chicken. While the petitioners' employment as chicken dressers is necessary
and desirable in the usual business of the respondent, they were employed on a mere temporary basis, since their employment was limited to a fixed
period. As such, they cannot be said to be regular employees, but are merely "contractual employees." Consequently, there was no illegal dismissal
when the petitioners' services were terminated by reason of the expiration of their contracts. Lack of notice of termination is of no consequence,

28

because when the contract specifies the period of its duration, it terminates on the expiration of such period. A contract for employment for a definite
period terminates by its own term at the end of such period.

Hacienda Bino/Hortencia Stark vs. Cuenca

G.R. No. 150478, April 15, 2005, citing 2003 Hacienda Fatima
Facts:
Hortencia L. Starke, herein petitioner, is the owner and operator of the Hacienda Bino. During the off milling season of 1996 he issued an Order or
Notice which stated, that all Hacienda Employees who signed in favor of CARP are expressing their desire to get out of employment on their own
volition and wherefore, only those who did not sign for CARP will be given employment by the hacienda.
Herein respondents are employees of the hacienda performing various works, such as cultivation, planting of cane points, fertilization, watering,
weeding, harvesting and loading of harvested sugarcanes to cargo trucks are those who signed in favor of CARP. They allege that they are regular and
permanent workers of the hacienda and that they were dismissed without just and lawful cause. They further alleged that they were dismissed because
they applied as beneficiaries under the Comprehensive Agrarian Reform Program (CARP) over the land owned by petitioner Starke. Petitioner Starke
alleged that in there was little work in the plantation as it was off-season; and so, on account of the seasonal nature of the work, she issued the order
giving preference to those who supported the re-classification. She pointed out that when the milling season began, the work was plentiful again and
she issued notices to all workers, including the respondents, informing them of the availability of work. However, the respondents refused to report back
to work.
Issue: Whether or not the respondents are regular employee
Held:
Petitioner Starke contends that the established doctrine that seasonal employees are regular employees had been overturned and abandoned by
Mercado, Sr. v. NLRC. 18 She stresses that in that case, the Court held that petitioners therein who were sugar workers, are seasonal employees and
their employment legally ends upon completion of the project or the season.
On the substantial issue of whether the respondents are regular or seasonal employees, the petitioners contend that the CA violated the doctrine of
stare decisis by not applying the ruling in the Mercado case that sugar workers are seasonal employees. We hold otherwise. Under the doctrine of stare
decisis, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future
cases in which the facts are substantially the same. 22 Where the facts are essentially different, however, stare decisis does not apply, for a perfectly
sound principle as applied to one set of facts might be entirely inappropriate when a factual variance is introduced.
The disparity in facts between the Mercado case and the instant case is best exemplified by the fact that the former decision ruled on the status of
employment of farm laborers, who, as found by the labor arbiter, work only for a definite period for a farm worker, after which they offer their services to
other farm owners, considering the area in question being comparatively small, comprising of seventeen and a half (17 1/2) hectares of land, such that
the planting of rice and sugar cane thereon could not possibly entail a whole year operation. The herein case presents a different factual condition as
the enormity of the size of the sugar hacienda of petitioner, with an area of two hundred thirty-six (236) hectares, simply do not allow for private
respondents to render work only for a definite period.
Indeed, in a number of cases, the Court has recognized the peculiar facts attendant in the Mercado case.
Primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in
relation to the usual trade or business of the employer. 28 There is no doubt that the respondents were performing work necessary and desirable in the
usual trade or business of an employer. Hence, they can properly be classified as regular employees.
For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in
nature. They must have been employed only for the duration of one season. 29 While the records sufficiently show that the respondents' work in the
hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls, 30
submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991. Absent any proof to the contrary, the
general rule of regular employment should, therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness of his
employee's dismissal.
Philippine Global Communications Inc. vs. De Vera
G.R. No. 157214, June 7, 2005
Facts:
Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. At the crux of the controversy is
Dr. De Vera's status vis a vis petitioner when the latter terminated his engagement.
It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981, 3 offered his services to the petitioner, therein proposing his plan of works
required of a practitioner in industrial medicine, to include the following:
1. Application of preventive medicine including periodic check-up of employees;
2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for consultation services to employees;

29

3.
4.
5.
6.

Management and treatment of employees that may necessitate hospitalization including emergency cases and accidents;
Conduct pre-employment physical check-up of prospective employees with no additional medical fee;
Conduct home visits whenever necessary;
Attend to certain medical administrative function such as accomplishing medical forms, evaluating conditions of employees applying for sick
leave of absence and subsequently issuing proper certification, and all matters referred which are medical in nature.

The parties agreed and formalized respondent's proposal in a document denominated as RETAINERSHIP CONTRACT 4 which will be for a period of
one year subject to renewal, it being made clear therein that respondent will cover "the retainership the Company previously had with Dr. K. Eulau" and
that respondent's "retainer fee" will be at P4,000.00 a month. Said contract was renewed yearly. 5 The retainership arrangement went on from 1981 to
1994 with changes in the retainer's fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally. However, in December
1996 when Philcom, thru a letter bearing on the subject boldly written as "TERMINATION RETAINERSHIP CONTRACT", informed De Vera of its
decision to discontinue the latter's "retainer's contract with the Company effective at the close of business hours of December 31, 1996" because
management has decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company
premises.
Issue: WON an employer-employee relationship exists between petitioner and respondent
Held:
Applying the four-fold test to this case, we initially find that it was respondent himself who sets the parameters of what his duties would be in offering his
services to petitioner. We note, too, that the power to terminate the parties' relationship was mutually vested on both. Either may terminate the
arrangement at will, with or without cause.
The tenor of this letter indicates that the complainant was proposing to extend his time with the respondent and seeking additional compensation for
said extension. This shows that the respondent PHILCOM did not have control over the schedule of the complainant as it [is] the complainant who is
proposing his own schedule and asking to be paid for the same. This is proof that the complainant understood that his relationship with the respondent
PHILCOM was a retained physician and not as an employee. If he were an employee he could not negotiate as to his hours of work.
The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with petitioner, he never was included in its payroll;
was never deducted any contribution for remittance to the Social Security System (SSS); and was in fact subjected by petitioner to the ten (10%)
percent withholding tax for his professional fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an
employer-employee relationship. Clearly, the elements of an employer-employee relationship are wanting in this case. We may add that the records are
replete with evidence showing that respondent had to bill petitioner for his monthly professional fees. 19 It simply runs against the grain of common
experience to imagine that an ordinary employee has yet to bill his employer to receive his salary.
Finally, remarkably absent from the parties' arrangement is the element of control, whereby the employer has reserved the right to control the employee
not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. Here, petitioner had no
control over the means and methods by which respondent went about performing his work at the company premises. He could even embark in the
private practice of his profession, not to mention the fact that respondent's work hours and the additional compensation therefor were negotiated upon
by the parties.
Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the existence of an employment relationship. As it is,
the provision merely distinguishes between two (2) kinds of employees, i.e., regular and casual. It does not apply where, as here, the very existence
of an employment relationship is in dispute.
Lacuesta vs. Ateneo de Manila
G.R. No. 152777, December 9, 2005
Facts:
Respondent Ateneo de Manila University (Ateneo) hired, on a contractual basis, petitioner Lolita R. Lacuesta as a part-time lecturer in its English
Department for the second semester of school year 1988-1989. She was re-hired, still on a contractual basis, for the first and second semesters of
school year 1989-1990. On July 13, 1990, the petitioner was first appointed as full-time instructor on probation, in the same department effective June
1, 1990 until March 31, 1991. Thereafter, her contract as faculty on probation was renewed effective April 1, 1991 until March 31, 1992. She was again
hired for a third year effective April 1, 1992 until March 31, 1993. During these three years she was on probation status. Respondent Dr. Leovino Ma.
Garcia, Dean of Ateneos Graduate School and College of Arts and Sciences, notified petitioner that her contract would no longer be renewed because
she did not integrate well with the English Department.Petitioner filed a complaint for illegal dismissal with prayer for reinstatement, back wages, and
moral and exemplary damages. She contends that Articles 280 and 281 of the Labor Code, not the Manual of Regulations for Private Schools, is the
applicable law to determine whether or not an employee in an educational institution has acquired regular or permanent status. She argues that (1)
under Article 281, probationary employment shall not exceed six (6) months from date of employment unless a longer period had been stipulated by an
apprenticeship agreement; (2) under Article 280, if the apprenticeship agreement stipulates a period longer than one year and the employee rendered
at least one year of service, whether continuous or broken, the employee shall be considered as regular employee with respect to the activity in which
he is employed while such activity exists; and (3) it is with more reason that petitioner be made regular since she had rendered services as part-time
and full-time English teacher for four and a half years, services which are necessary and desirable to the usual business of Ateneo.
Issue:

30

(1) Whether or not the Court of Appeals erred in ruling that it is the Manual of Regulations For Private Schools, not the Labor Code, that determines the
acquisition of regular or permanent status of faculty members in an educational institution;
(2) Whether or not after completing the three-year probation with an above-average performance, petitioner already acquired permanent status.
Held:
(1)
The Manual of Regulations for Private Schools, and not the Labor Code, determines whether or not a faculty member in an educational
institution has attained regular or permanent status. Under Policy Instructions No. 11 issued by the Department of Labor and Employment, the
probationary employment of professors, instructors and teachers shall be subject to the standards established by the Department of Education and
Culture.
Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time teachers who have satisfactorily completed their probationary
period shall be considered regular or permanent. Moreover, for those teaching in the tertiary level, the probationary period shall not be more than six
consecutive regular semesters of satisfactory service.The requisites to acquire permanent employment, or security of tenure, are
(1) the teacher is a full-time teacher;
(2) the teacher must have rendered three consecutive years of service; and
(3) such service must have been satisfactory.
(2)

A part-time teacher cannot acquire permanent status.

Only when one has served as a full-time teacher can he acquire permanent or regular status. The petitioner was a part-time lecturer before she was
appointed as a full-time instructor on probation. As a part-time lecturer, her employment as such had ended when her contract expired. Thus, the three
semesters she served as part-time lecturer could not be credited to her in computing the number of years she has served to qualify her for permanent
status. And completing the probation period does not automatically qualify her to become a permanent employee of the university. Petitioner could only
qualify to become a permanent employee upon fulfilling the reasonable standards for permanent employment as faculty member.
Consistent with academic freedom and constitutional autonomy, an institution of higher learning has the prerogative to provide standards for its teachers
and determine whether these standards have been met.At the end of the probation period, the decision to re-hire an employee on probation, belongs to
the university as the employer alone.
Posedion Fishing/Terry De Jesus vs. NLRC
G.R. No. 168052, February 20, 2006
Facts:
Private respondent was employed by Poseidon Fishing in January 1988 as Chief Mate. After five years, he was promoted to Boat Captain. In 1999,
petitioners, without reason, demoted respondent from Boat Captain to Radio Operator of petitioner Poseidon. 4 As a Radio Operator, he monitored the
daily activities in their office and recorded in the duty logbook the names of the callers and time of their calls.
On 3 July 2000, private respondent failed to record a 7:25 a.m. call in one of the logbooks. However, he was able to record the same in the other
logbook. Consequently, when he reviewed the two logbooks, he noticed that he was not able to record the said call in one of the logbooks so he
immediately recorded the 7:25 a.m. call after the 7:30 a.m. entry. Around 9:00 o'clock in the morning of 4 July 2000, petitioner Terry de Jesus detected
the error in the entry in the logbook. Subsequently, she asked private respondent to prepare an incident report to explain the reason for the said
oversight. At around 2:00 o'clock in the afternoon of that same day, petitioner Poseidon's secretary, namely Nenita Laderas, summoned private
respondent to get his separation pay amounting to Fifty-Five Thousand Pesos (P55,000.00). However, he refused to accept the amount as he believed
that he did nothing illegal to warrant his immediate discharge from work.
Rising to the occasion, private respondent filed a complaint for illegal dismissal on 11 July 2000
Issue:
WON respondent was a contractual or regular employee at the time he was terminated
Held:
In the case under consideration, the agreement has such an objective to frustrate the security of tenure of private respondent- and fittingly, must be
nullified. In this case, petitioners' intent to evade the application of Article 280 of the Labor Code is unmistakable. In a span of 12 years, private
respondent worked for petitioner company first as a Chief Mate, then Boat Captain, and later as Radio Operator. His job was directly related to the
deep-sea fishing business of petitioner Poseidon. His work was, therefore, necessary and important to the business of his employer. Such being the
scenario involved, private respondent is considered a regular employee of petitioner under Article 280 of the Labor Code.
Ostensibly, in the case at bar, at different times, private respondent occupied the position of Chief Mate, Boat Captain, and Radio Operator. In
petitioners' interpretation, however, this act of hiring and re-hiring actually highlight private respondent's contractual status saying that for every
engagement, a fresh contract was entered into by the parties at the outset as the conditions of employment changed when the private respondent filled
in a different position. But to this Court, the act of hiring and re-hiring in various capacities is a mere gambit employed by petitioner to thwart the tenurial
protection of private respondent. Such pattern of re-hiring and the recurring need for his services are testament to the necessity and indispensability of
such services to petitioners' business or trade.
Petitioners next assert that deep-sea fishing is a seasonal industry because catching of fish could only be undertaken for a limited duration or seasonal
within a given year. Thus, according to petitioners, private respondent was a seasonal or project employee.

31

As correctly pointed out by the Court of Appeals, the "activity of catching fish is a continuous process and could hardly be considered as seasonal in
nature." In Philex Mining Corp. v. National Labor Relations Commission, 34 we defined project employees as those workers hired (1) for a specific
project or undertaking, and (2) the completion or termination of such project has been determined at the time of the engagement of the employee. The
principal test for determining whether particular employees are "project employees" as distinguished from "regular employees," is whether or not the
"project employees" were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the
employees were engaged for that project. In this case, petitioners have not shown that private respondent was informed that he will be assigned to a
"specific project or undertaking." As earlier noted, neither has it been established that he was informed of the duration and scope of such project or
undertaking at the time of their engagement.
More to the point, in Maraguinot, Jr. v. National Labor Relations Commission, 35 we ruled that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these
tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee.
Cebu Metal Corp., vs. Saliling
G.R. No. 154463, September 5, 2006
Facts:
Cebu Metal Corporation is a corporation engaged in buying and selling of scrap iron. In the Bacolod branch it has (3) regular employees holding such
positions as Officer-in-Charge, a scaler, and a yardman, whose salaries are paid directly by its main office in Cebu. The complainants, Gregorio Saliling,
Elias Bolido, Manuel Alquiza, Benjie Amparado are the one who undertakes pakiao work in the unloading of scrap iron. The Bacolod buying station is
mainly a stockyard where scrap metal delivered by its suppliers are stockpiled. The supply of scrap metal is not steady as it depends upon many
factors, such as availability of supplies, price, competition and demand among others. There are weeks were there are no delivery while there are
weeks were quite a number of trucks are delivered to the stockyard. The arrivals of these trucks and the deliveries of scrap metal iron are not regular
and the schedules of deliveries to the stockyard are not known before hand by the respondent Cebu Metal Corporation. These trucks have their own
driver and truck boys employed by the different suppliers. Sometimes, these trucks do not have any truck boys, and in these instances, the corporation
hires the services of people for the unloading of the scrap metal from these trucks. It is for this reason that the unloaders hired by the respondent to
unload are basically seasonal workers. They are hired whenever there are trucks of suppliers do not have any accompanying truck boys. Whoever is
available and whoever are willing to help unload on a particular occasion are hired to unload. Usually, there is a leader for a particular group who is
tasked to unload the scrap metal from a particular truck. It is this leader who distributes the individual takes of each member of the particular group
unloading the scrap metal from a particular work The complainants maintained that they are hired by Cebu Metal Corparation as employees and filed on
January 10, 1997 a complaint with the regional arbitration in Bacolod City for underpayment of wages and non-payment of the following benefits 1. 13 th
month pay; 2. holiday pay; 3. service incentive leave pay. On March 6, 1998 includes the claim for illegal dismissal because they were dismissed after
the filing of the complaint. The Labor Arbiter rendered a decision in favor of the complainants. Aggrieved, Cebu Metal Corporation filed an appeal with
the NLRC. The NLRC reversed and set aside the decision of the Labor Arbiter and held that the complainants were not regular employees, thus, they
could not have been illegally dismissed. The order of the reversal was based on the Commissions finding that the petty cash vouchers submitted by
Cebu Metal Corporation confirmed the fact that unloaders were paid on pakiao or task basis at Php 15.00 per metric ton. The Commission further
rationalized that with the irregular nature of the work involved in the stoppage and resumption of which depended solely on the availability or supply of
scrap metal, it necessarily follows that after the job of unloading was completed and unloaders are paid the contract price, the latters working
relationship with Cebu Metal Corporation legally ended. They were then free to offer their services to others.
The complainants challenged the decision of the NLRC with the Court of Appeals, and it rendered the decision annulling the decision of the NLRC and
reinstated the decision made by the Labor Arbiter. Hence, this petition.
Issue: Whether or not the complainant respondents are regular employees.
Held:
The above findings validate respondent's position as to the nature of complainants' work. Their services are needed only when scrap metals are
delivered which occurs only one or twice a week or sometimes no delivery at all in a given week. The irregular nature of work, stoppage of work and
then work again depending on the supply of scrap metal has not been denied by complainants. On the contrary they even admitted the same in their
Reply to respondent's Appeal. . . . . Indeed, it would be unjust to require respondent to maintain complainants in the payroll even if there is no more
work to be done. To do so would make complainants privileged retainers who collect payment from their employer for work not done. This is extremely
unfair and amount to cuddling of labor at the expense of management.
The Supreme Court ruled there can be no illegal dismissal to speak of. Besides, the complainants cannot claim regularity in the hiring every time a truck
comes loaded with scrap metal. This is confirmed in the Petty Cash Vouchers which are in the names of different leaders who are apportion the amount
earned among its members. And, quite telling is the fact that not every truck delivery of scrap metal requires the services of respondent complainants
when particular truck is accompanied by its own unloader. And whenever required, respondent complainants were not always the ones contracted to
undertake the unloading of the trucks since the work was offered to whomever were available at a given time. It should be remembered that the
Philippine Constitution, while inexorably committed towards the protection of the working class from exploitation and unfair treatment, nevertheless
mandates the policy of social justice so as to strike a balance between an avowed predilection for labor, on the one hand, and the maintenance of the
legal rights of capital, the proverbial hen that lays the golden egg, on the other. Indeed we should not be mindful of the legal norm that justice is in every
case for the deserving, to be dispensed with in the light of established facts, the applicable law, an existing jurisprudence.

32

Hermonias L. Liganza vs. RBL Shipyard Corporation

G.R. NO. 159862, October 17, 2006
Facts:
After working as a carpenter for respondent since August 1991, petitioner's employment was terminated on 30 October 1999. This prompted petitioner
to file a complaint for illegal dismissal, alleging that on said date he was verbally informed that he was already terminated from employment and barred
from entering the premises. On the same occasion, he was told to look for another job. Thus, he claimed that he was unceremoniously terminated from
employment without any valid or authorized cause. On the other hand, respondent insisted that petitioner was a mere project employee who was
terminated upon completion of the project for which he was hired.
Issue: WON petitioner is a project employee and whether his termination was illegal.
Held:
Before an employee hired on a per project basis can be dismissed, a report must be made to the nearest employment office of the termination of the
services of the workers every time it completed a project, pursuant to Policy Instruction No. 20.
Petitioner claims he is a regular employee since he worked for respondent continuously and without interruption from 13 August 1991 up to 30 October
1999 and that his work as a carpenter was necessary and desirable to the latter's usual business of shipbuilding and repair. He asserts that when he
was hired by respondent in 1991, there was no employment contract fixing a definite period or duration of his engagement, and save for the contract
covering the period 20 September 1999 to 19 March 2000, respondent had been unable to show the other project employment contracts ever since
petitioner started working for the company. Furthermore, respondent failed to file as many termination reports as there are completed projects involving
petitioner, he adds.
On the other hand, respondent insists that petitioner is a project employee as evidenced by the project employment contracts it signed with him and
employee termination reports it submitted to the DOLE.
In the instant case, respondent seeks to prove the status of petitioner's employment through four (4) employment contracts covering a period of only
two (2) years to declare petitioner as a project employee.
Respondent failed to present the contracts purportedly covering petitioner's employment from 1991 to July 1997, spanning six (6) years of the total eight
(8) years of his employment. To explain its failure in this regard, respondent claims that the records and contracts covering said period were destroyed
by rains and flashfloods that hit the company's office.
The four employment contracts are not sufficient to reach the conclusion that petitioner was, and has been, a project employee earlier since 1991. The
Court is not satisfied with the explanation that the other employment contracts were destroyed by floods and rains. Respondent could have used other
evidence to prove project employment, but it did not do so, seemingly content with the convenient excuse of "destroyed documents."
This Court has held that an employment ceases to be co-terminous with specific projects when the employee is continuously rehired due to the
demands of employer's business and re-engaged for many more projects without interruption. In Maraguinot, Jr. v. NLRC (Second Division), 21 the
Court ruled that "once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same employer for the
same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence."
All considered, there are serious doubts in the evidence on record that petitioner is a project employee, or that he was terminated for just cause. These
doubts shall be resolved in favor of petitioner, in line with the policy of the law to afford protection to labor and construe doubts in favor of labor.
It is well-settled that the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. When there is no
showing of a clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on
the employer to prove that the termination was for a valid or authorized cause. For failure to prove otherwise, the Court has no recourse but to grant the
petition.
Fabeza vs. San Miguel Corporation
G.R. No. 150658, February 9, 2007
Facts:
Petitioners, along with Joselito de Lara and John Alovera, were hired by respondent San Miguel Corporation (SMC) as "Relief Salesmen" for the
Greater Manila Area (GMA) under separate but almost similarly worded "Contracts of Employment With Fixed Period." After having entered into
successive contracts of the same nature with SMC, the services of petitioners, as well as de Lara and Alovera, were terminated after SMC no longer
agreed to forge another contract with them.
Respondent SMC and its co-respondent Arman Hicarte, who was its Human Resources Manager, claimed that the hiring of petitioners was not intended
to be permanent, as the same was merely occasioned by the need to fill in a vacuum arising from SMC's gradual transition to a new system of selling
and delivering its products. Claiming that they were illegally dismissed, petitioners, as well as de Lara and Alovera, filed separate complaints for illegal
dismissal against respondents.

33

Issue: Whether they were hired for a fixed period, as claimed by respondents, or as regular employees who may not be dismissed except for just or
authorized causes.
Held:
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity actually exists.
Although Article 280 does not expressly recognize employment for a fixed period, which is distinct from employment which has been fixed for a specific
project or undertaking, Brent School, Inc. v. Zamora 11 has clarified that employment for a fixed period is not in itself illegal.
Thus, even if the duties of an employee consist of activities usually necessary or desirable in the usual business of the employer, it does not necessarily
follow that the parties are forbidden from agreeing on a period of time for the performance of such activities through a contract of employment for a fixed
term.
Albeit the Court of Appeals ruled in respondents' favor on the basis of a finding that petitioners were validly hired as project employees, respondents
deny that petitioners were project employees, asserting that they were hired only as fixed-term employees.
Since respondents attribute the termination of petitioners' employment to the expiration of their respective contracts, a determination of whether
petitioners were hired as project or seasonal employees, or as fixed-term employees without any force, duress or improper pressure having been
exerted against them is in order. If petitioners fall under any of these categories, then indeed their termination follows from the expiration of their
contracts.
Since, as earlier stated, respondents themselves deny that petitioners were project employees, and they do not allege that they were seasonal
employees, what remains for determination is whether petitioners were fixed-term employees under the Brent doctrine.
Significantly, both the Labor Arbiter and the NLRC found that petitioners were all regular employees. The NLRC even explicitly stated that the periods
stated in petitioners' contracts were fixed not because of temporary exigencies but because of a scheme to preclude petitioners from acquiring tenurial
security.
Brent instructs that a contract of employment stipulating a fixed-term, even if clear as regards the existence of a period, is invalid if it can be shown that
the same was executed with the intention of circumventing security of tenure, and should thus be ignored.
Indeed, substantial evidence exists in the present case showing that the subject contracts were utilized to deprive petitioners of their security of tenure.
As Brent pronounces, a fixed-term employment is valid only under certain circumstances, such as when the employee himself insists upon the period,
or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non.

Soriano vs. NLRC

G.R. No. 165594, April 23, 2007 citing 2005 Filipina Pre-fabricated Bldg. System (Filisystem)
Facts:
Petitioner and certain individuals namely Sergio Benjamin (Benjamin), Maximino Gonzales (Gonzales), and Noel Apostol (Apostol) were employed by
the respondent as Switchman Helpers in its Tondo Exchange Office (TEO). After participating in several trainings and seminars, petitioner, Benjamin,
and Gonzales were promoted as Switchmen. Apostol, on the other hand, was elevated to the position of Frameman. One of their duties as Switchmen
and Frameman was the manual operation and maintenance of the Electronic Mechanical Device (EMD) of the TEO.
In November 1995, respondent PLDT implemented a company-wide redundancy program. Subsequently, the respondent PLDT gave separate letters
dated 15 July 1996 to petitioner, Benjamin, Gonzales, and Apostol informing them that their respective positions were deemed redundant due to the
above-cited reasons and that their services will be terminated on 16 August 1996. They requested the respondent PLDT for transfer to some vacant
positions but their requests were denied since all positions were already filled up. Hence, on 16 August 1996, respondent PLDT dismissed the four from
employment.
Held:
Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business
enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors such as
over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken
by the enterprise.
The records show that respondent PLDT had sufficiently established the existence of redundancy in the position of Switchman.

34

Generally, deeds of release, waiver or quitclaims cannot bar employees from demanding benefits to which they are legally entitled or from contesting
the legality of their dismissal since quitclaims are looked upon with disfavor and are frowned upon as contrary to public policy. Where, however, the
person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable,
the transaction must be recognized as being a valid and binding undertaking.
The requisites for a valid quitclaim are: 1) that there was no fraud or deceit on the part of any of the parties; 2) that the consideration for the quitclaim is
credible and reasonable; and 3) that the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third
person with a right recognized by law.
It cannot be gainfully said that the petitioner did not fully understand the consequences of signing the "Receipt, Release, and Quitclaim" dated 15
August 1996. Petitioner is not an illiterate person who needs special protection. He held responsible positions in the office of the respondent PLDT and
had attended and passed various training courses for his position. It is thus assumed that he comprehended the contents of the "Receipt, Release, and
Quitclaim" which he signed on 15 August 1996. There is also no showing that the execution thereof was tainted with deceit or coercion.
Given the foregoing circumstances, the "Receipt, Release, and Quitclaim" dated 15 August 1996 should be considered as legal and binding on
petitioner. It is settled that a legitimate waiver which represents a voluntary and reasonable settlement of a worker's claim should be respected as the
law between the parties.
Caseres vs. Universal Robina Sugar Milling Corp.
G.R. No. 159343, September 28, 2007
Facts:
Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the cane sugar milling business. Pedy Caseres (petitioner
Caseres) started working for respondent in 1989, while Andito Pael (petitioner Pael) in 1993. At the start of their respective employments, they were
made to sign a Contract of Employment for Specific Project or Undertaking. Petitioners' contracts were renewed from time to time; until May 1999 when
they were informed that their contracts will not be renewed anymore. Petitioners filed a complaint for illegal dismissal, regularization, incentive leave
pay, 13th month pay, damages and attorneys fees.
Issue: Whether or not the petitioners are seasonal/project/term employees and not regular employees of respondents
Held:
Article 280 of the Labor Code provides:
ART. 280. Regular and Casual Employees. The provision of written agreement to the contrary notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed
is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such actually exists.
The foregoing provision provides for three kinds of employees: (a) regular employees or those who have been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer; (b) project employees or those whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and (c) casual employees or those
who are neither regular nor project employees.
The principal test for determining whether an employee is a project employee or a regular employee is whether the employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee. 10 A project
employee is one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration
of the season. A true project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed
thereof at the time of hiring.
In the case at bar, We note that complainants never bothered to deny that they voluntarily, knowingly and willfully executed the contracts of
employment. Neither was there any showing that respondents exercised moral dominance on the complainants, . . . it is clear that the contracts of
employment are valid and binding on the complainants.
The execution of these contracts in the case at bar is necessitated by the peculiar nature of the work in the sugar industry which has an off milling
season. The very nature of the terms and conditions of complainants' hiring reveals that they were required to perform phases of special projects for a
definite period after, their services are available to other farm owners. This is so because the planting of sugar does not entail a whole year operation,
and utility works are comparatively small during the off-milling season.

35

The fact that petitioners were constantly re-hired does not ipso facto establish that they became regular employees. Their respective contracts with
respondent show that there were intervals in their employment. In petitioner Caseres's case, while his employment lasted from August 1989 to May
1999, the duration of his employment ranged from one day to several months at a time, and such successive employments were not continuous. With
regard to petitioner Pael, his employment never lasted for more than a month at a time. These support the conclusion that they were indeed project
employees, and since their work depended on the availability of such contracts or projects, necessarily the employment of respondent's work force was
not permanent but co-terminous with the projects to which they were assigned and from whose payrolls they were paid.
Accordingly, petitioners cannot complain of illegal dismissal inasmuch as the completion of the contract or phase thereof for which they have been
engaged automatically terminates their employment.
Pier 8 Arrastre & Stevedoring Services, Inc. vs Boclot
G.R. No. 173849, September 28, 2007
Facts:
Petitioner Pier 8 Arrastre and Stevedoring Services, Inc. (PASSI) is a domestic corporation engaged in the business of providing arrastre and
stevedoring services[5] at Pier 8 in the Manila North Harbor. PASSI has been rendering arrastre and stevedoring services at the port area since 1974
and employs stevedores who assist in the loading and unloading of cargoes to and from the vessels. Petitioner Eliodoro C. Cruz is its Vice-President
and General Manager. Respondent Jeff B. Boclot was hired by PASSI to perform the functions of a stevedore starting 20 September 1999.
On 15 April 2000, the Philippine Ports Authority (PPA) seized the facilities and took over the operations of PASSI through its Special Takeover Unit,
absorbing PASSI workers as well as their relievers. By virtue of a Decision dated 9 January 2001 of the Court of Appeals, petitioners were able to regain
control of their arrastre and stevedoring operations at Pier 8 on 12 March 2001.
On 9 May 2003, respondent filed a Complaint with the Labor Arbiter of the NLRC, claiming regularization; payment of service incentive leave and 13th
month pays; moral, exemplary and actual damages; and attorney's fees. Respondent alleged that he was hired by PASSI in October 1999 and was
issued company ID No. 304, 8 a PPA Pass and SSS documents. In fact, respondent contended that he became a regular employee by April 2000, since
it was his sixth continuous month in service in PASSI's regular course of business. He argued on the basis of Articles 280 9 and 281 10 of the Labor
Code. He maintains that under paragraph 2 of Article 280, he should be deemed a regular employee having rendered at least one year of service with
the company. In opposition thereto, petitioners alleged that respondent was hired as a mere "reliever" stevedore and could thus not become a regular
employee
Held:
Under the 1987 Philippine Constitution, the State affords full protection to labor, local and overseas, organized and unorganized; and the promotion of
full employment and equality of employment opportunities for all. The State affirms labor as a primary social economic force and guarantees that it shall
protect the rights of workers and promote their welfare.
The Labor Code, which implements the foregoing Constitutional mandate, draws a fine line between regular and casual employees to protect the
interests of labor. 19 "Its language evidently manifests the intent to safeguard the tenurial interest of the worker who may be denied the rights and
benefits due a regular employee by virtue of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on
a casual status for as long as convenient." Thus, the standards for determining whether an employee is a regular employee or a casual or project
employee have been delineated in Article 280 of the Labor Code.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such actually exist.
Under the foregoing provision, a regular employee is (1) one who is either engaged to perform activities that are necessary or desirable in the usual
trade or business of the employer except for project 21 or seasonal employees; or (2) a casual employee who has rendered at least one year of service,
whether continuous or broken, with respect to the activity in which he is employed. 22 Additionally, Article 281 of the Labor Code further considers a
regular employee as one who is allowed to work after a probationary period. Based on the aforementioned, although performing activities that are
necessary or desirable in the usual trade or business of the employer, an employee such as a project or seasonal employee is not necessarily a regular
employee. The situation of respondent is similar to that of a project or seasonal employee, albeit on a daily basis.
Under the second paragraph of the same provision, all other employees who do not fall under the definition of the preceding paragraph are casual
employees. However, the second paragraph also provides that it deems as regular employees those casual employees who have rendered at least one
year of service regardless of the fact that such service may be continuous or broken.
The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of
the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such
activity exists. (Emphasis supplied.)

36

PASSI is engaged in providing stevedoring and arrastre services in the port area in Manila. Stevedoring, dock and arrastre operations include, but are
not limited to, the opening and closing of a vessel's hatches; discharging of cargoes from ship to truck or dock, lighters and barges, and vice-versa;
movement of cargoes inside vessels, warehouses, terminals and docks; and other related work. In line with this, petitioners hire stevedores who assist
in the loading and unloading of cargoes to and from the vessels.
Based on the circumstances of the instant case, this Court agrees. It takes judicial notice 24 that it is an industry practice in port services to hire
"reliever" stevedores in order to ensure smooth-flowing 24-hour stevedoring and arrastre operations in the port area. No doubt, serving as a stevedore,
respondent performs tasks necessary or desirable to the usual business of petitioners. However, it should be deemed part of the nature of his work that
he can only work as a stevedore in the absence of the employee regularly employed for the very same function. Bearing in mind that respondent
performed services from September 1999 until June 2003 for a period of only 228.5 days in 36 months, or roughly an average of 6.34 days a month;
while a regular stevedore working for petitioners, on the other hand, renders service for an average of 16 days a month, demonstrates that respondent's
employment is subject to the availability of work, depending on the absences of the regular stevedores. Moreover, respondent does not contest that he
was well aware that he would only be given work when there are absent or unavailable employees. Respondent also does not allege, nor is there any
showing, that he was disallowed or prevented from offering his services to other cargo handlers in the other piers at the North Harbor other than
petitioners. As aforestated, the situation of respondent is akin to that of a seasonal or project or term employee, albeit on a daily basis
The second paragraph thereof stipulates in unequivocal terms that all other employees who do not fall under the definitions in the first paragraph of
regular, project and seasonal employees, are deemed casual employees. 25 Not qualifying under any of the kinds of employees covered by the first
paragraph of Article 280 of the Labor Code, then respondent is a casual employee under the second paragraph of the same provision.
The same provision, however, provides that a casual employee can be considered as regular employee if said casual employee has rendered at least
one year of service regardless of the fact that such service may be continuous or broken. Section 3, Rule V, Book II of the Implementing Rules and
Regulations of the Labor Code clearly defines the term "at least one year of service" to mean service within 12 months, whether continuous or broken,
reckoned from the date the employee started working, including authorized absences and paid regular holidays, unless the working days in the
establishment as a matter of practice or policy, or that provided in the employment contract, is less than 12 months, in which case said period shall be
considered one year. 26 If the employee has been performing the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that
activity to the business of the employer. 27 Applying the foregoing, respondent, who has performed actual stevedoring services for petitioners only for
an accumulated period of 228.5 days does not fall under the classification of a casual turned regular employee after rendering at least one year of
service, whether continuous or intermittent.
Where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by an employee, such
imposition should be struck down or disregarded as contrary to public policy and morals. 30 However, we take this occasion to emphasize that the law,
while protecting the rights of the employees, authorizes neither the oppression nor the destruction of the employer. When the law tilts the scale of
justice in favor of labor, the scale should never be so tilted if the result would be an injustice to the employer. Thus, this Court cannot be compelled to
declare respondent as a regular employee when by the nature of respondent's work as a reliever stevedore and his accumulated length of service of
only eight months do not qualify him to be declared as such under the provisions of the Labor Code alone.
In light of the foregoing, petitioners must accord respondent the status of a regular employee.
Pacquing vs. Coca-Cola Bottlers Phils., Inc.;
G.R. No. 157966, January 31, 2008
citing Magsalin vs. National Organization of Workingmen, G.R. No. 148492, May 9, 2003
Facts:
Eddie Pacquing, Roderick Centeno, Juanito M. Guerra, Claro Dupilad, Jr., Louie Centeno, David Reblora, Raymundo Andrade (petitioners) were sales
route helpers or cargadores-pahinantes of Coca-Cola Bottlers Philippines, Inc.
Petitioners were part of a complement of three personnel comprised of a driver, a salesman and a regular route helper, for every delivery truck. They
worked exclusively at respondent's plants, sales offices, and company premises. On October 22, 1996, petitioners filed a Complaint against respondent
for unfair labor practice and illegal dismissal with claims for regularization, recovery of benefits under the Collective Bargaining Agreement (CBA), moral
and exemplary damages, and attorney's fees. In their Position Paper, petitioners alleged that they should be declared regular employees of respondent
since the nature of their work as cargadores-pahinantes was necessary or desirable to respondent's usual business and was directly related to
respondent's business and trade. In its Position Paper, respondent denied liability to petitioners and countered that petitioners were temporary workers
who were engaged for a five-month period to act as substitutes for an absent regular employee.
Held:
WON the respondent's sales route helpers or cargadores or pahinantes are regular workers of respondent has already been resolved in Magsalin v.
National Organization of Working Men.
The basic law on the case is Article 280 of the Labor Code.
In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by the law itself, is

37

whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the
nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. It is
distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade. But,
although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been performing the job for at least one
year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as being
sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The employment of such person is also then
deemed to be regular with respect to such activity and while such activity exists.
The argument of petitioner that its usual business or trade is softdrink manufacturing and that the work assigned to respondent workers as sales route
helpers so involves merely post production activities, one which is not indispensable in the manufacture of its products, scarcely can be
persuasive. If, as so argued by petitioner company, only those whose work are directly involved in the production of softdrinks may be held performing
functions necessary and desirable in its usual business or trade, there would have then been no need for it to even maintain regular truck sales route
helpers. The nature of the work performed must be viewed from a perspective of the business or trade in its entirety and not on a confined scope.
The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or desirability of their services in
the regular conduct of the business or trade of petitioner company. The Court of Appeals has found each of respondents to have worked for at least
one year with petitioner company. While this Court, in Brent School, Inc. vs. Zamora,has upheld the legality of a fixed-term employment, it has done
so, however, with a stern admonition that where from the circumstances it is apparent that the period has been imposed to preclude the acquisition of
tenurial security by the employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy. The
pernicious practice of having employees, workers and laborers, engaged for a fixed period of few months, short of the normal six-month probationary
period of employment, and, thereafter, to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be employed on such basis and to forego the protection given to them on their
security of tenure, demonstrate nothing more than the serious problem of impoverishment of so many of our people and the resulting unevenness
between labor and capital. A contract of employment is impressed with public interest. The provisions of applicable statutes are deemed written into
the contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply
contracting with each other.
Agusan Del Norte Electronic vs. Cagampang
G.R. No. 167627, October 10, 2008
Facts:
Respondents Joel Cagampang and Glenn Garzon started working as linemen for petitioner Agusan del Norte Electric Cooperative, Inc. (ANECO) on
October 1, 1990, under an employment contract which was for a period not exceeding three months.
When the contract expired, the two were laid-off for one to five days and then ordered to report back to work but on the basis of job orders. After several
renewals of their job contracts in the form of job orders for similar employment periods of about three months each, the said contracts eventually
expired on April 31, 1998 and July 30, 1999. Respondents' contracts were no longer renewed, resulting in their loss of employment.
Thus, on January 11, 2001, respondents filed an illegal dismissal case against petitioners
Issue: WON the respondents were illegally dismissed.
Held:
After considering the facts and the submissions of the parties, we are in agreement that respondents were illegally dismissed, and that the petition by
the employer lacks merit.
There is no dispute that the respondents' work as linemen was necessary or desirable in the usual business of ANECO. Additionally, the respondents
have been performing the job for at least one year. The law deems the repeated and continuing need for its performance as sufficient evidence of the
necessity, if not indispensability, of that activity to the business.
The test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. Also, if the employee has been performing the job for at least one year, even if the performance
is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if
not indispensability of that activity to the business. Thus, we held that where the employment of project employees is extended long after the supposed
project has been finished, the employees are removed from the scope of project employees and are considered regular employees.
While length of time may not be the controlling test for project employment, it is vital in determining if the employee was hired for a specific undertaking
or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, private respondent had been a
project employee several times over. His employment ceased to be coterminous with specific projects when he was repeatedly re-hired due to the
demands of petitioner's business. Where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial
security by the employee, they should be struck down as contrary to public policy, morals, good customs or public order.
Respondents in the present case being regular employees, ANECO as the employer had the burden of proof to show that the respondents' termination
was for a just cause. Unfortunately, however, what petitioners did was merely to refuse, without justifiable reason, to renew respondents' work contracts
for the performance of what would otherwise be regular jobs in relation to the trade or business of the former. 13 Such conduct dismally falls short of the

38

requirements of our labor laws regarding dismissals. No twin notices of termination were issued to the employees, hence the employer did not observe
due process in dismissing them from their employment. Their dismissals were patently illegal.
In termination cases, the burden of proof rests upon the employer to show that the dismissal is for just and valid cause; failure to do so would
necessarily mean that the dismissal was illegal. The employer's case succeeds or fails on the strength of its evidence and not on the weakness of the
employee's defense. If doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of
the latter. Moreover, the quantum of proof required in determining the legality of an employee's dismissal is only substantial evidence. Substantial
evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if
other minds, equally reasonable, might conceivably opine otherwise.
William Uy Construction et. al vs. Trinidad
GR No. 183250, March 10, 2010
Facts:
Jorge R. Trinidad filed a complaint for illegal dismissal and unpaid benefits against petitioner William Uy Construction Corporation. Trinidad claimed
that he had been working with the latter company for 16 years since 1988 as driver of its service vehicle, dump truck, and transit mixer. He had signed
several employment contracts with the company that identified him as a project employee although he had always been assigned to work on one
project after another with some intervals. Respondent Trinidad further alleged that petitioner company terminated him from work after it shut down
operations because of lack of projects. He learned later, however, that although it opened up a project in Batangas, it did not hire him back for that
project.
Petitioner company countered that it was in the construction business. By the nature of such business, it had to hire and engage the services of project
construction workers, including respondent Trinidad, whose employments had to be co-terminous with the completion of specific company projects. For
this reason, every time the company employed Trinidad, he had to execute an employment contract with it, called Appointment as Project Worker.
Petitioner company stressed that employment intervals or gaps were inherent in the construction business. In compliance with labor rules, the company
submitted an establishment termination report to the Department of Labor and Employment (DOLE).
The Labor Arbiter rendered a decision, dismissing respondent Trinidads complaint for unjust dismissal. The Labor Arbiter, however, ordered petitioner
company to pay Trinidad P1,500.00 in unpaid service incentive leave, taking into consideration the three-year prescriptive period for money claims. The
Labor Arbiter held that, since Trinidad was a project employee and since his company submitted the appropriate establishment termination report to
DOLE, his loss of work cannot be regarded as unjust dismissal.
Issue: Whether or not petitioner companys repeated rehiring of respondent Trinidad over several years as project employee for its various projects
automatically entitled him to the status of a regular employee.
Held:
The test for distinguishing a project employee from a regular employee is whether or not he has been assigned to carry out a specific project or
undertaking, with the duration and scope of his engagement specified at the time his service is contracted.
Here, it is not disputed that petitioner company contracted respondent Trinidads service by specific projects with the duration of his work clearly set out
in his employment contracts. He remained a project employee regardless of the number of years and the various projects he worked for the company.
Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one,
entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because
construction firms cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course.
Construction companies have no control over the decisions and resources of project proponents or owners. There is no construction company that
does not wish it has such control but the reality, understood by construction workers, is that work depended on decisions and developments over which
construction companies have no say. Respondent Trinidads series of employments with petitioner company were co-terminous with its projects. When
its Boni Serrano-Katipunan Interchange Project was finished, Trinidads employment ended with it. He was not dismissed. His employment contract
simply ended with the project for which he had signed up.
His employment history belies the claim that he continuously worked for the company. Intervals or gaps separated one contract from another.
Petitioner company needed only to show the last status of Trinidads employment, namely, that of a project employee under a contract that had ended
and the companys compliance with the reporting requirement for the termination of that employment. Indeed, both the Labor Arbiter and the NLRC
were satisfied that the fact of petitioner companys compliance with DOLE Order 19 had been proved in this case.
Dacuital et al, Vs. L.M. Camus Engineering Corp.
G.R. No. 176748, September 1, 2010
Facts:
Petitioners (LMCEC Employees) filed a complaint for illegal dismissal and non-payment of monetary benefits against respondent LM Camus
Engineering Corp. before the National Labor Relations Commission (NLRC). The employees alleged that they were illegally dismissed from

39

employment and that their employer failed to pay them their holiday pay, premium pay for holiday, rest day, service incentive leave pay, and 13th month
pay during the existence and duration of their employment. They also averred that they were not provided with sick and vacation leaves.
Respondents denied that petitioners were illegally dismissed from employment. They claimed that petitioners were project employees and, upon the
completion of each project, they were served notices of project completion. They clarified that the termination of petitioners employment was due to the
completion of the projects for which they were hired. Petitioners, however, countered that they were regular employees as they had been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of LMCEC. They denied that they were project or contractual
employees because their employment was continuous and uninterrupted for more than one (1) year. Finally, they maintained that they were part of a
work pool from which LMCEC drew its workers for its various projects.
The Labor Arbiter rendered a decision declaring the dismissal of the complainant-employees as ILLEGAL and the complainants are entitled to
reinstatement without back wages. The NLRC modified the decision of the Labor Arbiter and ordered the reinstatement of the complainants with limited
backwages. The respondents appealed the decision to the Court of Appeals and the appellate court held that the complainants are PROJECT
EMPLOYEES and hence, there was no illegal dismissal.
Issue: WON petitioners are PROJECT EMPLOYEES and that their dismissal from employment was legal.
Held:
No.
Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee" in this wise:
Article 280. Regular and casual employment.The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season...xxx
The principal test used to determine whether employees are project employees is whether or not the employees were assigned to carry out a specific
project or undertaking, the duration or scope of which was specified at the time the employees were engaged for that project.
Even though the absence of a written contract does not by itself grant regular status to petitioners, such a contract is evidence that petitioners were
informed of the duration and scope of their work and their status as project employees. In this case, where no other evidence was offered, the
absence of the employment contracts raises a serious question of whether the employees were properly informed at the onset of their employment of
their status as project employees.
While it is true that respondents presented the employment contract of Dacuital, the contract does not show that he was informed of the nature, as well
as the duration of his employment. In fact, the duration of the project for which he was allegedly hired was not specified in the contract.
Hence, the Dismissal of the petitioners are declared ILLEGAL.
Millennium Erectors Corporation vs. Magallanes
G.R. No. G.R. No. 184362, November 15, 2010
Facts:
Respondent Virgilio Magallanes started working in 1988 as a utility man for Laurencito Tiu (Tiu), Chief Executive Officer of Millennium Erectors
Corporation (petitioner), Tiu's family, and Kenneth Construction Corporation. He was assigned to different construction projects undertaken by petitioner
in Metro Manila, the last of which was for a building in Libis, Quezon City. In July of 2004 he was told not to report for work anymore allegedly due to old
age, prompting him to file on August 6, 2004 an illegal dismissal complaint 1 before the Labor Arbiter.
Issue: Whether or not Magallanes dismissal violates security of tenure.
Arguments:
MEC
1.)
Respondent was a project employee whom it hired for a building project in Libis on January 30 and which was in near completion on
August 3, 2004, when services were terminated. Said all DOLE requirements were complied.
2.)
Petitioner moved for reconsideration of the NLRC decision, contending that respondent's motion for reconsideration which it treated as an
appeal was not perfected, it having been belatedly filed; that there was no statement of the date of receipt of the appealed decision; and
that it lacked verification and copies thereof were not furnished the adverse parties
Held:
1.
A project employee is one whose "employment has been fixed for a specific project or undertaking, the completion or termination of which
has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season."

40

As the Court has consistently held, the service of project employees are coterminus [sic] with the project and may be terminated upon the end or
completion of that project or project phase for which they were hired. Regular employees, in contrast, enjoy security of tenure and are entitled to hold on
to their work or position until their services are terminated by any of the modes recognized under the Labor Code.
Assuming arguendo that petitioner hired respondent initially on a per project basis, his continued rehiring, as shown by the sample payrolls converted
his status to that of a regular employee
2.
In labor cases, rules of procedure should not be applied in a very rigid and technical sense . Technicalities should not be permitted to stand
in the way of equitably and completely resolving the rights and obligations of the parties. Where the ends of substantial justice shall be better served,
the application of technical rules of procedure may be relaxed.
As to the defective verification in the appeal memorandum before the NLRC, the same liberality applies. After all, the requirement regarding verification
of a pleading is formal, not jurisdictional.
Exodus International Construction Corp. vs. Biscocho et. Al
G.R. No. 166109, February 23, 2011
Facts:
Exodus International Construction Corporation obtained a contract from Dutch Boy Philippines, Inc. for the painting of the Imperial Sky Garden located
in Binondo, Manila. Dutch Boy awarded another contract to Exodus for the painting of Pacific Plaza, Towers in Fort Bonifacio, Taguig City. In the
furtherance of its business, Exodus hired respondents as painters on different dates.
On November 27, 2000, respondents filed a complaint for illegal dismissal and non-payment of holiday pay, service incentive leave pay, 13th month pay
and night-shift differential pay.
Petitioners denied respondents' allegations. As regards Gregorio, petitioners averred that he absented himself from work and applied as a painter with
SAEI-EEI which is the general building contractor of Pacific Plaza Towers. Since then, he never reported back to work.
Guillermo absented himself from work without leave. When he reported for work the following day, he was reprimanded so he worked only half-day and
thereafter was unheard of until the filing of the instant complaint.
Fernando, Ferdinand, and Miguel were caught eating during working hours for which they were reprimanded by their foreman. Since then they no
longer reported for work.
The Labor Arbiter exonerated Exodus from the charge of illegal dismissal as respondents chose not to report for work. Since there is neither illegal
dismissal nor abandonment of job, respondents were ordered be reinstated but without any backwages.
Issues: WON respondents were illegally dismissed for abandonment of work
WON they are regular employees, thus entitled to reinstatement
Held:
(1)
No. There was no dismissal, much less illegal, and there was also no abandonment of job to speak of.
As found by the Labor Arbiter, there was no evidence that respondents were dismissed nor were they prevented from returning to their work. It was only
respondents' unsubstantiated conclusion that they were dismissed. As a matter of fact, respondents could not name the particular person who effected
their dismissal and under what particular circumstances. Absent any showing of an overt or positive act proving that petitioners had dismissed
respondents, the latters' claim of illegal dismissal cannot be sustained. Indeed, a cursory examination of the records reveal no illegal dismissal to speak
of.
The Labor Arbiter is also correct in ruling that there was no abandonment on the part of respondents that would justify their dismissal from their
employment.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a settled rule that mere absence or failure to
report for work is not enough to amount to abandonment of work. To constitute abandonment of work, two elements must concur:
1. the employee must have failed to report for work or must have been absent without valid or justifiable reason and
2. there must have been a clear intention on the part of the employee to sever the employer-employee relationship manifested by some overt
act.
It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any
intention of returning." It is therefore incumbent upon petitioners to ascertain the respondents' interest or non-interest in the continuance of their
employment. However, petitioners failed to do so.
Petitioners posit that the reinstatement of respondents to their former positions, which were no longer existing, is impossible, highly unfair and unjust.
The project was already completed by petitioners, having completed their tasks, their positions automatically ceased to exist. Consequently, there were
no more positions where they can be reinstated as painters.
(2)

Respondents are regular employees of petitioners.

41

It is clear from the records that when one project is completed, respondents were automatically transferred to the next project awarded to petitioners.
There was no employment agreement given to respondents which clearly spelled out the duration of their employment, the specific work to be
performed and that such is made clear to them at the time of hiring. It is now too late for petitioners to claim that respondents are project employees
whose employment is coterminous with each project or phase of the project to which they are assigned.
Nonetheless, assuming that respondents were initially hired as project employees, a project employee may acquire the status of a regular employee.
The evidence on record shows that respondents were employed and assigned continuously to the various projects of petitioners. As painters, they
performed activities which were necessary and desirable in the usual business of petitioners, who are engaged in subcontracting jobs for painting of
residential units, condominium and commercial buildings. As regular employees, respondents are entitled to be reinstated without loss of seniority
rights.
Respondents are also entitled to their money claims such as the payment of holiday pay, service incentive leave pay, and 13th month pay. However,
they cannot be entitled to backwages. In cases where there is no evidence of dismissal, the remedy is reinstatement but without backwages.
Leyte Geothermal Power Progressive Employees Union vs. Phil National Oil Co.
G.R. No. 176351, March 30, 2011
Facts:
Respondent Philippine National Oil Corporation-Energy Development Corporation [PNOC-EDC] is a government-owned and controlled corporation
engaged in exploration, development, utilization, generation and distribution of energy resources like geothermal energy. Petitioner is a legitimate labor
organization, duly registered with the Department of Labor and Employment (DOLE) Regional Office No. VIII, Tacloban City. Among [respondent's]
geothermal projects is the Leyte Geothermal Power Project located at the Greater Tongonan Geothermal Reservation in Leyte. The said Project is
composed of the Tongonan 1 Geothermal Project (T1GP) and the Leyte Geothermal Production Field Project (LGPF) which provide the power and
electricity needed not only in the provinces and cities of Central and Eastern Visayas (Region VII and VIII), but also in the island of Luzon as well. Thus,
the [respondent] hired and employed hundreds of employees on a contractual basis, whereby, their employment was only good up to the completion or
termination of the project and would automatically expire upon the completion of such project. Majority of the employees hired by [respondent] in its
Leyte Geothermal Power Projects had become members of petitioner. In view of that circumstance, the petitioner demands from the [respondent] for
recognition of it as the collective bargaining agent of said employees and for a CBA negotiation with it. However, the [respondent] did not heed such
demands of the petitioner. Sometime in 1998 when the project was about to be completed, the [respondent] proceeded to serve Notices of Termination
of Employment upon the employees who are members of the petitioner. On December 28, 1998, the petitioner filed a Notice of Strike with DOLE
against the [respondent] on the ground of purported commission by the latter of unfair labor practice for "refusal to bargain collectively, union busting
and mass termination." On the same day, the petitioner declared a strike and staged such strike. To avert any work stoppage, then Secretary of Labor
Bienvenido E. Laguesma intervened and issued the Order, dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration.
Accordingly, all the striking workers were directed to return to work within twelve (12) hours from receipt of the Order and for the [respondent] to accept
them back under the same terms and conditions of employment prior to the strike. Further, the parties were directed to cease and desist from
committing any act that would exacerbate the situation. However, despite earnest efforts on the part of the Secretary of Labor and Employment to settle
the dispute amicably, the petitioner remained adamant and unreasonable in its position, causing the failure of the negotiation towards a peaceful
compromise. In effect, the petitioner did not abide by [the] assumption order issued by the Secretary of Labor. Consequently, on January 15, 1999, the
[respondent] filed a Complaint for Strike Illegality, Declaration of Loss of Employment and Damages at the NLRC-RAB VIII in Tacloban City and at the
same time, filed a Petition for Cancellation of Petitioner's Certificate of Registration with DOLE, Regional Office No. VIII. The two cases were later on
consolidated pursuant to the New NLRC Rules of Procedure. The consolidated case was docketed as NLRC Certified Case No. V-02-99 (NCMB-RAB
VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99). The said certified case was indorsed to the NLRC 4 th Division in Cebu City on June 21, 1999 for
the proper disposition thereof.
Issues:
1.
2.

Whether the officers and members of petitioner Union are project employees of respondent; and
Whether the officers and members of petitioner Union engaged in an illegal strike.

Held:
On the first issue, petitioner Union contends that its officers and members performed activities that were usually necessary and desirable to
respondent's usual business. In fact, petitioner Union reiterates that its officers and members were assigned to the Construction Department of
respondent as carpenters and masons, and to other jobs pursuant to civil works, which are usually necessary and desirable to the department.
Petitioner Union likewise points out that there was no interval in the employment contract of its officers and members, who were all employees of
respondent, which lack of interval, for petitioner Union, "manifests that the `undertaking' is usually necessary and desirable to the usual trade or
business of the employer."
The distinction between a regular and a project employment is provided in Article 280, paragraph 1, of the Labor Code:
ART. 280. Regular and Casual Employment.-- The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the
season.

42

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such actually exists.
The foregoing contemplates four (4) kinds of employees: (a) regular employees or those who have been "engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer"; (b) project employees or those "whose employment has been fixed for a
specific project or undertaking[,] the completion or termination of which has been determined at the time of the engagement of the employee";
(c) seasonal employees or those who work or perform services which are seasonal in nature, and the employment is for the duration of the season; and
(d) casual employees or those who are not regular, project, or seasonal employees. Jurisprudence has added a fifth kind-- a fixed-term employee.
Article 280 of the Labor Code, as worded, establishes that the nature of the employment is determined by law, regardless of any contract expressing
otherwise. The supremacy of the law over the nomenclature of the contract and the stipulations contained therein is to bring to life the policy enshrined
in the Constitution to "afford full protection to labor." Thus, labor contracts are placed on a higher plane than ordinary contracts; these are imbued with
public interest and therefore subject to the police power of the State.
However, notwithstanding the foregoing iterations, project employment contracts which fix the employment for a specific project or undertaking remain
valid under the law: x x x By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the project.
He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that project employees engaged for manual
services or those for special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid reason for
bestowing special treatment on them or for invalidating a contract of employment. Project employment contracts are not lopsided agreements in favor of
only one party thereto. The employer's interest is equally important as that of the employee[s'] for theirs is the interest that propels economic activity.
While it may be true that it is the employer who drafts project employment contracts with its business interest as overriding consideration, such
contracts do not, of necessity, prejudice the employee. Neither is the employee left helpless by a prejudicial employment contract. After all, under the
law, the interest of the worker is paramount.
In the case at bar, the records reveal that the officers and the members of petitioner Union signed employment contracts indicating the specific project
or phase of work for which they were hired, with a fixed period of employment. The NLRC correctly disposed of this issue: A deeper examination also
shows that [the individual members of petitioner Union] indeed signed and accepted the [employment contracts] freely and voluntarily. No evidence was
presented by [petitioner] Union to prove improper pressure or undue influence when they entered, perfected and consummated [the employment]
contracts. In fact, it was clearly established in the course of the trial of this case, as explained by no less than the President of [petitioner] Union, that
the contracts of employment were read, comprehended, and voluntarily accepted by them. x x x.
As clearly shown by [petitioner] Union's own admission, both parties had executed the contracts freely and voluntarily without force, duress or acts
tending to vitiate the worker[s'] consent. Thus, we see no reason not to honor and give effect to the terms and conditions stipulated therein. x x x.
Thus, we are hard pressed to find cause to disturb the findings of the NLRC which are supported by substantial evidence.
It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial bodies, which are deemed to have acquired expertise in matters
within their respective jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by substantial
evidence. Rule 133, Section 5 defines substantial evidence as "that amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion."
Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly adhered to in labor cases. We may take cognizance of and
resolve factual issues, only when the findings of fact and conclusions of law of the Labor Arbiter or the NLRC are inconsistent with those of the CA.
In the case at bar, both the NLRC and the CA were one in the conclusion that the officers and the members of petitioner Union were project employees.
Nonetheless, petitioner Union insists that they were regular employees since they performed work which was usually necessary or desirable to the
usual business or trade of the Construction Department of respondent.
Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual employees was designed to put
an end to casual employment in regular jobs, which has been abused by many employers to prevent so - called casuals from enjoying the benefits of
regular employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of Art. 280 was not
designed to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial.
What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us believe, to prevent small-scale
businesses from engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to the employees who are deemed "casuals" but
not to the "project" employees nor the regular employees treated in paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion
of the project or the [end of the] season. The termination of their employment cannot and should not constitute an illegal dismissal.
St. Paul College Quezon City vs. Spouses Ancheta
G.R. No. 169905, September 7, 2011
Facts:
Remigio Michael Ancheta was a full-time probationary teacher in the School Year 1996-1997 which was renewed in the following SY 1997-1998. His
wife, Cynthia was hired as a part time teacher of the Mass Communication Department in the second semester of SY 1996-1997 and her appointment
was renewed for SY 1997-1998.

43

On February 13, 1998, respondents signified their intentions to renew their contracts for SY 1998-1999. They were later sent two letters informing them
that the school is extending to them new contracts for SY 1998-1999.
Thereafter, a letter was written to Remigio Michael, enumerating the departmental and instructional policies that spouses failed to comply with, such as
the late submission of final grades, failure to submit final test questions to the Program Coordinator, the giving of tests in the essay form instead of the
multiple choice format as mandated by the school, failure to report to work on time; the high number of students with failing grades in the classes that
they handled, and not being open to suggestions to improve themselves as teachers, among others.
Thereafter, Sr. Bernadette (Department Coordinator) endorsed the immediate termination of the teaching services of the spouses. Respondent spouses
were given an opportunity to comment on the letter-recommendation. Subsequently however, they received their respective letters of termination. Thus,
spouses filed a Complaint for illegal dismissal.
St. Paul contends that it did not extend the contracts of respondent spouses. Although, it has sent letters to the spouses informing them that the school
is extending to them new contracts for the coming school year, the letters do not constitute as actual employment contracts but merely offers to teach
on the said school year.
Issues: WON respondents were considered regular employees
WON they were illegally dismissed
Held:
(1)
Employment on probationary status of teaching personnel is that they are not governed purely by the Labor Code. The Labor Code is
supplemented with respect to the period of probation by special rules found in the Manual of Regulations for Private Schools. On the matter of
probationary period, Section 92 of these regulations provides:
Section 92.Probationary Period. Subject in all instances to compliance with the Department and school requirements, the probationary period for
academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those
in the tertiary level where collegiate courses are offered on a trimester basis.
A probationary employee or probationer is one who is on trial for an employer, during which the latter determines whether or not he is qualified for
permanent employment. The probationary employment is intended to afford the employer an opportunity to observe the fitness of a probationary
employee while at work, and to ascertain whether he will become an efficient and productive employee. While the employer observes the fitness,
propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other hand, seeks to
prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment. Thus, the word probationary, as
used to describe the period of employment, implies the purpose of the term or period, not its length.
The common practice is for the employer and the teacher to enter into a contract, effective for one school year. At the end of the school year, the
employer has the option not to renew the contract, particularly considering the teacher's performance. If the contract is not renewed, the employment
relationship terminates. If the contract is renewed, usually for another school year, the probationary employment continues. Again, at the end of that
period, the parties may opt to renew or not to renew the contract. If renewed, this second renewal of the contract for another school year would then be
the last year since it would be the third school year of probationary employment. At the end of this third year, the employer may now decide
whether to extend a permanent appointment to the employee, primarily on the basis of the employee having met the reasonable standards of
competence and efficiency set by the employer. For the entire duration of this three-year period, the teacher remains under probation. Upon the
expiration of his contract of employment, being simply on probation, he cannot automatically claim security of tenure and compel the employer to renew
his employment contract.
(2)
No.
Section 91 of the Manual of Regulations for Private Schools, states that:
Section 91.Employment Contract. Every contract of employment shall specify the designation, qualification, salary rate, the period and nature of
service and its date of effectivity, and such other terms and condition of employment as may be consistent with laws and rules, regulations and
standards of the school. A copy of the contract shall be furnished the personnel concerned.
It is important that the contract of probationary employment specify the period or term of its effectivity. The failure to stipulate its precise duration could
lead to the inference that the contract is binding for the full three-year probationary period. Therefore, the letters sent by petitioner Sr. Bernadette, which
were void of any specifics cannot be considered as contracts. The closest they can resemble to are that of informal correspondence among the said
individuals. As such, petitioner school has the right not to renew the contracts of the respondents, the old ones having been expired at the end of their
terms.
Assuming, arguendo, that the employment contracts between the school and the spouses were renewed, this Court finds that there was a valid and
just cause for their dismissal. The Labor Code commands that before an employer may legally dismiss an employee from the service, the
requirement of substantial and procedural due process must be complied with. Under the requirement of substantial due process, the grounds for
termination of employment must be based on just or authorized causes.

44

Of the charges against Remigio Michael, his spouse also shared the same defenses and admissions as to the charges against her.
The plain admissions of the charges against them were the considerations taken into account by the petitioner school in their decision not to renew the
respondent spouses' employment contracts. This is a right of the school that is mandated by law and jurisprudence. It is the prerogative of the school to
set high standards of efficiency for its teachers since quality education is a mandate of the Constitution. As long as the standards fixed are reasonable
and not arbitrary, courts are not at liberty to set them aside. Schools cannot be required to adopt standards which barely satisfy criteria set for
government recognition. The same academic freedom grants the school the autonomy to decide for itself the terms and conditions for hiring its teacher,
subject of course to the overarching limitations under the Labor Code. The authority to hire is likewise covered and protected by its management
prerogative the right of an employer to regulate all aspects of employment, such as hiring, the freedom to prescribe work assignments, working
methods, process to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of
workers.
Lanvyl Fishing Enterprises, Inc. vs. Ariola et. al.
G.R. No. 181974, February 1, 2012
Facts:
Petitioner Lynvil Fishing Enterprises, Inc. (Lynvil) is engaged in deep-sea fishing. Respondents services were engaged in various capacities: Andres G.
Ariola, captain; Jessie D. Alcovendas, chief mate; Jimmy B. Calinao, chief engineer; Ismael G. Nubla, cook; Elorde Baez, oiler; and Leopoldo G.
Sebullen, bodegero.
On Aug. 1, 1998, Lynvil received a report from Ramonito Clarido, one of its employees, that on July 31, 1998, he witnessed that while on board the
company vessel Analyn VIII, respondents conspired with one another and stole eight tubs of pampano and tangigue fish and delivered them to
another vessel.
Petitioner filed a criminal complaint against respondents before the office of the City Prosecutor of Malabon City which found probable cause for
indictment of respondents for the crime of qualified theft. Relying on the finding and Nasipit Lumber Company v. NLRC, 257 Phil. 937 (1989), Lynvil
asserted there was sufficient basis for valid termination of employment of respondents based on serious misconduct and/or loss of trust and confidence.
Issues: Whether a finding of the city prosecutor of probable cause to indict employees of qualified theft is sufficient basis for valid termination for
serious misconduct and/or loss of trust or confidence
Whether the employees were validly terminated
Held:
On the first issue, the Supreme Court ruled in the negative. We ruled that proof beyond reasonable doubt of an employees misconduct is not required
when loss of confidence is the ground for dismissal. It is sufficient if the employer has some basis to lose confidence or that the employer has
reasonable ground to believe or to entertain the moral conviction that the employee concerned is responsible for the misconduct and that the nature of
his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position.
Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft the Labor Arbiter must follow the finding as a valid reason for
the termination of respondents employment. The proof required for purposes that differ from one and the other are likewise different.
(2)
On the second question, the Court stated that nonetheless, even without reliance on the prosecutors finding, we find that there was valid
cause for respondents dismissal.
Just cause is required for a valid dismissal. The Labor Code provides that an employer may terminate an employment based on fraud or willful breach
of the trust reposed on the employee. Such breach is considered willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must also be based on substantial evidence and not on the
employers whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not
be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just
cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer.
In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of
responsibility, trust and confidence or that the employee concerned is entrusted with confidence with respect to delicate matters, such as the handling
or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is
penalized. Breach of trust is present in this case.
However, Lynvil contends that it cannot be guilty of illegal dismissal because the private respondents were employed under a fixed-term contract which
expired at the end of the voyage. Contrarily, the private respondents (employees) contend that they became regular employees by reason of their
continuous hiring and performance of tasks necessary and desirable in the usual trade and business of Lynvil.
Jurisprudence, laid two conditions for the validity of a fixed-contract agreement between the employer and employee: first, the fixed period of
employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent; or second, it satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised by the former or the latter.

45

In the context of the facts that: (1) the respondents were doing tasks necessarily to Lynvils fishing business with positions ranging from captain of the
vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement continued for more
than ten years, the clear intention is to go around the security of tenure of the respondents as regular employees. And respondents are so by the
express provisions of the second paragraph of Article 280, thus: xxx Provided, That any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
Having found that respondents are regular employees who may be, however, dismissed for cause as we have so found in this case, there is a need to
look into the procedural requirement of due process in Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code. It is required that the
employer furnish the employee with two written notices: (1) a written notice served on the employee specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity within which to explain his side; and (2) a written notice of termination served on the employee
indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. In this case, it is clear that the
employees were not given the final written notices of dismissal.
The Court ruled that since employees were dismissed for just cause, they were not entitle to separation pay and backwages. However, they were to be
granted nominal damages for failure of the employer to comply with statutory due process.
D.M. Consunji, Inc. vs. Jasmin
GR NO 912594, April 18, 2012
Facts:
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired respondent Estelito L. Jamin as a laborer. Sometime in
1975, Jamin became a helper carpenter. Since his initial hiring, Jamins employment contract had been renewed a number of times. On March 20,
1999, his work at DMCI was terminated due to the completion of the SM Manila project. This termination marked the end of his employment with DMCI
as he was not rehired again.
On April 5, 1999, Jamin filed a complaint for illegal dismissal, with several money claims (including attorneys fees), against DMCI and its
President/General Manager, David M. Consunji. Jamin alleged that DMCI terminated his employment without a just and authorized cause at a time
when he was already 55 years old and had no independent source of livelihood. He claimed that he rendered service to DMCI continuously for almost
31 years. In addition to the schedule of projects (where he was assigned) submitted by DMCI to the labor arbiter, he alleged that he worked for three
other DMCI projects: Twin Towers, Ritz Towers, from July 29, 1980 to June 12, 1982; New Istana Project, B.S.B. Brunei, from June 23, 1982 to
February 16, 1984; and New Istana Project, B.S.B. Brunei, from January 24, 1986 to May 25, 1986.
DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from the start of his engagement in 1968 until the completion of its SM
Manila project on March 20, 1999 where Jamin last worked. With the completion of the project, it terminated Jamins employment. It alleged that it
submitted a report to the Department of Labor and Employment (DOLE) everytime it terminated Jamins services.
Issue: Whether there was violation of security of tenure.
Held:
Jamin worked for DMCI for almost 31 years, initially as a laborer and, for the most part, as a carpenter. Through all those years, DMCI treated him as a
project employee, so that he never obtained tenure. On the surface and at first glance, DMCI appears to be correct. Jamin entered into a contract of
employment (actually an appointment paper to which he signified his conformity) with DMCI either as a field worker, a temporary worker, a casual
employee, or a project employee everytime DMCI needed his services and a termination of employment paper was served on him upon completion of
every project or phase of the project where he worked.
The CA pierced the cover of Jamins project employment contract and declared him a regular employee who had been dismissed without cause and
without notice. To reiterate, the CAs findings were based on: (1) Jamins repeated and successive engagements in DMCIs construction projects, and
(2) Jamins performance of activities necessary or desirable in DMCIs usual trade or business.
We agree with the CA. In Liganza v. RBL Shipyard Corporation, the Court held that "[a]ssuming, without granting[,] that [the] petitioner was initially hired
for specific projects or undertakings, the repeated re-hiring and continuing need for his services for over eight (8) years have undeniably made him a
regular employee." We find the Liganza ruling squarely applicable to this case, considering that for almost 31 years, DMCI had repeatedly, continuously
and successively engaged Jamins services since he was hired on December 17, 1968 or for a total of 38 times 35 as shown by the schedule of
projects submitted by DMCI to the labor arbiter and three more projects or engagements added by Jamin, which he claimed DMCI intentionally did not
include in its schedule so as to make it appear that there were wide gaps in his engagements.
We reviewed Jamins employment contracts as the CA did and we noted that while the contracts indeed show that Jamin had been engaged as a
project employee, there was an almost unbroken string of Jamins rehiring from December 17, 1968 up to the termination of his employment on March
20, 1999. While the history of Jamins employment (schedule of projects) relied upon by DMCI shows a gap of almost four years in his employment for
the period between July 28, 1980 (the supposed completion date of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI Dorm IV
project), the gap was caused by the companys omission of the three projects.
For not disclosing that there had been other projects where DMCI engaged his services, Jamin accuses the company of suppressing vital evidence that
supports his contention that he rendered service in the companys construction projects continuously and repeatedly for more than three decades. The

46

non-disclosure might not have constituted suppression of evidence it could just have been overlooked by the company but the oversight is unfair
to Jamin as the non-inclusion of the three projects gives the impression that there were substantial gaps not only of several months but years in his
employment with DMCI.
To reiterate, Jamins employment history with DMCI stands out for his continuous, repeated and successive rehiring in the companys construction
projects. In all the 38 projects where DMCI engaged Jamins services, the tasks he performed as a carpenter were indisputably necessary and
desirable in DMCIs construction business. He might not have been a member of a work pool as DMCI insisted that it does not maintain a work pool, but
his continuous rehiring and the nature of his work unmistakably made him a regular employee. In Maraguinot, Jr. v. NLRC, the Court held that once a
project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature of
tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a
regular employee.
Further, as we stressed in Liganza, "[r]espondent capitalizes on our ruling in D.M. Consunji, Inc. v. NLRC which reiterates the rule that the length of
service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the employee."
"Surely, length of time is not the controlling test for project employment. Nevertheless, it is vital in determining if the employee was hired for a specific
undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, [private] respondent
had been a project employee several times over. His employment ceased to be coterminous with specific projects when he was repeatedly re-hired due
to the demands of petitioners business." Without doubt, Jamins case fits squarely into the employment situation just quoted.
Gapayao vs. Fulo
G.R. No. 193493; June 13, 2013
Facts:
Jaime Fulo (deceased) died of "acute renal failure secondary to 1st degree burn 70% secondary electrocution" 5 while doing repairs at the residence and
business establishment of petitioner.
Thereafter, private respondent filed a claim for social security benefits with the Social Security System (SSS)Sorosogon Branch. 8 However, upon
verification and evaluation, it was discovered that the deceased was not a registered member of the SSS.
respondent filed a Petition before the SSC on 17 February 2003. In her Petition, she sought social security coverage and payment of contributions in
order to avail herself of the benefits accruing from the death of her husband.
On 6 May 2003, petitioner filed an Answer disclaiming any liability on the premise that the deceased was not the formers employee, but was rather
an independent contractor whose tasks were not subject to petitioners control and supervision.
Issue: Won there exists between the deceased Jaime Fulo and petitioner an employer-employee relationship that would merit an award of benefits in
favor of private respondent under social security laws.
Held:
In asserting the existence of an employer-employee relationship, private respondent alleges that her late husband had been in the employ of petitioner
for 14 years, from 1983 to 1997. During that period, he was made to work as a laborer in the agricultural landholdings, a harvester in the abaca
plantation, and a repairman/utility worker in several business establishments owned by petitioner.
Lastly, petitioner alleges that the deceased is a freelance worker. Since he was engaged on a pakyaw basis and worked for a short period of time,
in the nature of a farm worker every season, he was not precluded from working with other persons and in fact worked for them. Under Article 280 of
the Labor Code, seasonal employees are not covered by the definitions of regular and casual employees.
Farm workers may be considered regular seasonal employees.
Jurisprudence has identified the three types of employees mentioned in the provision: (1) regular employees or those who have been engaged to
perform activities that are usually necessary or desirable in the usual business or trade of the employer; (2) project employees or those whose
employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of their
engagement, or those whose work or service is seasonal in nature and is performed for the duration of the season; and (3) casual employees or those
who are neither regular nor project employees.
Farm workers generally fall under the definition of seasonal employees.
We have consistently held that seasonal employees may be considered as regular employees.
Regular seasonal employees are those called to work from time to time.
For regular employees to be considered as such, the primary standard used is the reasonable connection between the particular activity they perform
and the usual trade or business of the employer.
Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists.
A reading of the records reveals that the deceased was indeed a farm worker who was in the regular employ of petitioner. From year to year, starting
January 1983 up until his death, the deceased had been working on petitioners land by harvesting abaca and coconut, processing copra, and clearing

47

weeds. His employment was continuous in the sense that it was done for more than one harvesting season. Moreover, no amount of reasoning could
detract from the fact that these tasks were necessary or desirable in the usual business of petitioner.
Pakyaw workers are considered employees for as long as their employers exercise control over them
Concrete Solutions, Inc. et al. vs. Cabusas
G.R. No. 177812; June 19, 2013
Facts:
Respondent Arthur Cabusas (respondent) was hired by petitioner Primary Structures Corporation (PSC) as transit mixer driver for petitioner Concrete
Solutions Inc. (CSI) Batching Plant Project.
The appointment letter stated:
xxx the status of his employment was that of a project employee and, as such, his employment was co-terminus with the completion of the
project or any phase thereof; that upon completion of the particular project or phase, he was free to seek other employment of his choice;
xxxx
He was accused of theft in the company, investigations were conducted, he sought assistance of counsel.
On June 12, 2001, petitioners, thru Manager Ardiente, sent respondent a termination letter 15 reading as follows:
Starting on May 6, 2001, you were absent from work without filing a Leave of Absence. A Notice of Abandonment was sent to you on May 25, 2001 via
telegram. Likewise, you were required to report or notify the company as soon as possible. However, two weeks already elapsed from the time the
notice was sent to you but you continued defying said request. Due to this, we are constrained to TERMINATE your services effective on the date you
abandoned your work with a strong belief that you are no longer interested to come back to your work anymore.
Issue: WON there was valid termination.
Held:
It is well settled that in termination cases, the burden of proof rests upon the employer to show that the dismissal was for a just and valid cause, and
failure
to
discharge
the
same
would
mean
that
the
dismissal
is
not
justified
and,
therefore,
illegal
To constitute abandonment, two elements must concur, to wit: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a
clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some
overt acts.
Respondent explained that his absence from work was due to the fact that he and his counsel had asked and were waiting for a copy of
result of the investigation on his alleged act of theft or dishonesty conducted on May 4, 2001 but were not given at all. We find his absence
from work not sufficient to establish that he already had intention of abandoning his job. Besides, settled is the rule that mere absence or failure to
report for work is not tantamount to abandonment of work.
Reinstatement
and
backwages.
Petitioners contend that respondent was a project employee and the project to which he was hired was already completed, thus he could not be
reinstated
anymore.
Considering that respondent was dismissed prior to the expiration of the duration of his employment and without a valid or just cause, his termination
was therefore illegal.
However, respondent could no longer be reinstated since the project he was assigned to was already completely finished. However, we find that he is
entitled to the salary corresponding to the unexpired portion of his employment.
D.M. Consunji vs. Bello
G.R. No. 159371; July 19, 2013
Facts:
Bello brought a complaint for illegal dismissal and damages against DMCI and/or Rachel Consunji. He claimed that DMCI had employed him as a
mason without any interruption from February 1, 1990 until October 10, 1997 at an hourly rate of P25.081; that he had been diagnosed to be suffering
from pulmonary tuberculosis, thereby necessitating his leave of absence; that upon his recovery, he had reported back to work, but DMCI had refused
to accept him and had instead handed to him a termination paper that the cause had not been explained to him.
DMCIs
projects
had
not
yet
been
completed.
DMCI contended that Bello had only been a project employee, as borne out by his contract of employment and appointment papersand that
although his last project employment contract had been set to expire on October 7, 1997, he had tendered his voluntary resignation on October 4,
1997 for health reasons that had rendered him incapable of performing his job, per his resignation letter.
Issues:
1.

WHETHER OR NOT PRIVATE RESPONDENT WAS A REGULAR EMPLOYEE; AND

48

2.

WHETHER OR NOT PRIVATE RESPONDENT WAS DISMISSED OR VOLUNTARILY RESIGNED.

Held:
In the context of the law, Bello was a project employee of DMCI at the beginning of their employer-employee relationship. The project employment
contract they then entered into clearly gave notice to him at the time of his engagement about his employment being for a specific project or phase of
work. He was also thereby notified of the duration of the project, and the determinable completion date of the project.
However, the history of Bellos appointment and employment showed that he performed his tasks as a mason in DMCIs various constructions
projects, Tthus, Bello acquired in time the status of a regular employee by virtue of his continuous work as a mason of DMCI.
It is settled that the extension of the employment of a project employee long after the supposed project has been completed removes the
employee from the scope of a project employee and makes him a regular employee. In this regard, the length of time of the employees service,
while not a controlling determinant of project employment, is a strong factor in determining whether he was hired for a specific undertaking or in fact
tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. 1
Voluntary resignation
Yet, even had the letter been actually signed by him, the voluntariness of the resignation could not be assumed from such fact alone. His claim that he
had been led to believe that the letter would serve only as the means of extending his sick leave from work should have alerted DMCI to the task of
proving the voluntariness of the resignation.
Under the circumstances, DMCI became burdened with the obligation to prove the due execution and genuineness of the document as a letter of
resignation, which it failed to prove.
Colegio del Santisimo Rosario et al. vs. Rojo
G.R. No. 170388; September 4, 2013
Facts:
Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on probationary basis for the school years 1992-1993, 199319947 and 1994-1995. On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada), decided not to renew respondents services.
Respondent filed a Complaint for illegal dismissal. He alleged that since he had served three consecutive school years which is the maximum number of
terms allowed for probationary employment, he should be extended permanent employment. Citing paragraph 75 of the 1970 Manual of Regulations for
Private Schools (1970 Manual), respondent asserted that "full- time teachers who have rendered three (3) consecutive years of satisfactory services
shall be considered permanent."
Petitioners maintain that upon the expiration of the probationary period, both the school and the respondent were free to renew the contract or let it
lapse. Petitioners insist that a teacher hired for three consecutive years as a probationary employee does not automatically become a regular employee
upon completion of his third year of probation. It is the positive act of the school the hiring of the teacher who has just completed three consecutive
years of employment on probation for the next school year that makes the teacher a regular employee of the school.
Held:
In Mercado v. AMA Computer College-Paraaque City, Inc., we had occasion to rule that cases dealing with employment on probationary status of
teaching personnel are not governed solely by the Labor Code as the law is supplemented, with respect to the period of probation, by special rules
found in the Manual of Regulations for Private Schools (the Manual).
With regard to the probationary period, Section 92 of the 1992 Manual provides:
Section 92. Probationary Period. Subject in all instances to compliance with the Department and school requirements, the probationary period for
academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those
in the tertiary level where collegiate courses are offered on a trimester basis.
In this case, petitioners teachers who were on probationary employment were made to enter into a contract effective for one school year. Thereafter, it
may be renewed for another school year, and the probationary employment continues. At the end of the second fixed period of probationary
employment, the contract may again be renewed for the last time.
Such employment for fixed terms during the teachers probationary period is an accepted practice in the teaching profession.
That teachers on probationary employment also enjoy the protection afforded by Article 281 of the Labor Code is supported by Section 93 of the 1992
Manual which provides:
Sec. 93. Regular or Permanent Status. - Those who have served the probationary period shall be made regular or permanent. Full-time teachers who
have satisfactorily completed their probationary period shall be considered regular or permanent.
The above provision clearly provides that full-time teachers become regular or permanent employees once they have satisfactorily completed the
probationary period of three school years. The use of the term satisfactorily necessarily connotes the requirement for schools to set reasonable

49

standards to be followed by teachers on probationary employment. For how else can one determine if probationary teachers have satisfactorily
completed the probationary period if standards therefor are not provided?
As such, "no vested right to a permanent appointment shall accrue until the employee has completed the prerequisite three-year period necessary for
the acquisition of a permanent status. [However, it must be emphasized that] mere rendition of service for three consecutive years does not
automatically ripen into a permanent appointment. It is also necessary that the employee be a full-time teacher, and that the services he rendered are
satisfactory.
However, for teachers on probationary employment, in which case a fixed term contract is not specifically used for the fixed term it offers, it is incumbent
upon the school to have not only set reasonable standards to be followed by said teachers in determining qualification for regular employment, the
same must have also been communicated to the teachers at the start of the probationary period, or at the very least, at the start of the period when they
were to be applied. These terms, in addition to those expressly provided by the Labor Code, would serve as the just cause for the termination of the
probationary contract.
In this case, glaringly absent from petitioners evidence are the reasonable standards that respondent was expected to meet that could have served as
proper guidelines for purposes of evaluating his performance. Nowhere in the Teachers Contract could such standards be found. Neither was it
mentioned that the same were ever conveyed to respondent. Even assuming that respondent failed to meet the standards set forth by CSR and made
known to the former at the time he was engaged as a teacher on probationary status, still, the termination was flawed for failure to give the required
notice to respondent.
Herrera-Manaois vs. St. Scholasticas College
G.R. No. 188914; December 11, 2013
Facts:
SSC, situated in the City of Manila, is a private educational institution offering elementary, secondary, and tertiary education. Manaois graduated from
SSC in October 1992 with a degree in Bachelor of Arts in English. In 1994, she returned to her alma mater as a part-time English teacher. After taking a
leave of absence for one year, she was again rehired by SSC for the same position. Four years into the service, she was later on recommended by her
Department Chairperson to become a full-time faculty member of the English Department.
Manaois thus applied for a position as full-time instructor for school year 2000-2001.
She mentioned in her application letter that she had been taking the course Master of Arts in English Studies, Major in Creative Writing, at the University
of the Philippines, Diliman (UP); that she was completing her master's thesis; and that her oral defense was scheduled for June 2000. In a reply letter 4
dated 17 April 2000, the Dean of Arts and Sciences informed her of the SSC Administrative Council's approval of her application. SSC hired her as a
probationary full-time faculty member with the assigned task of instructor for the school year 2000-2001. Her probationary employment continued for a
total of three consecutive years.
Because of the forthcoming completion of her third year of probationary employment, Manaois wrote the Dean of Arts and Sciences requesting an
extension of her teaching load for the school year 2003-2004. Manaois eventually received a letter from the Dean of College and Chairperson of the
Promotions and Permanency Board officially informing her of the board's decision not to renew her contract.
Issue: Whether the completion of a master's degree is required in order for a tertiary level educator to earn the status of permanency in a private
educational institution.
Held:
Probationary employment refers to the trial stage or period during which the employer examines the competency and qualifications of job applicants,
and determines whether they are qualified to be extended permanent employment status. Such an arrangement affords an employer the opportunity
before the full force of the guarantee of security of tenure comes into play to fully scrutinize and observe the fitness and worth of probationers while
on the job and to determine whether they would become proper and efficient employees. It also gives the probationers the chance to prove to the
employer that they possess the necessary qualities and qualifications to meet reasonable standards for permanent employment.
Viewed next to the statements and actions of Manaois i.e., the references to obtaining a master's degree in her application letter, in the subsequent
correspondences between her and SSC, and in the letter seeking the extension of a teaching load for the school year 2003-2004; and her submission
of certifications from UP and from her thesis adviser we find that there is indeed substantial evidence proving that she knew about the necessary
academic qualifications to obtain the status of permanency.
At this juncture, we reiterate the rule that mere completion of the three-year probation, even with an above-average performance, does not guarantee
that the employee will automatically acquire a permanent employment status. It is settled jurisprudence that the probationer can only qualify upon
fulfillment of the reasonable standards set for permanent employment as a member of the teaching personnel.
Thus, pursuant to the 1992 Manual, private educational institutions in the tertiary level may extend "full-time faculty" status only to those who possess,
inter alia, a master's degree in the field of study that will be taught. This minimum requirement is neither subject to the prerogative of the school nor to
the agreement between the parties. For all intents and purposes, this qualification must be deemed impliedly written in the employment contracts
between private educational institutions and prospective faculty members. The issue of whether probationers were informed of this academic
requirement before they were engaged as probationary employees is thus no longer material, as those who are seeking to be educators are presumed
to know these mandated qualifications. In the light of the failure of Manaois to satisfy the academic requirements for the position, she may only be
considered as a part-time instructor pursuant to Section 45 of the 1992 Manual.

50

Universal Robina Sugar Milling Corp. vs. Acibo et al.

G.R No. 186439; January 15, 2014
Facts:
URSUMCO is a domestic corporation engaged in the sugar cane milling business; Cabati is URSUMCO's Business Unit General Manager. The
complainants were employees of URSUMCO. They were hired on various dates (between February 1988 and April 1996) and on different capacities, 8
i.e., drivers, crane operators, bucket hookers, welders, mechanics, laboratory attendants and aides, steel workers, laborers, carpenters and masons,
among others. At the start of their respective engagements, the complainants signed contracts of employment for a period of one (1) month or for a
given season. URSUMCO repeatedly hired the complainants to perform the same duties and, for every engagement, required the latter to sign new
employment contracts for the same duration of one month or a given season.
The complainants filed before the LA complaints for regularization, entitlement to the benefits under the existing Collective Bargaining Agreement
(CBA), and attorney's fees.
Issue: Whether or not respondents are regular employees of URSUMCO
Held:
We find the respondents to be regular seasonal employees of URSUMCO.
Seasonal employment operates much in the same way as project employment, albeit it involves work or service that is seasonal in nature or lasting for
the duration of the season. As with project employment, although the seasonal employment arrangement involves work that is seasonal or periodic in
nature, the employment itself is not automatically considered seasonal so as to prevent the employee from attaining regular status. To exclude the
asserted "seasonal" employee from those classified as regular employees, the employer must show that: (1) the employee must be performing work or
services that are seasonal in nature; and (2) he had been employed for the duration of the season. Hence, when the "seasonal" workers are
continuously and repeatedly hired to perform the same tasks or activities for several seasons or even after the cessation of the season, this length of
time may likewise serve as badge of regular employment. In fact, even though denominated as "seasonal workers," if these workers are called to work
from time to time and are only temporarily laid off during the off-season, the law does not consider them separated from the service during the offseason period. The law simply considers these seasonal workers on leave until re-employed.
The nature of the employment depends on the nature of the activities to be performed by the employee, considering the nature of the employer's
business, the duration and scope to be done, and, in some cases, even the length of time of the performance and its continued existence. In light of the
above legal parameters laid down by the law and applicable jurisprudence, the respondents are neither project, seasonal nor fixed-term employees, but
regular seasonal workers of URSUMCO.
(1)
(2)

The respondents were made to perform various tasks that did not at all pertain to any specific phase of URSUMCO's strict milling
operations that would ultimately cease upon completion of a particular phase in the milling of sugar; rather, they were tasked to perform
duties regularly and habitually needed in URSUMCO's operations during the milling season.
The respondents were regularly and repeatedly hired to perform the same tasks year after year.

Noblejas v. IMAPI
G.R. No. 207888, June 09, 2014
Facts:
A.

The Parties to the Case

Petitioner Dionarto Q. Noblejas (Noblejas) filed a complaint for illegal dismissal, tax refund, moral and exemplary damages, non-payment of
13th month pay, food, gasoline and schooling allowances, health insurance, monetized leave, and attorneys fees, against Italian Maritime
Academy Phils., Inc. (IMAPI), Capt. Nicolo S. Terrei (Capt. Terrei), Raceli S. Ferrez (Ferrez), and Ma. Teresa R. Mendoza (Mendoza).
IMAPI was a training center for seamen and an assessment center for determination of the qualifications and competency of seamen and
officers for possible promotion. Capt. Terrei was the Managing Director of IMAPI while Ferrez was his secretary. Mendoza was the
companys Administrative Manager.

B.

The

Conflict

Record shows that Procerfina SA. Terrei, IMAPI President, wrote a letter 3 to Noblejas informing him that he had been appointed as training
instructor/assessor of the company on a contractual basis for a period of three (3) months effective May 20, 2009, with a monthly
salary of 75,000.00 inclusive of tax. After the expiration of the 3-month period, IMAPI hired Noblejas anew as training
instructor/assessor with the same salary rate, but no written contract was drawn for his rehiring. 4
The absence of a written contract to cover the renewal of his employment became Noblejas major concern. To address all his
apprehensions, he wrote Capt. Terrei a letter, dated March 9, 2010, requesting that a new contract be executed to reflect the following
provisions that they had allegedly agreed upon during their conversation on May 19, 2009, to wit: 1] that his monthly salary would be ?
75,000.00, tax excluded, and that 50% of his SSS premium would be shouldered by the company; and 2] that after the completion of his 3-

51

month contract, he would be given the option to choose either - a) to be regularly employed as an instructor of IMAPI; or b) to go on board
a vessel with the company extending him financial aid for the processing of pertinent documents, which amount would be later on deducted
from his salary. Likewise in the same letter, Noblejas intimated that he was electing to continue working for the company as its regular
instructor.
Noblejas averred that the company did not act on his letter-request, so he sought an audience with Capt. Terrei on March 16, 2010.
During the meeting, an altercation between them ensued. He claimed that after that incident, Capt. Terrei instructed Ferrez to
dismiss him from employment. He claimed that when he asked from Ferrez for a copy of his old contract, she allegedly replied,
No, you better pack up all your things now and go, you are now dismissed and you are no longer part in this office clearly, you
are
terminated
from
this
day
on.5
Issues:
A.
B.

WON he was a regular employee

WON he was illegally dismissed

HELD:
1.

Yes, Noblejas is a regular employee of IMAPI.

Pursuant to Article 280 of the Labor Code, there are two kinds of regular employees, namely:
(1)

those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer; and

(2)

those who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they
are employed.13

Regular employees are further classified into:

(1) regular employees - by nature of work and
(2) regular employees - by years of service.14
The regular employees by nature of work refers to those employees who perform a particular function which is necessary or
desirable in the usual business or trade of the employer, regardless of their length of service; while regular employees by years of service
refers to those employees who have been performing the job, regardless of its nature thereof, for at least a year. 15
In the case at bench, Noblejas was employed by IMAPI as a training instructor/assessor for a period of three (3) months effective May 20,
2009. After the end of the 3-month period, he was rehired by IMAPI for the same position and continued to work as such until March 16,
2010. There is no dispute that the work of Noblejas was necessary or desirable in the business or trade of IMAPI, a training and assessment
center for seamen and officers of vessels. Moreover, such continuing need for his services is sufficient evidence of the necessity and
indispensability of his services to IMAPIs business. Taken in this light, Noblejas had indeed attained the status of a regular employee at the
time he ceased to report for work on March 17, 2010.
2.

No

illegal

dismissal

because

no

substantial

evidence

was

furnished

by

the

employee.

Fair evidentiary rule dictates that before employers are burdened to prove that they did not commit illegal dismissal, it is incumbent upon the
employee to first establish by substantial evidence the fact of his or her dismissal. 16
Aside from his mere assertion, no corroborative and competent evidence was adduced by Noblejas to substantiate his claim that he was
dismissed from employment. The record is bereft of any indication that he was prevented from returning to work or otherwise deprived of any work
assignment. It is also noted that no evidence was submitted to show that respondent Ferrez, the secretary of Capt. Terrei, was actually authorized
by IMAPI to terminate the employment of the companys employees or that Ferrez was indeed instructed by Capt. Terrei to dismiss him from
employment.
The Court finds it odd that, instead of clarifying from Capt. Terrei what he heard from Ferrez, Noblejas immediately instituted an illegal
dismissal case against the respondents the day following the alleged incident and never reported back for work since then.

52

Respondents refusal to grant complainants demands does not constitute an overt act of dismissal.
Let it be underscored that the fact of dismissal must be established by positive and overt acts of an employer indicating the intention to
dismiss.21 Indeed, a party alleging a critical fact must support his allegation with substantial evidence, for any decision based on unsubstantiated
allegation cannot stand without offending due process. 22 Here, there is no sufficient proof showing that Noblejas was actually laid off from work. In any
event, his filing of a complaint for illegal dismissal, irrespective of whether reinstatement or separation pay was prayed for, could not by itself be the sole
consideration in determining whether he has been illegally dismissed. All circumstances surrounding the alleged termination should also be taken into
account.

Omni Hauling Services v. Tortoles

GR No. 199388, Sept. 3, 2014
Facts: Petitioner Omni Hauling Services, was awarded a one (1) year service contract by the local government of Quezon City to provide garbage
hauling services for the period July 1, 2002 to June 30, 2003. For this purpose, Omni hired respondents as garbage truck drivers who were then paid on
a per trip basis.
When the service contract was renewed for another year, July 1, 2003 to June 30, 2004, petitioners required each of the respondents to sign
employment contracts which provided that they will be re-hired only for the duration of the same period. However, respondents refused to sign the
employment contracts, claiming that they were regular employees since they were engaged to perform activities which were necessary and desirable to
Omnis usual business or trade. For this reason, Omni terminated the employment of respondents which, in turn, resulted in the filing of cases for illegal
dismissal, nonpayment of Emergency Cost of Living Allowance (ECOLA) and 13th month pay, and actual, moral, and exemplary damages.
During the mandatory conference before the Labor Arbiter (LA), Omni offered to re-employ respondents on the condition that they sign the employment
contracts but respondents refused such offer.
Issue: Whether or not respondents were project employees?
Held: No, respondents are not project employees, but regular employees. Employers claiming that their workers are project employees should not only
prove that the duration and scope of the employment was specified at the time they were engaged, but also that there was indeed a project.
Respondents were not clearly and knowingly informed of their employment status as mere project employees, with the duration and scope of the project
specified at the time they were engaged. As such, the presumption of regular employment should be accorded in their favor pursuant to Article 280 of
the Labor
Code which provides that [employees] who have rendered at least one year of service, whether such service is continuous or broken shall be
considered as [regular employees with respect to the activity in which they are employed and their employment shall continue while such activity
actually exists..
HACIENDA LEDDY/RICARDO GAMBOA, JR., v. PAQUITO VILLEGAS
FACTS:
Villegas is an employee at the Hacienda Leddy as early as 1960, when it was still named Hacienda Teresa. Later on named Hacienda Leddy owned by
Ricardo Gamboa Sr., the same was succeeded by his son Ricardo Gamboa, Jr. During his employment up to the time of his dismissal, Villegas
performed sugar farming job 8 hours a day, 6 days a week work, continuously for not less than 302 days a year, and for which services he was paid
P45.00 per day. He likewise worked in petitioner's coconut lumber business where he was paid P34.00 a day for 8 hours work.
On June 9, 1993, Gamboa went to Villegas' house and told him that his services were no longer needed without prior notice or valid reason. Hence,
Villegas filed the instant complaint for illegal dismissal.
ISSUE:
Whether or not herein respondent classified as regular employee and thus entitled to security of tenure under Article 279?
RULING:
Respondent is a regular employee entitled to security of tenure.
The Labor Code draws a fine line between regular and casual employees to protect the interests of labor.
Villegas is entitled to security of tenure under Article 279 of the Labor Code and can only be removed for cause. We found no valid cause attending to
his dismissal and found also that his dismissal was without due process. Article 277(b) of the Labor Code provides that: Subject to the constitutional
right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment.
The failure of the petitioner to comply with these procedural guidelines renders its dismissal of Villegas illegal. An illegally dismissed employee should
be entitled to either reinstatement if viable, or separation pay if reinstatement is no longer viable, plus backwages in either instance. Considering that
reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay should be granted.

53

IV.

MANAGEMENT PREROGATIVE

Dosch vs. NLRC

G.R. No. L-51182. July 5, 1983
Facts:
Helmut Dosch, an American citizen, married to a Filipina, was the resident Manager of Northwest Airlines, Inc. in the Philippines. He has to his credit 11
years of continuous service with the company, including 9 years as Northwest Manager with station at Manila. He received an inter-office
communication from R.C. Jenkins, Northwest's Vice President for Orient Region based in Tokyo, promoting him to the position of Director of
International Sales and transferring him to Northwest's General Office in Minneapolis, U.S.A., effective immediately.
Dosch in his letter, expressed appreciation for the promotion and at the same time regretted that "for personal reasons and reasons involving his family,
he is unable to accept a transfer from the Philippines and that he would, therefore, prefer to remain in his position, of Manager-Philippines until such
time that his services in that capacity are no longer required by the company. Petitioner tried to resume his duties as Manager after an authorized
vacation but the Vice-President for the Orient Region of Northwest advised petitioner that in view of his letter, his status as an employee of the company
ceased on the close of business and the company therefore considers his letter to be a resignation without notice.
Issue: Whether or not the employers letter constitute a transfer as a valid exercise of a management prerogative.
Held:
No. The Supreme Court treats the Jenkins letter as directing the promotion of the petitioner from his position as Philippine manager to Director of
International Sales in Minneapolis, U.S.A. It is not merely a transfer order but "it is more in the nature of a promotion that a transfer, the latter being
merely incidental to such promotion." The inter-office communication of Vice President Jenkins is captioned "Transfer" but it is basically and essentially
a promotion for the nature of an instrument is characterized not by the title given to it but by its body and contents. The communication informed the
petitioner that effective August 18, 1975, he was to be promoted to the position of Director of International Sales, and his compensation would be
upgraded and the payroll accordingly adjusted. Petitioner was, therefore, advanced to a higher position and rank and his salary was increased and that
is a promotion.
There is no law that compels an employee to accept a promotion, as a promotion is in the nature of a gift or a reward, which a person has a right to
refuse. When petitioner refused to accept his promotion to Director of International Sales, he was exercising a right and he cannot be punished for it as
qui jure suo utitur neminem laedit. He who uses his own legal right injures no one. While it may be true that the right to transfer or reassign an
employee is an employer's exclusive right and the prerogative of management, such right is not absolute. The right of an employer to freely select or
discharge his employee is limited by the paramount police power for the relations between capital and labor are not merely contractual but impressed
with public interest (Article 1700, New Civil Code). And neither capital nor labor shall act oppressively against each other. The Court did not agree to
Northwest's submission that petitioner was guilty of disobedience and insubordination which respondent Commission sustained. Petitioners
acknowledgment of his promotion and the way he expressed his desire to remain in his position in the Philippines for reasons involving his family, the
Court could not discern even the slightest hint of defiance, much less imply insubordination on the part of petitioner.
The Court emphasized the long and faithful years of service that petitioner had rendered to respondent company, eleven good years, nine of which as
Manager with station at Manila. It is plainly abusive of the company and oppressive to the petitioner that the latter is peremptorily dismissed on the
shallow claim of "resignation without notice,". The Court ordered petitioner's reinstatement to his former position with full backwages for three (3) years
without loss of seniority rights and other benefits recognized by law, including attorney's fees equivalent to 10% of the total monetary benefits which the
petitioner may recover, and ordered petitioners reinstatement.
PT&T vs. Court of Appeals
G.R. No. 152057. September 29, 2003
Facts:
PT&T is a domestic corporation engaged in the business of providing telegraph and communication services thru its branches all over the country.
Sometime in 1997, after conducting several studies, PT and T came up with a Relocation and Restructuring Program that aimed to (a) sustain its retail
operations (b) decongest surplus workforce in some branches, to promote efficiency and productivity; (c) lower expenses incidental to hiring and
training new personnel; and (d) avoid retrenchment of employees occupying redundant positions. The company offered relocation benefits/allowances
to employees who would agree to be transferred to new PT and T branches in the provinces. Moreover, employees who would agree to the transfer
would be considered promoted.
In line with the petitioners program, seven employees were directed by the company to relocate to their new PT&T branches. The seven employees
however rejected the petitioner companys offer on the reason that the said transfers involved distant places which would require their separation from
their families.
Due to the employees refusal, the company dismissed the seven employees on the ground that their refusal amounted to insubordination and willful
disobedience to a lawful order. As the seven employees were all members of a registered labor union, their union in behalf of them, filed with the Labor
Arbiter a complaint for unfair labor practice and illegal dismissal against PT&T.

54

The petitioner companys defense was that the transfers were valid exercise of management prerogative. The Labor Arbiter dismissed the complaint
and upheld the company, but on appeal, the National Labor Relations Commission declared the employees dismissal as illegal. The Court of Appeals
affirmed the NLRCs ruling.
Issue:
(1) Whether or not the transfers initiated by petitioner PT and T to its employees were in the nature of a promotion.
(2) Whether or not the dismissal of the employees was valid on the ground that there was insubordination and willful disobedience to a lawful order.
Held:
(1) The employees transfers are promotions in nature even if they were not accompanied by an increase in salary.
It was petitioner company itself that admitted to this fact as was stated in their position paper submitted to the Labor Arbiter. With or without a
corresponding increase in salary, the respective transfers of the private respondents were in fact promotions, following the ruling enunciated in
Homeowners Savings and Loan Association, Inc. v. NLRC:
[P]romotion, as we defined in Millares v, Subido, is the advancement from one position to another with an increase in duties and responsibilities as
authorized by law, and usually accompanied by an increase in salary. Apparently, the indispensable element for there to be a promotion is that there
must beadvancement from one position to another or an upward vertical movement of the employees rank or position. Any increase in salary should
only be considered incidental but never determinative of whether or not a promotion is bestowed upon an employee.
(2) An employee cannot be promoted, even if merely as a result of transfer, without his consent. A transfer that results in promotion or demotion,
advancement or reduction or a transfer that aims to lure the employee away from his permanent position cannot be done without the employees
consent.
There is no law that compels an employee to accept a promotion for the reason that a promotion is in the nature of a gift or reward, which a person has
a right to refuse. Hence, the exercise by the private respondents of their right cannot be considered in law as insubordination, or willful disobedience of
a lawful order of the employer. As such, there was no valid cause for the private respondents dismissal.
As the questioned dismissal is not based on any of the just or valid grounds under Article 282 of the Labor Code, the NLRC correctly ordered the private
respondents reinstatement without loss of seniority rights and the payment of back wages from the time of their dismissal up to their actual
reinstatement.
Mendoza vs. Rural Bank of Lucban
G.R. No. 155421, July 7, 2004
Facts:
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board Resolution Nos. 99-52 and 99-53, ordering the reshuffling of
its and employees in line with the policy of the bank to familiarize bank employees with the various phases of bank operations and further strengthen
the existing internal control system.
In that Board resolution, Mendoza was assigned to Clerk-Meralco collection from the position of Appraiser. Petitioner in an undated letter to the Banks
Board Chairman stated that the transfer was in effect a demotion on his part without legal basis and is a blatant harassment on from the employer as a
prelude petitioners termination in due time. That it resulted to unfair labor practice.
The Boards Chairman in his reply, only reiterated that the reason behind the resolution on the reshuffling of its employees was merely familiarize bank
employees with the various phases of bank operations and further strengthen the existing internal control system.
On June 7, 2009, petitioner in a letter applied for leave of absence due to an ailment good for ten days, and another was submitted for 30 days. Within
this period, petitioner filed a complaint before Arbitration Branch No. IV of the National Labor Relations Commission against the Rural Bank of Lucban
for illegal dismissal, underpayment, separation pay and damages. The Labor Arbiter upheld petitioners claims but then it was reversed by the NLRC on
appeal. The Court of Appeals also found no grave abuse of discretion on the part of the NLRC.
Issue: Whether or not the reshuffling or transfer is deemed to be a demotion on petitioners position.
Held:
Constructive dismissal is defined as an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution of pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to the employee.
In the pursuit of its legitimate business interest, management has the 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. This privilege is inherent in the right of employers to control
and manage their enterprise effectively. The right of employees to security of tenure does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their assignments or to transfer them. Managerial prerogatives, however, are subject to limitations
provided by law, collective bargaining agreements, and general principles of fair play and justice.

55

Management Prerogative to Transfer Employees. Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts often
decline to interfere in legitimate business decisions of employers. Indeed, labor laws discourage interference in employers judgments concerning the
conduct of their business. The law must protect not only the welfare of employees, but also the right of employers. In the pursuit of its legitimate
business interest, management has the 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. This privilege is inherent in the right of employers to control and manage their
enterprise effectively. The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving
management of its prerogative to change their assignments or to transfer them.
Petitioners Transfer Lawful. Petitioners transfer was made in pursuit of respondents policy to familiarize bank employees with the various phases of
bank operations and further strengthen the existing internal control system of all officers and employees. We have previously held that employees may
be transferred -- based on their qualifications, aptitudes and competencies -- to positions in which they can function with maximum benefit to the
company. There appears no justification for denying an employer the right to transfer employees to expand their competence and maximize their full
potential for the advancement of the establishment. Petitioner was not singled out; other employees were also reassigned without their express
consent. Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges and other benefits. This fact is clear in
respondents Board Resolutions, the April 30, 1999 letter of Bank President Daya to Branch Manager Cada, and the May 10, 1999 letter of Daya to
petitioner.
Duncan Association of Detailman vs. Glaxo Wellcome Phils.
G.R. 162994, September 17, 2004
Facts:
Petitioner Tecson was hired by respondent Glaxo Wellcome Phils. as a medical representative. Tecson signed a contract of employment, which
stipulates among others, that he agrees to disclose existing or future relationship with co-employees and employees of competing companies that
should such relationship poses a conflict of interest, to resign from the company. Despite repeated warnings, Tecson and Bettsy, an employee of a
competing company, got married. Glaxo transferred Tecson to Butuan, but he defied such orders and continued acting as medical representative in
Camarines area. The National Conciliation and Mediation board rendered as valid the policy and the right to transfer.
Issue: Whether or not the policy constitutes a prohibition against marriage.
Held:
No.
Glaxos policy prohibiting an employee from having a relationship is a valid exercise of management prerogatives as relationships of that nature might
compromise the interests of the company. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information for competitors.
The right to protect its economic interests is recognized by the constitution which recognizes the right of enterprises to adopt and enforce such a policy
to protect its right to reasonable returns on investments and for expansion and growth. Indeed, while our laws endeavor to give life to the constitutional
policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers.
The law also recognized that management has rights which are also entitled to respect and enforcement in the interest of fair play. The challenged
company policy does not violate the equal protection clause of the constitution as such clause is addressed only to the state or those acting under color
of its authority.
The policy being questioned is not a policy against marriage. An employee of the company remains free to marry anyone of his or her choosing. The
policy is aimed at restricting a personal prerogative that belongs only to the individual. However, an employees personal decision does not detract the
employer from exercising management prerogatives to ensure maximum profit and business success.
PLDT vs. Paquio
G.R. No. 152689, October 12, 2005
Facts:
In 1994, PLDT assessed the performance of the 27 Exchanges comprising the GMM Network. Upon receipt of the ratings, Alfredo Paguio, Head of the
Garnet Exchange, sent a letter to his immediate supervisor and Asst. VP criticizing the PLDT criteria for performance rating as unfair because they
depended on manpower after receiving its appraisal rating. He also suggested that the criteria failed to recognize that exchanges with new plants could
easily meet the objectives of GMM compared to those with old plants.
Despite Paguios criticism, Garnet Exchange, the oldest plant in GMM, obtained the top rating in the GMM. Nevertheless, Paguio reiterated his letter to
Santos and objected to the performance rating as it was based only on the attainment of objectives, without considering other relevant factors. Two
years later on June 1996, PLDT rebalanced the manpower of the East Center. Paguio wrote Santos and requested reconsideration of the manpower
rebalancing, claiming it was unfair to Garnet Exchange because as the oldest exchange in the East Center, it was disallowed to use contractors for new
installations and was not made beneficiary of the cut-over bonus.

56

He was then was reassigned as Head for Special Assignment at the Office of the GMM East Center and asked to turn over his functions as Garnet
Exchange Head to Tessie Go. Believing that his transfer was a disciplinary action, Paguio requested the first VP for a formal hearing of the charges
against him and asked that his reassignment be deferred. He also filed a complaint against his supervisor for grave abuse of authority and
manipulation of the East Center performance. Findings were that the memo was in order as it was based on the finding that Paguio was not a team
player and cannot accept decisions of management, which is short of insubordination. He was then advised to transfer to any group in the company that
may avail of his services. Likewise, another memo informed Paguio that his transfer was not in the nature of a disciplinary action that required
investigation and that he agreed with the reasons of the transfer. Aggrieved, Paguio files a complaint for illegal dismissal with prayer for reinstatement
and damages which was later amended to illegal demotion with prayer for reversion to old position, damages and attorneys fees.
Issue: Whether or not the transfer of Paguio is legal.
Held:
PLDT alleges that the NLRC ruling would allow a change of cause of action since the complaint alleged illegal demotion while the decision involved
illegal transfer. Prefatorily, we note from the records that there has been no change of cause of action from illegal demotion to illegal transfer.
Illegal demotion is a type of illegal transfer. Moreover, it is familiar and fundamental doctrine that it is not the title of the action but the allegations in the
pleading that determines the nature of the action. An employer is free to regulate, according to his own discretion and judgment, all aspects of
employment, including the transfer of employees. It is the employers prerogative, based on its assessment and perception of its employees
qualifications, aptitudes, and competence, to deploy its employees in the various areas of its business operations in order to ascertain where they will
function with maximum benefit to the company. An employees right to security of tenure does not give him such a vested right in his position as would
deprive the company of its prerogative to change his assignment or transfer him where he will be most useful.
Nonetheless, there are limits to the management prerogative. While it may be conceded that management is in the best position to know its operational
needs, the exercise of management prerogative cannot be utilized to circumvent the law and public policy on labor and social justice. That prerogative
accorded management should not defeat the very purpose for which our labor laws exist: to balance the conflicting interests of labor and management.
By its very nature, management prerogative must be exercised always with the principles of fair play and justice. In particular, the employer must be
able to 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. The employer bears the burden of proving that the transfer of the employee has complied with the foregoing
test.
In the present case, we see no credible reason for Paguios transfer except his criticisms of the companys performance evaluation methods. Based on
the undisputed facts, Garnet Exchange was doing well and excelled in the performance rating. In the same way, Paguios performance was
consistently rated as outstanding. There was also no proof that Paguio refused to comply with any management policy. Patently, his transfer could not
be due to poor performance. Neither was it because he was needed in the new post for the new assignment was functionless and it was nothing but a
title. Paguios transfer could only be caused by the managements negative reception of his comments. It is prejudicial to Paguio because it left him out
for a possible promotion as he was assigned to a functionless position with neither office nor staff.
Hence, transfer was not valid.
Star Paper Corp., vs. Simbol
G.R. No. 164774, April 12, 2006
Facts:
Petitioner Star Paper Corporation is a corporation engaged in trading, principally of paper products. Josephine Ongsitco is its Manager of the Personnel
and Administration Department while Sebastian Chua is its Managing Director.
Respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company.
Simbol was employed by the company on October 1993 and met Alma Dayrit, also an employee of the company, whom he married on June 1998. Prior
to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company policy. Simbol
resigned on June 20, 1998 pursuant to the company policy.
Comia was hired by the company on February 1997. She met Howard Comia, a co-employee, whom she married on June 1, 2000. Ongsitco likewise
reminded them that pursuant to company policy, one must resign should they decide to get married. Comia resigned on June 30, 2000.
Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a co-worker. Petitioners stated that Zuiga, a married man, got Estrella
pregnant. The company allegedly could have terminated her services due to immorality but she opted to resign on December 21, 1999.
The respondents signed a Release and Confirmation Agreement and stated therein that they have no money and property accountabilities in the
company. Respondents offer a different version of their dismissal. Respondents later filed a complaint for unfair labor practice, constructive dismissal,
separation pay and attorneys fees. They averred that the aforementioned company policy is illegal and contravenes Article 136 of the Labor Code.
Labor Arbiter dismissed the complaint and states that the company policy was decreed pursuant to what the respondent corporation perceived as
management prerogative. On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter. In its assailed Decision dated August 3,
2004, the Court of Appeals reversed the NLRC decision.
Issue: Whether such company policy violates the Labor Code.

57

Held:
Such policy violates the fundamental right of an employee. Art 136 of the Labor Code provides:
Art. 136. It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not
get married, or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.
With more women entering the workforce, employers are also enacting employment policies specifically prohibiting spouses from working for the same
company. We note that two types of employment policies involve spouses: policies banning only spouses from working in the same company (nospouse employment policies), and those banning all immediate family members, including spouses, from working in the same company (anti-nepotism
employment policies).
It utilizes two theories of employment discrimination: the disparate treatment and the disparate impact. Under the disparate treatment analysis, the
plaintiff must prove that an employment policy is discriminatory on its face. No-spouse employment policies requiring an employee of a particular sex to
either quit, transfer, or be fired are facially discriminatory. On the other hand, to establish disparate impact, the complainants must prove that a facially
neutral policy has a disproportionate effect on a particular class.
Rivera vs. Solidbank
G.R. No. 163269, April 19, 2006
Facts:
Rivera started working with Solidbank Corporation as an audit clerk since July 1, 1977. Then he was promoted as credit investigator, senior clerk,
assistant accountant, and finally as assistant manager. Prior to his retirement, he became the Manager of the banks Credit Investigation and Appraisal
Division of the Consumer's Banking Group. In the meantime, Rivera and his brother-in-law put up a poultry business in Cavite.
In December 1994, Solidbank offered two retirement programs to its employees: (a) the Ordinary Retirement Program (ORP), under which an employee
would receive 85% of his monthly basic salary multiplied by the number of years in service; and (b) the Special Retirement Program (SRP), under which
a retiring employee would receive 250% of the gross monthly salary multiplied by the number of years in service. Rivera decided to devote his time and
attention to his poultry business in Cavite and applied for retirement under the SRP. Solidbank approved the application and confirmed his separation
from Solidbank on February 25, 1995. However, Solidbank required Rivera to sign an undated Release, Waiver and Quitclaim, which was notarized on
March 1, 1995. He acknowledged receipt of the net proceeds of his separation and retirement benefits and promised that "he would not, at any time, in
any manner whatsoever, directly or indirectly engage in any unlawful activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary
companies, their stockholders, officers, directors, agents or employees, and their successors-in-interest and will not disclose any information concerning
the business of Solidbank, its manner or operation, its plans, processes, or data of any kind." He also signed in an Undertaking upon which he promised
that "not to seek employment with a competitor bank or financial institution within one (1) year from February 28, 1995, and that any breach of the
Undertaking or the provisions of the Release, Waiver and Quitclaim would entitle Solidbank to a cause of action against him before the appropriate
courts of law.
But on May 1, 1995, Rivera got employed with Equitable Banking Corporation (Equitable) as Manager of its Credit Investigation and Appraisal Division
of its Consumers' Banking Group. Upon learning this, Solidbank wrote a letter dated May 18, 1995, informing Rivera that he had violated the
Undertaking and demanded the return of all the monetary benefits he received in consideration of the SRP within five (5) days from receipt; otherwise,
appropriate legal action would be taken against him.
Issue: Whether the employment ban incorporated in the Undertaking which petitioner executed upon his retirement is unreasonable, oppressive,
hence, contrary to public policy.
Held:
The SC held that Article 1306 of the New Civil Code provides that the contracting parties may establish such stipulations, clauses, terms and conditions
as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. The freedom of contract is
both a constitutional and statutory right. A contract is the law between the parties and courts have no choice but to enforce such contract as long as it is
not contrary to law, morals, good customs and against public policy. The well-entrenched doctrine is that the law does not relieve a party from the
effects of an unwise, foolish or disastrous contract, entered into with full awareness of what he was doing and entered into and carried out in good faith.
Such a contract will not be discarded even if there was a mistake of law or fact. Courts have no jurisdiction to look into the wisdom of the contract
entered into by and between the parties or to render a decision different therefrom. They have no power to relieve parties from obligation voluntarily
assailed, simply because their contracts turned out to be disastrous deals.
In the present case, there is no factual basis to agree with the contention of the respondent bank. On the face of the Undertaking, the post-retirement
competitive employment ban is unreasonable because it has no geographical limits; respondent is barred from accepting any kind of employment in any
competitive bank within the proscribed period. Although the period of one year may appear reasonable, the matter of whether the restriction is
reasonable or unreasonable cannot be ascertained with finality solely from the terms and conditions of the Undertaking, or even in tandem with the
Release, Waiver and Quitclaim.

58

Undeniably, petitioner retired under the SRP and received P963,619.28 from respondent. However, petitioner is not proscribed, by waiver or estoppel,
from assailing the post-retirement competitive employment ban since under Article 1409 of the New Civil Code, those contracts whose cause, object or
purpose is contrary to law, morals, good customs, public order or public policy are inexistent or void from the beginning.
Respondent, as employer, is burdened to establish that a restrictive covenant barring an employee from accepting a competitive employment after
retirement or resignation is not an unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus, unenforceable for being repugnant
to public policy. There are two principal grounds on which the doctrine is founded that a contract in restraint of trade is void as against public policy.
One is, the injury to the public by being deprived of the restricted partys industry; and the other is, the injury to the party himself by being precluded
from pursuing his occupation, and thus being prevented from supporting himself and his family.
In cases where an employee assails a contract containing a provision prohibiting him or her from accepting competitive employment as against public
policy, the employer has to adduce evidence to prove that the restriction is reasonable and not greater than necessary to protect the employers
legitimate business interests. The restraint may not be unduly harsh or oppressive in curtailing the employees legitimate efforts to earn a livelihood and
must be reasonable in light of sound public policy.
Courts should carefully scrutinize all contracts limiting a mans natural right to follow any trade or profession anywhere he pleases and in any lawful
manner. But it is just as important to protect the enjoyment of an establishment in trade or profession, which its employer has built up by his own
honest application to every day duty and the faithful performance of the tasks which every day imposes upon the ordinary man. What one creates by
his own labor is his. Freedom to contract must not be unreasonably abridged. Neither must the right to protect by reasonable restrictions that which a
man by industry, skill and good judgment has built up, be denied.
The Court reiterates that the determination of reasonableness is made on the particular facts and circumstances of each case. The question of
reasonableness of a restraint requires a thorough consideration of surrounding circumstances, including the subject matter of the contract, the purpose
to be served, the determination of the parties, the extent of the restraint and the specialization of the business of the employer. The court has to
consider whether its enforcement will be injurious to the public or cause undue hardships to the employee, and whether the restraint imposed is greater
than necessary to protect the employer.
Consideration must be given to the employees right to earn a living and to his ability to determine with certainty the area within which his employment
ban is restituted. A provision on territorial limitation is necessary to guide an employee of what constitutes as violation of a restrictive covenant and
whether the geographic scope is co-extensive with that in which the employer is doing business. In considering a territorial restriction, the facts and
circumstances surrounding the case must be considered.
Thus, in determining whether the contract is reasonable or not, the trial court should consider the following factors: (a) whether the covenant protects a
legitimate business interest of the employer; (b) whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious
to the public welfare; (d) whether the time and territorial limitations contained in the covenant are reasonable; and (e) whether the restraint is
reasonable from the standpoint of public policy.
We are not impervious of the distinction between restrictive covenants barring an employee to accept a post-employment competitive employment or
restraint on trade in employment contracts and restraints on post-retirement competitive employment in pension and retirement plans either
incorporated in employment contracts or in collective bargaining agreements between the employer and the union of employees, or separate from said
contracts or collective bargaining agreements which provide that an employee who accepts post retirement competitive employment will forfeit
retirement and other benefits or will be obliged to restitute the same to the employer. The strong weight of authority is that forfeitures for engaging in
subsequent competitive employment included in pension and retirement plans are valid even though unrestricted in time or geography.
A post-retirement competitive employment restriction is designed to protect the employer against competition by former employees who may retire and
obtain retirement or pension benefits and, at the same time, engage in competitive employment.
Daisy B. Tiu vs.Platinum Plans Phil., Inc.
G.R. No. 163512 February 28, 2007
Facts:
Tiu was a division marketing director of Platinum plans, a domestic corp. engaged in the pre need- industry. Tiu was then rehired as senior vice
president and territorial operations head in charge of Hongkong and ASEAN operations. Respondent and petitioner agreed on and executed a five year
contract of employment, on of the salient features thereof being a non- involvement provision to the effect that during the employees engagement, and
two years after separation form the company, the employee will not engage in or be involved with any corporation or entity whether directly or indirectly,
which is engaged in the same business or belongs to the same pre-need industry as the employee. Any breach of this provision by the employee will
render him liable to the employer for liquidated damages in the sum of P100.000.
On September 16 1995, petitioner stopped working for respondent. In November 1995, she became the Vice- president for sales of another company
engaged in the pre need industry, the Professional Pensions Plans, Inc. So, respondent filed a complaint for damages against petitioner before the
RTC of Pasig for violation of non- involvement clause in the contract of employment.
In response, petitioner argued that the non- involvement clause was unenforceable for being against public order and public policy because first, it is a
restraint much greater than what is necessary to afford respondent a fair and reasonable protection; Second, respondent did not invest in petitioners
training and improvement as at the time she was hired she already possessed the knowledge and expertise required in the industry and respondent
benefited tremendously from it; third, a strict application of the clause would deprive her of the right to engage in the only work she knew.

59

Issue: Whether or not the said clause is valid.

Held:
As early as 1916, we already had the occasion to discuss the validity of a non-involvement clause. In Ferrazzini v. Gsell, we said that such clause was
unreasonable restraint of trade and therefore against public policy. InFerrazzini, the employee was prohibited from engaging in any business or
occupation in the Philippines for a period of five years after the termination of his employment contract and must first get the written permission of his
employer if he were to do so. The Court ruled that while the stipulation was indeed limited as to time and space, it was not limited as to trade. Such
prohibition, in effect, forces an employee to leave the Philippines to work should his employer refuse to give a written permission.
In G. Martini, Ltd. v. Glaiserman, we also declared a similar stipulation as void for being an unreasonable restraint of trade. There, the employee was
prohibited from engaging in any business similar to that of his employer for a period of one year. Since the employee was employed only in connection
with the purchase and export of abaca, among the many businesses of the employer, the Court considered the restraint too broad since it effectively
prevented the employee from working in any other business similar to his employer even if his employment was limited only to one of its multifarious
business activities.
However, in Del Castillo v. Richmond, we upheld a similar stipulation as legal, reasonable, and not contrary to public policy. In the said case, the
employee was restricted from opening, owning or having any connection with any other drugstore within a radius of four miles from the employers
place of business during the time the employer was operating his drugstore. We said that a contract in restraint of trade is valid provided there is a
limitation upon either time or place and the restraint upon one party is not greater than the protection the other party requires.
Finally, in Consulta v. Court of Appeals, we considered a non-involvement clause in accordance with Article 1306 of the Civil Code. While the
complainant in that case was an independent agent and not an employee, she was prohibited for one year from engaging directly or indirectly in
activities of other companies that compete with the business of her principal. We noted therein that the restriction did not prohibit the agent from
engaging in any other business, or from being connected with any other company, for as long as the business or company did not compete with the
principals business. Further, the prohibition applied only for one year after the termination of the agents contract and was therefore a reasonable
restriction designed to prevent acts prejudicial to the employer.
Conformably then with the aforementioned pronouncements, a non-involvement clause is not necessarily void for being in restraint of trade as long as
there are reasonable limitations as to time, trade, and place.
In this case, the non-involvement clause has a time limit: two years from the time petitioners employment with respondent ends. It is also limited as to
trade, since it only prohibits petitioner from engaging in any pre-need business akin to respondents.
More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge of respondents Hongkong and
Asean operations, she had been privy to confidential and highly sensitive marketing strategies of respondents business. To allow her to engage in a
rival business soon after she leaves would make respondents trade secrets vulnerable especially in a highly competitive marketing environment. In
sum, we find the non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and reasonable protection to
respondent.
In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. Article 1159 of the same Code also
provides that obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Courts
cannot stipulate for the parties nor amend their agreement where the same does not contravene law, morals, good customs, public order or public
policy, for to do so would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force and effect
thereto.15 Not being contrary to public policy, the non-involvement clause, which petitioner and respondent freely agreed upon, has the force of law
between them, and thus, should be complied with in good faith.
Duldulao vs. Court of Appeals
G.R. No. 164893, March 1, 2007
Facts:
Constancia P. Duldulao was hired by respondent Baguio Colleges Foundation (BCF) as secretary/clerk-typist and assigned to the College of Law
sometime in June of 1987.
In August 1996, a certain law student filed a complaint against petitioner for alleged irregularities in the performance of her work. Petitioner was told to
submit her answer to the complaint and given several extensions within which to do so. Despite the extensions, she failed to submit her answer. On 1
October 1996, Dean Honorato V. Aquino of the College of Law informed respondents President, Atty. Edilberto B. Tenefrancia, of petitioners failure to
file her answer and recommended the assignment of petitioner outside the College of Law, not only because of such failure to answer but also her
having admitted fraternizing with students of the College. On the same day, respondents Vice President for Administration, Leonardo S. dela Cruz,
issued a Department Order to Mrs. Duldulao informing her of her transfer to the Office of the Principals of the High School and Elementary
Departments.
On 21 January 1997, the Administrative Investigating Committee found the Department Order appropriate since it was intended to prevent the
controversy between petitioner and the complaining student from adversely affecting a harmonious relationship within the College of Law among all its
constituents. On 17 February 1997, petitioner filed a complaint for constructive dismissal with prayer for moral and exemplary damages and attorneys
fees before the NLRC Regional Arbitration Branch-Cordillera Administrative Region. She stated that aside from being tainted with procedural lapses in

60

violation of her right to due process, the transfer also amounted to her demotion in rank. The NLRC dismissed the complaint for lack of merit which
decision was affirmed by the Court of Appeals.
Issue:
Whether petitioners transfer as secretary/clerk-typist from the College of Law to the High School and Elementary Departments amounts to constructive
dismissal.
Held:
There was no constructive dismissal.
The SC held that there is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the
part of the employee that it would foreclose any choice by him except to forego his continued employment. It exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.
The factual milieu in this case is different. It is the employers prerogative, based on its assessment and perception of its employees qualifications,
aptitudes, and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with
maximum benefit to the company. An employees right to security of tenure does not give him such a vested right in his position as would deprive the
company of its prerogative to change his assignment or transfer him where he will be most useful.
When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries,
benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. The transfer of petitioner does not amount to
a demotion in rank and status.
At the onset, it must be stressed that petitioner has no vested right to the position of secretary/clerk-typist of the College of Law that may operate to
deprive respondent of its prerogative to change or transfer her assignment to another department where she will be most useful in its judgment.
After all, petitioner was employed by respondent which is the BCF system itself, not the College of Law only, which is but a component part of the
system. Thus, to respondent belongs the prerogative to reassign petitioner to any of its departments as it sees fit, provided that such reassignment is
made in good faith.
Petitioner was a secretary/clerk-typist of the College of Law. As such secretary/clerk-typist, she would only have to perform the same duties in the Office
of the Principals of the High School and Elementary Departments. Petitioner was not denied due process. Reassignments made by management
pending investigation of irregularities allegedly committed by an employee fall within the ambit of management prerogative. The transfer, while
incidental to the pending charges against petitioner, was not meant to be a penalty, but rather a preventive measure to avoid further damage to the
College of Law. The purpose of reassignments is no different from that of preventive suspension which management could validly impose as a measure
of protection of the companys property pending investigation of any malfeasance or misfeasance committed by the employee.
Almario vs. Philippine Airlines
G.R. No. 170928, September 11, 2007
Facts:
This is a complaint for reimbursement of training costs filed by PAL against its pilot, Almario.
Almario was initially hired as a Boeing 747 Systems Engineer. Later on, he successfully bid for the higher position of Airbus 300 First Officer, for which
he was given additional training at PALs expense. After completing the course,Almario served as A-300 First Officer of PAL but after eight months of
service, he tendered his resignation for personal reasons.
PAL then wrote him a letter, stating that they invested heavily on his professional training on the basis that he continue to serve the Company for a
definite period of time which is approximately 3 yrs. In short, PAL wanted Almario to reconsider his resignation, otherwise they would be compelled to
ask reimbursement for the training costs from him. Despite this,Almario pushed through with his resignation. Hence, a reimbursement case was filed.
In the lower court, PAL invoked the existence of an innominate contract of do ut facias (I give that you may do) withAlmario in that by spending for
his training, he would render service to it until the costs of training were recovered in at least 3 yrs. They based the period of 3 yrs to a decision of the
Secretary of Labor concerning PALs CBA with its employee-union.
For his part, Almario denied the existence of any agreement with PAL that he would render service to it for three years after his training, failing which he
would reimburse the training costs. The lower court ruled in favor of Almario. On appeal, CA found Almario liable under the CBA and under Article 22 of
the Civil Code.
Issue: Whether or not Almario is obliged to reimburse the costs incurred by PAL for his training
Held:
The petition fails.
The rationale of the three-year period is the prohibitive training costs. At an earlier time, when the CBA between PAL and its employees were still
negotiated, the Secretary of Labor basically ruled that PAL should be allowed a return on investment for their pilots training expenses. Thus, the

61

provisions that pilots 57 years of age shall be frozen and pilots less than 57, provided they have previously qualified in any companys turbo-jet aircraft,
shall be permitted to occupy anyposition in the companys turbo-jet fleet, were incorporated in later incarnations of the CBA.
When Almario took the training course, he was about 39 yrs old, 21 yrs away from the retirement age of 60. Hence, with the maturity, expertise and
experience he gained from the training course, he was expected to serve PAL for at least three yrs to offset the prohibitive costs thereof.
Article 22 of the Civil Code applies. This provision on unjust enrichment recognizes the principle that one may not enrich himself at the expense of
another.
Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so long as it is appreciable in money. It may consist of some
positive pecuniary value incorporated into the patrimony of the defendant, such as: (1) the enjoyment of a thing belonging to the plaintiff; (2) the benefits
from service rendered by the plaintiff to the defendant; (3) the acquisition of a right, whether real or personal; (4) the increase of value of property of the
defendant; (5) the improvement of a right of the defendant, such as the acquisition of a right of preference; (6) the recognition of the existence of a right
in the defendant; and (7) the improvement of the conditions of life of the defendant.
The enrichment of the defendant must have a correlative prejudice, disadvantage, or injury to the plaintiff. This prejudice may consist, not only of the
loss of property or the deprivation of its enjoyment, but also of non-payment of compensation for a prestation or service rendered to the
defendant without intent to donate on the part of the plaintiff, or the failure to acquire something which the latter would have obtained. The injury to the
plaintiff, however, need not be the cause of the enrichment of the defendant. It is enough that there be some relation between them, that
theenrichment of the defendant would not have been produced had it not been for the fact from which the injury to the plaintiff is derived.
In the present case, PAL invested for the training of Almario on the expectation that they may recover by availing ofAlmarios services for at least three
years. This expectation was not fully realized, however, due to Almarios resignation after only eight months of service following the completion of
his training course. He cannot, therefore, refuse to reimburse the costs of training without violating the principle of unjust enrichment.
Bisig Manggagawa sa Tryco vs. NLRC
G.R. No. 151309, Oct. 15, 2008
Facts:
Petitioners are employees of Tryco Pharmaceuticals Corporation, maker of veterinary medicines and products. Tryco and the petitioners signed a
Memorandum of Agreement (MOA), providing for a compressed workweek schedule to be implemented in the company effective May 20, 1996. The
MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the
Implementation of Compressed Workweek.
As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be
due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim
overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in
lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12
p.m., such employee shall be entitled to overtime pay. Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of
the implementation of a compressed workweek in the company. In January 1997, BMT and Tryco negotiated for the renewal of their collective
bargaining agreement (CBA) but failed to arrive at a new agreement. Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of
Animal Industry of the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City since
its operating permit was licensed there. Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed petitioners to report to the
company's plant site in Bulacan. BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. In
protest, BMT declared a strike on May 26, 1997. Petitioners then filed their complaints to the labor arbiter alleging that Tryco negotiated in bad faith and
unfair labor practice of Tryco by transferring the members of the union in order to paralyze it and that therefore it amounted to constructive dismissal.
Issue: WON there was constructive dismissal due to the transfer of the petitioners from Caloocan City to San Rafael Bulacan
Held:
The petition has no merit.
Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of
Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct
its own business affairs to achieve its purpose cannot be denied.
This prerogative extends to the management's right to regulate, according to its own discretion and judgment, all aspects of employment, including the
freedom to transfer and reassign employees according to the requirements of its business.Management's prerogative of transferring and reassigning
employees from one area of operation to another in order to meet the requirements of the business is, therefore, generally not constitutive of
constructive dismissal. Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department was well within the scope of its
management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of
salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. However, the employer has the

62

burden of proving that the transfer of an employee is for valid and legitimate grounds. 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.
Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the
petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents
of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. Objection to a
transfer that is 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.
Manila Electric Co. vs. Lim
G.R. No. 184769; October 5, 2010
Facts:
Rosario G. Lim (respondent), also known as Cherry Lim, is an administrative clerk at the Manila Electric Company (MERALCO). On June 4, 2008, an
anonymous letter was posted at the door of the Metering Office of the Administration building of MERALCO Plaridel, Bulacan Sector, at which
respondent is assigned, denouncing respondent. The letter reads:
Cherry Lim:
MATAPOS MONG LAMUNIN LAHAT NG BIYAYA NG MERALCO, NGAYON NAMAN AY GUSTO MONG PALAMON ANG BUONG KUMPANYA SA
MGA BUWAYA NG GOBYERNO. KAPAL NG MUKHA MO, LUMAYAS KA RITO, WALANG UTANG NA LOOB
Resource Staffing, directed the transfer of respondent to MERALCO's Alabang Sector in Muntinlupa as "A/F OTMS Clerk," effective July 18, 2008 in
light of the receipt of ". . . reports that there were accusations and threats directed against her from unknown individuals and which could possibly
compromise her safety and security."
Respondent, by letter of July 10, 2008 addressed to petitioner Ruben A. Sapitula, Vice-President and Head of MERALCO's Human Resource
Administration, appealed her transfer and requested for a dialogue so she could voice her concerns and misgivings on the matter, claiming that the
"punitive" nature of the transfer amounted to a denial of due process. Citing the grueling travel from her residence in Pampanga to Alabang and back
entails, and violation of the provisions on job security of their Collective Bargaining Agreement (CBA).
Respondent filed a petition for the issuance of a writ of habeas data against petitioners before the Regional Trial Court (RTC) of Bulacan. By
respondent's allegation, petitioners' unlawful act and omission consisting of their continued failure and refusal to provide her with details or information
about the alleged report which MERALCO purportedly received concerning threats to her safety and security amount to a violation of her right to privacy
in life, liberty and security, correctible by habeas data.
Respondent is essentially questioning the transfer of her place of work by her employer and the terms and conditions of her employment which arise
from an employer-employee relationship over which the NLRC and the Labor Arbiters under Article 217 of the Labor Code have jurisdiction.
Petitioners moved for the dismissal of the petition and recall of the TRO on the grounds that, inter alia, resort to a petition for writ of habeas data was
not in order; and the RTC lacked jurisdiction over the case which properly belongs to the NLRC.
Issue: Whether or not, RTC has jurisdiction.

Held:
Respondent's plea that she be spared from complying with MERALCO's Memorandum directing her reassignment to the Alabang Sector, under the
guise of a quest for information or data allegedly in possession of petitioners, does not fall within the province of a writ of habeas data.
It is evident that respondent's reservations on the real reasons for her transfer a legitimate concern respecting the terms and conditions of one's
employment are what prompted her to adopt the extraordinary remedy of habeas data. Jurisdiction over such concerns is inarguably lodged by law
with the NLRC and the Labor Arbiters.
Bello vs. Bonifacio Security Services, Inc.
G.R. No. 188086; August 3, 2011
Facts:
Respondent Bonifacio Security Services, Inc. (BSSI) is a domestic private corporation engaged in the business of providing security services. In July
2001, the BSSI hired Bello as a roving traffic marshal to manage traffic and to conduct security and safety-related operations in the Bonifacio Global
City (BGC). In August 2001, Bello was posted at the Negros Navigation Company in Pier 2, North Harbor, to supervise sectoral operations. In
November 2001, he was assigned at BGC as assistant detachment commander. After a week, he was transferred to Pacific Plaza Towers as assistant
detachment commander and later as detachment commander. In June 2002, he was assigned at Pier 2, North Harbor as assistant detachment

63

commander, but later reassigned to BGC. In August 2002, the BSSI hired a new operations manager, resulting in the reorganization of posts. In October
2002, Bello was assigned as roving traffic marshal at the BGC. On October 25, 2002, he filed an indefinite leave of absence when his new assignment
took effect.
On November 5, 2002, Bello filed a complaint against the BSSI and its General Manager, respondent Samuel Tomas, with the National Labor Relations
Commission (NLRC), claiming that he had been constructively dismissed when he was demoted from a detachment commander to a mere traffic
marshal. He alleged that he received a series of promotions from 2001 to 2002, from traffic marshal to supervisor, to assistant detachment commander,
and to detachment commander.
The BSSI denied Bello's claim of constructive dismissal, arguing that no promotion took place; Bello's designation as assistant detachment commander
or detachment commander was not an employment position but a duty-related assignment; Bello abandoned his job when he went on an indefinite
leave of absence and did not report for work.
Labor Arbiter Cresencio G. Ramos, Jr. found that Bello was illegally dismissed, noting that the BSSI failed to adduce evidence that Bello abandoned his
employment.
In its March 26, 2008 resolution, the NLRC affirmed the labor arbiter's decision, finding that Bello had been constructively dismissed when he was
demoted to the rank-and-file position of traffic marshal after occupying the supervisory position of assistant detachment commander and detachment
commander.
The CA nullified the NLRC resolutions, finding the records bereft of evidence substantiating the labor arbiter's and the NLRC's conclusions that Bello
had been constructively dismissed. It noted that Bello offered no evidence to prove that there was a series of promotions that would justify his claim of
subsequent demotion. The CA denied the BSSI's motion for reconsideration, paving the way for the present petition.
Issue: Whether or not, Bello was illegally dismissed.
Held:
We find no reason to disturb the CA conclusion that there was no constructive dismissal. Case law defines constructive dismissal as a cessation of work
because continued employment has been rendered impossible, unreasonable, or unlikely, as when there is a demotion in rank or diminution in pay, or
both, or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.
Other than his bare and self-serving allegations, Bello has not offered any evidence that he was promoted in a span of four months since his
employment as traffic marshal in July 2001 to a detachment commander in November 2001. During his six-month probationary period of employment, it
is highly improbable that Bello would be promoted after just a month of employment, from a traffic marshal in July 2001 to supervisor in August 2001,
and three months later to assistant detachment commander and to detachment commander in November 2001. At most, the BSSI merely changed his
assignment or transferred him to the post where his service would be most beneficial to its clients. The management's prerogative of transferring and
reassigning employees from one area of operation to another in order to meet the requirements of the business is generally not constitutive of
constructive dismissal. We see this to be the case in the present dispute so that the consequent reassignment of Bello to a traffic marshal post was well
within the scope of the BSSI's management prerogative.

Alert Security vs. Pasawilan

G.R. No. 182397, September 14, 2011
Facts:
Respondents Saidali Pasawilan, Wilfredo Verceles and Melchor Bulusan were all employed by petitioner Alert Security and Investigation Agency, Inc.
(Alert Security) as security guards beginning March 31, 1996, January 14, 1997, and January 24, 1997, respectively. They were paid 165.00 pesos a
day as regular employees, and assigned at the Department of Science and Technology (DOST) pursuant to a security service contract between the
DOST and Alert Security.
Respondents aver that because they were underpaid, they filed a complaint for money claims against Alert Security and its president and general
manager, petitioner Manuel D. Dasig, before Labor Arbiter Ariel C. Santos. As a result of their complaint, they were relieved from their posts in the
DOST and were not given new assignments despite the lapse of six months. On January 26, 1999, they filed a joint complaint for illegal dismissal
against petitioners.
Petitioners, on the other hand, deny that they dismissed the respondents. Petitioners presented "Duty Detail Orders" that Alert Security issued to show
that respondents were in fact assigned to LRTA. Respondents, however, failed to report at the LRTA and instead kept loitering at the DOST and tried to
convince other security guards to file complaints against Alert Security. Thus, on August 3, 1998, Alert Security filed a "termination report" with the
Department of Labor and Employment relative to the termination of the respondents.
Issue: Whether respondents were illegally dismissed
Held:
We rule in the affirmative.
As a rule, employment cannot be terminated by an employer without any just or authorized cause. No less than the 1987 Constitution in Section 3,
Article 13 guarantees security of tenure for workers and because of this, an employee may only be terminated for just or authorized causes that must

64

comply with the due process requirements mandated by law. Hence, employers are barred from arbitrarily removing their workers whenever and
however they want. The law sets the valid grounds for termination as well as the proper procedure to take when terminating the services of an
employee.
Although we recognize the right of employers to shape their own work force, this management prerogative must not curtail the basic right of employees
to security of tenure. There must be a valid and lawful reason for terminating the employment of a worker. Otherwise, it is illegal and would be dealt with
by the courts accordingly.
The Labor Code, as amended, enumerates several just and authorized causes for a valid termination of employment. An employee asserting his right
and asking for minimum wage is not among those causes. Dismissing an employee on this ground amounts to retaliation by management for an
employees legitimate grievance without due process. Such stroke of retribution has no place in Philippine Labor Laws.
On the element of the failure of the employee to report for work, we also cannot accept the allegations of petitioners that respondents unjustifiably
refused to report for duty in their new posts. A careful review of the records reveals that there is no showing that respondents were notified of their new
assignments. Granting that the "Duty Detail Orders" were indeed issued, they served no purpose unless the intended recipients of the orders are
informed of such.
The employer cannot simply conclude that an employee is ipso facto notified of a transfer when there is no evidence to indicate that the employee had
knowledge of the transfer order. Hence, the failure of an employee to report for work at the new location cannot be taken against him as an element of
abandonment.
We acknowledge and recognize the right of an employer to transfer employees in the interest of the service. This exercise is a management prerogative
which is a lawful right of an employer. However, like all rights, there are limitations to the right to transfer employees. As ruled in the case of Blue Dairy
Corporation v. NLRC:
x x x The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of
justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by
the employer to rid himself of an undesirable worker. In particular, the employer must be able to 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. x x x
In addition to these tests for a valid transfer, there should be proper and effective notice to the employee concerned. It is the employers burden to show
that the employee was duly notified of the transfer. Verily, an employer cannot reasonably expect an employee to report for work in a new location
without first informing said employee of the transfer. Petitioners insistence on the sufficiency of mere issuance of the transfer order is indicative of bad
faith on their part.
Manila Pavilion Hotel vs. Delada
G.R. No. 189947, January 25, 2011
Facts:
Delada was the Union President of the Manila Pavilion Supervisors Association at MPH. He was originally assigned as Head Waiter of Rotisserie, a
fine-dining restaurant operated by petitioner. Pursuant to a supervisory personnel reorganization program, MPH reassigned him as Head Waiter of
Seasons Coffee Shop, another restaurant operated by petitioner at the same hotel. Respondent declined the inter-outlet transfer and instead asked for
a grievance meeting on the matter, pursuant to their Collective Bargaining Agreement (CBA). He also requested his retention as Head Waiter of
Rotisserie while the grievance procedure was ongoing.
MPH replied and told respondent to report to his new assignment for the time being, without prejudice to the resolution of the grievance involving the
transfer. He adamantly refused to assume his new post at the Seasons Coffee Shop and instead continued to report to his previous assignment at
Rotisserie. Thus, MPH sent him several memoranda on various dates, requiring him to explain in writing why he should not be penalized for the
following offenses: serious misconduct; willful disobedience of the lawful orders of the employer; gross insubordination; gross and habitual neglect of
duties; and willful breach of trust. Despite the notices from MPH, Delada persistently rebuffed orders for him to report to his new assignment. According
to him, since the grievance machinery under their CBA had already been initiated, his transfer must be held in abeyance. Thus, on 9 May 2007, MPH
initiated administrative proceedings against him.
Issue: WON MPH retained the authority to continue with the administrative case against Delada for insubordination and willful disobedience of the
transfer order.
Held:
MPH did not lose its authority to discipline respondent for his continued refusal to report to his new assignment.
In Allied Banking Corporation, employer Allied Bank reassigned respondent Galanida from its Cebu City branch to its Bacolod and Tagbilaran branches.
He refused to follow the transfer order and instead filed a Complaint before the Labor Arbiter for constructive dismissal. While the case was pending,
Allied Bank insisted that he report to his new assignment. When he continued to refuse, it directed him to explain in writing why no disciplinary action
should be meted out to him. Due to his continued refusal to report to his new assignment, Allied Bank eventually terminated his services. When the
issue of whether he could validly refuse to obey the transfer orders was brought before this Court, we ruled thus:

65

The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer.1wphi1 Employees may object to, negotiate
and seek redress against employers for rules or orders that they regard as unjust or illegal. However, until and unless these rules or orders are declared
illegal or improper by competent authority, the employees ignore or disobey them at their peril. For Galanidas continued refusal to obey Allied Bank's
transfer orders, we hold that the bank dismissed Galanida for just cause in accordance with Article 282(a) of the Labor Code. Galanida is thus not
entitled to reinstatement or to separation pay.
It is important to note what the PVA said on Deladas defiance of the transfer order:
In fact, Delada cannot hide under the legal cloak of the grievance machinery of the CBA or the voluntary arbitration proceedings to disobey a valid order
of transfer from the management of the hotel. While it is true that Deladas transfer to Seasons is the subject of the grievance machinery in accordance
with the provisions of their CBA, Delada is expected to comply first with the said lawful directive while awaiting the results of the decision in the
grievance proceedings. This issue falls squarely in the case of Allied Banking Corporation vs. Court of Appeals x x x.
Pursuant to Allied Banking, unless the order of MPH is rendered invalid, there is a presumption of the validity of that order. Since the PVA eventually
ruled that the transfer order was a valid exercise of management prerogative, we hereby reverse the Decision and the Resolution of the CA affirming
the Decision of the PVA in this respect. MPH had the authority to continue with the administrative proceedings for insubordination and willful
disobedience against Delada and to impose on him the penalty of suspension. As a consequence, petitioner is not liable to pay back wages and other
benefits for the period corresponding to the penalty of 90-day suspension.
Barba vs. Liceo de Cagayan University
G.R. No. 193857; November 28, 2012
Facts:
Petitioner started working for respondent on July 8, 1993 as medical officer/school physician for a period of one school year or until March 31, 1994and
she was chosen by respondent to be the recipient of a scholarship grant to pursue a three-year residency training in Rehabilitation Medicine at the
Veterans Memorial Medical Center (VMMC) provided that after the duration of her study and training the petitioner shall serve the SCHOOL in whatever
position the SCHOOL desires related to the SCHOLAR's studies for a period of not less than ten (10) years;
After completing her residency training with VMMC in June 1997, petitioner returned to continue working for respondent until she was appointed as
Dean of Physical Therapy effective July 1, 2002 for a period of three (3) years unless sooner revoked for a valid cause.
Due to the low number of enrollees, respondent decided to freeze the operation of the College of Physical Therapy indefinitely thus, respondent's
President Dr. Rafaelita Pelaez-Golez wrote petitioner a letter dated March 16, 2005 informing her that her services as dean of the said college will end
at the close of the school year. Thereafter, the College of Physical Therapy ceased operations on March 31, 2005, and petitioner went on leave without
pay starting on April 9, 2005.
Subsequently, respondents Executive Vice President, Dr. Marian M. Lerin, through Dr. Glory S. Magdale, respondent's Vice President for Academic
Affairs repeatedly sent letters to the petitioner directing her to report to the College of Nursing for her teaching load to wit:

Letter dated April 27, 2005 instructing petitioner to return to work on June 1, 2005 wherein the latter responded that she has not committed
to teach in the College of Nursing and that as far as she can recall, her employment is not dependent on any teaching load.
Letter dated June 21, 2005, directing petitioner to report for work and to teach her assigned subjects on or before June 23, 2005, otherwise,
she will be dismissed from employment on the ground of abandonment wherein the latter replied through counsel, that teaching in the
College of Nursing is in no way related to her scholarship and training in the field of rehabilitation medicine. Petitioner added that coercing
her to become a faculty member from her position as College Dean is a great demotion which amounts to constructive dismissal.
Letter dated June 24, 2005 ordering her to report for work as she was still bound by the Scholarship Contract to serve respondent for two
more years which petitioner refused to heed.

On June 22, 2005, , petitioner filed a complaint before the Labor Arbiter for illegal dismissal, payment of separation pay and retirement benefits against
respondent, Dr. Magdale and Dr. Golez. She alleged that her transfer to the College of Nursing as a faculty member is a demotion amounting to
constructive dismissal.
June 28, 2005, Dr. Magdale sent petitioner a notice terminating her services on the ground of abandonment.
Issue: Whether or not the petitioners transfer to the College of Nursing as faculty member is a demotion amounting to constructive dismissal
Held:
In constructive dismissal cases, the employer has the burden of proving that its conduct and action or the transfer of an employee are for valid and
legitimate grounds such as genuine business necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer must be
able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee. In this case, petitioner's transfer was not
unreasonable, inconvenient or prejudicial to her. On the contrary, the assignment of a teaching load in the College of Nursing was undertaken by
respondent to accommodate petitioner following the closure of the College of Physical Therapy. Respondent further considered the fact that petitioner
still has two years to serve the university under the Scholarship Contract.

66

Petitioner's subsequent transfer to another department or college is not tantamount to demotion as it was a valid transfer. There is therefore no
constructive dismissal to speak of. That petitioner ceased to enjoy the compensation, privileges and benefits as College Dean was but a logical
consequence of the valid revocation or termination of such fixed-term position. Indeed, it would be absurd and unjust for respondent to maintain a
deanship position in a college or department that has ceased to exist. Under the circumstances, giving petitioner a teaching load in another
College/Department that is related to Physical Therapy thus enabling her to serve and complete her remaining two years under the Scholarship
Contract is a valid exercise of management prerogative on the part of respondent.
Best Wear Garments vs. De Lemos
G.R. no. 191281; December 5, 2012
Facts:
Petitioner Best Wear Garments is a sole proprietorship represented by its General Manager Alex Sitosta. Respondents Cecile M. Ocubillo and Adelaida
B. De Lemos were hired as sewers on piece-rate basis by petitioners on October 27, 1993 and July 12, 1994, respectively.
De Lemos claimed that after two months in her new assignment, she was able to adjust but Sitosta again transferred her to a "different operation where
she could not earn much as before because by-products require long period of time to finish." She averred that the reason for her transfer was her
refusal "to render [overtime work] up to 7:00 p.m."
On her part, Ocubillo alleged that her transfer was precipitated by her having "incurred excessive absences since 2001." Her absences were due to the
fact that her father became very sick since 2001 until his untimely demise on November 9, 2003; aside from this, she herself became very sickly. She
claimed that from September to October 2003, Sitosta assigned her to different machines "whichever is available" and that "there were times, she could
not earn for a day because there was no available machine to use."
On May 20, 2004, De Lemos filed a complaint for illegal dismissal with prayer for backwages and other accrued benefits, separation pay, service
incentive leave pay and attorney's fees. A similar complaint was filed by Ocubillo on June 10, 2004. Both alleged in their position paper that in August
2003, Sitosta arbitrarily transferred them to other areas of operation of petitioner's garments company, which they said amounted to constructive
dismissal as it resulted in less earnings for them.
Respondent company points out that it is engaged in the business of garments manufacturing as a sub-contractor. That, the kind of work it performs is
dependent into with its client which specifies the work it has to perform. And, that corollary thereto, the work to be performed by its employees will
depend on the work specifications in the contract. Thus, if complainants have been assigned to different operations, it was pursuant to the requirements
of its contracts. As to the allegation of respondents that the reason for their transfer was their refusal to render overtime work until 7:00 p.m., petitioners
asserted that respondents are piece-rate workers and hence they are not paid according to the number of hours worked.
Issue: Whether or not deployment of sewers to work on different types of garments as is arbitrary and constitute constructive dismissal
Held:
The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative
to change their assignments or to transfer them. Thus, an employer may 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.
In Blue Dairy Corporation v. NLRC, we held that:
The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice
and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the
employer to rid himself of an undesirable worker. In particular, the employer must be able to 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 employee's transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because
continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise,
constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee
leaving him with no option but to forego with his continued employment.
Being piece-rate workers assigned to individual sewing machines, respondents' earnings depended on the quality and quantity of finished products.
That their work output might have been affected by the change in their specific work assignments does not necessarily imply that any resulting
reduction in pay is tantamount to constructive dismissal. Workers under piece-rate employment have no fixed salaries and their compensation is
computed on the basis of accomplished tasks. As admitted by respondent De Lemos, some garments or by-products took a longer time to finish so they
could not earn as much as before. Also, the type of sewing jobs available would depend on the specifications made by the clients of petitioner company.
Under these circumstances, it cannot be said that the transfer was unreasonable, inconvenient or prejudicial to the respondents. Such deployment of
sewers to work on different types of garments as dictated by present business necessity is within the ambit of management prerogative which, in the
absence of bad faith, ill motive or discrimination, should not be interfered with by the courts.
Royal Plant Workers Union vs. Coca-Cola Bottlers Phils., Inc. -Cebu Plant

67

G.R.

No.

198783,

April

15,

2013

Facts:
Under the employ of each bottling plant are bottling operators. In the case of the plant in Cebu City, there are 20 bottling operators who work for its
Bottling Line 1 while there are 12-14 bottling operators who man its Bottling Line 2. All of them are male and they are members of herein respondent
Royal Plant Workers Union (ROPWU).
The bottling operators work in two shifts. The first shift is from 8 a.m. to 5 p.m. and the second shift is from 5 p.m. up to the time production operations
is finished. Thus, the second shift varies and may end beyond eight (8) hours. However, the bottling operators are compensated with overtime pay if the
shift extends beyond eight (8) hours. For Bottling Line 1, 10 bottling operators work for each shift while 6 to 7 bottling operators work for each shift for
Bottling Line 2.
Each shift has rotations of work time and break time. Prior to September 2008, the rotation is this: after two and a half (2 1/2) hours of work, the bottling
operators are given a 30-minute break and this goes on until the shift ends. In September 2008 and up to the present, the rotation has changed and
bottling operators are now given a 30-minute break after one and one half (1 1/2) hours of work.
In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their request. In 1988, the bottling operators of then Bottling Line 1
followed suit and asked to be provided also with chairs. Their request was likewise granted. Sometime in September 2008, the chairs provided for the
operators were removed pursuant to a national directive of petitioner. With this task of moving constantly to check on the machinery and equipment
assigned to him, a bottling operator does not need a chair anymore, hence, petitioner's directive to remove them. Furthermore, CCBPI rationalized that
the removal of the chairs is implemented so that the bottling operators will avoid sleeping, thus, prevent injuries to their persons.
The bottling operators took issue with the removal of the chairs.
Issue: Whether or not the removal of the bottling operators' chairs from CCBPI's production/manufacturing lines a valid exercise of a management
prerogative
Held:
Yes.
The Court has held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. The exercise of management prerogative, however, is
not absolute as it must be exercised in good faith and with due regard to the rights of labor.
In the present controversy, it cannot be denied that CCBPI removed the operators' chairs pursuant to a national directive and in line with its "I Operate, I
Maintain, I Clean" program, launched to enable the Union to perform their duties and responsibilities more efficiently. The chairs were not removed
indiscriminately. They were carefully studied with due regard to the welfare of the members of the Union. The removal of the chairs was compensated
by: a) a reduction of the operating hours of the bottling operators from a two-and-one-half (2 1/2)-hour rotation period to a one-and-a-half (1 1/2) hour
rotation period; and b) anincrease of the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid instances of operators sleeping on the job while
in the performance of their duties and responsibilities and because of the fact that the chairs were not necessary considering that the operators
constantly move about while working. In short, the removal of the chairs was designed to increase work efficiency. Hence, CCBPI's exercise of its
management prerogative was made in good faith without doing any harm to the workers' rights.
The rights of the Union under any labor law were not violated. There is no law that requires employers to provide chairs for bottling operators. Further,
The operators' chairs cannot be considered as one of the employee benefits covered in Article 100 of the Labor Code. In the Court's view, the term
"benefits" mentioned in the non-diminution rule refers to monetary benefits or privileges given to the employee with monetary equivalents. Such benefits
or privileges form part of the employees' wage, salary or compensation making them enforceable obligations
Peckson vs. Robinsons Supermarket Corp.
G.R.
No.

198534,

July

3,

2013

Facts:
The petitioner first joined the Robinsons Supermarket Corporation (RSC) as a Sales Clerk on November 3, 1987. On October 26, 2006, she was
holding the position of Category Buyer when respondent Roena Sarte (Sarte), RSC's Assistant Vice-President for Merchandising, reassigned her to the
position of Provincial Coordinator, effective November 1, 2006. Claiming that her new assignment was a demotion because it was non-supervisory and
clerical in nature, the petitioner refused to turn over her responsibilities to the new Category Buyer, or to accept her new responsibilities as Provincial
Coordinator.
Issue: Whether or not petitioners lateral transfer from Category Buyer to Provincial Coordinator is considered a demotion amounting to constructive
dismissal
Held:
Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, the time, place and manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline, dismissal, and recall of employees. The only limitations to the exercise of this prerogative are those
imposed by labor laws and the principles of equity and substantial justice.

68

Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is a movement from one position to another of
equivalent rank, level or salary without break in the service or a lateral movement from one position to another of equivalent rank or salary; (b) the
employer has the inherent right to transfer or reassign an employee for legitimate business purposes; (c) a transfer becomes unlawful where it is
motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient cause; (d) the employer must be able
to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee.
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him, and it does not involve a demotion in rank or a diminution of
his salaries, benefits and other privileges, the employee may not complain that it amounts to a constructive dismissal.
The respondents had the burden of proof that the transfer of the petitioner was not tantamount to constructive dismissal. The respondents have
discharged the burden of proof that the transfer of the petitioner was not tantamount to constructive dismissal.
In the case at bar, we agree with the appellate court that there is substantial showing that the transfer of the petitioner from Category Buyer to Provincial
Coordinator was not unreasonable, inconvenient, or prejudicial to her. The petitioner failed to dispute that the job classifications of Category Buyer and
Provincial Coordinator are similar, or that they command a similar salary structure and responsibilities. We agree with the NLRC that the Provincial
Coordinator's position does not involve mere clerical functions but requires the exercise of discretion from time to time, as well as independent
judgment, since the Provincial Coordinator gives appropriate recommendations to management and ensures the faithful implementation of policies and
programs of the company. It even has influence over a Category Buyer because of its recommendatory function that enables the Category Buyer to
make right decisions on assortment, price and quantity of the items to be sold by the store.
V.

TERMINATION OF EMPLOYMENT

Retuya vs. NLRC

G.R. No. 148848. August 5, 2003
Facts:
Private respondent, Insular Builders, Inc., is a family-owned corporation managed and operated principally by Antonio Murillo, father, and his son,
Rodolfo Murillo. It is engaged in the construction business. Petitioners, on the other hand, were workers who have rendered services in various
corporations of private respondents, namely Mindanao Integrated Builders, Inc., Sta. Clara Plywood, Inc., Insular Builders, Inc. and Queen City
Builders, Inc. Early 1993, at the height of the feud between private respondents Antonio Murillo and Rodolfo Murillo, the former discharged the latter
from his position as manager of Insular Builders, Inc. and assumed control of the company. Petitioners found themselves in the middle of the crossfire
and were told to temporarily stop working. Later, or on July 26, 1993, private respondent Antonio Murillo dismissed petitioners and reported the matter
to the DOLE. Petitioners were however made to continue their work, rendering the same services, in the same place, locality and at the same office but
under a different company, the Queen City Builders, Inc., managed and controlled by private respondent Rodolfo Murillo. On August 3, 1993, petitioners
filed with the NLRC-RAB X, a complaint for illegal dismissal, non-payment of wages, 13th month pay, and retirement pay as regards petitioner Abdon
Dayson. Petitioners averred that they were terminated from employment on July 26, 1993 without prior notice and also in absence of any valid cause.
They alleged that their termination was an off-shoot of the supposed personal rift and disagreements between private respondents Antonio Murillo and
Rodolfo Murillo. On the other hand, private respondents Insular Builders, Inc. and Antonio Murillo deny having employed petitioners Baltazar Quilat,
Abdon Dayson and Eleuterio Ensalada as they were personal employees of and rendering services to private respondent Rodolfo Murillo.
Issue:
Whether or not petitioners are entitled to full back wages and separation pay considering they were found to be illegally dismissed?
Ruling:
The SC held that illegally dismissed employees were entitled to full back wages that should not be diminished or reduced by the amount
they had earned from another employment during the period of their illegal dismissal. While litigating, employees must still earn a living. Furthermore,
as penalty for their illegal dismissal, their employers must pay them full back wages.
In the present case, petitioners were dismissed because of a "change of management." They were not given any prior written notice, but simply told
that their services were terminated on the day they stopped working for Insular Builders, Inc. Under the circumstances, the CA was correct in upholding
the labor arbiter's finding that they had been illegally dismissed. Having been illegally dismissed, petitioners should be awarded back wages in
accordance with Bustamante v. NLRC. The fact that they worked for a sister company immediately after being dismissed from Insular Builders, Inc.
should not preclude such award.
The Court deems it appropriate, however, to reconsider such earlier ruling on the computation of backwages as enunciated in said Pines City
Educational Center case, by now holding that comfortably with the evident legislative intent as expressed in Rep. Act. No. 6715, above-quoted,
backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him
elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his
dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he
has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers
than was previously given them under the Mercury Drug rule or the 'deduction of earnings elsewhere' rule. Therefore, in accordance with R.A. No. 6715,
petitioners are entitled to their full backwages, inclusive of allowances and other benefits or their monetary equivalent, from the time their actual
compensation was withheld from them up to the time of their actual reinstatement.

69

While it may be true that petitioners continued to work in the same place and office as in their previous employment, it is equally true that they had in
fact been illegally dismissed by their previous employer. Thus, they lost their former work status and benefits in a manner violative of the law. They
became new employees of the latter firm and, as such, were deprived of seniority and other employment benefits they had when they were still with
their former employer. Moreover, petitioners are entitled to separation pay. As provided by Article 279 of the Labor Code, an illegally dismissed
employee is entitled to the twin reliefs of 1) either reinstatement or separation pay, if reinstatement is no longer feasible; and 2) back wages. These are
distinct and separate reliefs given to alleviate the economic setback brought about by the employee's dismissal. The award of one does not bar the
other. Back wages may be awarded without reinstatement, and reinstatement may be ordered without awarding back wages. Petition for backwages
and separation is granted.
Agabon vs. NLRC
GR No. 158693. November 17, 2003
Facts:
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It
employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they
were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December 28,
1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims and, in lieu of
reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999.
Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a
"pakyaw" basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as
Social Security System (SSS) members. Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing.
Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work. In fact, private respondent sent
two letters to the last known addresses of the petitioners advising them to report for work. Private respondent's manager even talked to petitioner
Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of
cornice installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company.
Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed
the illegal dismissal case.
Issue:
Whether or not petitioners abandoned their work.
Ruling:
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. 14 It is a form of neglect of duty, hence, a just cause
for termination of employment by the employer. 15 For a valid finding of abandonment, these two factors should be present: (1) the failure to report for
work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to
discontinue the employment must be shown by clear proof that it was deliberate and unjustified.
In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another
company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In
January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they
would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee
relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him.
The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent,
however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because
they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice
requirements to the employee's last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process.
Jaka Food Processing vs. Pacot
G.R. No. 151378. March 28, 2005
Facts:
Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by petitioner
JAKA Foods Processing Corporation (JAKA, for short) until the latter terminated their employment on August 29, 1997 because the corporation was "in
dire financial straits". It is not disputed, however, that the termination was effected without JAKA complying with the requirement under Article 283 of the
Labor Code regarding the service of a written notice upon the employees and the Department of Labor and Employment at least one (1) month before
the intended date of termination.
In time, respondents separately filed with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) complaints for illegal
dismissal, underpayment of wages and nonpayment of service incentive leave and 13th month pay against JAKA and its HRD Manager, Rosana
Castelo. After due proceedings, the Labor Arbiter rendered a decision 3 declaring the termination illegal and ordering JAKA and its HRD Manager to
reinstate respondents with full backwages, and separation pay if reinstatement is not possible.

70

Issue: What are the legal implications of a situation where an employee is dismissed for cause but such dismissal was effected without the employer's
compliance with the notice requirement under the Labor Code.
Ruling:
In the very recent case of Agabon vs. NLRC, 8 we had the opportunity to resolve a similar question. Therein, we found that the employees committed a
grave offense, i.e., abandonment, which is a form of a neglect of duty which, in turn, is one of the just causes enumerated under Article 282 of the Labor
Code. In said case, we upheld the validity of the dismissal despite non-compliance with the notice requirement of the Labor Code. However, we
required the employer to pay the dismissed employees the amount of P30,000.00, representing nominal damages for non-compliance with statutory
due process. The difference between Agabon and the instant case is that in the former, the dismissal was based on a just cause under Article 282 of the
Labor Code while in the present case, respondents were dismissed due to retrenchment, which is one of the authorized causes under Article 283 of the
same Code. A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the
employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected
his duties. Thus, it can be said that the employee himself initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the
employee. Instead, the dismissal process is initiated by the employer's exercise of his management prerogative, i.e. when the employer opts to install
labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program.
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice
requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the
employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal, process was initiated by the employer's exercise of his management prerogative.
It is, therefore, established that there was ground for respondents' dismissal, i.e., retrenchment, which is one of the authorized causes enumerated
under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article.
Considering the factual circumstances in the instant case and the above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00.
Mauricio vs. NLRC
G.R. No.164635. November 17, 2005
Facts:
Petitioner, Majurine L. Mauricio, started working as an Administrative Assistant in the Legal Department of the Manila Banking Corporation on July 1,
1999 as a probationary employee. As a pre-employment requirement, the bank directed the submission by petitioner of, among other things, a 1x1 ID
picture, 2 x 2 ID picture, two reference letters, and clearance from the employees previous employment. Petitioner failed to submit the required
documents, however. The bank thus gave her up to December 15, 1999 to comply, and advised her that the processing of her regularization as
employee would be held in abeyance. Despite the deadline given her, petitioner still failed to comply with the requirements, drawing the bank to send
her a Memorandum dated December 27, 1999 signed by its Vice-President for Personnel Department Clarence D. Guerrero (Guerrero), giving her until
December 29, 1999 to submit the requirements, and informing that her failure to do so would cause the termination of her employment effective
December 29, 1999.
Petitioner, by letter of December 28, 1999, informed the bank that she could not secure a clearance from her previous employer, the Manila Bankers
Life Insurance Corporation (MBLIC), as she had a pending case with it. She thus requested that any action relative to her employment be held in
abeyance as she was still following up the early resolution of the case. Said request was denied by the bank. Petitioner thus filed on January 21, 2000
a complaint for illegal dismissal, unpaid salary, and moral and exemplary damages against the bank and Guerrero.
Issue:
Whether or not petitioner was illegally dismissed?
Ruling:
The SC held that the CA was correct when it ruled that in terminating petitioners probationary employment due to her failure to submit a certificate of
clearance from her previous employer, the bank was merely exercising its management prerogative.
Industrial Timber Corp. vs. Ababon
G.R. No. 164518. January 25, 2006
Facts:
Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant located at Agusan, Pequeo, Butuan City, leased to Industrial Timber
Corporation (ITC) on August 30, 1985 for a period of five years. Thereafter, ITC commenced operation of the plywood plant and hired 387 workers.On
March 16, 1990, ITC notified the Department of Labor and Employment (DOLE) and its workers that effective March 19, 1990 it will undergo a "no plant
operation" due to lack of raw materials and will resume only after it can secure logs for milling. Meanwhile, IPGC notified ITC of the expiration of the
lease contract in August 1990 and its intention not to renew the same. On June 26, 1990, ITC notified the DOLE and its workers of the plant's shutdown
due to the non-renewal of anti-pollution permit that expired in April 1990. 6 This fact and the alleged lack of logs for milling constrained ITC to lay off all
its workers until further notice. This was followed by a final notice of closure or cessation of business operations on August 17, 1990 with an advice for
all the workers to collect the benefits due them under the law and CBA. On October 15, 1990, IPGC took over the plywood plant after it was issued a

71

Wood Processing Plant Permit No. WPR-1004-081791-042, 8 which included the anti-pollution permit, by the Department of Environment and Natural
Resources (DENR) coincidentally on the same day the ITC ceased operation of the plant. This prompted Virgilio Ababon, et al. to file a complaint
against ITC and IPGC for illegal dismissal, unfair labor practice and damages. They alleged, among others, that the cessation of ITC's operation was
intended to bust the union and that both corporations are one and the same entity being controlled by one owner. On January 20, 1992, after requiring
both parties to submit their respective position papers, Labor Arbiter Irving A. Petilla rendered a decision which refused to pierce the veil of corporate
fiction for lack of evidence to prove that it was used to perpetuate fraud or illegal act; upheld the validity of the closure; and ordered ITC to pay
separation pay of 1/2 month for every year of service.
Ababon, et al. appealed to the NLRC. On May 20, 1993, the NLRC set aside the decision of the Labor Arbiter and ordered the reinstatement of the
employees to their former positions, and the payment of full back wages, damages and attorney's fees. On the second Petition for Relief, the NLRC set
aside all its prior decision and resolutions.
Issue: Whether Ababon, et al. were illegally dismissed due to the closure of ITC's business; and whether they are entitled to separation pay,
backwages, and other monetary awards.
Ruling:
Work is a necessity that has economic significance deserving legal protection. The social justice and protection to labor provisions in the Constitution
dictate so. On the other hand, employers are also accorded rights and privileges to assure their self-determination and independence, and reasonable
return of capital. This mass of privileges comprises the so-called management prerogatives. Although they may be broad and unlimited in scope, the
State has the right to determine whether an employer's privilege is exercised in a manner that complies with the legal requirements and does not offend
the protected rights of labor. One of the rights accorded an employer is the right to close an establishment or undertaking. The right to close the
operation of an establishment or undertaking is one of the authorized causes in terminating employment of workers, the only limitation being that the
closure must not be for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code.
A reading of Article 283 of the Labor Code shows that a partial or total closure or cessation of operations of establishment or undertaking may either be
due to serious business losses or financial reverses or otherwise. Under the first kind, the employer must sufficiently and convincingly prove its
allegation of substantial losses, while under the second kind, the employer can lawfully close shop anytime as long as cessation of or withdrawal from
business operations was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as he
pays his employees their termination pay in the amount corresponding to their length of service. Just as no law forces anyone to go into business, no
law can compel anybody to continue the same.
It would be stretching the intent and spirit of the law if a court interferes with management's prerogative to close or cease its business operations just
because the business is not suffering from any loss or because of the desire to provide the workers continued employment. Having established that
ITC's closure of the plywood plant was done in good faith and that it was due to causes beyond its control, the conclusion is inevitable that said closure
is valid.
Consequently, Ababon, et al. could not have been illegally dismissed to be entitled to full backwages.
Equitable Bank vs. Sadac
G.R. No. 164772. June 8, 2006
Facts:
Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1 August 1981, and subsequently General
Counsel on 8 December 1981. On 26 June 1989, nine lawyers of petitioner Banks Legal Department, in a letter-petition to the Chairman of the Board
of Directors, accused respondent Sadac of abusive conduct, and ultimately, petitioned for a change in leadership of the department.
On the ground of lack of confidence in respondent Sadac, under the rules of client and lawyer relationship, petitioner Bank instructed respondent Sadac
to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto, respondent Sadac
requested for a full hearing and formal investigation but the same remained unheeded. On 9 November 1989, respondent Sadac filed a complaint for
illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. After learning of the filing of the
complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on 10 August 1989, respondent Sadac was removed from his office
and ordered disentitled to any compensation and other benefits.
Issue: Whether or not Respondent Sadac was illegally dismissed?
Ruling:
The SC held that respondent Sadac was dismissal illegal. The existence of the employer-employee relationship between petitioner Bank and
respondent Sadac had been duly established bringing the case within the coverage of the Labor Code. Sec. 26, Rule 138 of the Rules of Court is not
applicable, as claimed by the petitioner, that the association between the parties was one of a client-lawyer relationship, and, thus, it could terminate at
any time the services of respondent Sadac. Respondent Sadacs dismissal was grounded on any of the causes stated in Article 282 of the Labor Code.
Petitioner Bank disregarded the procedural requirements in terminating respondent Sadacs employment as so required by Section 2 and Section 5,
Rule XIV, Book V of the Implementing Rules of the Labor Code.
Decision of the NLRC is affirmed.

72

Heirs of Sara Lee vs. Rey

G.R. No. 1499013. August 31, 2006
Facts:
The House of Sara Lee (petitioner) is engaged in the direct selling of a variety of product lines for men and women. In the pursuit of its business, the
petitioner engages and contracts with dealers to sell the aforementioned merchandise. These dealers, known either as "Independent Business
Managers" (IBMs) or "Independent Group Supervisors" (IGSs), depending on whether they sell individually or through their own group, would obtain at
discounted rates the merchandise from the petitioner on credit and then sell the same products to their own customers at fixed prices also determined
by the petitioner. Under existing company policy, the dealers must remit to the petitioner the proceeds of their sales within a designated credit period,
which would either be 38 days for IGSs or 52 days for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner.
Cynthia Rey (respondent), at the time of her dismissal from employment, or on June 25, 1996, held the position of Credit Administration Supervisor or
CAS at the Cagayan de Oro City branch of the petitioner. While respondent was still working in Butuan City, she allegedly instructed the Accounts
Receivable Clerk of the Cagayan de Oro outlet, to change the credit term of one of the IBMs of the petitioner, who happens to be respondents sister-inlaw, from the 52-day limit to an "unauthorized" term of 60 days. The respondent made the instruction, just before the computer data for the computation
of the Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this allegedly unauthorized act of respondent to
her Branch Operations Manager, Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records and
discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were several other IBMs
whose credit terms had been similarly extended beyond the periods allowed by company policy. BOM Villagracia then summoned the respondent and
required her to explain the unauthorized credit extensions.
On the basis of the hearing, the alleged voluntary admissions of respondent, and the findings of the auditors report, the petitioner, on June 25, 1996,
formally dismissed the respondent for breach of trust and confidence.
Issue: Whether or not the petitioner validly terminated respondents employment on the ground of loss of trust and confidence.
Ruling:
Contrary to the findings of the NLRC and the CA, the Court holds that respondent was dismissed for a just cause.
Loss of confidence as a just cause for dismissal is premised on the fact that an employee concerned holds a position of trust and confidence. This
situation applies where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the
employers property. But, in order to constitute a just cause for dismissal, the act complained of must be "work-related," such that the employee
concerned is unfit to continue working for the employer.
The nature of her work requires a substantial amount of trust and confidence on the part of the employer. Being the Credit Administration Supervisor of
the Cagayan de Oro and Butuan City branches of the petitioner, respondent occupied a highly sensitive and critical position and may thus be dismissed
on the ground of loss of trust and confidence. Clearly, respondents position involves a high degree of responsibility requiring trust and confidence. The
position carried with it the duty to observe proper company procedures in the fulfillment of her job, as it relates closely to the financial interests of the
company. Respondents unauthorized extensions of the credit periods of the dealers are prejudicial to the interest of the petitioner and bear serious
financial implications
Well-settled is the rule that separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on her moral character. Inasmuch as the reason for which the respondent was validly separated involves her
integrity, which is required for the position of Credit Administration Supervisor, she is not worthy of compassion as to deserve separation pay for her
length of service.
Galaxie Steel Workers Union vs. NLRC
G.R. No. 165757. October 17, 2006
Facts:
Respondent Galaxie Steel Corporation (Galaxie) is a corporation engaged in the business of manufacturing and sale of re-bars and steel billets which
are used primarily in the construction of high-rise buildings. On account of serious business losses which occurred in 1997 up to mid-1999 totaling
around P127,000,000.00, Galaxie decided to close down its business operations.
Galaxie thus filed on July 30, 1999 a written notice with the Department of Labor and Employment (DOLE) informing the latter of its intended closure
and the consequent termination of its employees effective August 31, 1999. And it posted the notice of closure on the corporate bulletin board
Galaxie thus filed on July 30, 1999 a written notice with the Department of Labor and Employment (DOLE) informing the latter of its intended closure
and the consequent termination of its employees effective August 31, 1999. And it posted the notice of closure on the corporate bulletin board.
Petitioners Galaxie Steel Workers Union and Galaxie employees filed a complaint for illegal dismissal, unfair labor practice, and money claims against
Galaxie.

73

Issue: Whether or not there was a valid termination of employment of petitioners due to closure on account of serious losses.
Ruling:
In this case, the Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in ruling that Galaxies closure or cessation of business operations
was due to serious business losses or financial reverses, and not because of any alleged anti-union position. This Court finds no reason to Respecting
petitioners claim for separation pay, modify such finding.
Where, the closure then is due to serious business losses, the Labor Code does not impose any obligation upon the employer to pay separation
benefits. Explaining the policy distinction in Article 283 of the Labor Code, this Court, in Cama v. Jonis Food Services, Inc., declared:16
The Constitution, while affording full protection to labor, nonetheless, recognizes "the right of enterprises to reasonable returns on investments, and to
expansion and growth." In line with this protection afforded to business by the fundamental law, Article 283 of the Labor Code clearly makes a policy
distinction. It is only in instances of "retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses" that employees whose employment has been terminated as a result are entitled to separation
pay. In other words, Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses.
To require an employer to be generous when it is no longer in a position to do so, in our view, would be unduly oppressive, unjust, and unfair to the
employer. Ours is a system of laws, and the law in protecting the rights of the working man, authorizes neither the oppression nor the self-destruction of
the employer
Finally, with regard to the notice requirement, the Labor Arbiter found, and it was upheld by the NLRC and the Court of Appeals, that the written notice
of closure or cessation of Galaxies business operations was posted on the company bulletin board one month prior to its effectivity. The mere posting
on the company bulletin board does not, however, meet the requirement under Article 283 of "serving a written notice on the workers." The purpose of
the written notice is to inform the employees of the specific date of termination or closure of business operations, and must be served upon them at
least one month before the date of effectivity to give them sufficient time to make the necessary arrangements. Nevertheless, the validity of termination
of services can exist independently of the procedural infirmity in the dismissal. After analyzing the consequences of the divergent doctrines on
employment termination, the Court held that in cases involving dismissals for cause, but without observance of statutory due process, the better rule is
to abandon the Serrano doctrine and to follow Wenphil by declaring that the dismissal was for cause but imposing sanctions on the employer. By so
doing, dispensing justice not just to employees but to employers as well is achieved.
Under the facts and circumstances attendant to the case, this Court finds the amount of P20,000 in nominal damages sufficient to vindicate each
petitioners right to due process.
Sy vs. Metrobank
GR No. 160618. November 2, 2006
Facts:
Petitioner Dennis D. Sy, as the branch manager in Bajada, Davao City, of respondent Metropolitan Bank and Trust Company.
Under the banks Retirement Plan, an employee must retire upon reaching the age of 55 years or after rendering 30 years of service, whichever comes
first. Sy would have rendered 30 years of service by August 18, 1999. However, on February 5, 1999, he was reappointed as branch manager for a
term of one year starting August 18, 1999 until August 18, 2000. His monthly compensation was accordingly increased from P50,400 to P54,500,
effective August 16, 1999.
Meanwhile, on November 10 and 15, 1999, the bank released the results of the audit conducted in its Bajada branch. The bank alleged that Sy allowed
spouses Gorgonio and Elizabeth Ong to conduct "kiting" activities in their account with the bank. Thus, the bank placed Sy under preventive suspension
and gave him 48 hours to submit a written explanation. In response, Sy wrote a letter explaining that he only made a wrong credit judgment.
Unconvinced, the bank dismissed Sy on December 15, 1999.
Issue:
(1) Whether or not the petitioner was illegally terminated? If his dismissal was valid, would he still be entitled to retirement benefits?
Ruling:
We hold that petitioner Sy was validly dismissed on the ground of fraud and willful breach of trust under Article 282 of the Labor Code. Records show
that as bank manager, he authorized "kiting" or drawing of checks against uncollected funds in wanton violation of the banks policies. It was sufficient
basis for the bank to lose trust in him.
Petitioners conduct betrays his culpability. Shortly after the audit conducted in the Bajada branch, he tendered an "irrevocable letter of retirement." In
the said letter, he requested that his retirement be made effective December 1, 1999. Said request arouses suspicion considering that he had
previously agreed to the extension of his employment as branch manager until August 18, 2000. Petitioners evident failure to offer any reasonable
explanation for such sudden shift in his plans is prejudicial to his cause. As for the requirement of due process, records show that it has been fully
satisfied in the instant case. The bank had complied with the two-notice requirement, i.e.: (a) a written notice of the cause for his dismissal to afford him
ample opportunity to be heard and to defend himself with the assistance of counsel, if he so desires; and (b) a written notice of the decision to terminate
him, stating clearly the reason therefor.
Is petitioner nevertheless entitled to retirement benefits?

74

Under the Labor Code, only unjustly dismissed employees are entitled to retirement benefits and other privileges including reinstatement and
backwages. Since petitioners dismissal was for a just cause, he is not entitled to any retirement benefit. To hold otherwise would be to reward acts of
willful breach of trust by the employee. It would also open the floodgate to potential anomalous banking transactions by bank employees whose
employments have been extended. Since a banks operation is essentially imbued with public interest, it owes great fidelity to the public it deals with. In
turn, it cannot be compelled to continue in its employ a person in whom it has lost trust and confidence and whose continued employment would
patently be inimical to the banks interest. While the scale of justice is tilted in favor of workers, the law does not authorize blind submission to the claim
of labor regardless of merit.
While the Court commiserates with petitioner who has spent with the bank the best three decades of his employable life, we find no room to accord him
compassionate justice. Records showed that he violated the bank policies prior to his compulsory retirement. Thus, there can be no earned retirement
benefits to speak of. No such provision is provided for by the Labor Code. In fact, even the Civil Service Law imposes forfeiture of retirement benefits in
valid dismissal cases.
King of Kings Transport vs. NLRC
G.R. NO 166208 JUNE 29, 2007
Facts:
Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente and Melissa Lim. Respondent Mamac was hired
as bus conductor of Don Mariano Transit Corporation (DMTC) on April 29, 1999.
The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE. Respondent was elected
KKKK president.
Respondent was required to accomplish a Conductors Trip Report and submit it to the company after each trip. As a background, this report indicates
the ticket opening and closing for the particular day of duty. After submission, the company audits the reports. Once an irregularity is discovered, the
company issues an Irregularity Report against the employee, indicating the nature and details of the irregularity. Thereafter, the concerned employee
is asked to explain the incident by making a written statement or counter-affidavit at the back of the same Irregularity Report. After considering the
explanation of the employee, the company then makes a determination of whether to accept the explanation or impose upon the employee a penalty for
committing an infraction. That decision shall be stated on said Irregularity Report and will be furnished to the employee.
Upon audit of the October 28, 2001 Conductors Report of respondent, KKTI noted an irregularity. It discovered that respondent declared several sold
tickets as returned tickets causing KKTI to lose an income of eight hundred and ninety pesos. While no irregularity report was prepared on the October
28, 2001 incident, KKTI nevertheless asked respondent to explain the discrepancy. In his letter,[3] respondent said that the erroneous declaration in his
October 28, 2001 Trip Report was unintentional. He explained that during that days trip, the windshield of the bus assigned to them was smashed; and
they had to cut short the trip in order to immediately report the matter to the police. As a result of the incident, he got confused in making the trip report.
On November 26, 2001, respondent received a letter terminating his employment effective November 29, 2001. The dismissal letter alleged that the
October 28, 2001 irregularity was an act of fraud against the company. KKTI also cited as basis for respondents dismissal the other offenses he
allegedly committed since 1999.
On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions, nonpayment of 13th-month pay, service incentive leave,
and separation pay. He denied committing any infraction and alleged that his dismissal was intended to bust union activities. Moreover, he claimed
that his dismissal was effected without due process.
In its April 3, 2002 Position Paper,[5] KKTI contended that respondent was legally dismissed after his commission of a series of misconducts and
misdeeds. It claimed that respondent had violated the trust and confidence reposed upon him by KKTI. Also, it averred that it had observed due
process in dismissing respondent and maintained that respondent was not entitled to his money claims such as service incentive leave and 13th-month
pay because he was paid on commission or percentage basis. On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered judgment
dismissing respondents Complaint for lack of merit. Affirming the NLRC, the CA held that there was just cause for respondents dismissal. It ruled that
respondents act in declaring sold tickets as returned tickets x x x constituted fraud or acts of dishonesty justifying his dismissal.
Issue:
Whether the Honorable Court of Appeals erred in ruling that KKTI did not comply with the requirements of procedural due process before dismissing the
services of the complainant/private respondent.
Ruling:
The petition is partly meritorious.
The disposition of the first assigned error depends on whether petitioner KKTI complied with the due process requirements in terminating respondents
employment; thus, it shall be discussed secondly.
Non-compliance with the Due Process Requirements
Due process under the Labor Code involves two aspects: first, substantivethe valid and authorized causes of termination of employment under the
Labor Code; and second, proceduralthe manner of dismissal. In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that
the termination of employment of respondent was based on a just cause. This ruling is not at issue in this case. The question to be determined is
whether the procedural requirements were complied with.

75

Art. 277 of the Labor Code provides the manner of termination of employment, thus:
Art. 277. Miscellaneous Provisions.x x x
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized
cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought
to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to
contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of
proving that the termination was for a valid or authorized cause shall rest on the employer.
Accordingly, the implementing rule of the aforesaid provision states:
SEC. 2. Standards of due process; requirements of notice.In all cases of termination of employment, the following standards of due process shall be
substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a)
A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity
within which to explain his side.
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to
the charge, present his evidence, or rebut the evidence presented against him.
(c) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination. [13]
In case of termination, the foregoing notices shall be served on the employees last known address.[14]
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a
directive that the employees are given the opportunity to submit their written explanation within a reasonable period. Reasonable opportunity under
the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their
defense.[15] This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to
study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the
complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being
charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the
opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the
evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating
that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the
severance of their employment.
In the instant case, KKTI admits that it had failed to provide respondent with a charge sheet.[16] However, it maintains that it had substantially
complied with the rules, claiming that respondent would not have issued a written explanation had he not been informed of the charges against
him.[17]
We are not convinced.
First, respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the
charges against an employee does not comply with the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC,[18] the Court held that
consultations or conferences are not a substitute for the actual observance of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano,[19]
the Court, sanctioning the employer for disregarding the due process requirements, held that the employees written explanation did not excuse the fact
that there was a complete absence of the first notice.
Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his offense, such would not comply
with the requirements of the law. We observe from the irregularity reports against respondent for his other offenses that such contained merely a
general description of the charges against him. The reports did not even state a company rule or policy that the employee had allegedly violated.
Likewise, there is no mention of any of the grounds for termination of employment under Art. 282 of the Labor Code. Thus, KKTIs standard charge
sheet is not sufficient notice to the employee.
Third, no hearing was conducted. Regardless of respondents written explanation, a hearing was still necessary in order for him to clarify and present
evidence in support of his defense. Moreover, respondent made the letter merely to explain the circumstances relating to the irregularity in his October

76

28, 2001 Conductors Trip Report. He was unaware that a dismissal proceeding was already being effected. Thus, he was surprised to receive the
November 26, 2001 termination letter indicating as grounds, not only his October 28, 2001 infraction, but also his previous infractions.

Asian Terminal vs. NLRC

GR No. 158458. December 19, 2007
Facts:
Romeo Labrague (respondent) was a stevedore antigo employed with Asian Terminals, Inc. since the 1980's. Beginning September 9, 1993,
respondent failed to report for work allegedly because he was arrested and placed in detention for reasons not related to his work. After respondent had
been absent for more than one year, Asian Terminals, Inc., through Atty. Rodolfo G. Corvite, Jr., (petitioners) sent him (respondent) a letter, dated
December 27, 1994, at his last known address at Area H, Parola, Tondo, Manila, requiring him to explain within 72 hours why he should not suffer
disciplinary penalty for his prolonged absence. The following month, petitioner sent respondent another notice of similar tenor.
Finally, on February 8, 1995, petitioner terminated Labragues employment.
Following his acquittal and release from detention, respondent reported for work on July 3, 1996 but was advised by petitioners to file a new application
so that he may be rehired. Thus, respondent filed with the NLRC a complaint for illegal dismissal, separation pay, non-payment of labor standard
benefits, damages and attorney's fees.
Issue: Whether or not there was abandonment of work on the part of the respondent to justify his dismissal from work.
Ruling:
To justify the dismissal of respondent for abandonment, petitioners should have established by concrete evidence the concurrence of two elements:
first, that respondent had the intention to deliberately and without justification abandon his employment or refuse to resume his work; and second, that
respondent performed overt acts from which it may be deduced that he no longer intended to work.
Absences incurred by an employee who is prevented from reporting for work due to his detention to answer some criminal charge is excusable if his
detention is baseless, in that the criminal charge against him is not at all supported by sufficient evidence. In Magtoto v. National Labor Relations
Commission as well as Pedroso v. Castro, we declared such absences as not constitutive of abandonment, and held the dismissal of the employeedetainee invalid
Respondent herein was prevented from reporting for work by reason of his detention. That his detention turned out to be without basis, as the criminal
charge upon which said detention was ordered was later dismissed for lack of evidence, made the absences he incurred as a consequence thereof not
only involuntary but also excusable. It was certainly not the intention of respondent to absent himself, or his fault that he was detained on an erroneous
charge. In no way may the absences he incurred under such circumstances be likened to abandonment. The CA, therefore, correctly held that the
dismissal of respondent was illegal, for the absences he incurred by reason of his unwarranted detention did not amount to abandonment.
His dismissal being illegal, respondent is entitled to backwages as a matter of right provided by law.
Smart Communications vs. Astorga
GR No. 148142, January 28, 2008
Facts:
Regina M. Astorga (Astorga) was employed by respondent Smart Communications, Incorporated (SMART) on May 8, 1997 as District Sales Manager of
the Corporate Sales Marketing Group/ Fixed Services Division (CSMG/FSD). She was receiving a monthly salary of P33,650.00. As District Sales
Manager, Astorga enjoyed additional benefits, namely, annual performance incentive equivalent to 30% of her annual gross salary, a group life and
hospitalization insurance coverage, and a car plan in the amount of P455,000.00.
In February 1998, SMART launched an organizational realignment to achieve more efficient operations. This was made known to the employees on
February 27, 1998. Part of the reorganization was the outsourcing of the marketing and sales force. Thus, SMART entered into a joint venture
agreement with NTT of Japan, and formed SMART-NTT Multimedia, Incorporated (SNMI). Since SNMI was formed to do the sales and marketing work,
SMART abolished the CSMG/FSD, Astorgas division.
Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March 3, 1998, SMART issued a memorandum advising Astorga
of the termination of her employment on ground of redundancy, effective April 3, 1998. Astorga received it on March 16, 1998.
Issue: Whether or not Astorga was validly terminated on the ground of redundancy.
Ruling:
Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an employee. The characterization of an
employees services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the
employer. The wisdom and soundness of such characterization or decision is not subject to discretionary review provided, of course, that a violation of
law or arbitrary or malicious action is not shown.

77

Astorga claims that the termination of her employment was illegal and tainted with bad faith. She asserts that the reorganization was done in order to
get rid of her. But except for her barefaced allegation, no convincing evidence was offered to prove it. This Court finds it extremely difficult to believe
that SMART would enter into a joint venture agreement with NTT, form SNMI and abolish CSMG/FSD simply for the sole purpose of easing out a
particular employee, such as Astorga. Moreover, Astorga never denied that SMART offered her a supervisory position in the Customer Care
Department, but she refused the offer because the position carried a lower salary rank and rate. If indeed SMART simply wanted to get rid of her, it
would not have offered her a position in any department in the enterprise.
Astorga also states that the justification advanced by SMART is not true because there was no compelling economic reason for redundancy. But
contrary to her claim, an employer is not precluded from adopting a new policy conducive to a more economical and effective management even if it is
not experiencing economic reverses. Neither does the law require that the employer should suffer financial losses before he can terminate the services
of the employee on the ground of redundancy.
But while tilting the scales of justice in favor of workers, the fundamental law also guarantees the right of the employer to reasonable returns for his
investment. In this light, we must acknowledge the prerogative of the employer to adopt such measures as will promote greater efficiency, reduce
overhead costs and enhance prospects of economic gains, albeit always within the framework of existing laws. Accordingly, we sustain the
reorganization and redundancy program undertaken by SMART.
However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice prior to termination. The record is clear that
Astorga received the notice of termination only on March 16, 1998 or less than a month prior to its effectivity on April 3, 1998. Likewise, the Department
of Labor and Employment was notified of the redundancy program only on March 6, 1998.
Be that as it may, this procedural infirmity would not render the termination of Astorgas employment illegal. However, we find the need to modify, by
increasing, the indemnity awarded by the CA to Astorga, as a sanction on SMART for non-compliance with the one-month mandatory notice
requirement. We deem it proper to increase the amount of the penalty on SMART to P50,000.00.
RB Michael Press vs. Galit
G.R. No. 153510, February 13, 2008
Facts:
On May 1, 1997, respondent was employed by petitioner R.B. Michael Press as an offset machine operator, whose work schedule was from 8:00 a.m.
to 5:00 p.m., Mondays to Saturdays, and he was paid PhP 230 a day. During his employment, Galit was tardy for a total of 190 times, totaling to 6,117
minutes, and was absent without leave for a total of nine and a half days.
On February 22, 1999, respondent was ordered to render overtime service in order to comply with a job order deadline, but he refused to do so.
The following day, February 23, 1999, respondent reported for work but petitioner Escobia told him not to work, and to return later in the afternoon for a
hearing. When he returned, a copy of an Office Memorandum was served on him, as follows:
To

Mr. Nicasio Galit

From

ANNALENE REYES-ESCOBIA

Re

WARNING FOR DISMISSAL; NOTICE OF

HEARING

This warning for dismissal is being issued for the following offenses:
(1)
(2)

habitual and excessive tardiness

committing acts of discourtesy, disrespect in addressing
superiors
(3) failure to work overtime after having been instructed to
do so
(4)
Insubordination - willfully disobeying, defying or
disregarding company authority

The offenses youve committed are just causes for termination of employment as provided by the Labor Code. You were given verbal warnings
before, but there had been no improvement on your conduct.
Further investigation of this matter is required, therefore, you are summoned to a hearing at 4:00 p.m. today. The hearing wills determine your
employment status with this company.
(SGD) ANNALENE REYES-ESCOBIA
Manager[1]

78

On February 24, 1999, respondent was terminated from employment. Respondent subsequently filed a complaint for illegal dismissal and money claims
before the National Labor Relations Commission (NLRC) Regional Arbitration Branch No. IV, which was docketed as NLRC Case No. RAB IV-2-1080699-C. On October 29, 1999, the labor arbiter rendered a Decision,
Issue: WHETHER OR OR NOT THERE WAS AN ILLEGAL DISMISSAL
Ruling:
Respondents tardiness cannot be considered condoned by petitioners
Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to work on time everyday exhibit the employees
deportment towards work. Habitual and excessive tardiness is inimical to the general productivity and business of the employer. This is especially true
when the tardiness and/or absenteeism occurred frequently and repeatedly within an extensive period of time.
In resolving the issue on tardiness, the labor arbiter ruled that petitioners cannot use respondents habitual tardiness and unauthorized absences to
justify his dismissal since they had already deducted the corresponding amounts from his salary. Furthermore, the labor arbiter explained that since
respondent was not subjected to any admonition or penalty for tardiness, petitioners then had condoned the offense or that the infraction is not serious
enough to merit any penalty. The CA then supported the labor arbiters ruling by ratiocinating that petitioners cannot draw on respondents habitual
tardiness in order to dismiss him since there is no evidence which shows that he had been warned or reprimanded for his excessive and habitual
tardiness.
We find the ruling incorrect.
The mere fact that the numerous infractions of respondent have not been immediately subjected to sanctions cannot be interpreted as condonation of
the offenses or waiver of the company to enforce company rules. A waiver is a voluntary and intentional relinquishment or abandonment of a known
legal right or privilege.[9] It has been ruled that a waiver to be valid and effective must be couched in clear and unequivocal terms which leave no
doubt as to the intention of a party to give up a right or benefit which legally pertains to him.[10] Hence, the management prerogative to discipline
employees and impose punishment is a legal right which cannot, as a general rule, be impliedly waived.
Insubordination or willful disobedience
While the CA is correct that the charge of serious misconduct was not substantiated, the charge of insubordination however is meritorious.
For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the employees assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee,
and must pertain to the duties which he had been engaged to discharge.
Respondents excuse that he was not feeling well that day is unbelievable and obviously an afterthought. He failed to present any evidence other than
his own assertion that he was sick. Also, if it was true that he was then not feeling well, he would have taken the day off, or had gone home earlier, on
the contrary, he stayed and continued to work all day, and even tried to go to work the next day, thus belying his excuse, which is, at most, a selfserving statement.
Due process: twin notice and hearing requirement
On the issue of due process, petitioners claim that they had afforded respondent due process. Petitioners maintain that they had observed due process
when they gave respondent two notices and that they had even scheduled a hearing where he could have had explained his side and defended himself.
We held in Agabon v. NLRC:
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought
a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based
on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices
30 days prior to the effectivity of his separation.[15]
Under the twin notice requirement, the employees must be given two (2) notices before his employment could be terminated: (1) a first notice to apprise
the employees of their fault, and (2) a second notice to communicate to the employees that their employment is being terminated. Not to be taken
lightly of course is the hearing or opportunity for the employee to defend himself personally or by counsel of his choice.
In view of the infirmities in the proceedings, we conclude that termination of respondent was railroaded in serious breach of his right to due process.
And as a consequence of the violation of his statutory right to due process and following Agabon, petitioners are liable jointly and solidarily to pay
nominal damages to the respondent in the amount of PhP 30,000.
School of the Holy Spirit of Q.C. vs. Taguiam
G.R. No. 165565. June 7, 2004
Facts:

79

Respondent Corazon P. Taguiam was the Class Adviser of Grade 5-Esmeralda of the petitioner, School of the Holy Spirit of Quezon City. On March 10,
2000, the class president, wrote a letter to the grade school principal requesting permission to hold a year-end celebration at the school grounds. The
principal authorized the activity and allowed the pupils to use the swimming pool. In this connection, respondent distributed the parent's/guardian's
permit forms to the pupils.
Respondent admitted that Chiara Mae Federico's permit form was unsigned. Nevertheless, she concluded that Chiara Mae 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. Respondent went after them to verify where they were going.
Unfortunately, while respondent was away, Chiara Mae drowned. When respondent returned, the maintenance man was already administering
cardiopulmonary resuscitation on Chiara Mae. She was still alive when respondent rushed her to the General Malvar Hospital where she was
pronounced dead on arrival.
Petitioners dismissed respondent on the ground of gross negligence resulting to loss of trust and confidence. Respondent in turn filed a complaint
against the school and/or Sr. Crispina Tolentino for illegal dismissal, with a prayer for reinstatement with full backwages and other money claims,
damages and attorney's fees.
Issue: Whether or not respondent's dismissal on the ground of gross negligence resulting to loss of trust and confidence was valid.
Ruling:
Under Article 282 of the Labor Code, gross and habitual neglect of duties is a valid ground for an employer to terminate an employee. 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 one's duties for a period of
time, depending upon the circumstances.
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.
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.
All told, 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 Appeals to reverse and set aside the resolution of the NLRC.
Flight Attendants and Steward Assoc. of the Phils. Vs. Phil. Airlines
G.R. No. 178083 July 23, 2008
Facts:
Petitioner FASAP is the duly certified collective bargaining representative of PAL flight attendants and stewards, or collectively known as PAL cabin crew
personnel. Respondent PAL is a domestic corporation organized and existing under the laws of the Republic of the Philippines, operating as a common
carrier transporting passengers and cargo through aircraft.
On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its cabin crew personnel, to take effect on July 15, 1998. PAL
adopted the retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline industry brought
about by the Asian financial crisis. During said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood at P85 billion
Prior to the full implementation of the assailed retrenchment program, FASAP and PAL conducted a series of consultations and meetings and explored
all possibilities of cushioning the impact of the impending reduction in cabin crew personnel. However, the parties failed to agree on how the scheme
would be implemented. Thus PAL unilaterally resolved to utilize the criteria set forth in Section 112 of the PAL-FASAP Collective Bargaining Agreement
(CBA) in retrenching cabin crew personnel: that is, that retrenchment shall be based on the individual employee's efficiency rating and seniority.
While consultations between FASAP and PAL were ongoing, the latter began implementing its retrenchment program by initially terminating the services
of 140 probationary cabin attendants only to rehire them in April 1998. Moreover, their employment was made permanent and regular.
On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crew personnel.
Meanwhile, in June 1998, PAL was placed under corporate rehabilitation and a rehabilitation plan was approved per Securities and Exchange
Commission (SEC) Order dated June 23, 1998 in SEC Case No. 06-98-6004.
On June 22, 1998, FASAP filed a Complaint against PAL and Patria T. Chiong (Chiong) for unfair labor practice, illegal retrenchment with claims for
reinstatement and payment of salaries, allowances and backwages of affected FASAP members, actual, moral and exemplary damages with a prayer
to enjoin the retrenchment program then being implemented.
Issue:

80

Whether or not PAL's retrenchment scheme was justified.

Ruling:
Under the Labor Code, retrenchment or reduction of employees is authorized as follows:
ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry
of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices
or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which
would endanger its existence or stability.
The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting evidence. Its failure to prove these reverses
or losses necessarily means that the employee's dismissal was not justified. Any claim of actual or potential business losses must satisfy certain
established standards, all of which must concur, before any reduction of personnel becomes legal. These are:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the
intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half () month pay for every
year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent
the employees' right to security of tenure; and,
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such
as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
In the instant case, PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more than
1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis, however, it cannot be assumed
that it has likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate rehabilitation does not automatically justify
the retrenchment of its cabin crew personnel.
To prove that PAL was financially distressed, it could have submitted its audited financial statements but it failed to present the same with the Labor
Arbiter. Instead, it narrated a litany of woes without offering any evidence to show that they translated into specific and substantial losses that would
necessitate retrenchment.
We find that PAL had implemented its retrenchment program in an arbitrary manner and with evident bad faith, which prejudiced the tenurial rights of
the cabin crew personnel.
In sum, PAL's retrenchment program is illegal because it was based on wrongful premise (Plan 14, which in reality turned out to be Plan 22, resulting in
retrenchment of more cabin attendants than was necessary) and in a set of criteria or rating variables that is unfair and unreasonable when
implemented. It failed to take into account each cabin attendant's respective service record, thereby disregarding seniority and loyalty in the evaluation
of overall employee performance.
John Hancock Life Insurance Corp. vs. Davis
G.R. No. 169549. October 18, 2000
Facts:
Respondent Joanna Cantre Davis was agency administration officer of petitioner John Hancock Life Insurance Corporation.
On October 18, 2000, Patricia Yuseco, petitioner's corporate affairs manager, discovered that her wallet was missing. She immediately reported the loss
of her credit cards to AIG and BPI Express. To her surprise, she was informed that "Patricia Yuseco" had just made substantial purchases using her
credit cards in various stores in the City of Manila. She was also told that a proposed transaction in Abenson's-Robinsons Place was disapproved
because "she" gave the wrong information upon verification.
Because loss of personal property among its employees had become rampant in its office, petitioner sought the assistance of the National Bureau of
Investigation (NBI). The NBI, in the course of its investigation, obtained a security video from Abenson's showing the person who used Yuseco's credit
cards. Yuseco and other witnesses positively identified the person in the video as respondent.

81

Consequently, the NBI and Yuseco filed a complaint for qualified theft against respondent in the office of the Manila city prosecutor. But because the
affidavits presented by the NBI (identifying respondent as the culprit) were not properly verified, the city prosecutor dismissed the complaint due to
insufficiency of evidence.
Meanwhile, petitioner placed respondent under preventive suspension and instructed her to cooperate with its ongoing investigation. Instead of doing
so, however, respondent filed a complaint for illegal dismissal alleging that petitioner terminated her employment without cause.
Issue:
Whether or not petitioner substantially proved the presence of valid cause for respondent's termination.
Ruling:
Article 282. Termination by Employer. - An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobendience by the employee of the lawful orders of his employer or his representatives in connection with his work;
(e) Other causes analogous to the foregoing.
Misconduct involves "the transgression of some established and definite rule of action, forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment." For misconduct to be serious and therefore a valid ground for dismissal, it must be:
1. of grave and aggravated character and not merely trivial or unimportant and
2. connected with the work of the employee.
In this case, petitioner dismissed respondent based on the NBI's finding that the latter stole and used Yuseco's credit cards. But since the theft was not
committed against petitioner itself but against one of its employees, respondent's misconduct was not work-related and therefore, she could not be
dismissed for serious misconduct.
Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are susceptible of comparison to another in general or in
specific detail. For an employee to be validly dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary
and/or willful act or omission of the employee.
A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an employee's moral depravity. Theft committed by an
employee against a person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct.
All things considered, petitioner validly dismissed respondent for cause analogous to serious misconduct.
Yrasuegui vs. Phil. Airlines
GR NO. 168081. OCTOBER 17, 2008
Facts:
An international flight steward was dismissed for "his failure to adhere to the weight standards of the airline company."
In consequence thereof, petitioner filed a complaint for illegal dismissal against PAL before LA. The LA ruled that petitioner was illegally dismissed.
NLRC affirmed LA's decision. Respondent PAL appealed to the CA. CA reversed the NLRC case.
Issue: WON the dismissal was valid.
Ruling:
Yes, the dismissal was valid.
The Court found that obesity of petitioner is a ground for dismissal under Article 282(e) of the Labor Code. It found that the weight standards of PAL
constitute a continuing qualification of an employee in order to keep the job. And an employee may be dismissed the moment he is unable to comply
with his ideal weight as prescribed by the weight standards. Hence a dismissal of the employee falls under Article 282(e) [1] of the Labor Code.
The Court held that the obesity of petitioner, in the context of his work as flight attendant, becomes an analogous cause under Article 282(e) of the
Labor Code that justifies his dismissal from the service. His obesity may not be intentional but it is voluntary. This element runs through all just causes
under Article 282.
The weight standards of PAL are reasonable. PAL being a common carrier is bound to observe extraordinary diligence for the safety of the passengers
it transports. The weight standards of PAL show its effort to comply with these exacting obligations. PAL has committed itself to safely transport its
passengers. In order to achieve this, it must necessarily rely on its employees, most particularly the cabin flight deck crew who are on board the
aircraft.
Flight safety was given primary importance by the court, stating that: It cannot be gainsaid that cabin attendants must maintain agility at all times in
order to inspire passenger confidence on their ability to care for the passengers when something goes wrong. It is not farfetched to say that airline
companies, just like all common carriers, thrive due to public confidence on their safety records. People, especially the riding public, expect no less than
that airline companies transport their passengers to their respective destinations safely and soundly.
Cabin crew do not only serve meals or attend to passengers whims. Their most important activity is to care for the safety of passengers and the
evacuation of the aircraft when an emergency occurs. Passenger safety goes to the core of the job of a cabin attendant. Truly, airlines need cabin
attendants who have the necessary strength to open emergency doors, the agility to attend to passengers in cramped working conditions, and the
stamina to withstand grueling flight schedules. And the body weight and size of a cabin attendant are important factors to consider in case of
emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Airline companies cannot be compelled to reconfigure the aircraft
just for overweight cabin attendants.

82

He was also found to be in estoppel since the weight standards were made known to him prior to his employment. He never questioned the authority of
PAL when he was asked to trim down his weight.
Nevertheless the Court granted him separation pay even if normally, a legally dismissed employee is not entitled to separation pay. But it may be
awarded as an act social justice, or based on equity, if the dismissal is not for serious misconduct and does not reflect on the moral character of the
employee. He was thus given separation pay equivalent to one-half (1/2) months pay for every year of service.
Garcia vs. PAL
G.R. No. 160798. June 8, 2005
Facts:
The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners after they were allegedly caught in the act of
sniffing shabu when a team of company security personnel and law enforcers raided the PAL Technical Centers Toolroom Section on July 24, 1995.
After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline, prompting them to file a complaint for
illegal dismissal and damages which was, by Decision of January 11, 1999, resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia,
immediately comply with the reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiters decision, the Securities and Exchange Commission (SEC) placed PAL (hereafter referred to as
respondent), which was suffering from severe financial losses, under an Interim Rehabilitation Receiver, who was subsequently replaced by a
Permanent Rehabilitation Receiver on June 7, 1999.
Issue: Whether or not petitioners may collect their wages during the period between the Labor Arbiters order of reinstatement pending appeal and the
NLRC decision overturning that of the Labor Arbiter, now that respondent has exited from rehabilitation proceedings.
Ruling:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.
The view as maintained in a number of cases is that:
Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages
of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during
the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is
entitled to such, more so if he actually rendered services during the period.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to
require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted
from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining
agreement provisions, and company practices. However, if the employee was reinstated to work during the pendency of the appeal, then the employee
is entitled to the compensation received for actual services rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is not
entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision.
The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory even pending appeal and the
posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of
reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the
execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere
continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of
Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement
order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual.
The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part
of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. It settles the
view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same
terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative,
employer must pay the employees salaries.
After the labor arbiters decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the
delay in enforcing the reinstatement pending appeal was without fault on the part of the employer.
The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and
(2) the delay must not be due to the employers unjustified act or omission. If the delay is due to the employers unjustified refusal, the employer may
still be required to pay the salaries notwithstanding the reversal of the Labor Arbiters decision.
Perez vs. PT&T Co.
G.R. No. 152048. April 7, 2009
Facts:

83

Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine Telegraph and Telephone Company (PT&T) as shipping clerk
and supervisor, respectively, in PT&Ts Shipping Section, Materials Management Group.
Acting on an alleged unsigned letter regarding anomalous transactions at the Shipping Section, respondents formed a special audit team to investigate
the matter. It was discovered that the Shipping Section jacked up the value of the freight costs for goods shipped and that the duplicates of the shipping
documents allegedly showed traces of tampering, alteration and superimposition.
On September 3, 1993, petitioners were placed on preventive suspension for 30 days for their alleged involvement in the anomaly. Their suspension
was extended for 15 days twice: first on October 3, 1993 and second on October 18, 1993.
On October 29, 1993, a memorandum with the following tenor was issued by respondents:
In line with the recommendation of the AVP-Audit as presented in his report of October 15, 1993 (copy attached) and the subsequent filing of criminal
charges against the parties mentioned therein, [Mr. Felix Perez and Mr. Amante Doria are] hereby dismissed from the service for having falsified
company documents.
On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal dismissal. They alleged that they were dismissed on November 8,
1993, the date they received the above-mentioned memorandum.
Issue: Whether or not the dismissal was legal.
Ruling:
Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause for termination.
The burden of proof rests on the employer to establish that the dismissal is for cause in view of the security of tenure that employees enjoy under the
Constitution and the Labor Code. The employers evidence must clearly and convincingly show the facts on which the loss of confidence in the
employee may be fairly made to rest. It must be adequately proven by substantial evidence. Respondents failed to discharge this burden.
Respondents illegal act of dismissing petitioners was aggravated by their failure to observe due process. To meet the requirements of due process in
the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination
and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all
circumstances, grounds have been established to justify the employer's decision to dismiss the employee.
This Court has consistently ruled that the due process requirement in cases of termination of employment does not require an actual or formal
hearing.Where the dismissal was without just or authorized cause and there was no due process, Article 279 of the Labor Code, as amended,
mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances,
and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. In this
case, however, reinstatement is no longer possible because of the length of time that has passed from the date of the incident to final resolution.
Fourteen years have transpired from the time petitioners were wrongfully dismissed. To order reinstatement at this juncture will no longer serve any
prudent or practical purpose.
Telecommunications Distributors Specialists, Inc. vs. Garriel
GR No. 174981, May 25, 2009
Facts:
Respondent was a Customer Sales Assistant (CSA)[5] of petitioner Telecommunications Distributors Specialist, Inc. (TDSI).[6] He had direct access to
company assets and property, in terms of cash collections from subscribers and customers as well as goods and inventory to be sold to subscribers and
customers.
Three incidents triggered the filing of this case. The first incident involved one Lourdes Ratcliffe who subscribed to mobile phone services and
purchased a mobile phone unit from TDSI through respondent, the attending CSA. Respondent failed to make Ratcliffe sign a coverage waiver.[7] Days
later, respondent called up Ratcliffe and asked her to just answer yes in case she was questioned by the company regarding her application.[8] It was
later found that Ratcliffes signature in the coverage waiver was forged. (Respondents instruction for Ratcliffe to say yes was apparently meant to
validate the forged signature he affixed on the coverage waiver.)
A similar incident involving one Mila Huilar occurred. Respondent also failed to ask Huilar to sign the coverage waiver. Huilars signature was likewise
found to have been forged.
In the third incident, a subscriber named Helcon Mabesa purchased a mobile phone unit from TDSI. Respondent attended to him but did not issue an
official receipt. It was later discovered that respondent sold a defective mobile phone personally owned by him to Mabesa who eventually demanded a
replacement. Respondent replaced the defective unit with a similar unit from one of TDSIs counters. Respondent thereafter attempted to influence
Jason Mapa, his co-employee and fellow CSA, to declare a cash shortage of P5,000 as he (respondent) could not pay for the unit he filched to replace
Mabesas defective phone.
These incidents came to the attention of TDSIs human resources department manager, Joann P. Hizon, who lost no time in meeting with Ratcliffe,
Huilar and Mabesa. The latter reiterated their complaints. On October 17, 2000, respondent was issued a notice to explain which served as a formal
notice of violation of company rules and procedures.
Respondent was formally investigated. In a notice dated February 7, 2001,[12] respondent was dismissed on grounds of serious misconduct and loss of
trust and confidence.
Issue: Whether there was illegal dismissal

84

Ruling:
RESPONDENTS ACTS OF DISLOYALTY AND DISHONESTY CONSTITUTED SERIOUS MISCONDUCT AND LOSS OF TRUST AND CONFIDENCE
An employees dismissal must be supported by substantial evidence.[17] This burden of proof is on the employer. This TDSI was able to discharge.
Respondent failed to make Ratcliffe and Huilar sign the coverage waivers. Such failure, in itself, although a misconduct, was not serious enough to
warrant dismissal. The serious misconduct was respondents act of forging the signatures of Ratcliffe and Huilar to cover up his negligence. In fact, he
even instructed Ratcliffe to lie and just say yes to the questions that may be asked of her by the company.
Respondents acts of forging subscribers signatures, attempting to cover up his failure to secure their signatures on the coverage waivers, selling a
personally owned mobile phone to a company customer (a defective one at that) and attempting to connive with other TDSI employees to cover up his
illicit schemes were serious acts of dishonesty.
In Philippine Long Distance Telephone Company v. Bolso,[24] we held:
Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error in judgment. The misconduct, to be serious within the meaning of the Labor Code
must be of such grave and aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must nevertheless be in
connection with the employees work to constitute just cause for his separation.
Martinez vs. B&B Fish Broker
GR. No. 179985. September 18, 2009
Facts:
Odilon L. Martinez (petitioner) was employed as a cashier on February 2000 by B&B Fish Broker, a partnership owned and managed by respondent
Norberto M. Lucinario (Lucinario) and Jose Suico. On November 24, 2002, Lucinario called petitioners attention to his alleged shortages in his cash
collections and ordered him to, as he did, take a leave the following day. When petitioner reported back for work, he was relieved of his position and
reassigned as company custodian.
On December 2, 2002, petitioner filed an application for a four-day leave effective on even date due to an inflamed jaw. On December 9, 2002,
petitioner discovered that his name had been removed from the company logbook and was prevented from logging in. And he was informed that his
application filed on December 2, 2002 for a four-day leave of absence had been denied. The following day or on December 10, 2002, petitioner, having
understood that the removal of his name from the logbook amounted to the termination of his employment, tried to confer with Lucinario but to no avail,
hence, filed on December 19, 2002 a complaint against B&B Fish Broker and/or Lucinario, for illegal dismissal, underpayment and non-payment of
wages with prayer for reinstatement before the Arbitration Branch of the NLRC. Denying petitioners charge that his services were illegally terminated,
Lucinario claimed, in effect, that petitioner abandoned his job.
Issue: WON Martinez abandoned his job.
Ruling:
Abandonment is a form of neglect of duty, one of the just causes for an employer to terminate an employee. It is a hornbook precept that in illegal
dismissal cases, the employer bears the burden of proof. For a valid termination of employment on the ground of abandonment, Lucinario must prove,
by substantial evidence, the concurrence of petitioners failure to report for work for no valid reason and his categorical intention to discontinue
employment.
Indeed, Lucinario, however, failed to establish any overt act on the part of petitioner to show his intention to abandon employment. As reflected above,
petitioner, after being informed of his alleged shortages in collections and despite his relegation to that of company custodian, still reported for work. He
later applied for a 4-day leave of absence. On his return, he discovered that his name was erased from the logbook, was refused entry into the
company premises, and learned that his application for a 4-day leave was not approved. He thereupon exerted efforts to communicate with Lucinario
on the status of his employment, but to no avail. To the Court, these circumstances do not indicate abandonment. Finally, that petitioner immediately
filed the illegal dismissal complaint with prayer for reinstatement should dissipate any doubts that he wanted to return to work.
What thus surfaces is that petitioner was constructively dismissed. No actual dismissal might have occurred in the sense that petitioner was not served
with a notice of termination, but there was constructive dismissal, petitioner having been placed in a position where continued employment was
rendered impossible and unreasonable by the circumstances indicated above.
Flight Attendants and Steward Assoc. of the Phils. Vs. Phil. Airlines
GR No. 178083. October 2, 2009, see main decision of July 22, 2008
Facts:
FASAP is the duly certified collective bargaining representative of PAL flight attendants and stewards. On June 1998, PAL retrenched 5,000 of its
employees, including more than 1,400 of its cabin crew personnel. It adopted the retrenchment scheme allegedly to cut costs and mitigate huge
financial losses as a result of a downturn in the airline industry brought about by the Asian financial crisis. PAL was adjudged guilty of illegal dismissal
for failing to comply with the requirements of a valid retrenchment. First, it failed to substantiate its claim of actual and imminent substantial losses
which would justify the retrenchment of more than 1,400 of its cabin crew personnel. Second, it implemented its retrenchment program in an arbitrary
manner and with evident bad faith, which prejudiced the tenurial rights of the cabin crew personnel. Finally, in assessing the overall performance of

85

each cabin crew personnel, PAL only considered the year 1997 which made the evaluation of each cabin attendants efficiency rating capricious and
prejudicial to PAL employees covered by it. Now, PAL comes before the Court via a motion for reconsideration. PAL has all the time tried to convince the
Court that its decision to downsize its flight fleet was the principal reason why it undertook a corresponding downsizing of cabin crew personnel. This
time, however, it significantly changed stance and blamed the June 5, 1998 pilots strike as the real culprit which drove it to undertake the massive
retrenchment under scrutiny characterizing the retrenchment scheme and the downsizing of aircraft as mere necessary reactions to or unfortunate
consequences of the pilots strike, which it claims likewise necessitated a disregard of all previous negotiations for the implementation of cost-cutting
measures that could have rendered the retrenchment scheme unnecessary, and which cost-cutting measures it no longer found necessary to
undertake.
Ruling:
The Court finds no reason to disturb its finding that the retrenchment of the flight attendants was illegally executed. As held in the Decision sought to be
reconsidered, PAL failed to observe the procedure and requirements for a valid retrenchment.
The strike was a temporary occurrence that did not necessitate the immediate and sweeping retrenchment of 1,400 cabin or flight attendants. Some of
the striking pilots went back to work less than one month after the strike began. Moreover, PAL admitted that it remedied the situation by employing
management pilots. It could have hired new pilots as well. It could have implemented the cost-cutting measures being discussed as a temporary
measure to obviate the adverse effects of the pilots strike. There was no reason to drastically implement a permanent retrenchment scheme in
response to a temporary strike, which could have ended at any time, or remedied promptly, if management acted with alacrity. Juxtaposed with its
failure to implement the required cost-cutting measures, the retrenchment scheme was a knee-jerk solution to a temporary problem that beset PAL at
the time.
PAL cannot just blame the striking pilots for causing the massive retrenchment of cabin personnel. Using them as scapegoats to validate a
comprehensive retrenchment scheme of cabin personnel without observing the requirements set by law is both unfair and underhanded. PAL must still
prove that it implemented cost-cutting measures to obviate retrenchment, which under the law should be the last resort. By its own admission, however,
the cabin personnel retrenchment scheme was one of the first remedies it resorted to, even before it could complete the proposed downsizing of its
aircraft fleet. It admittedly dropped all plans of implementing cost-cutting measures as soon as the pilots went on strike, and right away it sent notices of
termination to its cabin personnel. This knee-jerk reaction would explain why it had to eventually recall and rehire some of the cabin attendants almost
immediately after it retrenched them, because the retrenchment simply was not commensurate with the downsizing of aircraft fleet size. This only shows
that the decision to retrench came even before a final determination of how many aircraft were needed to be retained or discarded, or even before the
rehabilitation plan could be approved.
In order for a retrenchment scheme to be valid, all of the following elements under Article 283 of the Labor Code must concur or be present, to wit:
(1)
That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2)
That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to
the intended date of retrenchment;
(3)
That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half () month pay for
every year of service, whichever is higher;
(4)
That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or
circumvent the employees right to security of tenure; and,
(5)
That the employer uses fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the
employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
In the absence of one element, the retrenchment scheme becomes an irregular exercise of management prerogative. The employers obligation to
exhaust all other means to avoid further losses without retrenching its employees is a component of the first element as enumerated above. To impart
operational meaning to the constitutional policy of providing full protection to labor, the employers prerogative to bring down labor costs by retrenching
must be exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting.
Here, PAL admitted that since the pilots strike allegedly created a situation of extreme urgency, it no longer implemented cost-cutting measures and
proceeded directly to retrench. This being so, it clearly did not abide by all the requirements under Art. 283. At the time it was implemented, the
retrenchment scheme under scrutiny was not triggered directly by any financial difficulty PAL was experiencing at the time, nor borne of an actual
implementation of its proposed downsizing of aircraft. It was brought about by and resorted to as an immediate reaction to a pilots strike which, in
strict point of law, may not be considered as a valid reason to retrench, nor may it be used to excuse PAL for its non-observance of the requirements of
the law on retrenchment under the Labor Code.
Plantation Bay Resort and Spa vs. Dubrico
G.R. No. 182216. December 4, 2009
Facts:
Efren Belarmino (Belarmino) challenge the Court of Appeals Resolution dismissing their petition and affirming the Resolutions of the National Labor
Relations Commission (NLRC)in favor of herein respondents.
Dubrico, Villaflor and Ngujo are former employees of Plantation Bay located in Cebu, of which Belarmino is the Manager. On several dates Plantation
Bay issued a series of memoranda and conducted seminars relative to its drug-free workplace policy, Plantation Bay, in compliance with Republic Act
No. 9165 (Comprehensive Dangerous Drugs Act of 2002), conducted surprise random drug tests on its employees. The drug tests, said to have been

86

carried out with the assistance of the Philippine National Police-Scene of Crime Operations (SOCO), were administered on about 122 employees by the
Martell Medical Trade and Lab Services (Martell), a drug testing laboratory. And confirmatory tests were conducted by the Philippine Drug Screening
Laboratory, Inc. (Phil. Drug), a Department of Health-accredited laboratory.
Dubrico failed to take the drug test conducted, hence, he was issued a memorandum requiring him to appear in a mandatory conference. Before the
scheduled conference, Dubrico explained in writing his failure to undergo the drug test, he averring that, inter alia, the procedure for the random drug
testing was not followed such that he was not informed about his selection; and that he was at the appointed time and place for the pre-test meeting
but that the duty manager was not around, hence, he left and failed to be tested. Dubrico was later tested and found positive for use of
methamphetamine hydrochloride (shabu).Twenty other employees were found positive for use of shabu including Godfrey Ngujo (Ngujo) and Julius
Villaflor (Villaflor).
In compliance with separate memoranda issued by the management of Plantation Bay, the employees submitted their explanations on the result of the
tests, which explanations were found unsatisfactory, hence, Plantation Bay dismissed them.
Dubrico, Ngujo and Villaflor and three others filed their respective complaints for illegal dismissal, questioning the conduct of the drug tests without the
presence of the DOLE Regional Director or his representative. Labor Arbiter dismissed the employees complaints, holding that in testing positive for
the use of shabu, they were guilty of serious misconduct, hence, Plantation Bay validly terminated their employment; and that they were afforded due
process, they having been issued memoranda as to the mandatory investigation and given the chance to, as they did refute the results of the drug tests
by submitting results of recent drug tests.
The Labor Arbiter discredited the drug test results presented by the employees as the tests were taken more than 72 hours after the conduct of the
random drug tests. On appeal, the NLRC, affirmed the Decision of the Labor Arbiter. Upon motion for reconsideration, it, however, reversed its Decision
and declared that respondents were illegally dismissed.
NLRC held that the results of the confirmatory drug tests cannot be given credence since they were conducted prior to the conduct by the employer of
the drug tests. It ratiocinated:
Considering the indubitable documentary evidence on record notably submitted by respondents [petitioners herein] themselves, we agree with
complainants that either or both drug tests and confirmatory tests conducted on them were fabricated, farce or sham. For how could one confirm
some thing which was yet to be established or discovered? Needless to say, the drug testing should always come ahead of the confirmatory testing,
not the other way around. We thus agree with complainants that if the drug tests against them were true, the supposed confirmatory tests conducted
on them were not based on their urine samples that were the subject of the drug tests. Or that is the confirmatory tests were correct, these could not
have been gotten from their urine samples which were yet to undergo drug testing. At any rate, there is not only doubt that on the version of
respondents but also their conduct is highly suspicious based on their own evidence. Thus, we now rule that respondents were not really into drugs.
On the issue of due process, the NLRC abandoned its earlier statement that it was the SOCO which conducted the drug tests, this time declaring that it
was Martell which actually administered them. It added that respondents were not given the opportunity to examine the evidence and confront the
witnesses against them through their counsel.
Plantation Bay appealed to the Court of Appeals, in which the appellate court affirmed the NLRC Resolution with modification by deleting the award of
damages. Hence, Plantation Bay elevate the matter to the SC.
Issue: Whether or not the termination of the services of respondents, relied on the results of the random drug tests undertaken by an accredited and
licensed drug testing facility, and if the results turned out to be questionable or erroneous, they should not be made liable therefore.
Ruling:
The petition is bereft of merit.
While it is a well-settled rule, also applicable in labor cases, that Issue not raised below cannot be raised for the first time on appeal, there are
exceptions thereto among which are for reasons of public policy or interest.
The NLRC did not err in considering the issue of the veracity of the confirmatory tests even if the same was raised only in respondents Motion for
Reconsideration of its Decision, it being crucial in determining the validity of respondents dismissal from their employment. Technical rules of
procedure are not strictly adhered to in labor cases. In the interest of substantial justice, new or additional evidence may be introduced on appeal
before the NLRC. Such move is proper, provided due process is observed, as was the case here, by giving the opposing party sufficient opportunity to
meet and rebut the new or additional evidence introduced.
The Constitution no less directs the State to afford full protection to labor. To achieve this goal, technical rules of procedure shall be liberally construed
in favor of the working class in accordance with the demands of substantial justice. On the merits, the petition just the same fails. The importance of
the confirmatory test is underscored in Plantation Bays own Policy and Procedures, in compliance with Republic Act No. 9165, requiring that a
confirmatory test must be conducted if an employee is found positive for drugs in the Employees Prior Screening Test, and that both tests must arrive
at the same positive result.
Records show the following timeline, based on the reports on respondents respective drug tests administered by Martell and confirmatory tests
undertaken by the Phil. Drug:
Name
Drug Test Confirmatory Test
Romel Dubrico
Urine sample received on 09/29/04 at 5:14 p.m.
Issued on 09/29/04 at 3:57 p.m.
Godfrey Ngujo
Urine sample received on 09/29/04 at 5:24 p.m.
Issued on 09/29/04 at 3:57 p.m.
Julius Villaflor
Urine sample received on 09/29/04 at 5:32 p.m.
Issued on 09/29/04 at 4:15 p.m.
As reflected in the above matrix, the confirmatory test results were released earlier than those of the drug test, thereby casting doubts on the
veracity of the confirmatory results.
Indeed, how can the presence of shabu be confirmed when the results of the initial screening were not yet out?
Plantation Bays arguments that it should not be made liable thereof and that the doubt arising from the time of the conduct of the drug and confirmatory
tests was the result of the big volume of printouts being handled by Martell do not thus lie. It was Plantation Bays responsibility to ensure that the tests
would be properly administered, the results thereof being the bases in terminating the employees services.

87

Time and again, we have ruled that where there is no showing of a clear, valid and legal cause for termination of employment, the law considers the
case a matter of illegal dismissal. The burden is on the employer to prove that the termination of employment was for a valid and legal cause. For an
employee's dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process.
Plantation Bay failed to indubitably prove that respondents were guilty of drug use in contravention of its drug-free workplace policy amounting to
serious misconduct, respondents are deemed to have been illegally dismissed.
Fulache vs. ABS-CBN Broadcasting Corp.
G.R. NO. 183810. January 21, 2010
Facts:
Petitioners here are cameraman, editors, personal assistant, teleprompter operator-editing, VTR man/editor. They alleged that they had been excluded
from the coverage in the CBA as ABS-CBN considered them temporary and not regular employees, in violation of the Labor Code. They claimed that
they had already rendered more than a year of service in the company and therefore they should be considered as regular employees entitled
privileges and benefits enjoyed by regular employees. Respondent on the other hand claimed that the production of programs per se is not necessary
or desirable in its business because it could general profits by selling airtime to block timers or through advertising. It further claimed that to cope with
fluctuating business conditions, it contracts on a case to case basis the services of persons who possess the necessary requirements. It alleged that
petitioners services were contracted on various dates as independent contractors and they were not entitled to regularization in these capacities.
Labor Arbiter Rendoque rendered a decision holding petitioners as regular employees of ABS-CBN and are entitled to the benefits and privileges of
regular employees. Respondent appealed the ruling to the NLRC contending that petitioners are not regular employees but are independent
contractors.
While the appeal was pending, respondent dismissed the petitioner drivers for their refusal to sign up contracts of employment with service contractor
Able Services. Respondent alleged that before there was a decision rendered in the regularization case, it had already decided to course through
legitimate service contractors all driving, messengerial, janitorial, utility, make up, wardrobe and security services to improve operations and to make
economically viable. Petitioner drivers were not singled out for dismissal, as drivers, they were dismissed because they belong to a job category that
had already been contracted out. Labor Arbiter upheld the validity of ABS-CBSs contracting out. The petitioner had been dismissed due to redundancy
and authorized cause under the law. He awarded them separation pay.
Again, ABS-CBN appealed to the NLRC which rendered a joint decision on the regularization and illegal dismissal case. It ruled that there was
employer-employee relationship as the company exercised control over the petitioners in the performance of their work; the petitioners were regular
employees because they were engaged to perform activities usually necessary or desirable in trade or business. It, however, reversed the ruling in the
illegal dismissal case. It found that the petitioners were illegally dismissed and awarded them backwages and separation pay in lieu of reinstatement.
Both parties filed their respective motion for reconsideration. The NLRC resolved the motions. On the regularization issue, the NLRC ruled that
petitioners were regular employees and are entitled to benefits and privileges of regular employees. On the illegal dismissal case, the petitioners, while
recognized as regular employee, were declared dismissed due to redundancy.
The petitioners went to the Court of Appeals through a petition for certiorari. CA ruled that the petitioners were not illegally dismissed as their separation
from service was due to redundancy; they had not presented any evidence that respondent abused it prerogative in contracting out the services of
drivers. The petitioners moved for reconsideration but was denied. Hence, the present petition.
Issue: Whether or not the petitioners were illegally dismissed.
Ruling:
The petitioners were illegally dismissed.
It forgot that by claiming redundancy as authorized cause for dismissal, it impliedly admitted that the petitioners were regular employees whose
services, by law, can only be terminated for the just and authorized causes defined under the Labor Code. It similarly forgot that an exercise of
management prerogative can be valid only if it is undertaken in good faith and with no intent to defeat or circumvent the rights of its employees under
the laws or under valid agreements.
Lastly, it forgot that there was a standing labor arbiters decision that, while not yet final because of its own pending appeal, cannot simply be
disregarded. By implementing the dismissal action at the time the labor arbiters ruling was under review, the company unilaterally negated the effects
of the labor arbiters ruling while at the same time appealling the same ruling to the NLRC. This unilateral move is a direct affront to the NLRCs
authority and an abuse of the appeal process.
All these go to show that ABS-CBN acted with patent bad faith. A close parallel we can draw to characterize this bad faith is the prohibition against
forum-shopping under the Rules of Court. In forum-shopping, the Rules characterize as bad faith the act of filing similar and repetitive actions for the
same cause with the intent of somehow finding a favorable ruling in one of the actions filed. ABS-CBNs actions in the two cases, as described above,
are of the same character, since its obvious intent was to defeat and render useless, in a roundabout way and other than through the appeal it had
taken, the labor arbiters decision in the regularization case. Forum-shopping is penalized by the dismissal of the actions involved. The penalty against
ABS-CBN for its bad faith in the present case should be no less.
While notice has been made to the employees whose positions were declared redundant, the element of good faith in abolishing the positions of the
complainants appear to be wanting. In fact, it remains undisputed that herein complainants were terminated when they refused to sign an employment

88

contract with Able Services which would make them appear as employees of the agency and not of ABS-CBN. Such act by itself clearly demonstrates
bad faith on the part of the respondent in carrying out the companys redundancy program x x x.
The injustice committed on the petitioners/drivers requires rectification. Their dismissal was not only unjust and in bad faith as the above discussions
abundantly show. The bad faith in ABS-CBNs move toward its illegitimate goal was not even hidden; it dismissed the petitioners already recognized
as regular employees for refusing to sign up with its service contractor. Thus, from every perspective, the petitioners were illegally dismissed.
By law, illegally dismissed employees are entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of
allowances, and to other benefits or their monetary equivalent from the time their compensation was withheld from them up to the time of their actual
reinstatement. The four dismissed drivers deserve no less.
Ancheta vs. Destinay Financial Plans, Inc.
G.R. No. 179702. February 16, 2010
Facts:
On December 1, 2002, respondent Destiny Financial Plans, Inc., a pre-need insurance company, hired petitioner as Head of its Marketing Group, with
a compensation package of Ninety Thousand Pesos (P90,000.00) a month. On February 2, 2004, a Marketing Committee meeting was called by
respondent Arsenio Bartolome (Bartolome) at the conference room of respondent company. Present at the meeting were petitioner, respondent
Bartolome, various leaders of the marketing team, and the operations director of the company. During the meeting, respondent Bartolome made several
announcements. However, to the surprise of petitioner, respondent Bartolome announced that petitioner was to resign from the respondent company.
On February 11, 2004, petitioner received a letter from respondent company, asking him to explain within forty-eight (48) hours why his services should
not be terminated for loss of confidence in his ability to perform the functions of Marketing Director of the company. On February 13, 2004, petitioner
submitted his letter of explanation to respondent company. On February 17, 2004, the board of directors of respondent company terminated petitioners
services on the ground of loss of confidence. Thus, on March 16, 2004, petitioner filed before the Labor Arbiter a complaint for illegal dismissal, with
prayer for reinstatement, payment of full backwages, payment of 13th month pay, moral and exemplary damages, and attorneys fees, against
respondent. On April 28, 2005, the Labor Arbiter rendered a Decision in favor of petitioner Ancheta. National Labor Relations Commission (NLRC)
reversed the decision of the Labor Arbiter. Aggrieved, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. On April
19, 2007, the CA rendered a Decision, affirming with modification the decision of the NLRC.
Issue: Whether petitioners employment was validly terminated because of loss of confidence.
Ruling:
Two requisites must concur in order that there be a valid dismissal from employment, namely: (1) the dismissal must be for any of the causes
expressed in Article 282 of the Labor Code; and (2) the employee must be given an opportunity to be heard and to defend himself. Under Article 282(c)
of the Labor Code, an employer can terminate the employment of the employee concerned for "fraud or willful breach by an employee of the trust
reposed in him by his employer or duly authorized representative." The doctrine of loss of confidence requires the concurrence of the following: (1) loss
of confidence should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal, or unjustified; (3) it may not be
arbitrarily asserted in the face of overwhelming evidence to the contrary; (4) it must be genuine, not a mere afterthought to justify an earlier action taken
in bad faith; and (5) the employee involved holds a position of trust and confidence. Loss of confidence, as a just cause for termination of employment,
is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence. He must be invested with confidence on
delicate matters, such as the custody, handling, care, and protection of the employer's property and/or funds. In order to constitute a just cause for
dismissal, the act complained of must be "work-related" such as would show the employee concerned to be unfit to continue working for the employer.
Petitioner was a managerial employee of respondent company, holding a highly sensitive position. Being the Head of the Marketing Group of
respondent company, he was in charge, among others, of the over-all production and sales performance of the company. Thus, as aptly pointed out
by the CA, his performance was practically the lifeblood of the corporation, because its earnings depended on the sales of the marketing group, which
he used to head. The position held by petitioner required the highest degree of trust and confidence of his employer in the formers exercise of
managerial discretion insofar as the conduct of the latters business was concerned. Petitioners inability to perform the functions of his office to the
satisfaction of his employer and the formers poor judgment as marketing head caused the company huge financial losses. If these were not timely
addressed and corrected, the company could have collapsed, to the detriment of its policy holders, stockholders, employees, and the public in general.
The power to dismiss an employee is a recognized prerogative inherent in the employers right to freely manage and regulate his business. The law, in
protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer. The worker's right to security of tenure is not an
absolute right, for the law provides that he may be dismissed for cause. In this case, as admitted by petitioner, he was hired because of his expertise in
the pre-need industry. His competence and satisfactory performance as head of the marketing group assumed primordial importance for his continued
employment in the company. His dismal performance was causing the company financial losses; thus, it was not wise for the company to continue his
services. To be sure, an employer cannot be compelled to continue with the employment of workers when continued employment will prove inimical to
the employers interest. The SC agrees to CA that private respondents did not strictly comply with the two notice requirement in dismissing petitioner
Ancheta. While private respondents sent a show cause letter to petitioner Ancheta, the same letter precipitately implemented termination procedures,
i.e., demanded the return of the Executive elevator key which allows petitioner Ancheta access to the office premises and the surrender of the company
car assigned to him, even as petitioner Ancheta had yet to answer and air his side. Such betrays the fact that the said show cause letter was but a
formality and petitioner Anchetas dismissal is a foregone conclusion. It is thus apparent that private respondents did not comply with the procedural
requirements of due process in dismissing petitioner Ancheta. Respondents failure to observe due process in the termination of employment of
petitioner for a just cause does not invalidate the dismissal but makes respondent company liable for non-compliance with the procedural requirements
of due process. The violation of petitioners right to statutory due process warrants the payment of nominal damages, the amount of which is addressed
to the sound discretion of the court, taking into account the relevant circumstances. Petition Denied.

89

Javellana, Jr. vs. Belen

G.R. Nos. 181913 & 182158. March 5, 2010
Facts:
Belen was hired by Javellana as company driver and assigned him the tasks of picking up and delivering live hogs, feeds, and lime stones used for
cleaning the pigpens. On August 19, 1999 Javellana gave him instructions to (a) pick up lime stones in Tayabas, Quezon; (b) deliver live hogs at Barrio
Quiling, Talisay, Batangas; (c) have the delivery truck repaired; and (d) pick up a boar at Joliza Farms in Norzagaray, Bulacan. Petitioner Belen further
alleged that his long and arduous day finally ended at 4:30 a.m. of the following day, August 20, 1999. But after just three hours of sleep, respondent
Javellana summoned him to the office. When he arrived at 8:20 a.m., Javellana had left. After being told that the latter would not be back until 4:00 p.m.,
Belen decided to go home and get some more sleep. Petitioner Belen was promptly at the office at 4:00 p.m. but respondent Javellana suddenly blurted
out that he was firing Belen from work. Deeply worried that he might not soon get another job, Belen asked for a separation pay. When Javellana
offered him only P5,000.00, he did not accept it. Javellana claimed, on the other hand, that he hired petitioner Belen in 1995, not as a company driver,
but as family driver. Belen did not do work for his farm on a regular basis, but picked up feeds or delivered livestock only on rare occasions when the
farm driver and vehicle were unavailable.
Regarding petitioner Belen's dismissal from work, respondent Javellana insisted that he did it for a reason. Belen intentionally failed to report for work
on August 20, 1999 and this warranted his dismissal.
Issue: Does the amount that the Labor Arbiter awarded petitioner Belen represent all that he will get when the decision in his case becomes final or
does it represent only the amount that he was entitled to at the time the Labor Arbiter rendered his decision, leaving room for increase up to the date the
decision in the case becomes final?
Ruling:
Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:
Art. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.
Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the Labor Arbiter's decision until the dismissed
employee is actually reinstated. But if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that backwages shall be
computed from the time of illegal dismissal until the date the decision becomes final
As it happens, the parties filed separate petitions before this Court. The petition in G.R. 181913, filed by respondent Javellana, questioned the CA's
finding of illegality of dismissal while the petition in G.R. 182158, filed by petitioner Belen, challenged the amounts of money claims awarded to him.
The Court denied the first with finality in its resolution of September 22, 2008; the second is the subject of the present case. Consequently, Belen
should be entitled to backwages from August 20, 1999, when he was dismissed, to September 22, 2008, when the judgment for unjust dismissal in G.R.
181913 became final. Separation pay, on the other hand, is equivalent to one month pay for every year of service, a fraction of six months to be
considered as one whole year. Here that would begin from January 31, 1994 when petitioner Belen began his service. Technically the computation of
his separation pay would end on the day he was dismissed on August 20, 1999 when he supposedly ceased to render service and his wages ended.
But, since Belen was entitled to collect backwages until the judgment for illegal dismissal in his favor became final, here on September 22, 2008, the
computation of his separation pay should also end on that date. Further, since the monetary awards remained unpaid even after it became final on
September 22, 2008 because of Issue raised respecting the correct computation of such awards, it is but fair that respondent Javellana be required to
pay 12% interest per annum on those awards from September 22, 2008 until they are paid. The 12% interest is proper because the Court treats
monetary claims in labor cases the equivalent of a forbearance of credit. It matters not that the amounts of the claims were still in question on
September 22, 2008. What is decisive is that the issue of illegal dismissal from which the order to pay monetary awards to petitioner Belen stemmed
had been long terminated.
WPP Marketing Communications, Inc. vs. Galera
G.R. No. 169207, March 25, 2010
Facts:
Petitioner is Jocelyn Galera, an American citizen who was recruited from the US by private respondent John Steedman, Chairman-WPP Worldwide and
Chief Executive Officer of Mindshare, Co., a corporation based in Hong Kong, China, to work in the Philippines for private respondent WPP Marketing
Communications, Inc. (WPP). On December 14, 2000, GALERA alleged she was verbally notified by private STEEDMAN that her services had been
terminated from private respondent WPP. A termination letter followed the next day. On 3 January 2001, Galera filed a complaint for illegal dismissal,
holiday pay, service incentive leave pay, 13th month pay, incentive plan, actual and moral damages, and attorney's fees against WPP and/or John
Steedman (Steedman), Mark Webster (Webster) and Nominada Lansang (Lansang). The Labor Arbiter's Ruling for illegal dismissal and damages in
favor of GALERA. The First Division of the NLRC reversed the ruling of Arbiter Madriaga. Yet it was reversed again by CA.
Issues:
1.
2.

Whether Galera is an Employee or a Corporate Officer.

Whether WPP illegally dismissed Galera.

90

Ruling:
Employee. Galera, on the belief that she is an employee, filed her complaint before the Labor Arbiter. On the other hand, WPP, Steedman, Webster and
Lansang contend that Galera is a corporate officer; hence, any controversy regarding her dismissal is under the jurisdiction of the Regional Trial Court.
We agree with Galera. Corporate officers are given such character either by the Corporation Code or by the corporation's by-laws. Galera's
appointment as a corporate officer (Vice-President with the operational title of Managing Director of Mindshare) during a special meeting of WPP's
Board of Directors is an appointment to a non-existent corporate office. At the time of Galera's appointment, WPP already had one Vice-President in the
person of Webster and all five directorship positions provided in the by-laws are already occupied. Another indicator that she was a regular employee
and not a corporate officer is Section 14 of the contract, which clearly states that she is a permanent employee not a Vice-President or a member of
the Board of Directors. Another convincing indication that she was only a regular employee and not a corporate officer is the disciplinary procedure,
which states that her right of redress is through Mindshare's Chief Executive Officer for the Asia-Pacific. This implies that she was not under the
disciplinary control of private respondent WPP's Board of Directors (BOD), which should have been the case if in fact she was a corporate officer
because only the Board of Directors could appoint and terminate such a corporate officer.
WPP's dismissal of Galera lacked both substantive and procedural due process. Apart from Steedman's letter dated 15 December 2000 to Galera, WPP
failed to prove any just or authorized cause for Galera's dismissal. Steedman's letter to Galera reads: The operations are currently in a shamble. There
is lack of leadership and confidence in your abilities from within, our agency partners and some clients. Most of the staff I spoke with felt they got more
guidance and direction from Minda than yourself. In your role as Managing Director, that is just not acceptable. I believe your priorities are mismanaged.
The recent situation where you felt an internal strategy meeting was more important than a new business pitch is a good example. You failed to lead
and advise on the two new business pitches. In both cases, those involved sort (sic) Minda's input. As I discussed with you back in July, my directive
was for you to lead and review all business pitches. It is obvious [that] confusion existed internally right up until the day of the pitch. The quality output is
still not to an acceptable standard, which was also part of my directive that you needed to focus on back in July. I do not believe you understand the
basic skills and industry knowledge required to run a media special operation.
WPP, Steedman, Webster, and Lansang, however, failed to substantiate the allegations in Steedman's letter. Galera, on the other hand, presented
documentary evidence 22 in the form of congratulatory letters, including one from Steedman, which contents are diametrically opposed to the 15
December 2000 letter. The law further requires that the employer must furnish the worker sought to be dismissed with two written notices before
termination of employment can be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employer's decision to dismiss him. Failure to comply with the requirements
taints the dismissal with illegality. 23 WPP's acts clearly show that Galera's dismissal did not comply with the two-notice rule.
Maribago Bluewater Beach Resort vs. Dual
G.R. No. 180660 July 20, 2010
Facts:
On 18 October 1995, petitioner hired respondent Dual as waiter and promoted him later as outlet cashier of its Poolbar/Allegro Restaurant
On 9 January 2005, around 6:30 p.m., a group of Japanese guests and their companions dined at Allegro. Pursuant to the order slip, fourteen (14) sets
of dinner were prepared by the chef.
After dinner, at around 9:00 p.m., the guests asked for their bill. Since Hiyas was attending to other guests, he gave a signal to Mission to give the bill.
Mission asked respondent Dual for the sales transaction receipt and presented this to the guests. The guests paid the amount indicated on the receipt
and thereafter left in a hurry.
The receipt printed at 10:40 p.m. shows that only P3,036.00 was remitted by cashier Dual corresponding to six (6) sets of dinner.
In view of the discrepancy between the order slip and the receipt issued, petitioner Maribago, through its Human Resource Development (HRD)
manager, issued memoranda, all dated 12 January 2005, requiring respondent Dual, Alvin Hiyas, Ernesto Avenido and Basilio Alcoseba to explain why
they should not be penalized for violating House Rule 4.1 (dishonesty in any nature).
On 14 January 2005, the concerned employees were requested to attend a clarificatory hearing to be conducted on 15 January 2005. The hearing was
attended by respondent Dual, Human Resource Manager Ignacio Hermias, Jr., Chief Security Officer Roland Cubillan, Captain Waiter Hiyas, Chef
Arman, Bartender Avenido, Room Service Waiter Alcoseba, Butcher Ryan Alegrado, John Marollana, and union officials. This was followed by another
clarificatory hearing conducted on 16 January 2005.
After the investigation, respondent Dual was found guilty of dishonesty for his fabricated statements and for asking one of the waiters (Mission) to
corroborate his allegations. He was terminated per memorandum dated 22 January 2005. On 3 February 2005, Dual filed a complaint for unfair labor
practice, illegal dismissal, non-payment of 13th month and separation pay, and damages before the NLRC, Regional Arbitration Branch No. VII, Cebu
City.
The Labor Arbiter found that respondents termination was without valid cause and ruled that respondent is entitled to separation pay.
The NLRC set aside the Labor Arbiters decision and dismissed the complaint. The NLRC also denied respondents motion for reconsideration.It ruled
that complainants act of depriving respondent of its lawful revenue is tantamount to fraud against the company which warrants dismissal from the
service. The Court of Appeals reversed the decision and resolution of the NLRC. Hence this petition

91

Issue: Whether the Court of Appeals erred in ruling that respondent was illegally dismissed.
Ruling:
After a full review of the case, we are constrained to reverse the Court of Appeals.
The law requires that an employer shall not terminate the services of an employee except for a just or authorized cause. Otherwise, an employee
unjustly dismissed from work is entitled to reinstatement and full backwages. The law also requires the employer to observe due process in termination
cases. In Agabon v. National Labor Relations Commission, we ruled that violation of the employees statutory right to due process makes the employer
liable to pay indemnity in the form of nominal damages. The law further requires that the burden of proving the cause for termination rests with the
employer. In this case, we are in agreement that petitioners evidence proved that respondent is guilty of dishonesty and of stealing money entrusted to
him as cashier.
Respondents acts constitute serious misconduct which is a just cause for termination under the law.Theft committed by an employee is a valid reason
for his dismissal by the employer. Although as a rule this Court leans over backwards to help workers and employees continue with their employment or
to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property, petitioners income in this case, are a different
matter.
Nacague vs. Sulpicio Lines, Inc.
G.R. No. 172589. August 8, 2010
Facts:
Jeffrey Nacague (Nacague) was hepe de viaje or the representative of Sulpicio Lines,
Inc. (Sulpicio) on board one its vessels (the ship). A housekeeper on the ship reported to Sulpicio that Nacague and the chief mate made a threat on his
life after he found drug paraphernalia on board the ship. Sulpicio sent Nacague a notice of investigation informing him of the charges against him use
of illegal drugs and threatening a co-employee. When the ship docked in the port of Manila, crew members, including Nacague, were subjected to a
random drug test at the S.M. Lazo Medical Clinic (S.M. Lazo Clinic). Nacague tested positive for methamphetamine hydrochloride or shabu and was
subsequently subjected to a formal investigation. Nacague denied using illegal drugs and on the fifth day following the random drug test, underwent a
voluntary drug test at the Chong Hua Hospital in Cebu City, which yielded a negative result. Nacague submitted this result to Sulpicio, but Sulpicio later
terminated his services. Nacague filed a complaint for illegal suspension, illegal dismissal and reinstatement with backwages. The Labor Arbiter
declared that Nacague was illegally dismissed and awarded him separation pay in lieu of reinstatement due to his strained relations with Sulpicio. The
Labor Arbiter gave more weight to the drug test result from Chong Hua Hospital because it was accredited by the Dangerous Drugs Board, unlike S.M.
Lazo Clinic. On Sulpicios appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiters decision, holding that there was a
presumption that S.M. Lazo Clinic was an accredited drug testing center and it was incumbent on Nacague to show otherwise. Nacague filed a petition
for certiorari with the Court of Appeals which sustained the termination of his employment. Nacague brought the case to the Supreme Court for review.
Issue: Whether or not there was just cause to terminate Nacagues employment.
Ruling:
Sulpicio failed to clearly show that Nacague was guilty of using illegal drugs. The lack of accreditation of S.M. Lazo Clinic made its drug test results
doubtful.
Section 36 of Republic Act No. 9165 (Comprehensive Dangerous Drugs Act of 2002) provides that drug tests shall be performed only by any
government forensic laboratories or any of the drug testing laboratories accredited and monitored by the Department of Health, to safeguard the quality
of test results. The same provision also requires that drug testing should consist of both the screening test and the confirmatory test. In this case,
Sulpicio failed to prove that S.M. Lazo Clinic was an accredited drug testing center. Sulpicio did not even deny Nacagues allegation that S.M. Lazo
Clinic was not accredited. Also, only a screening test was conducted to determine if Nacague was guilty of using illegal drugs. Sulpicio Lines did not
confirm the positive result of the screening test with a confirmatory test. Sulpicio Lines failed to clearly show that it had a valid and legal cause for
terminating Nacagues employment. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law
considers the matter a case of illegal dismissal.
As the Labor Arbiter found, Nacagues reinstatement was no longer feasible due to the strained relations between Nacague and Sulpicio and he should
instead be granted separation pay. The Labor Arbiters decision was reinstated.
St. Marys Academy of Dipolog City vs. Palacio
G.R. NO. 164913, September 8, 2010
DECS Memorandum No. 10 provides that all incumbent teachers have until September 19, 2000 to pass the Licensure Examination for Teachers (LET),
otherwise they cannot continue teaching in public or private schools unless they obtain a temporary permit to teach as para-teachers. The complainants
in this case were dismissed from the school on March 31, 2000 after they failed to pass the LET. The Supreme Court held that their dismissal was illegal
and premature. The law has provided a specific timeframe within which the teachers could comply with the requirement of passing the LET hence, the
school cannot deny them this privilege, which the law has accorded to them, without violating their right to security of tenure.
To reiterate, this Court will not hesitate to defend respondents right to security of tenure. The premature dismissal from the service of respondents
Palacio, Calibod, Laquio, Santander and Montederamos is unwarranted. However, we take exception to the case of respondent Saile who, as alleged
by petitioner, was not qualified to take the LET as she only had three out of the minimum 10 required educational units to be admitted to take the LET

92

pursuant to Section 15 of RA 7836, which fact respondent Saile did not refute. Not being qualified to take the examination to become a duly licensed
professional teacher, petitioner cannot be compelled to retain her services as she cannot possibly obtain the needed prerequisite to allow her to
continue practicing the teaching profession. Thus, we find her termination just and legal.
PLDT vs. Teves
GR NO. 143511, November 15, 2010
Even assuming that respondents absenteeism constitutes willful disobedience, such offense does not warrant respondents dismissal. Not every case
of insubordination or willful disobedience by an employee reasonably deserves the penalty of dismissal. There must be a reasonable proportionality
between the offense and the penalty.
While management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers, pursuant to company rules
and regulations, however, such management prerogatives must be exercised in good faith for the advancement of the employers interest and not for
the purpose of defeating or circumventing the rights of the employees under special laws and valid agreements. The Court is wont to reiterate that while
an employer has its own interest to protect, and pursuant thereto, it may terminate an employee for a just cause, such prerogative to dismiss or lay off
an employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. The employer
should bear in mind that, in the execution of said prerogative, what is at stake is not only the employees position, but his very livelihood, his very
breadbasket.
Shimizu Phils Contractors vs. Callanta
G.R. NO. 165923, September 29, 2010
Facts:
Shimizu Phils. a corporation engaged in the construction business, employed Virgilio Callanta on August 23, 1994 as Safety Officer assigned at YutakaGiken Project and eventually as Project Administrator of petitioners Structural Steel Division (SSD) in 1995. Virgilio Callanta was informed that his
services will be terminated effective July 9, 1997 due to the lack of any vacancy in other projects and the need to re-align the companys personnel
requirements brought about by the imperatives of maximum financial commitments. He then filed an illegal dismissal complaint against petitioner
assailing his dismissal as without any valid cause.
Shimizu advanced that respondents services was terminated in accordance with a valid retrenchment program being implemented by the company
since 1996 due to financial crisis that plague the construction industry. To prove its financial deficit, petitioner presented financial statements for the
years 1995 to 1997 as well as the Securities and Exchange Commissions approval of petitioners application for a new paid-in capital amounting to
P330,000,000. Shimizu alleged that in order not to jeopardize the completion of its projects, the abolition of several departments and the concomitant
termination of some employees were implemented as each project is completed. When respondents Honda Project was completed, petitioner offered
respondent his separation pay which the latter refused to accept and instead filed an illegal dismissal complaint.
Mr. Callanta claimed that Shimizu failed to comply with the requirements called for by law before implementing a retrenchment program thereby
rendering it legally infirmed. First, it did not comply with the provision of the Labor Code mandating the service of notice of retrenchment. He pointed out
that the notice sent to him never mentioned retrenchment but only project completion as the cause of termination. Also, the notice sent to the
Department of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second, petitioner failed to use fair and
reasonable criteria in determining which employees shall be retrenched or retained. In the termination report submitted to DOLE, he was the only one
dismissed out of 333 employees. Worse, junior and inexperienced employees were appointed/assigned in his stead to new projects thus also ignoring
seniority in hiring and firing employees.
Shimizu argued that when it submitted the retrenchment notice/termination report to DOLE, there was already substantial compliance with the
requirement.
Labor Arbiter rendered a decision holding that Mr. Callanta was validly retrenched. He found that sufficient evidence was presented to establish
company losses; that petitioner offered respondent his separation pay; and that petitioner duly notified DOLE about the retrenchment. The Labor Arbiter
further relied on petitioners factual version relating to respondents employment background with regard to his position and behavioral conduct.
NLRC upheld the ruling that there was valid ground for respondents termination but modified the Labor Arbiters Decision by holding that petitioner
violated respondents right to procedural due process. The NLRC found that petitioner failed to comply with the 30-day prior notice to the DOLE and that
there is no proof that petitioner used fair and reasonable criteria in the selection of employees to be retrenched. Shimizu Philippine Contractor, Inc., is
ordered to pay complainant-appellant Virgilio P. Callanta his separation pay equivalent to one (1) month pay for every year of service. For want of due
notice, respondent is further directed to pay complainant an indemnity equivalent to one (1) month salary.
CA reversed and set aside the NLRCs ruling. The CA opined that Shimizu failed to prove that there were employees other than respondent who were
similarly dismissed due to retrenchment and that respondents alleged replacements held much higher ranks and were more deserving employees.
Moreover, there were no proofs to sustain that petitioner used fair and reasonable criteria in determining which employees to retrench. According to the
CA, petitioners failure to produce evidence raises the presumption that such evidence will be adverse to it. Consequently, the CA invalidated the
retrenchment, held respondent to have been illegally dismissed, and ordered respondents reinstatement and payment of backwages.
Issue: Whether or not Shimizu has failed to obeserve fair and reasonable standards or criteria in effecting the dismissal or Mr. Callanta?

93

Ruling:
There was substantial compliance for a valid retrenchment; Shimizu used fair and reasonable criteria in effecting retrenchment.
As an authorized cause for separation from service under Article 283 of the Labor Code, retrenchment is a valid exercise of management prerogative
subject to the strict requirements set by jurisprudence:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the
intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least month pay for every year of service,
whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent
the employees right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such
as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
Both the Labor Arbiter and the NLRC found sufficient compliance with these substantive requirements, there being enough evidence to prove that
petitioner was sustaining business losses, that separation pay was offered to respondent, and that notices of termination of service were furnished
respondent and DOLE. However, the NLRC modified the Decision of the Labor Arbiter by granting respondent indemnity since the notice to DOLE was
served short of the 30-day notice requirement and that there is no proof of the use of fair and reasonable criteria in the selection of employees to be
retrenched or retained. The CA, then, reversed the Decision of the NLRC by ruling that the absence of fair and reasonable criteria in implementing the
retrenchment invalidates altogether the retrenchment.
In implementing its retrenchment scheme, petitioner was constrained to streamline its operations and to downsize its complements in a progressive
manner in order not to jeopardize the completion of its projects. Thus, several departments like the Civil Works Division, Electro-mechanical Works
Division and the Territorial Project Management Offices, among others, were abolished in the early part of 1996 and thereafter the Structural Steel
Division, of which respondent was an Administrator. Respondent was among the last batch of employees who were retrenched and by the end of year
1997, all of the employees of the Structural Steel Division were severed from employment.
Mr. Callanta argued that that he was singled out for termination as allegedly shown in petitioners monthly termination report for the month of July 1997
filed with the DOLE does not persuade this Court. Standing alone, this document is not proof of the total number of retrenched employees or that
respondent was the only one retrenched. It merely serves as notice to DOLE of the names of employees terminated/ retrenched only for the month of
July. In other words, it cannot be deemed as an evidence of the number of employees affected by the retrenchment program. Thus we cannot conclude
that no other employees were previously retrenched.
Shimizu implemented its retrenchment program in good faith because it undertook several measures in cutting down its costs, to wit, withdrawing
certain privileges of petitioners executives and expatriates; limiting the grant of additional monetary benefits to managerial employees and cutting down
expenses; selling of company vehicles; and infusing fresh capital into the company. Respondent did not attempt to refute that petitioner adopted these
measures before implementing its retrenchment program.
Shimizu was able to prove that it incurred substantial business losses, that it offered to pay respondent his separation pay, that the retrenchment
scheme was arrived at in good faith, and lastly, that the criteria or standard used in selecting the employees to be retrenched was work efficiency which
passed the test of fairness and reasonableness.
The termination notice sent to DOLE did not comply with the 30-day notice requirement, thus, respondent is entitled to indemnity for violation of due
process. However, petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the second
notice, before the intended date of respondents dismissal.
The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of termination. Non-compliance
with this rule clearly violates the employees right to statutory due process.
Consequently, we affirm the NLRCs award of indemnity to respondent for want of sufficient due notice. But to be consistent with our ruling in Jaka Food
Processing Corporation v. Pacot, the indemnity in the form of nominal damages should be fixed in the amount of P50,000.00.
Manila Mining Corp. Employees Assoc.-FFW vs. Manila Mining Corp.
G.R. No. 178222-23, September 29, 2010
Facts:
Respondent Manila Mining Corporation (MMC) is a publicly-listed corporation engaged in large-scale mining for gold and copper ore. MMC is required
by law to maintain a tailings containment facility to store the waste material generated by its mining operations. Consequently, MMC constructed
several tailings dams to treat and store its waste materials. One of these dams was Tailings Pond No. 7 (TP No. 7), which was constructed in 1993 and
was operated under a permit issued by the Department of Environment and Natural Resources (DENR), through its Environmental Management
Bureau (EMB) in Butuan City, Agusan del Norte.
Upon expiration of the tailings permit on 25 July 2001, DENR-EMB did not issue a permanent permit due to the inability of MMC to secure an
Environmental Compliance Certificate (ECC). An essential component of an ECC is social acceptability or the consent of the residents in the

94

community to allow TP No. 7 to operate, which MMC failed to obtain. Hence, it was compelled to temporarily shut down its mining operations, resulting
in the temporary lay-off of more than 400 employees in the mine site.
On 30 July 2001, MMC called for the suspension of negotiations on the CBA with the Union until resumption of mining operations.
Among the employees laid-off, complainants Samuel Zuiga, Myrna Maquio, Doroteo Torre, Arsenio Mark Perez, Edmundo Galvez, Diana Ruth
Rellores, Jonathan Araneta, Teresita Lagman, Reynaldo Anzures, Gerardo Opena, and Edwin Tuazon, together with the Union filed a complaint before
the labor arbiter on even date praying for reinstatement, recognition of the Union as the sole and exclusive representative of its rank-and-file
employees, and payment of moral and exemplary damages and attorneys fees.
In their Position Paper, complainants challenged the validity of their lay-off on the averment that MMC was not suffering from business losses. They
alleged that MMC did not want to bargain collectively with the Union, so that instead of submitting their counterproposal to the CBA, MMC decided to
terminate all union officers and active members. Petitioners questioned the timing of their lay-off, and alleged that first, there was no showing that costcutting measures were taken by MMC; second, no criteria were employed in choosing which employees to lay-off; and third, the individuals laid-off were
those who signed the attendance sheet of the union organizational meeting. Petitioners likewise claimed that they were denied due process because
they were not given a 30-day notice informing them of the lay-off. Neither was the DOLE informed of this lay-off, as mandated by law.
Respondents justified the temporary lay-off as bona fide in character and a valid management prerogative pending the issuance of the permit to
continuously operate TP No. 7.
The labor arbiter ruled in favor of MMC and held that the temporary shutdown of the mining operation, as well as the temporary lay-off of the
employees, is valid.
On appeal, the National Labor Relations Commission (NLRC) modified the judgment of the labor arbiter and ordered the payment of separation pay
equivalent to one month pay for every year of service. It ratiocinated that the temporary lay-off, which exceeded more than six (6) months, had the
effect of severance of the employer-employee relationship.
Issue: WON there was bad faith on the part of MMC in implementing the temporary lay-off resulting in the complainants constructive dismissal
Held:
The lay-off is neither illegal nor can it be considered as unfair labor practice.
Despite all efforts exerted by MMC, it did not succeed in obtaining the consent of the residents of the community where the tailings pond would operate,
one of the conditions imposed by DENR-EMB in granting its application for a permanent permit. It is precisely MMCs faultless failure to secure a permit
which caused the temporary shutdown of its mining operations.
For a charge of unfair labor practice to prosper, it must be shown that the employer was motivated by ill-will, bad faith or fraud, or was oppressive to
labor. The employer must have acted in a manner contrary to morals, good customs, or public policy causing social humiliation, wounded feelings or
grave anxiety. While the law makes it an obligation for the employer and the employees to bargain collectively with each other, such compulsion does
not include the commitment to precipitately accept or agree to the proposals of the other. All it contemplates is that both parties should approach the
negotiation with an open mind and make reasonable effort to reach a common ground of agreement.
Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation at all to the laid-off employees. The validity of its act of
suspending its operations does not excuse it from paying separation pay.
Article 286 of the Labor Code allows the bona fide suspension of operations for a period not exceeding six (6) months. During the suspension, an
employee is not deemed terminated. As a matter of fact, the employee is entitled to be reinstated once the employer resumes operations within the 6month period. However, Article 286 is silent with respect to the rights of the employee if the suspension of operations lasts for more than 6 months.
Thus is bred the issue regarding the responsibility of MMC toward its employees.
The Court is not impressed with the claim that actual severe financial losses exempt MMC from paying separation benefits to complainants. In the first
place, MMC did not appeal the decision of the Court of Appeals which affirmed the NLRCs award of separation pay to complainants. MMCs failure
had the effect of making the awards final so that MMC could no longer seek any other affirmative relief. In the second place, the non-issuance of a
permit forced MMC to permanently cease its business operations, as confirmed by the Court of Appeals. Under Article 283, the employer can lawfully
close shop anytime as long as cessation of or withdrawal from business operations is bona fide in character and not impelled by a motive to defeat or
circumvent the tenurial rights of employees, and as long as he pays his employees their termination pay in the amount corresponding to their length of
service. The cessation of operations, in the case at bar is of such nature. It was proven that MMC stopped its operations precisely due to failure to
secure permit to operate a tailings pond. Separation pay must nonetheless be given to the separated employees.
Robinsons Galleria/Robinsons Supermarket Corporation vs. Ranchez
G.R. No. 177937, January 19, 2011
Facts:
Respondent was a probationary employee of petitioner Robinsons Galleria/Robinsons Supermarket Corporation (petitioner Supermarket) for a period of
five (5) months, or from October 15, 1997 until March 14, 1998. She underwent six (6) weeks of training as a cashier before she was hired as such on
October 15, 1997.
Two weeks after she was hired, or on October 30, 1997, respondent reported to her supervisor the loss of cash amounting to Twenty Thousand Two
Hundred Ninety-Nine Pesos (P20,299.00) which she had placed inside the company locker. Petitioner Jess Manuel (petitioner Manuel), the Operations

95

Manager of petitioner Supermarket, ordered that respondent be strip-searched by the company guards. However, the search on her and her personal
belongings yielded nothing.
Respondent acknowledged her responsibility and requested that she be allowed to settle and pay the lost amount. However, petitioner Manuel did not
heed her request and instead reported the matter to the police. An information for Qualified Theft was filed with the Quezon City Regional Trial Court.
Respondent was constrained to spend two weeks in jail for failure to immediately post bail. On November 25, 1997, respondent filed a complaint for
illegal dismissal and damages.
On March 12, 1998, petitioners sent to respondent by mail a notice of termination and/or notice of expiration of probationary employment dated March
9, 1998. In dismissing the complaint for illegal dismissal, the Labor Arbiter ratiocinated that at the time respondent filed the complaint for illegal
dismissal, she was not yet dismissed by petitioners. When she was strip- searched by the security personnel of petitioner Supermarket, the guards
were merely conducting an investigation. The subsequent referral of the loss to the police authorities might be considered routine. Respondent's nonreporting for work after her release from detention could be taken against her in the investigation that petitioner supermarket would conduct. In
reversing the decision of the Labor Arbiter, the NLRC ruled that respondent was denied due process by petitioners. Strip-searching respondent and
sending her to jail for two weeks certainly amounted to constructive dismissal because continued employment had been rendered impossible,
unreasonable, and unlikely.
Issue: The sole issue for resolution is whether respondent was illegally terminated from employment by petitioners.
Ruling:
Yes. There is probationary employment when the employee upon his engagement is made to undergo a trial period during which the employer
determines his fitness to qualify for regular employment based on reasonable standards made known to him at the time of engagement.
A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of probationary employment, aside from just or
authorized causes of termination, an additional ground is provided under Article 281 of the Labor Code,i.e., the probationary employee may also be
terminated for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the
time of the engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated for any of the following:
(1) a just or (2) an authorized cause; and (3) when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the
employer.
Article 277(b) of the Labor Code mandates that subject to the constitutional right of workers to security of tenure and their right to be protected against
dismissal, except for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the same Code, the employer
shall furnish the worker, whose employment is sought to be terminated, a written notice containing a statement of the causes of termination, and shall
afford the latter ample opportunity to be heard and to defend himself with the assistance of a representative if he so desires, in accordance with
company rules and regulations pursuant to the guidelines set by the Department of Labor and Employment.
In the instant case, based on the facts on record, petitioners failed to accord respondent substantive and procedural due process. The haphazard
manner in the investigation of the missing cash, which was left to the determination of the police authorities and the Prosecutor's Office, left respondent
with no choice but to cry foul. Administrative investigation was not conducted by petitioner Supermarket. On the same day that the missing money was
reported by respondent to her immediate superior, the company already pre-judged her guilt without proper investigation, and instantly reported her to
the police as the suspected thief, which resulted in her languishing in jail for two weeks.
As correctly pointed out by the NLRC, the due process requirements under the Labor Code are mandatory and may not be supplanted by police
investigation or court proceedings. The criminal aspect of the case is considered independent of the administrative aspect. Thus, employers should not
rely solely on the findings of the Prosecutor's Office. They are mandated to conduct their own separate investigation, and to accord the employee every
opportunity to defend himself. Furthermore, respondent was not represented by counsel when she was strip-searched inside the company premises or
during the police investigation, and in the preliminary investigation before the Prosecutor's Office.
Respondent was constructively dismissed by petitioner Supermarket effective October 30, 1997. It was unreasonable for petitioners to charge her with
abandonment for not reporting for work upon her release in jail. It would be the height of callousness to expect her to return to work after suffering in jail
for two weeks. Work had been rendered unreasonable, unlikely, and definitely impossible, considering the treatment that was accorded respondent by
petitioners.
University of the Immaculada concepcion vs. NLRC
G.R. NO. 181146, January 26, 2011
Facts:
Petitioner University of the Immaculate Conception is a private educational institution located in Davao City. Private respondent Teodora C. Axalan is a
regular faculty member in the university holding the position of Associate Professor II. Aside from being a regular faculty member, Axalan is the elected
president of the employees' union.
From November 18-22, 2002, Axalan attended a seminar in Quezon City on website development. Axalan then received a memorandum from Dean
Maria Rosa Celestial asking her to explain in writing why she should not be dismissed for having been absent without official leave.

96

Dean Celestial relayed to Axalan the message of the university president that no administrative charge would be filed if Axalan would admit having been
absent without official leave and write a letter of apology seeking forgiveness. Axalan opted not to write the letter of admission and contrition the
university president requested. The Dean wrote Axalan that the university president had created an ad hoc grievance committee to investigate the
AWOL charge.
From 28 January to 3 February 2003, Axalan attended a seminar in Baguio City on advanced paralegal training. Dean Celestial wrote Axalan informing
her that her participation in the paralegal seminar in Baguio City was the subject of a second AWOL charge. The dean asked Axalan to explain in writing
why no disciplinary action should be taken against her.
After conducting hearings and receiving evidence, the ad hoc grievance committee found Axalan to have incurred AWOL on both instances and
recommended that Axalan be suspended without pay for six months on each AWOL charge. The university president approved the committee's
recommendation.
The university president then wrote Axalan informing her that she incurred absences without official leave when she attended the seminars on website
development in Quezon City and on advanced paralegal training in Baguio City on 18-22 November 2002 and on 28 January-3 February 2003,
respectively. In the same letter, the university president informed Axalan that the total penalty of one-year suspension without pay for both AWOL
charges would be effective immediately.
On 1 December 2003, Axalan filed a complaint against the university for illegal suspension, constructive dismissal, reinstatement with backwages, and
unfair labor practice with prayer for damages and attorney's fees.
Meanwhile, upon the expiration of the one-year suspension, Axalan promptly resumed teaching at the university on 1 October 2004.
Issue: WON Axalan was constructively dismissed
Held:
Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely as
when there is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee leaving the latter with no other option but to quit.
In this case however, there was no cessation of employment relations between the parties. It is unrefuted that Axalan promptly resumed teaching at the
university right after the expiration of the suspension period. In other words, Axalan never quit. Hence, Axalan cannot claim that she was left with no
choice but to quit, a crucial element in a finding of constructive dismissal. Thus, Axalan cannot be deemed to have been constructively dismissed.
Significantly, at the time the Labor Arbiter rendered his Decision on 11 October 2004, Axalan had already returned to her teaching job at the university
on 1 October 2004. The Labor Arbiter's Decision ordering the reinstatement of Axalan, who at the time had already returned to work, is thus absurd.
There being no constructive dismissal, there is no legal basis for the Labor Arbiter's order of reinstatement as well as payment of backwages, salary
differentials, damages, and attorney's fees.
Note that on the first AWOL incident, the university even offered to drop the AWOL charge against Axalan if she would only write a letter of contrition.
But Axalan adamantly refused knowing fully well that the administrative case would take its course leading to possible sanctions. She cannot now be
heard that the imposition of the penalty of six-month suspension without pay for each AWOL charge is unreasonable. We are convinced that Axalan was
validly suspended for cause and in accord with procedural due process.
The Court recognizes the right of employers to discipline its employees for serious violations of company rules after affording the latter due process and
if the evidence warrants. The university, after affording Axalan due process and finding her guilty of incurring AWOL on two separate occasions, acted
well within the bounds of labor laws in imposing the penalty of six-month suspension without pay for each incidence of AWOL.
As a learning institution, the university cannot be expected to take lightly absences without official leave among its employees, more so among its
faculty members even if they happen to be union officers. To do so would send the wrong signal to the studentry and the rest of its teaching staff that
irresponsibility is widely tolerated in the academe.
Hospital Management Services, Inc. vs. Hospital Management Services, Inc. Medical Center Manila Employees Association
G.R. no. 176287. January 31, 2011
Facts:
De Castro and ward-clerk orientee Gina Guillergan were at the nurse station on night duty when Rufina Causaren, an 81-year-old patient confined at
Room 724-1 of petitioner hospital fell from the right side of the bed as she was trying to reach for the bedpan. The niece of the latter sought assistance
from the nurse station but instead of personally seeing the patient, respondent De Castro directed ward-clerk orientee Guillergan to check the patient.
Thereafter, a formal investigation was conducted and during the committee investigation, respondent De Castro explained that she was attending to a
newly-admitted patient at Room 710 2:30 a.m. to 3:00 a.m. (March 24,1999) and, because of this, she instructed Nursing Assistant Tatad to check the
vital signs of patient Causaren, with ward-clerk orientee Guillergan accompanying the latter.
However, the Investigation Committee found that the subject incident happened between 11:00 a.m. to 11:30 a.m. of March 23, 1999. The committee
recommended that despite her more than seven years of service, respondent De Castro should be terminated from employment for her lapse in
responding to the incident and for trying to manipulate and influence her staff to cover-up the incident.

97

Issue: WON De Castro was illegally dismissed by the employer hospital.

Ruling:
Yes.
Article 282 (b) of the Labor Code provides that an employer may terminate an employment for gross and habitual neglect by the employee
of his duties.
It is incumbent upon respondent De Castro to ensure that patients, covered by the nurse station to which she was assigned, be accorded utmost health
care at all times without any qualification or distinction. Respondent De Castros failure to
o
personally assist patient Causaren
o
check her vital signs and examine if she sustained any injury,
o
refer the matter to the patient's attending physician or any physician-on-duty, and
o
note the incident in the report sheet for endorsement to the next shift for proper monitoring constitute serious misconduct that warrants her
termination of employment.
However neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence connotes want of care in the performance of
one's duties. Habitual neglect implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. A single or
isolated act of negligence does not constitute a just cause for the dismissal of the employee.
There was no any wrongful intent, deliberate refusal, or bad faith on her part when, instead of personally attending to patient Causaren, she requested
Nursing Assistant Tatad and ward-clerk orientee Guillergan to see the patient, as she was then attending to a newly-admitted patient at Room 710. It
was her judgment call, albeit an error of judgment, being the staff nurse with presumably more work experience and better learning curve, to send
Nursing Assistant Tatad and ward-clerk orientee Guillergan to check on the health condition of the patient, as she deemed it best, under the given
situation, to attend to a newly-admitted patient who had more concerns that needed to be addressed accordingly. Being her first offense, respondent
De Castro cannot be said to be grossly negligent so as to justify her termination of employment. Moreover, petitioners allegation, that respondent De
Castro exerted undue pressure upon her co-nurses to alter the actual time of the incident so as to exculpate her from any liability, was not clearly
substantiated.
Culili vs. Eastern Telecommunications Philippines, Inc.
G.R. No. 165381 February 9, 2011
Facts:
Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications company engaged mainly in the business of establishing
commercial telecommunications systems and leasing of international datalines or circuits that pass through the international gateway facility (IGF).
Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its Field Operations Department on January 27, 1981. On December 12,
1996, Culili was promoted to Senior Technician in the Customer Premises Equipment Management Unit of the Service Quality Department and his
basic salary was increased.
In 1998, due to business troubles and losses, ETPI was compelled to implement a Right-Sizing Program which consisted of two phases: the first phase
involved the reduction of ETPIs workforce to only those employees that were necessary and which ETPI could sustain; the second phase entailed a
company-wide reorganization which would result in the transfer, merger, absorption or abolition of certain departments of ETPI.
Among the departments abolished was the Service Quality Department. The functions of the Customer Premises Equipment Management Unit, Culilis
unit, were absorbed by the Business and Consumer Accounts Department. The abolition of the Service Quality Department rendered the specialized
functions of a Senior Technician unnecessary. As a result, Culilis position was abolished due to redundancy and his functions were absorbed by Andre
Andrada, another employee already with the Business and Consumer Accounts Department.
On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice, and money claims before the Labor
Arbiter.
On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair labor practice. On appeal, the
NLRC affirmed the Labor Arbiters decision but modified the amount of moral and exemplary damages awarded.
Issue: WON Culili was legally dismissed.
Ruling:
Culili asserted that he was illegally dismissed because there was no valid cause to terminate his employment. He claimed that ETPI failed to prove that
his position had become redundant and that ETPI was indeed incurring losses. Culili further alleged that his functions as a Senior Technician could not
be considered a superfluity because his tasks were crucial and critical to ETPIs business.
Under our laws, an employee may be terminated for reasons involving measures taken by the employer due to business necessities. Article 283 of the
Labor Code provides:
Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the

98

Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of laborsaving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least
one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year.
There is redundancy when the service capability of the workforce is greater than what is reasonably required to meet the demands of the business
enterprise. A position becomes redundant when it is rendered superfluous by any number of factors such as over-hiring of workers, decrease in volume
of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise.
This Court has been consistent in holding that the determination of whether or not an employees services are still needed or sustainable properly
belongs to the employer. Provided there is no violation of law or a showing that the employer was prompted by an arbitrary or malicious act, the
soundness or wisdom of this exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC.
However, an employer cannot simply declare that it has become overmanned and dismiss its employees without producing adequate proof to sustain its
claim of redundancy. Among the requisites of a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position;
and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant, such as but not limited to: preferred status, efficiency,
and seniority.
This Court also held that the following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility studies/ proposal on
the viability of the newly created positions, job description and the approval by the management of the restructuring.
In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-Sizing Program. Even in the face of initial opposition from
and rejection of the said program by ETEU, ETPI patiently negotiated with ETEUs officers to make them understand ETPIs business dilemma and its
need to reduce its workforce and streamline its organization. This evidently rules out bad faith on the part of ETPI.
In deciding which positions to retain and which to abolish, ETPI chose on the basis of efficiency, economy, versatility and flexibility. It needed to reduce
its workforce to a sustainable level while maintaining functions necessary to keep it operating. The records show that ETPI had sufficiently established
not only its need to reduce its workforce and streamline its organization, but also the existence of redundancy in the position of a Senior Technician.
ETPI explained how it failed to meet its business targets and the factors that caused this, and how this necessitated it to reduce its workforce and
streamline its organization. ETPI also submitted its old and new tables of organization and sufficiently described how limited the functions of the
abolished position of a Senior Technician were and how it decided on whom to absorb these functions.
For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall be deemed complied with upon service
of a written notice to the employee and the appropriate Regional Office of the Department of Labor and Employment at least thirty days before
effectivity of the termination, specifying the ground or grounds for termination.
ETPI does not deny its failure to provide DOLE with a written notice regarding Culilis termination. It, however, insists that it has complied with the
requirement to serve a written notice to Culili as evidenced by his admission of having received it and forwarding it to his union president. Accordingly, it
is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and
(2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should
be stiffer because the dismissal process was initiated by the employer's exercise of his management prerogative.
Hence, since it has been established that Culilis termination was due to an authorized cause and cannot be considered unfair labor practice on the part
of ETPI, his dismissal is valid. However, in view of ETPIs failure to comply with the notice requirements under the Labor Code, Culili is entitled to
nominal damages in addition to his separation pay.
Plastimer Indutrial Corp. vs. Gopo
GR No. 183390, February 16, 2011
Facts:
On 7 May 2004, Plastimer issued a Memo informing all its employees of the decision of the Board of Directors to downsize and reorganize its business
operations due to withdrawal of investments and shares of stocks which resulted in the change of its corporate structure. On 14 May 2004, the
employees of Plastimer, including respondents were served written notices of their termination effective 13 June 2004. On 24 May 2004, Plastimer and
Plastimer Industrial Corporation Christian Brotherhood (PICCB), the CBA representative of all rank and file employees, entered into a MOA relative to
the terms and conditions that would govern the retrenchment of the affected employees. On 26 May 2004, Plastimer submitted to the Department of
Labor and Employment (DOLE) an Establishment Termination Report containing the list of the employees affected by the reorganization and
downsizing. On 28 May 2004, the affected employees, including respondents, signed individual Release Waiver and Quitclaim.
Thereafter, respondents filed a complaint against Plastimer before the Labor Arbiter for illegal dismissal with prayer for reinstatement and full
backwages, underpayment of separation pay, moral and exemplary damages and attorneys fees. Respondents alleged that they did not voluntarily
relinquish their jobs and that they were required to sign the waivers and quitclaims without giving them an opportunity to read them and without
explaining their contents. Respondents further alleged that Plastimer failed to establish the causes/valid reasons for the retrenchment and to comply

99

with the one-month notice to the DOLE as well as the standard prescribed under the CBA. Petitioners countered that the retrenchment was a
management prerogative and that respondents got their retrenchment or separation pay even before the effective date of their separation from service.
Labor Arbiter: Plastimer were able to prove that there was a substantial withdrawal of stocks that led to the downsizing of the workforce. Notices to the
affected employees were given on 14 May 2004, 30 days before its effective date on 14 June 2004. It was only the notice to the DOLE that was filed
short of the 30-day period. Labor Arbiter further ruled that respondents could not claim ignorance of the contents of the waivers and quitclaims because
they were assisted by the union President and their counsel in signing them.
Issue:

Whether respondents were illegally retrenched by petitioners.

Ruling:
No.
One-Month Notice of Termination of Employment
Plastimer submitted the notice of termination of employment to the DOLE on 26 May 2004. However, notices to the affected employees were given to
them on 14 May 2004 or 30 days before the effectivity of their termination from employment on 13 June 2004. While notice to the DOLE was short of
the one-month notice requirement, the affected employees were sufficiently informed of their retrenchment 30 days before its effectivity. Petitioners
failure to comply with the one-month notice to the DOLE is only a procedural infirmity and does not render the retrenchment illegal. In Agabon v. NLRC,
we ruled that when the dismissal is for a just cause, the absence of proper notice should not nullify the dismissal or render it illegal or ineffectual.
Instead, the employer should indemnify the employee for the violation of his statutory rights. Here, the failure to fully comply with the one-month notice
of termination of employment did not render the retrenchment illegal but it entitles respondents to nominal damages.
Validity of Retrenchment
The Court of Appeals ruled that there was no valid cause for retrenchment. We do not agree.
The Court of Appeals acknowledged that an independent auditor confirmed petitioners losses for the years 2001 and 2002. The fact that there was a
net income in 2003 does not justify the Court of Appeals ruling that there was no valid reason for the retrenchment. Records showed that the net
income of P6,185,707.05 for 2003 was not even enough for petitioners to recover from the P52,904,297.88 loss in 2002.Article 283 of the Labor Code
recognizes retrenchment to prevent losses as a right of the management to meet clear and continuing economic threats or during periods of economic
recession to prevent losses. There is no need for the employer to wait for substantial losses to materialize before exercising ultimate and drastic option
to prevent such losses.
Validity of Waivers and Quitclaims
The Court has ruled that a waiver or quitclaim is a valid and binding agreement between the parties, provided that it constitutes a credible and
reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full understanding of its import.
We agree with LA and NLRC that respondents were sufficiently apprised of their rights under the waivers and quitclaims that they signed. Each
document contained the signatures of Edward Marcaida (Marcaida), PICCB President, and Atty.Bayani Diwa, the counsel for the union, which proved
that respondents were duly assisted when they signed the waivers and quitclaims.
SC uphold the validity of respondents retrenchment with MODIFICATION that petitioners pay each of the respondents the amount of P30,000 as
nominal damages for non-compliance with statutory due process.
Lopez vs. Alturas Group Of Companies
G.R. NO. 191008. April 11, 2011
Facts:
Petitioner Quirico Lopez was hired as a truck driver by Alturas Group of Companies. Sometime in 1997, he was dismissed after he was allegedly caught
by respondent's security guard in the act of attempting to smuggle out of the company premises 60 kilos of scrap iron worth P840. In compliance with
the Show Cause Order, petitioner answered the allegations by a handwritten explanation.
Finding petitioner's explanation unsatisfactory, respondent company terminated his employment by Notice of Termination, on the grounds of loss of trust
and confidence, and of violation of company rules and regulations.
Petitioner thereupon filed a complaint against respondent company for illegal dismissal and underpayment of wages. He claimed that the smuggling
charge against him was fabricated to justify his illegal dismissal; that the filing of the charge came about after he reported the loss of the original copy of
his pay slip, which report, he went on to claim, respondent company took to mean that he could use the pay slip as evidence for filing a complaint for
violation of labor laws.
By decision of the Labor Arbiter, it was held that petitioner's dismissal was justified, for he, a truck driver, held a position of trust and confidence, and his
act of stealing company property was a violation of the trust reposed upon him.
On appeal, the National Labor Relations Commission's (NLRC), reversed the ruling of the Labor Arbiter upon finding that respondent's evidence did not
suffice to warrant the termination of petitioner's services.
When the respondent appealed the case to the Court of Appeals, it reversed the NLRC ruling and held that respondent company was justified in
terminating petitioner's employment on the ground of loss of trust and confidence, his alleged act of smuggling out the scrap iron having been
sufficiently established through the affidavits of superior employees.
Albeit the appellate court found that petitioner's dismissal was for a just cause, it held that due process was not observed when respondent company
failed to give him a chance to defend his side in a proper hearing.
Issues:

100

WON the termination was for a just cause.

WON the petitioner was afforded due process.

Ruling:
1.
The termination was for a just cause.
Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due process, and the legality of the manner of dismissal
which constitutes procedural due process.
As to substantive due process, the Court finds that respondent company's loss of trust and confidence arising from petitioner's smuggling out of the
scrap iron, compounded by his past acts of unauthorized selling cartons belonging to respondent company, constituted just cause for terminating his
services.
Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of respondent company's goods and property, and
consequently with its handling and protection, hence, even if he did not occupy a managerial position, he can be said to be holding a position of
responsibility. As to his act principal ground for his dismissal his attempt to smuggle out the scrap iron belonging to respondent company, the
same is undoubtedly work-related.
2.
The Petitioner was given due process.
Procedural due process has been defined as giving an opportunity to be heard before judgment is rendered. Petitioner was given the opportunity to
explain his side when he was informed of the charge against him and required to submit his written explanation with which he complied. There is no
violation of due process even if no hearing was conducted, where the party was given a chance to explain his side of the controversy. The right to
counsel and the assistance of one in investigations involving termination cases is neither indispensable nor mandatory, except when the employee
himself requests for one or that he manifests that he wants a formal hearing on the charges against him. In petitioner's case, there is no showing that he
requested for a formal hearing to be conducted or that he be assisted by counsel.
Hence, the petition was denied.
Apacible vs. Mutimed Industries Inc.
G.R. NO. 178903. MAY 30, 2011
Facts:
Petitioner Juliet Apacible was the companys Assistant Area Sales Manager for Cebu Operations when she was separated from service.
On 2003, Petitioner was informed that she will be transferred to the company's main office in Pasig City on account of the ongoing reorganization. At the
same time, she was placed under investigation for the delayed released of BCRs (cash budget for customer representation in sealed envelopes which
are given to loyal clients). In her written explanation, petitioner, admitting that the delay constituted a violation of company policies, averred that she
forgot to endorse the BCRs because she was thinking about her impending transfer; and that she did not misappropriate the money as she had already
released the BCRs. Finding that the delay in releasing the BCRs amounted to loss of trust and confidence, petitioner was given the option to resign.
She thereupon reported to the head office in Pasig City. In the meeting there, she was given the options of resignation, termination, availment of an
early retirement package, or transfer to Pasig City. Without availing of any option, petitioner took a leave of absence.
Petitioner, through counsel, inform the company that the meeting that took place was "illegal," "insensitive," "inhumane" and petitioner's dismissals a
"unilateral arrangement and ruthless display of power." In the same letter, her counsel demanded payment of separation pay and stated that he had
advised petitioner to remain in her current position in Cebu.
The respondent company then sent petitioner a memorandum-directive for her to immediately report to the head office in Pasig City and to return the
company vehicle assigned to her to the Cebu Office within 24 hours. Petitioner did not heed the directive, however. She instead filed an application for
sick leave.
By Memorandum, respondent reiterated its directive to petitioner, but her counsel sent another letter to the company, faulting her for pressuring
petitioner to resign and reiterating the demand for separation pay. Again counsel stated that he had advised petitioner to remain in Cebu.
Petitioner then requested that she be given her daily work assignment in Cebu, which request was denied by the respondent. Later on, petitioner was
given a show cause notice for her to explain in writing why she should not be sanctioned for insubordination for failure to comply with the transfer order.
Again, petitioner, through counsel, wrote respondent company, maintaining that she was "not transferring to Manila" and that if the company "want[ed]
petitioner out of the company," separation pay must be paid.
By letter to the petitioners counsel, respondent company denied having pressured petitioner as it stressed that the transfer was based on business
demands and did not entail a demotion in rank nor diminution of benefits.
Respondent company then sent petitioner a notice of termination for insubordination, prompting petitioner to file a complaint for illegal dismissal, nonpayment of overtime pay, 13th month pay, service incentive leave pay, separation pay, damages and attorney's fees before the Labor Arbiter.
The Labor Arbiter dismissed petitioner's complaint, ruling that she was dismissed for just cause, i.e., fraud or loss or trust and confidence under Article
282 (a) and (c) of the Labor Code.
On appeal, the National Labor Relations Commission (NLRC), affirmed the Labor Arbiter's decision but on a different ground petitioner's refusal to
obey the transfer orders which amounted to insubordination. The NLRC, however, granted petitioner separation pay by way of financial assistance, 13th
month pay, and an amount representing salary for five unpaid days.
The Court of Appeals granted respondent company's appeal by modifying the NLRC Decision. It ruled that petitioner was not entitled to separation pay
because, contrary to the NLRC's finding, she "lacked good faith." It noted that petitioner, from the start, knew and accepted the company policy on
transfers whenever so required, and could not thus refuse "another valid reassignment by treating it as an imposition and burden."
The appellate court further held that as an Assistant Area Sales Manager, petitioner was expected to "show more exacting work ethics, a higher degree
of loyalty and respect as opposed to her subordinate employees," yet she "openly and continually defied" the transfer orders; and that her belligerent
attitude became even more pronounced when her counsel sent several insulting and threatening letters to respondent company and its officers.
The appellate court went on to find that petitioner's acts were "highly insolent, impertinent and lacking in good faith," hence, not entitled to separation
pay by way of financial assistance.

101

Issue: WON petitioner is entitled separation pay by way of financial assistance.

Ruling:
The petition fails.
As found by the Labor Arbiter, the NLRC and the appellate court, petitioner was justly dismissed from employment.
The law is clear. Separation pay is only warranted when the cause for termination is not attributable to the employee's fault such as those provided in
Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an
employee is dismissed for just cause, such as serious misconduct. In clear and unmistakable language, it has been held that the award of financial
assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character.
When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion.
Petitioner was, it bears reiteration, dismissed for willfully disobeying the lawful order of her employer to transfer from Cebu to Pasig City. As correctly
noted by the appellate court, petitioner knew and accepted respondent company's policy on transfers when she was hired and was in fact even
transferred many times from one area of operations to another Bacolod City, Iloilo City and Cebu.
The act of the Petitioner constitutes serious misconduct or willful disobedience. Willful disobedience of the employer's lawful orders, as a just cause for
dismissal of an employee, envisages the concurrence of at least two requisites: (1) the employee's assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and
must pertain to the duties which he had been engaged to discharge.
Clearly, petitioner's adamant refusal to transfer, coupled with her failure to heed the order for her return the company vehicle assigned to her and, more
importantly, allowing her counsel to write letters couched in harsh language to her superiors unquestionably show that she was guilty of insubordination,
hence, not entitled to the award of separation pay.
Barroga V. Data Center College Of The Philippines
G.R. NO. 174158. JUNE 27, 2011
Facts:
Petitioner was employed as an Instructor in Data Center College Laoag City branch in Ilocos Norte. A Memorandum was issued by the respondent
which transferred him to University of Northern Philippines (UNP) in Vigan, Ilocos Sur where the school had a tie-up program. Petitioner was informed
that he would be receiving, in addition to his monthly salary, an allowance for board and lodging during his stint as instructor in UNP-Vigan. He was
recalled to Laoag campus afterwards. Again, petitioner received a Memorandum transferring him to Data Center College Bangued, Abra branch as
Head for Education/Instructor due to an urgent need for an experienced officer and computer instructor thereat.
However, petitioner declined to accept his transfer to Abra citing among others, the absence of additional remuneration to defray expenses for board
and lodging which constitutes implicit diminution of his salary. Petitioner filed a Complaint for constructive dismissal against respondents. Petitioner
alleged that his proposed transfer to Abra constitutes a demotion in rank and diminution in pay and would cause personal inconvenience and hardship.
For their part, respondents claimed that they were merely exercising their management prerogative to transfer employees for the purpose of advancing
the school's interests. They argued that petitioner's refusal to be transferred to Abra constitutes insubordination. They claimed that petitioner's
appointment as instructor carries a proviso of possible re-assignments to any branch or tie-up schools as the school's necessity demands. Head for
Education in Laoag branch was merely temporary and that he would still occupy his original plantilla item as instructor at his proposed assignment in
Abra branch.
The Labor Arbiter rendered a Decision dismissing the Complaint for lack of merit. The Labor Arbiter ruled that there was no demotion in rank as
petitioner's original appointment as instructor conferred upon respondents the right to transfer him to any of the school's branches and that petitioner's
designation as Head for Education can be withdrawn anytime since he held such administrative position in a non-permanent capacity.
The NLRC affirmed the findings of the Labor Arbiter that there was no constructive dismissal. It ruled that the management decision to transfer
petitioner was well within the rights of respondents in consonance with petitioner's contract of employment and which was not sufficiently shown to have
been exercised arbitrarily by respondents.
The CA dismissed the petition because of the non-compliance of certain procedural requirements.
Issue: WON the transfer of the petitioner was tantamount to constructive dismissal.
Ruling:
Petitioner's transfer was not tantamount to constructive dismissal.
Constructive dismissal is quitting because continued employment is rendered impossible, unreasonable or unlikely, or because of a demotion in rank or
a diminution of pay. It exists when there is a clear act of discrimination, insensibility or disdain by an employer which becomes unbearable for the
employee to continue his employment.
Petitioner was originally appointed as instructor and was given additional administrative functions as Head for Education during his stint in Laoag
branch. He did not deny having been designated as Head for Education in a temporary capacity for which he cannot invoke any tenurial security.
Hence, being temporary in character, such designation is terminable at the pleasure of respondents who made such appointment. It is management
prerogative for employers to transfer employees on just and valid grounds such as genuine business necessity.
The Court agrees with the Labor Arbiter that there was no violation of the prohibition on diminution of benefits. Indeed, any benefit and perks being
enjoyed by employees cannot be reduced and discontinued; otherwise, the constitutional mandate to afford full protection to labor shall be offended. But
the rule against diminution of benefits is applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a long
period which is consistent and deliberate.
Petitioner failed to present any other evidence that respondents committed to provide the additional allowance or that they were consistently granting
such benefit as to have ripened into a practice which cannot be peremptorily withdrawn. Moreover, there is no conclusive proof that petitioner's basic

102

salary will be reduced as it was not shown that such allowance is part of petitioner's basic salary. Hence, there will be no violation of the rule against
diminution of pay enunciated under Article 100 of the Labor Code.
Lopez Vs Keppel Bank Philippines
G.R. NO. 176800, September 05, 2011
Facts:
PETITIONER was the branch manager of Keppel Bank Philippines, Inc. in Iloilo City. InAugust 2003, respondent specifically instructed him not to
proceed with Hertz Exclusive Cars, Inc.s loan application because of the negative credit rating issued by the banks credit committee. This,
notwithstanding, Lopez processed the loan. He was dismissed from the service.
Issue: Was the dismissal justified?
Ruling:
Yes. Lopezs good intentions, assuming them to be true, are beside the point because ultimately, what comes out is his defiance of a direct order of the
bank on a matter of business judgment. The right of an employer to freely select or discharge his employee is a recognized prerogative of management;
an employer cannot be compelled to continue employing one who has been guilty of acts inimical to its interests. When this happens, the employer can
dismiss the employee for loss of confidence. At the same time, loss of confidence as a just cause of dismissal was never intended to provide employers
with a blank check for terminating employment. Loss of confidence should ideally apply only (1) to cases involving employees occupying positions of
trust and confidence, or (2)to situations where the employee is routinely charged with the care and custody of the employers money or property. To the
first class belong managerial employees, i.e., those vested with the powers and prerogatives to lay down management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees, or effectively recommend such managerial actions. To the second class belong
cashiers, auditors, property custodians, or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of
money or property. As branch manager, Lopez clearly occupies a "position of trust." His hold on his position and his stay in the service depend on the
employer's trust and confidence in him and on his managerial services.[27] According to the bank, Lopez betrayed this trust and confidence when he
issued the subject POs without authority and despite the express directive to put the client's application on hold. In response, Lopez insists that he had
sufficient authority to act as he did, as this authority is inherent in his position as bank manager. He points to his record in the past when he issued POs
which were honored and paid by the bank and which constituted the arbiter's "overwhelming evidence"[28] in support of the finding that "complainant's
dismissal from work was without just cause, hence, illegal."
The due process issue
As the NLRC and the CA did, we find Lopez to have been afforded due process when he was dismissed. He was given the required notices. More
importantly, he was actually given the opportunity to be heard; when he moved for reconsideration of the bank's decision to terminate his employment, it
scheduled a hearing where he appeared together with his lawyer and a military man. This was an opportunity to be heard that the law recognizes.
St. Paul College Quezon City vs. Ancheta II
G.R. No. 169905, Sept. 7, 2011
Facts:
RESPONDENT Remigio Michael was hired by the petitioner St. Paul College Quezon City (SPCQC) as a teacher in the General Education Department,
with a probationary rank, in the school year (SY) 1996-1997. This was renewed in the following SY 1997-1998. His wife, respondent Cynthia, was hired
by the same school as a part-time teacher of the Mass Communication Department in the second semester of SY 1996-1997 and her appointment was
renewed for SY 1997-1998.
In response to respondent spouses request for renewal of contract, petitioner SPCQC through Sr. Bernadete Racadio sent each of them letters both
dated March 9, 1998, informing them that the school was extending to them new contracts for SY 1998-1999.
On April 30, 1998, Sr. Racadio endorsed the immediate termination of the teaching services of respondent spouses for failure to comply with
enumerated departmental and instructional policies of SPCQC. On May 14, 1998, the spouses received their letters of termination.
Both the labor arbiter and the National Labor Relations Commission (NLRC) dismissed the respondents complaint for illegal dismissal. The Court of
Appeals (CA) granted their petition for certiorari and reversed the decisions of the labor arbiter and the NLRC. Did the CA err?
Ruling:
Yes.
The common practice is for the employer and the teacher to enter into a contract, effective for one school year. At the end of the school year, the
employer has the option not to renew the contract, particularly considering the teachers performance.
If the contract is not renewed, the employment relationship terminates. If the contract is renewed, usually for another school year, the probationary
employment continues. Again, at the end of that period, the parties may opt to renew or not to renew the contract. If renewed, this second renewal of
the contract for another school year would then be the last year since it would be the third school year of probationary employment. At the end of
this third year, the employer may now decide whether to extend a permanent appointment to the employee, primarily on the basis of the employee
having met the reasonable standards of competence and efficiency set by the employer. For the entire duration of this three-year period, the teacher
remains under probation. Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security of tenure
and compel the employer to renew his employment contract.
xxx
It is important that the contract of probationary employment specify the period or term of its effectivity. The failure to stipulate its precise duration could
lead to the inference that the contract is binding for the full three-year probationary period. Therefore, the letters sent by petitioner Sr. Racadio, which

103

were void of any specifics cannot be considered as contracts. The closest they can resemble to are that of informal correspondence among the said
individuals. As such, petitioner school has the right not to renew the contracts of the respondents, the old ones having been expired at the end of their
terms. (St. Paul College Quezon City, et. al. vs. Remigio Michael A. Ancheta II, G.R. No. 169905, Sept. 7, 2011).
Jumuad vs. Hi-Flyer
G.R. No. 187887, Sept. 7, 2011
Facts:
Pamela Florentina P. Jumuad(Jumuad) began her employment with respondent Hi-Flyer Food, Inc. (Hi-Flyer), as management trainee. Jumuad
received several promotions until she became the area manager for the entire Visayas-Mindanao. Aside from being responsible in monitoring her
subordinates, Jumuad was tasked to: 1) be highly visible in the restaurants under her jurisdiction; 2) monitor and support day-to-day operations; and 3)
ensure that all the facilities and equipment at the restaurant were properly maintained and serviced. Among the branches under her supervision were
the KFC branches in Gaisano Mall, Cebu City (KFC-Gaisano); in Cocomall, Cebu City (KFC-Cocomall); and in Island City Mall, Bohol (KFC-Bohol).
Hi-Flyer conducted series a food safety, service and sanitation audit atKFC-Gaisano and KFC-Cocomall and Hi-Flyer audited the accounts of KFCBohol amid reports that certain employees were covering up cash shortages. Seeking to hold Jumuad accountable for the irregularities uncovered in
the branches under her supervision, Hi-Flyer sent Jumuad an Irregularities Reportand Notice of Charges. Jumuad submitted her written explanation. HiFlyer held an administrative hearing where Jumuad appeared with counsel. Apparently not satisfied with her explanations, Hi-Flyer served her a Notice
of Dismissal.
Jumuad filed a complaint against Hi-Flyer and/or Jesus R. Montemayor(Montemayor) for illegal dismissal before the NLRC. praying for reinstatement
and payment of separation pay, 13th month pay, service incentive leave, moral and exemplary damages, and attorneys fees. Jumuad also sought the
reimbursement of the amount equivalent to her forty percent (40%) contribution to Hi-Flyers subsidized car loan program.
Labor Arbiters Ruling: the employers prerogative to dismiss or layoff an employee must be exercised without abuse of discretion and should be
tempered with compassion and understanding. Thus, the dismissal was too harsh considering the circumstances. After finding that no serious cause
for termination existed, the LA ruled that Jumuad was illegally dismissed.
HI-FLYER FOOD, INC. AND OR JESUS R. MONTEMAYOR are hereby ordered to pay, jointly and severally, complainant PAMELA FLORENTINA P.
JUMUAD, the total amount of THREE HUNDRED THIRTY-SIX THOUSAND FOUR HUNDRED PESOS (P 336,400.00), representing Separation Pay.
Both Jumuad and Hi-Flyer appealed to the NLRC. Jumuad faulted the LA for not awarding backwages and damages despite its finding that she was
illegally dismissed. Hi-Flyer and Montemayor, on the other hand, assailed the finding that Jumuad was illegally dismissed and that they were solidarily
liable therefor. They also questioned the orders of the LA that they pay separation pay and reimburse the forty percent (40%) of the loan Jumuad paid
pursuant to Hi-Flyers car entitlement program.
NLRC affirmed in toto the LA decision the NLRC noted that even before the Irregularities Report and Notice of Charges were given to Jumuad two (2)
electronic mails (e-mails) between Montemayor and officers of Hi-Flyer showed that Hi-Flyer was already determined to terminate Jumuad. According to
the NLRC, these e-mails were proof that Jumuad was denied due process considering that no matter how she would refute the charges hurled against
her, the decision of Hi-Flyer to terminate her would not change.24
CA rendered the subject decision reversing the decision of the labor tribunalthe CA was of the opinion that the requirements of substantive and
procedural due process were complied with affording Jumuad an opportunity to be heard first, when she submitted her written explanation and then,
when she was informed of the decision and the basis of her termination.28 As for the e-mail exchanges between Montemayor and the officers of HiFlyer, the CA opined that they did not equate to a predetermination of Jumuads termination. It was of the view that the e-mail exchanges were mere
discussions between Montemayor and other officers of Hi-Flyer on whether grounds for disciplinary action or termination existed. To the mind of the CA,
the e-mails just showed that Hi-Flyer extensively deliberated the nature and cause of the charges against Jumuad.29
Issue: Whether Jumuad was illegally dismissed
Ruling:
Jumuad was found to have willfully breached her duties as to be unworthy of the trust and confidence of Hi-Flyer. First, Jumuad was a managerial
employee; she executed management policies and had the power to discipline the employees of KFC branches in her area. She recommended actions
on employees to the head office. According to the Supreme Court, based on established facts, the mere existence of the grounds for the loss of trust
and confidence justifies petitioners dismissal. In the present case, the CERs reports of Hi-Flyer show that there were anomalies committed in the KFC
branches managed by Jumuad. On the principle ofrespondeat superior or command responsibility alone, Jumuad may be held liable for negligence in
the performance of her managerial duties. She may not have been directly involved in causing the cash shortages in KFC-Bohol, but her involvement in
not performing her duty monitoring and supporting the day to day operations of the branches and ensure that all the facilities and equipment at the
restaurant were properly maintained and serviced, could have prevented the whole debacle from occurring.Pamela Florentina P. Jumuad vs. Hi-Flyer
Food, Inc. and/or Jesus R.
Nissan Mortor Phils vs. Angelo
G.R. No. 164181, Sept. 14, 2011
Ruling:
Neglect of duty, to be a ground for dismissal, must be both gross and habitual. In this case, Respondents repeated failure to turn over his task of
preparing the payroll of the petitioners employees to someone capable of performing the vital tasks which he could not effectively perform or undertake
because of his heart ailment or condition constitutes gross neglect. However, although the dismissal was legal, respondent was still held to be entitled

104

to a separation pay as a measure of compassionate justice, considering his length of service and his poor physical condition which was one of the
reasons he filed a leave of absence. As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282
of the Labor Code is not entitled to separation pay. By way of exception, however, the grant of separation pay or some other financial assistance may
be allowed to an employee dismissed for just causes on the basis of equity.
PNB vs. Padao
G.R. NO. 180849, November 16, 2011
Facts:
Padao was a credit investigator at PNB, Dipolog City branch. Sometime in 1994, PNB became embroiled in a scandal involving "behest loans." The
questionable loans were reportedly being extended to select bank clients that the collateral provided in numerous loan accommodations were grossly
over-appraised. The credit standing of the loan applicants was also fabricated, allowing them to obtain larger loan portfolios from PNB. These borrowers
eventually defaulted on the payment of their loans, causing PNB to suffer millions in losses.
Padao was administratively charged. After due investigation, PNB found Padao guilty of gross and habitual neglect of duty and ordered him dismissed
from the bank.
Held:
Dismissal; gross and habitual neglect of duties. Gross negligence connotes want of care in the performance of ones duties, while habitual neglect
implies repeated failure to perform ones duties for a period of time, depending on the circumstances. In the case at bench, Padao was accused of
having presented a fraudulently positive evaluation of the business, credit standing/rating and financial capability of Reynaldo and Luzvilla Baluma and
eleven other loan applicants. Some businesses were eventually found not to exist at all, while in other transactions, the financial status of the
borrowers simply could not support the grant of loans in the approved amounts. Moreover, Padao over-appraised the collateral of spouses Gardito and
Alma Ajero, and that of spouses Ihaba and Rolly Pango. Padaos repeated failure to discharge his duties as a credit investigator of the bank amounted
to gross and habitual neglect of duties under Article 282 (b) of the Labor Code. He not only failed to perform what he was employed to do, but also did
so repetitively and habitually, causing millions of pesos in damage to PNB. Thus, PNB acted within the bounds of the law by meting out the penalty of
dismissal, which it deemed appropriate given the circumstances.
That there is no proof that Padao derived any benefit from the scheme is immaterial. What is crucial is that his gross and habitual negligence caused
great damage to his employer. Padao was aware that there was something irregular about the practices being implemented by his superiors, but he
went along with, became part of, and participated in the scheme.
Dismissed employees; separation pay. Padao is not entitled to financial assistance. The rule regarding separation pay as a measure of social justice is
that it shall be paid only in those instances where the employee is validly dismissed for causes other than serious misconduct, willful disobedience,
gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those reflecting on his
moral character. In this case, Padao was guilty of gross and habitual neglect of duties.
Termination of employment; when company tolerated violation of company policy. The CA was correct in stating that when the violation of company
policy or breach of company rules and regulations is tolerated by management, it cannot serve as a basis for termination. This principle, however, only
applies when the breach or violation is one which neither amounts to nor involves fraud or illegal activities. In such a case, one cannot evade liability or
culpability based on obedience to the corporate chain of command. In this case, Padao, in affixing his signature on the fraudulent reports, attested to
the falsehoods contained therein. Moreover, by doing so, he repeatedly failed to perform his duties as a credit investigator. Thus, the termination of his
employment is justified.
Tamsons Enterprises vs. CA
G.R. No. 192881, November 16, 2011
Facts:
On September 1, 2006, Rosemarie L. Sy was hired by Tamson's as Assistant to the President. Despite the title, she did not act as such because, per
instruction of the company President, she was directed to act as payroll officer, though she actually worked as a payroll clerk. On February 24, 2007,
four days before she completed her sixth month of working in Tamson's, Sy was informed that her services would be terminated due to inefficiency. She
was asked to sign a letter of resignation and quitclaim. She was told not to report for work anymore because her services were no longer needed.
During her pre-employment interview, Lee had nice comments about her good work experience and educational background. She was assured of a
long-term employment with benefits. Throughout her employment, she earnestly performed her duties, had a perfect attendance record, worked even
during brownouts and typhoons, and would often work overtime just to finish her work.
Ruling:
Probationary employment; security of tenure. It is settled that even if probationary employees do not enjoy permanent status, they are accorded the
constitutional protection of security of tenure. This means they may only be terminated for a just cause or when they otherwise fail to qualify as regular
employees in accordance with reasonable standards made known to them by the employer at the time of their engagement. In this case, the
justification given by the petitioners for Sys dismissal was her alleged failure to qualify by the companys standard. Other than the general allegation
that said standards were made known to her at the time of her employment, however, no evidence, documentary or otherwise, was presented to
substantiate the same. Neither was there any performance evaluation presented to prove that indeed hers was unsatisfactory. Hence, for failure of the
petitioners to support their claim of unsatisfactory performance by Sy, the SC held that Sys employment was unjustly terminated to prevent her from
acquiring a regular status in circumvention of the law on security of tenure.
Probationary employment; termination. Even on the assumption that Sy indeed failed to meet the standards set by the petitioner-employer and made
known to the former at the time of her engagement, still, the termination was flawed for failure to give the required notice to Sy. Section 2, Rule I, Book
VI of the Implementing Rules provides that: If the termination is brought about by the completion of a contract or phase thereof, or by failure of an

105

employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the
employee, within a reasonable time from the effective date of termination.
Concepcion vs. Minex Import
G.R. No. 153569, January 24, 2012
Facts:
Respondent Minex Import-Export Corporation is engaged in the retail of semi-precious stones, selling them in kiosks or stalls installed in various
shopping centers within Metro Manila. It employed petitioner Concepcion initially as a salesgirl and then made her a supervisor. One day, petitioner
determined their total for three days to be P50,912.00. The next day, petitioner phoned the assistant manager to report that the said amount was
missing, explaining how she and her salesgirls had placed the wrapped amount at the bottom of the cabinet the night before, and how she had found
upon reporting to work that morning that the contents of the cabinet were in disarray and the money already missing.
While petitioner was giving a detailed statement on the theft to the security investigator of the shopping center, her superiors arrived with a policeman
who immediately placed her under arrest and brought her to the police station where she was investigated and detained for a day. Petitioner
complained against the respondents for illegal dismissal in the Department of Labor and Employment. Minex filed a complaint for qualified theft against
the petitioner in the Office of the City Prosecutor in Manila.
Ruling:
Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires the existence of a just and valid cause. Article 282 of the
Labor Code enumerates the just causes for termination by the employer. It is unfair to require an employer to first be morally certain of the guilt of the
employee by awaiting a conviction before terminating him when there is already sufficient showing of the wrongdoing. Requiring that certainty may
prove too late for the employer, whose loss may potentially be beyond repair. In the present case, no less than the DOJ Secretary found probable cause
for qualified theft against Concepcion. That finding was enough to justify her termination for loss of confidence.
Indeed, the employer is not expected to be as strict and rigorous as a judge in a criminal trial in weighing all the probabilities of guilt before terminating
the employee. Unlike a criminal case, which necessitates a moral certainty of guilt due to the loss of the personal liberty of the accused being the issue,
a case concerning an employee suspected of wrongdoing leads only to his termination as a consequence. The quantum of proof required for convicting
an accused is thus higher proof of guilt beyond reasonable doubt than the quantum prescribed for dismissing an employee substantial
evidence.
Employee dismissal; due process. Even if there is a just or valid cause for terminating an employee, it is necessary to comply with the requirements of
due process prior to the termination. The petitioner plainly demonstrated how quickly and summarily her dismissal was carried out without first requiring
her to explain anything in her defense as demanded under Section 2 (d) of Rule I of the Implementing Rules of Book VI of the Labor Code. Instead, the
respondents forthwith had her arrested and investigated by the police authorities for qualified theft. This, we think, was a denial of her right to due
process of law, consisting in the opportunity to be heard and to defend herself. In Agabon v. NLRC the Court said: Where the dismissal is for a just
cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer
should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission.
Morales vs. Harbour Centre Port Terminal
G.R. No. 174208, January 25, 2012
Facts:
Petitioner Morales was a Division Manager of the Accounting Department of respondent Harbour Centre Port Terminal, Inc. (HCPTI). Subsequent to
HCPTI's transfer to its new offices, Morales received an inter-office memorandum reassigning him to Operations Cost Accounting. Morales wrote
Singson, HCPTIs Administration Manager, protesting that his reassignment was a clear demotion since the position to which he was transferred was
not even included in HCPTI's plantilla. In response to Morales' grievance that he had been effectively placed on floating status, Singson issued a interoffice memorandum to the effect that "transfer of employees is a management prerogative." For the whole of the ensuing month Morales was absent
from work and/or tardy. As a consequence, Singson issued to Morales the following inter-office memoranda: First Warning, Second Warning and a
Notice to Report for Work and Final Warning.
In the meantime, Morales filed a complaint against HCPTI for constructive dismissal. He alleged that subsequent to its transfer to its new offices,
HCPTI had suspended all the privileges enjoyed by its Managers, Division Chiefs and Section Heads.
HCPTI argued that Morales abandoned his employment and was not constructively dismissed.
Ruling:
Constructive dismissal; change in position. Constructive dismissal exists where there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay and other benefits. Aptly called a dismissal in
disguise of an act amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear
discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him
except to forego his continued employment.In cases of a transfer of an employee, the rule is settled that the employer is charged with the burden of
proving that its conduct and action are for valid and legitimate grounds such as genuine business necessity and that the transfer is not unreasonable,
inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof, the employees transfer shall be tantamount to
unlawful constructive dismissal.
Dismissal; abandonment. As a just and valid ground for dismissal, at any rate, abandonment requires the deliberate, unjustified refusal of the employee
to resume his employment, without any intention of returning. Since an employee like Morales who takes steps to protest his dismissal cannot logically

106

be said to have abandoned his work, it is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with abandonment of
employment.
Mirant (Philippines) Corporation vs. Sario
G.R. No. 197598. November 21, 2012
Facts:
Respondent Sario worked for the company as procurement officer from March 1998 to October 2005.
The company issued the 2002 MMD Policies and Procedures Manual (2002 Procurement Manual) for the guidance of its employees and officers in
soliciting bid quotations and proposals from vendors, suppliers and contractors. Subsequently, this manual was replaced by the 2004 Procurement
Policies of the Company which was disseminated and which became effective on Aug. 31, 2004, seminars were conducted and a proficiency
examination was administered and Respondent took the proficiency examination on Sept. 28, 2004.
On September 8, 2005, Sario received a Show Cause Notice from the company, advising him that based on an internal audit, he was found to have
committed the following violations: 1.Non-compliance with the Minimum Bid/Quotation Requirements; 2.Non-compliance with the Single Tender
Justification Requirement; 3.No Evidence of Independent Approval of the PRF; 4.No Evidence of Authorized Recommendation or Approval of the PO;
5.PO not Awarded to the lowest Bidder; and 6.No TAS Attached.
Sario was given ten (10) days, or until September 18, 2005, to explain why no disciplinary action should be taken against him for the violations. He was
also notified that an investigation would be conducted on the matter. He was placed on preventive suspension pending the investigation. He submitted
his written explanation on September 17, 2005.
At the administrative hearing on October 6, 2005, Sario argued that he could not be faulted for not complying with the 2004 Procurement Manual
because it was never properly disseminated (rolled out) and neither did he take the proficiency examination on the manual. He admitted, however, that
he failed to comply with the procurement procedures laid out in the manual due to his desire to meet the quota imposed by his supervisors.
On October 25, 2005, Sliman sent Sario a letter informing him of the termination of his employment for his failure to comply with the standard operating
procedures/instructions; for his serious misconduct or willful disobedience of the lawful orders of the company in connection with his work; and for his
gross and habitual neglect of his duties. The company found Sario liable for his failure to comply with the 2002 and 2004 Procurement Manuals,
especially his unabated practice of sending Requests for Quotation (RFQs) to suppliers who have a history of not responding to requests or of not
sending quotes. The practice, the company lamented, resulted in the issuance of purchase orders to the lone bidders.
Issue: WON respondent was illegal dismissed?
Ruling:
Under the law, the burden of proving that the termination of a worker's employment was for a valid or authorized cause rests on the employer. In this
case, the company was able to prove that Sario's dismissal was for a valid cause. Through his repeated violations of the company's 2002 and 2004
Procurement Manuals, Sario committed a serious misconduct or willful disobedience of the lawful directives or orders of his employer, constituting a just
cause for termination of employment.
As the records show, Sario failed to faithfully discharge his duties as procurement officer. These duties placed him at the early but critical stage of the
company's procurement process. The very first one in the list of his duties at once suggests the heavy responsibility he had to bear and the
sensitiveness of his functions, considering that he had to "[p]erform the entire purchasing process of a Station's set of materials, parts, equipment,
and/or project[.]" Flowing from this catch-all statement, Sario's activities consisted of (1) receiving purchase requisition form assignments; (2) identifying
the vendors/suppliers to be invited, setting bid periods and deadlines for bid submission, including the RFQ process coordinating critical issues with
end-users and preparing the RFQ package, sending RFQs to vendors and initiating RFQ confirmation status, and resolving commercial issues with
vendors; (3) receiving quotes/bids, reviewing tenders and performing tender analysis summary when necessary; (4) securing and evaluating justification
for single tender transactions, and coordinating price, payment and delivery terms with vendors; (5) preparing purchase orders and checking of
approval of purchase orders in accordance with the limits of authority; and (6) coordinating vendor performance evaluation, resolving disputes between
end-users and vendors, and recommending appropriate sanctions for infractions committed by the vendors. ScaCEH
Over a span of almost one-and-a-half years, from January 2004 to May 2005 (not two years as the company claims), Sario committed 27 violations of
the 2002 and 2004 Procurement Manuals in critical areas of the procurement process, in particular, non-compliance with the minimum bid/quotation
requirements, non-compliance with the single tender justification requirement, failure to provide proof of approval of the purchase requisition form,
failure to provide proof of authorized recommendation of the purchase order, failure to award purchase order to the lowest bidder, and no tender
analysis summary.
Given the critical and sensitive role Sario played in the company's procurement program, we appreciate why the company has employed all legal
means to terminate his services. Sario's continued employment has become inimical to its business interests which rely critically on the effectiveness
and integrity of its procurement procedure. We can, therefore, also understand why it had to issue the 2002 and 2004 Procurement Manuals to
ensure that the procedure is not compromised. To be sure, the company has the prerogative to issue the 2002 and 2004 Procurement Manuals.
As the NLRC aptly noted, "the issuance of the 2002 and 2004 Procurement Manuals was a reasonable and valid exercise of management
prerogative . . . to curb the rampant practice of some unscrupulous employees to favor some suppliers over the others in the award of Purchase
Orders[.]" "Any employee may be dismissed for violation of a reasonable company rule or regulation for the conduct of the latter's business[.]"
Sario has to account for his own actions. The circumstance that his recommendations were approved by his superiors does not erase the fact that he
repeatedly violated the 2002 and 2004 Procurement Manuals. He was well aware of his duties and their parameters, based on the 2002 and 2004
Procurement Manuals. He committed the violations for one-and-a-half years. These repeated violations can only indicate a willful disobedience to
reasonable company rules and regulations.
Based on the facts, the law and jurisprudence, Sario deserves to be dismissed for willful disobedience. In Gold City Integrated Port Services, Inc. v.
NLRC, the Court stressed that willful disobedience of an employee contemplates the concurrence of at least two requisites: the employee's assailed
conduct must have been willful or intentional, the willfulness being characterized by a "wrongful and perverse attitude"; and the order violated must

107

have been reasonable, lawful and made known to the employee, and must pertain to the duties which he had been engaged to discharge. We find the
two requisites present in this case.
Sario's repeated violations of the company's 2002 and 2004 Procurement Manuals lawful orders in themselves as they provide the dos and,
necessarily, thedon'ts of a procurement officer constitute willful disobedience. He committed the repeated violations because he knew or was
confident that he would not get caught since his actions were being approved, as he claims, by his superiors, evidencing wrongful or perverse intent.
Sario has become unfit to remain in employment. "The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of
the employer."
Mansion Printing vs. Bitara
G.R. No. 168120, January 25, 2012
Facts:
Petitioner Mansion Printing Center is engaged in the printing of quality self-adhesive labels and the like. Respondent Bitara was the company's sole
driver tasked to pick-up raw materials, collect account receivables and deliver the products within the delivery schedules. Petitioner noted his habitual
tardiness and absenteeism. Petitioner issued several memoranda to respondent requiring the latter to submit written explanations: first, as to why no
administrative sanction should be imposed on him for his habitual tardiness; and then several months later, after Bitaras apology and a failed
undertaking to adhere to the attendance policies, why his services should not be terminated. The last memoranda was personally handed to him, but
the latter, after reading the directive, refused to acknowledge receipt thereof. He did not submit any explanation and, thereafter, never reported for work.
As a consequence, Davis Cheng, General Manager, personally served another Memorandum (Notice of Termination) upon him informing him that the
company found him grossly negligent of his duties, for which reason, his services were terminated. Respondent met with the management requesting
for reconsideration of his termination. However, after hearing his position, the management decided to implement the last Memorandum. Respondent
filed a complaint for illegal dismissal.
Ruling:
Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined as the want of care in the performance of ones duties
and habitual neglect has been defined as repeated failure to perform ones duties for a period of time, depending upon the circumstances. These are
not overly technical terms, which, in the first place, are expressly sanctioned by the Labor Code of the Philippines, to wit: ART. 282. Termination by
employer. An employer may terminate an employment for any of the following causes: [xxx](b) Gross and habitual neglect by the employee of his
duties; [xxx] Diosdado Bitara was dismissed from service due to habitual tardiness and absenteeism, and for having continued disregarding attendance
policies despite his undertaking to report on time. His weekly time record for the first quarter of the year 2000 revealed that he came late 19 times out of
the 47 times he reported for work. He also incurred 19 absences out of the 66 working days during the quarter. His absences without prior notice and
approval from March 11-16, 2000 were considered to be the most serious infraction of all because of its adverse effect on business operations. The
Supreme Court held that even in the absence of a written company rule defining gross and habitual neglect of duties, Bitaras omissions qualify as such
warranting his dismissal from the service.
Dismissal; procedural due process. Procedural due process entails compliance with the two-notice rule in dismissing an employee, to wit: (1) the
employer must inform the employee of the specific acts or omissions for which his dismissal is sought; and (2) after the employee has been given the
opportunity to be heard, the employer must inform him of the decision to terminate his employment.
In Bughaw v. Treasure Island Industrial Corporation, this Court, in verifying the veracity of the allegation that respondent refused to receive the Notice of
Termination, essentially looked for the following: (1) affidavit of service stating the reason for failure to serve the notice upon the recipient; and (2) a
notation to that effect, which shall be written on the notice itself. We are convinced that the notices have been validly served.
Manila Electric Company vs. Beltran
G.R. No. 173774. January 30, 2012
Facts:
Petitioner, the respondents employer, dismissed the latter on the ground of breach of trust and confidence for allegedly having withheld and
misappropriated for her personal purpose or benefit an electric bill payment of a Meralco customer.
Respondent filed for illegal dismissal against petitioner and argued that she had no intention to withhold company funds. Besides, it was not her
customary duty to collect and remit payments from customers. She claimed good faith, believing that her acceptance of Chang's payment is considered
goodwill in favor of both MERALCO and its customer. If at all, her only violation was a simple delay in remitting the payment, which caused no
considerable harm to the company. Further, her nine years of unblemished service to the company should be taken into account such that the penalty of
dismissal is not a commensurate penalty for the unintentional act committed.
MERALCO, on the other hand, maintained that under company policy, Beltran had the duty to remit payment for electric bills by any customer on the
day the same was received. It opined that if indeed the money was kept intact inside the drawer and was not put to personal use, Beltran could have
easily turned over the same when Garcia instructed her to do so on January 7, 1997. However, Beltran failed to remit the money on said date and even
on the following day, January 8, when she reported for work. Worse, in the two succeeding days, she went on leave. Thus, there was a clear sign of
misappropriation of company funds, considered a serious misconduct and punishable by dismissal from the service. Further, Beltran's reason for her
failure to perform such obligation on account of family problems deserves scant consideration. MERALCO insisted that Beltran's act renders her
unworthy of the trust and confidence demanded of her position.
LA ruled for respondent stating that the penalty of dismissal as not commensurate to the degree of infraction committed as there was no adequate proof
of misappropriation on the part of Beltran and that it was unintentional and same cannot serve as sufficient basis to conclude that there was

108

misappropriation of company funds. While the Labor Arbiter commiserated with Beltran's circumstances and took into account her long and untainted
service, he nonetheless imposed disciplinary action in the form of forfeiture of salary for her neglect in remitting the funds at once.
NLRC reversed and found that Beltran withheld company funds by failing to remit it for almost four months. It disregarded Beltran's assertion of family
problems as the same cannot be used as an excuse for committing a serious misconduct in violation of the trust reposed on her as a Senior Branch
Clerk. The NLRC was convinced that Beltran used the money for her personal needs since her act of taking a leave of absence right after her
confrontation with Garcia suggested that she needed time to produce it. The NLRC thus ruled that MERALCO validly dismissed Beltran from the service
in the exercise of its inherent right to discipline its employees. It likewise denied Beltrans MR.
CA affirmed LA.
Issue: WON CA SERIOUSLY ERRED IN ORDERING THE REINSTATEMENT OF [BELTRAN] DESPITE THE UNDISPUTED FINDING THAT SHE IS
GUILTY OF WITHHOLDING COMPANY FUNDS.
Held:
Court finds for respondent, affirms CA.
For loss of trust and confidence to be a valid ground for dismissal, it 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. In addition, loss of trust and confidence must rest on substantial grounds and not on the employer's
arbitrariness, whims, caprices or suspicion.
In the case at bench, Beltran attributed her delay in turning over Chang's payment to her difficult family situation as she and her husband were having
marital problems and her child was suffering from an illness. Admittedly, she was reminded of Chang's payment by her supervisor on January 7, 1997
but denied having been ordered to remit the money on that day. She then reasoned that her continued delay was caused by an inevitable need to take
a leave of absence for her to attend to the needs of her child who was suffering from asthma.
It should be emphasized at this point that the burden of proving the legality of an employee's dismissal lies with the employer. 26 "Unsubstantiated
suspicions, accusations, and conclusions of employers do not provide legal justification for dismissing employees." 27 "[M]ere conjectures cannot work
to deprive employees of their means of livelihood." 28 To begin with, MERALCO cannot claim or conclude that Beltran misappropriated the money
based on mere suspicion. The NLRC thus erred in concluding that Beltran made use of the money from the mere fact that she took a leave of absence
after having been reminded of the unremitted funds. And even if Beltran delayed handing over the funds to the company, MERALCO still has the burden
of proof to show clearly that such act of negligence is sufficient to justify termination from employment. Moreover, we find that Beltran's delay does not
clearly and convincingly establish a willful breach on her part, that is, which is done "intentionally, knowingly and purposely, without any justifiable
excuse." True, the reasons Beltran proffered for her delay in remitting the cash payment are mere allegations without any concrete proof. Nonetheless,
we emphasize that as the employer, the burden still lies on MERALCO to provide clear and convincing facts upon which the alleged loss of confidence
is to be made to rest.
Undoubtedly, Beltran was remiss in her duties for her failure to immediately turn over Chang's payment to the company. Such negligence, however, is
not sufficient to warrant separation from employment. To justify removal from service, the negligence should be gross and habitual. 29 "Gross
negligence . . . is the want of even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and
intentionally, with a conscious indifference to consequences insofar as other persons may be affected." Habitual neglect, on the other hand, connotes
repeated failure to perform one's duties for a period of time, depending upon the circumstances. 31 No concrete evidence was presented by MERALCO
to show that Beltran's delay in remitting the funds was done intentionally. Neither was it shown that same is willful, unlawful and felonious contrary to
MERALCO's finding as stated in the letter of termination it sent to Beltran. 32 Surely, Beltran's single and isolated act of negligence cannot justify her
dismissal from service.
Moreover, Beltran's simple negligence did not result in any loss. From the time she received the payment on September 28, 1996 until January 7, 1997
when she was apprised by her supervisor about Chang's payment, no harm or damage to the company or to its customers attributable to Beltran's
negligence was alleged by MERALCO. Also, from the time she was apprised of the non-remittance by her superior on January 7, 1997, until the turnover of the amount on January 13, 1997, no such harm or damage was ever claimed by MERALCO.
Under the circumstances, MERALCO's sanction of dismissal will not be commensurate to Beltran's inadvertence not only because there was no clear
showing of bad faith and malice but also in consideration of her untainted record of long and dedicated service to MERALCO. 33 In the similar case of
Philippine Long Distance Telephone Company v. Berbano, Jr., 34we held that:
The magnitude of the infraction committed by an employee must be weighed and equated with the penalty prescribed and must be commensurate
thereto, in view of the gravity of the penalty of dismissal or termination from the service. The employer should bear in mind that in termination cases,
what is at stake is not simply the employee's job or position but [her] very livelihood.
Where a penalty less punitive would suffice, whatever missteps may be committed by an employee ought not to be visited with a consequence so
severe such as dismissal from employment. 35 Hence, we find no reversible error or any grave abuse of discretion on the part of the CA in ordering
Beltran's reinstatement without backwages. The forfeiture of her salary is an equitable punishment for the simple negligence committed.
Bank Of Lubao, Inc. vs. Manabat
G.R. No. 188722. February 1, 2012
Facts:

109

Respondent which was a market collector and subsequently assigned as an encoder of the Bank of Lubao's Sta. Cruz Extension Office, was terminated
from his employment by reason of serious misconduct tantamount to willful breach of trust and was likewise charged with criminal complaints for
Qualified Theft with a certain Lingad. Respondent's primary duty is to encode the clients' deposits on the bank's computer after the same are received
by Lingad. Petitioner after investigation had findings of discrepancies during the audit that showed a misappropriation of funds in the amount of P
3,000,000.00, hence the dismissal from service.
Respondent filed a Complaint 3 for illegal dismissal with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in San
Fernando City, Pampanga. In the said complaint, the respondent, to bolster his claim that there was no valid ground for his dismissal, averred that the
charge against him for qualified theft was dismissed for lack of sufficient basis to conclude that he conspired with Lingad. The respondent sought an
award for separation pay, full backwages, 13th month pay for 2004 and moral and exemplary damages.
For its part, the petitioner insists that the dismissal of the respondent is justified, asserting the February 14, 2006 Audit Report which confirmed the
participation of the respondent in the alleged misappropriations. Likewise, the petitioner asserted that the dismissal of the qualified theft charge against
the respondent is immaterial to the validity of the ground for the latter's dismissal.
LA sustained respondent's claim of illegal dismissal thus ordering the petitioner to reinstate the respondent to his former position and awarding the latter
backwages in the amount of P111,960.00 and 13th month pay in the amount of P6,220.00. The LA opined that the petitioner failed to adduce substantial
evidence that there was a valid ground for the respondent's dismissal.
NLRC affirmed decision of LA: it was sufficiently established that only Lingad was the one responsible for the said misappropriations. Further, the
NLRC asserted that the February 14, 2006 and April 30, 2007 audit reports presented by the petitioner could not be given evidentiary weight as the
same were executed after the respondent had already been dismissed. NLRC denied MR of petitioner.
CA denied petitioners Certiorari, CA agreed with the LA and the NLRC that the petitioner failed to establish by substantial evidence that there was
indeed a valid ground for the respondent's dismissal. Nevertheless, the CA held that the petitioner should pay the respondent separation pay since the
latter did not pray for reinstatement before the LA and that the same would be in the best interest of the parties considering the animosity and
antagonism that exist between them.
Issues:
WON the CA erred in ordering the petitioner to pay the respondent separation pay in lieu of reinstatement;
WON the respondent is entitled to payment of backwages.
Ruling:
Court finds for respondent, upheld unanimous decisions of LA, NLRC and CA.
Doctrine of Strained Relations. Under the law and prevailing jurisprudence, 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. 17
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is
no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. 18
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.
Here, we agree with the CA that the relations between the parties had been already strained thereby justifying the grant of separation pay in lieu of
reinstatement in favor of the respondent.
First, it cannot be gainsaid that the petitioner's reinstatement to his former position would only serve to intensify the atmosphere of antipathy and
antagonism between the parties. Undoubtedly, the petitioner's filing of various criminal complaints against the respondent for qualified theft and the
subsequent filing by the latter of the complaint for illegal dismissal against the latter, taken together with the pendency of the instant case for more than
six years, had caused strained relations between the parties.
Second, considering that the respondent's former position as bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it
would not be equitable on the part of the petitioner to be ordered to maintain the former in its employ since it may only inspire vindictiveness on the part
of the respondent.
Third, the refusal of the respondent to be re-admitted to work is in itself indicative of the existence of strained relations between him and the petitioner.
In the case of Lagniton, Sr. v. National Labor Relations Commission, 20 the Court held that the refusal of the dismissed employee to be re-admitted is
constitutive of strained relations:
It appears that relations between the petitioner and the complainants have been so strained that the complainants are no longer willing to be reinstated.
As such reinstatement would only exacerbate the animosities that have developed between the parties, the public respondents were correct in ordering
instead the grant of separation pay to the dismissed employees in the interest of industrial peace. 21

110

Time and again, this Court has recognized that strained relations between the employer and employee is an exception to the rule requiring actual
reinstatement for illegally dismissed employees for the practical reason that the already existing antagonism will only fester and deteriorate, and will
only worsen with possible adverse effects on the parties, if we shall compel reinstatement; thus, the use of a viable substitute that protects the interests
of both parties while ensuring that the law is respected.
Backwages. The arguments raised by the petitioner with regard to the issue of backwages, essentially, attacks the factual findings of the
CA, the NLRC and the LA. As stated earlier, subject to well-defined exceptions, factual questions may not be raised in a petition for review on certiorari
under Rule 45 as this Court is not a trier of facts. The petitioner failed to assert any circumstance which would impel this Court to disregard the findings
of fact of the lower tribunals on the propriety of the award of backwages in favor of the respondent.
However, the backwages that should be awarded to the respondent should be modified. Employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld
from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. 23
Thus, when there is an order of reinstatement, the computation of backwages shall be reckoned from the time of illegal dismissal up to the time that the
employee is actually reinstated to his former position.
Pursuant to the order of reinstatement rendered by the LA, the petitioner sent the respondent a letter requiring him to report back to work on May 4,
2007. Notwithstanding the said letter, the respondent opted not to report for work. Thus, it is but fair that the backwages that should be awarded to the
respondent be computed from the time that the respondent was illegally dismissed until the time when he was required to report for work, i.e., from
September 1, 2005 until May 4, 2007. It is only during the said period that the respondent is deemed to be entitled to the payment of backwages.
The fact that the CA, in its April 4, 2009 decision, ordered the payment of separation pay in lieu of the respondent's reinstatement would not entitle the
latter to backwages. It bears stressing that decisions of the CA, unlike that of the LA, are not immediately executory. Accordingly, the petitioner should
only pay the respondent backwages from September 1, 2005, the date when the respondent was illegally dismissed, until May 4, 2007, the date when
the petitioner required the former to report to work.
Canadian Opportunities Unlimited, Inc. vs. Dalangin, Jr.
G.R. No. 172223. February 6, 2012.
Facts:
Respondent was hired as Immigration and Legal Manager of petitioner company. He was placed on probation for six months. He was to report directly
to the Chief Operations Officer, Annie Llamanzares Abad. His tasks involved principally the review of the clients' applications for immigration to Canada
to ensure that they are in accordance with Canadian and Philippine laws.
The company terminated Dalangin's employment, declaring him "unfit" and "unqualified" to continue as Immigration and Legal Manager on the grounds
of:
a)
Obstinacy and utter disregard of company policies. Propensity to take prolonged and extended lunch breaks, shows no interest in
familiarizing oneself with the policies and objectives.
b)
Lack of concern for the company's interest despite having just been employed in the company. (Declined to attend company sponsored
activities, seminars intended to familiarize company employees with Management objectives and enhancement of company interest and objectives.)
c)
Showed lack of enthusiasm toward work.
d)
Showed lack of interest in fostering relationship with his co-employees.
Respondent filed a complaint for illegal dismissal with prayer for reinstatement and backwages, as well as damages (moral and exemplary) and
attorney's fees, against petitioner. He argues that the seminar he was required to attend bears no connection with his duties and functions and that it is
beyond his work hours as stipulated in his employment contract. Aside from that he posits that he should not be treated similarly with other employees
(required to attend such seminars) as they are differently situated in terms of positions and duties.
Through their position paper, 10 the company and its principal officers alleged that at the time of Dalangin's engagement, he was advised that he was
under probation for six months and his employment could be terminated should he fail to meet the standards to qualify him as a regular employee. He
was informed that he would be evaluated on the basis of the results of his work; on his attitude towards the company, his work and his co-employees,
as spelled out in his job description. The company argued that since Dalangin failed to qualify for the position of Immigration and Legal Manager, the
company decided to terminate his services, after duly notifying him of the company's decision and the reason for his separation.
LA declared Dalangin's dismissal illegal, and awarded him backwages of P75,000.00, moral damages of P50,000.00 and exemplary damages of
P50,000.00, plus 10% attorney's fees. The labor arbiter found that the charges against Dalangin, which led to his dismissal, were not established by
clear and substantial proof.
NLRC rendered a decision on March 26, 2004 14 granting the appeal, thereby reversing the labor arbiter's ruling. It found Dalangin's dismissal to be a
valid exercise of the company's management prerogative because Dalangin failed to meet the standards for regular employment. NLRC denied MR.

111

CA found for respondent agreeing with LA that he was illegally dismissed. CA found that the company failed to support, with substantial evidence, its
claim that Dalangin failed to meet the standards to qualify as a regular employee. CA pointed out that the company did not allow Dalangin to prove that
he possessed the qualifications to meet the reasonable standards for his regular employment; instead, it dismissed Dalangin peremptorily from the
service. It opined that it was quite improbable that the company could fully determine Dalangin's performance barely one month into his employment.
CA denied MR.
Issue: WON respondent as a probationary employee was validly dismissed.
Ruling:
Court finds for petitionerfinding substantial evidence indicating that the company was justified in terminating Dalangin's employment, however brief it
had been.
3.
One month enough to determine respondents unfitness, probationary term or period denotes its purpose but not its length. Dalangin
admitted in compulsory arbitration that the proximate cause for his dismissal was his refusal to attend the company's "Values Formation Seminar"
scheduled for October 27, 2001, a Saturday. He refused to attend the seminar after he learned that it had no relation to his duties, as he claimed, and
that he had to leave at 2:00 p.m. because he wanted to be with his family in the province. When Abad insisted that he attend the seminar to encourage
his co-employees to attend, he stood pat on not attending, arguing that marked differences exist between their positions and duties, and insinuating that
he did not want to join the other employees. He also questioned the scheduled 2:00 p.m. seminars on Saturdays as they were not supposed to be doing
a company activity beyond 2:00 p.m. He considers 2:00 p.m. as the close of working hours on Saturdays; thus, holding them beyond 2:00 p.m. would
be in violation of the law.
The "Values Formation Seminar" incident is an eye-opener on the kind of person and employee Dalangin was. His refusal to attend the seminar brings
into focus and validates what was wrong with him, as Abad narrated in her affidavit 36 and as reflected in the termination of employment memorandum.
37 It highlights his lack of interest in familiarizing himself with the company's objectives and policies. Significantly, the seminar involved acquainting and
updating the employees with the company's policies and objectives. Had he attended the seminar, Dalangin could have broadened his awareness of
the company's policies, in addition to Abad's briefing him about the company's policies on punctuality and attendance, and the procedures to be
followed in handling the clients' applications. No wonder the company charged him with obstinacy.
The incident also reveals Dalangin's lack of interest in establishing good working relationship with his co-employees, especially the rank and file; he did
not want to join them because of his view that the seminar was not relevant to his position and duties. It also betrays an arrogant and condescending
attitude on his part towards his co-employees, and a lack of support for the company objective that company managers be examples to the rank and file
employees.
Additionally, very early in his employment, Dalangin exhibited negative working habits, particularly with respect to the one hour lunch break policy of the
company and the observance of the company's working hours. Thus, Abad stated that Dalangin would take prolonged lunch breaks or would go out of
the office without leave of the company only to call the personnel manager later to inform the latter that he would be unable to return as he had to
attend to personal matters. Without expressly countering or denying Abad's statement, Dalangin dismissed the charge for the company's failure to
produce his daily time record. 38
The same thing is true with Dalangin's handling of Tecson's application for immigration to Canada, especially his failure to find ways to appeal the denial
of Tecson's application, as Abad stated in her affidavit. Again, without expressly denying Abad's statement or explaining exactly what he did with
Tecson's application, Dalangin brushes aside Abad's insinuation that he was not doing his job well, with the ready argument that the company did not
even bother to present Tecson's testimony.
In the face of Abad's direct statements, as well as those of his co-employees, it is puzzling that Dalangin chose to be silent about the charges, other
than saying that the company could not cite any policy he violated. All along, he had been complaining that he was not able to explain his side, yet from
the labor arbiter's level, all the way to this Court, he offered no satisfactory explanation of the charges. In this light, coupled with Dalangin's adamant
refusal to attend the company's "Values Formation Seminar" and a similar program scheduled earlier, we find credence in the company's submission
that Dalangin was unfit to continue as its Immigration and Legal Manager. As we stressed earlier, we are convinced that the company had seen enough
from Dalangin's actuations, behavior and deportment during a four-week period to realize that Dalangin would be a liability rather than an asset to its
operations.
We, therefore, disagree with the CA that the company could not have fully determined Dalangin's performance barely one month into his employment.
As we said in International Catholic Migration Commission, the probationary term or period denotes its purpose but not its length. To our mind, four
weeks was enough for the company to assess Dalangin's fitness for the job and he was found wanting. In separating Dalangin from the service before
the situation got worse, we find the company not liable for illegal dismissal.
4.
Procedural Due Process. The notice served on him did not give him a reasonable time, from the effective date of his separation, as required
by the rules. He was dismissed on the very day the notice was given to him, or, on October 27, 2001. Although we cannot invalidate his dismissal in
light of the valid cause for his separation, the company's non-compliance with the notice requirement entitles Dalangin to indemnity, in the form of
nominal damages in an amount subject to our discretion. 40 Under the circumstances, we consider appropriate an award of nominal damages of
P10,000.00 to Dalangin.
Manila Electric Company vs. Gala
G.R. Nos. 191288 & 191304. February 29, 2012

112

Facts:
Respondent was employed as a probationary lineman of petitioner company, barely 4 months on the job he was dismissed for alleged complicity in
pilferages of Meralco's electrical supplies, particularly, for the incident which took place on May 25, 2006. On that day, Gala and other Meralco workers
were instructed to replace a worn-out electrical pole at the Pacheco Subdivision in Valenzuela City.
While the Meralco crew was at work, one Noberto "Bing" Llanes, a non-Meralco employee, arrived. He appeared to be known to the Meralco foremen
as they were seen conversing with him. Llanes boarded the trucks, without being stopped, and took out what were later found as electrical supplies.
Aside from Gala, the foremen and the other linemen who were at the worksite when the pilferage happened were later charged with misconduct and
dishonesty for their involvement in the incident. Unknown to them the whole incident was being videoed by Meralco surveillance task force.
Meralco called for an investigation of the incident and asked Gala to explain. Gala denied involvement in the pilferage, contending that even if his
superiors might have committed a wrongdoing, he had no participation in what they did. He claimed that: (1) he was at some distance away from the
trucks when the pilferage happened; (2) he did not have an inkling that an illegal activity was taking place since his supervisors were conversing with
Llanes, giving him the impression that they knew him; (3) he did not call the attention of his superiors because he was not in a position to do so as he
was a mere lineman; and (4) he was just following instructions in connection with his work and had no control in the disposition of company supplies
and materials. He maintained that his mere presence at the scene of the incident was not sufficient to hold him liable as a conspirator.
Despite Gala's explanation, Meralco proceeded with the investigation and eventually terminated his employment on July 27, 2006. 4 Gala responded by
filing an illegal dismissal complaint against Meralco.
LA dismissed the complaint for lack of merit. She held that Gala's participation in the pilferage of Meralco's property rendered him unqualified to become
a regular employee.
NLRC reversed the labor arbiter's ruling. It found that Gala had been illegally dismissed, since there was "no concrete showing of complicity with the
alleged misconduct/dishonesty[.]" 8 The NLRC, however, ruled out Gala's reinstatement, stating that his tenure lasted only up to the end of his
probationary period. It awarded him backwages and attorney's fees.
Both parties moved for partial reconsideration; Gala, on the ground that he should have been reinstated with full backwages, damages and interests;
and Meralco, on the ground that the NLRC erred in finding that Gala had been illegally dismissed. The NLRC denied the motions.
CA denied Meralco's petition for lack of merit and partially granted Gala's petition. It concurred with the NLRC that Gala had been illegally dismissed, a
ruling that was supported by the evidence. It opined that nothing in the records show Gala's knowledge of or complicity in the pilferage. It ordered
Gala's reinstatement with full backwages and other benefits. The CA also denied Meralco's motion for reconsideration.
Issue: WON respondent was illegaly dismissed
Ruling:
Court finds for petitioner, contrary to conclusions of NLRC and CA.
Respondent failed to meet standards and qualification of company. Gala misses the point. He forgets that as a probationary employee, his overall job
performance and his behavior were being monitored and measured in accordance with the standards (i.e., the terms and conditions) laid down in his
probationary employment agreement. 22 Under paragraph 8 of the agreement, he was subject to strict compliance with, and non-violation of the
Company Code on Employee Discipline, Safety Code, rules and regulations and existing policies. Par. 10 required him to observe at all times the
highest degree of transparency, selflessness and integrity in the performance of his duties and responsibilities, free from any form of conflict or
contradicting with his own personal interest. TDAHCS
The evidence on record established Gala's presence in the worksite where the pilferage of company property happened. It also established that it was
not only on May 25, 2006 that Llanes, the pilferer, had been seen during a Meralco operation. He had been previously noticed by Meralco employees,
including Gala (based on his admission), 23 in past operations. If Gala had seen Llanes in earlier projects or operations of the company, it is
incredulous for him to say that he did not know why Llanes was there or what Zuiga and Llanes were talking about. To our mind, the Meralco crew (the
foremen and the linemen) allowed or could have even asked Llanes to be there during their operations for one and only purpose to serve as their
conduit for pilfered company supplies to be sold to ready buyers outside Meralco worksites.
The familiarity of the Meralco crew with Llanes, a non-Meralco employee who had been present in Meralco field operations, does not contradict at all
but rather support the Meralco submission that there had been "reported pilferage" or "rampant theft," by the crew, of company property even before
May 25, 2006.
The established fact that Llanes, a non-Meralco employee, was often seen during company operations, conversing with the foremen, for reason or
reasons connected with the ongoing company operations, gives rise to the question: what was he doing there? Apparently, he had been visiting Meralco
worksites, at least in the Valenzuela Sector, not simply to socialize, but to do something else. As testified to by witnesses, he was picking up unused
supplies and materials that were not returned to the company. From these factual premises, it is not hard to conclude that this activity was for the
mutual pecuniary benefit of himself and the crew who tolerated the practice. For one working at the scene who had seen or who had shown familiarity
with Llanes (a non-Meralco employee), not to have known the reason for his presence is to disregard the obvious, or at least the very suspicious.

113

We consider, too, and we find credible the company submission that the Meralco crew who worked at the Pacheco Subdivision in Valenzuela City on
May 25, 2006 had not been returning unused supplies and materials, to the prejudice of the company. From all these, the allegedly hearsay evidence
that is not competent in judicial proceedings (as noted above), takes on special meaning and relevance.
On the whole, the totality of the circumstances obtaining in the case convinces us that Gala could not but have knowledge of the pilferage of company
electrical supplies on May 25, 2006; he was complicit in its commission, if not by direct participation, certainly, by his inaction while it was being
perpetrated and by not reporting the incident to company authorities. Thus, we find substantial evidence to support the conclusion that Gala does not
deserve to remain in Meralco's employ as a regular employee. He violated his probationary employment agreement, especially the requirement for him
"to observe at all times the highest degree of transparency, selflessness and integrity in the performance of their duties and responsibilities[.]" 27 He
failed to qualify as a regular employee.
Complaint dismissed for lack of merit.
Aro vs. NLRC
G.R. No. 174792. March 7, 2012
Facts:
Several employees of private respondent Benthel Development Corporation, including the petitioners, filed a Complaint for illegal dismissal with various
money claims and prayer for damages against the respondent.
LA found for the private respondents, ruled illegal dismissal and ordered to pay their separation pay.
NLRC affirmed decision of the LA but with the modification that private respondent pay backwages computed from the respective dates of dismissal
until finality of the decision. Private respondent, unsatisfied with the modification made by the NLRC, filed a motion for reconsideration with the
contention that, since it has been found by the Labor Arbiter and affirmed in the assailed decision that the employees were project employees, the
computation of backwages should be limited to the date of the completion of the project and not to the finality of the decision. The NLRC, however,
denied the motion ruling that private respondent failed to establish the date of the completion of the project.
CA denied petition for certiorari and MR.
Private Respondent appealed to NLRC contending that the computation for backwages must be only until the completion of the project and not until the
finality of the decision. Public respondent, in its Decision dated June 25, 2004, affirmed the Order of Labor Arbiter Bantug, but reduced the total amount
to P4,073,858.00, inclusive of attorney's fees. Thereafter private respondent filed another MR which was denied by public respondent, hence, private
respondent filed a petition for certiorari with the CA, alleging that public respondent committed grave abuse of discretion in promulgating its assailed
decision and denying its motion for reconsideration. The CA granted the petition, therefore, annulling and setting aside the decision and resolution of
the NLRC as to the award for backwages and remanded the case to the same public respondent for the proper computation of the backwages due to
each of the petitioners herein. Hence the present petition.
Issues:
WON employees were project employees.
WON the computation of their backwages was to be reckoned from the time of their illegal dismissal up to the time of the finality of judgment.
Held:
Court finds for private respondent, denied petitioners petition for review and affirming decision of CA dated March 7, 2006 and Resolution dated July 27,
2006 in toto.
1.
Termination of project employees and their backwages. According to the CA, petitioners are project employees as found by Labor Arbiter
Ernesto Carreon in his Decision dated May 28, 1998, because they were hired for the construction of the Cordova Reef Village Resort in Cordova,
Cebu, which was later on affirmed by the NLRC in its January 12, 1999 decision. The only discrepancy is the Order of the NLRC that petitioners are
entitled to backwages up to the finality of its decision, when as project employees, private respondents are only entitled to payment of backwages until
the date of the completion of the project. In a later resolution on private respondent's motion for reconsideration of its January 12, 1999 decision, the
NLRC changed its findings by ruling that petitioners herein were regular employees and, therefore, entitled to full backwages, until finality of the
decision, citing that petitioners' repeated rehiring over a long span of time made them regular employees.
this Court agrees with the findings of the CA that petitioners were project employees. It is not disputed that petitioners were hired for the construction of
the Cordova Reef Village Resort in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners' employment was to carry out a
specific project. Hence, the CA did not commit grave abuse of discretion when it affirmed the findings of the Labor Arbiter. The CA correctly ruled:
A review of the facts and the evidence in this case readily shows that a finding had been made by Labor Arbiter Ernesto Carreon, in his decision dated
May 28, 1998, that complainants, including private respondents, are project employees. They were hired for the construction of the Cordova Reef
Village Resort in Cordova, Cebu. We note that no appeal had been made by the complainants, including herein private respondents, from the said
finding. Thus, that private respondents are project employees has already been effectively established.
Likewise, a review of the public respondent's January 12, 1999 decision shows that it affirmed the labor arbiter's finding of the private respondents'
being project employees.

114

We therefore cannot fathom how the public respondent could have ordered backwages up to the finality of its decision when, as project employees,
private respondents are only entitled to payment of the same until the date of the completion of the project. It is settled that, without a valid cause, the
employment of project employees cannot be terminated prior to expiration. Otherwise, they shall be entitled to reinstatement with full backwages.
However, if the project or work is completed during the pendency of the ensuing suit for illegal dismissal, the employees shall be entitled only to full
backwages from the date of the termination of their employment until the actual completion of the work.
While it may be true that in the proceedings below the date of completion of the project for which the private respondents were hired had not been
clearly established, it constitutes grave abuse of discretion on the part of the public respondent for not determining for itself the date of said completion
instead of merely ordering payment of backwages until finality of its decision.
xxx xxx xxx
The decision of the labor arbiter, as affirmed by the public respondent in its January 12, 1999 decision, clearly established that private respondents
were project employees. Because there was no showing then that the project for which their services were engaged had already been completed, the
public respondent likewise found that private respondents were illegally dismissed and thus entitled to backwages.
However, in utter disregard of the law and prevailing jurisprudence, the public respondents capriciously and arbitrarily ordered that the said backwages
be computed until the finality of its decision instead of only until the date of the project completion. In grave abuse of its discretion, the public
respondent refused to consider the evidence presented before it as to the date of completion of the Cordova Reef Village Resort project. The records
show that affidavits have been executed by the petitioner's manager, corporate architect and project engineer as to the fact of the completion of the
project in October 1996. As these evidences [sic] were already a matter of record, the public respondent should not have closed its eyes and should
have endeavored to render a correct and just judgment. CHcTIA
xxx xxx xxx
Furthermore, as earlier noted, private respondents did not appeal from the Labor Arbiter's findings that they were indubitably project employees.
However, they were entitled to the payment of separation pay only for the reason that the date of the completion of the project for which they were hired
had not been clearly established. Thus, in affirming the labor arbiter's decision, the public respondent in effect sustained the finding that private
respondents are project employees. The statement, therefore, contained in the resolution of the petitioner's motion for reconsideration of its January 12,
1999 decision that repeated rehiring makes the worker a regular employee, is at best an obiter, especially considering that such conclusion had not
been shown to apply to the circumstances then obtaining with the private respondents' employment with the petitioner. 17
Therefore, being project employees, petitioners are only entitled to full backwages, computed from the date of the termination of their employment until
the actual completion of the work. Illegally dismissed workers are entitled to the payment of their salaries corresponding to the unexpired portion of their
employment where the employment is for a definite period. 18 In this case, as found by the CA, the Cordova Reef Village Resort project had been
completed in October 1996 and private respondent herein had signified its willingness, by way of concession to petitioners, to set the date of completion
of the project as March 18, 1997; hence, the latter date should be considered as the date of completion of the project for purposes of computing the full
backwages of petitioners.
Ymbong VS ABS-CBN Broadcasting Corp.
G.R. NO. 184885; March 7, 2012
Facts:
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation (ABS-CBN) in 1993 at its regional station in Cebu as a television
talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later extended to radio when ABS-CBN Cebu launched its AM station DYAB
in 1995 where he worked as drama and voice talent, spinner, scriptwriter and public affairs program anchor.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as talent, director and scriptwriter for various radio
programs aired over DYAB.
On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the "Policy on Employees Seeking Public Office." The
pertinent portions read:
1.Any employee who intends to run for any public office position, must file his/her letter of resignation, at least thirty (30) days prior to the official filing of
the certificate of candidacy either for national or local election.
xxx xxx xxx
3.Further, any employee who intends to join a political group/party or even with no political affiliation but who intends to openly and aggressively
campaign for a candidate or group of candidates (e.g., publicly speaking/endorsing candidate, recruiting campaign workers, etc.) must file a request for
leave of absence subject to management's approval. For this particular reason, the employee should file the leave request at least thirty (30) days prior
to the start of the planned leave period.
Because of the impending May 1998 elections and based on his immediate recollection of the policy at that time, Dante Luzon, Assistant Station
Manager of DYAB issued the following memorandum:
TO:ALL CONCERNED
FROM:DANTE LUZON
DATE:MARCH 25, 1998
SUBJECT:AS STATED

115

Please be informed that per company policy, any employee/talent who wants to run for any position in the coming election will have to file a leave of
absence the moment he/she files his/her certificate of candidacy.
The services rendered by the concerned employee/talent to this company will then be temporarily suspended for the entire campaign/election period.
After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon. Luzon claims that Ymbong approached him and told him that
he would leave radio for a couple of months because he will campaign for the administration ticket. It was only after the elections that they found out
that Ymbong actually ran for public office himself at the eleventh hour. Ymbong, on the other hand, claims that in accordance with the March 25, 1998
Memorandum, he informed Luzon through a letter that he would take a few months leave of absence from March 8, 1998 to May 18, 1998 since he was
running for councilor of Lapu-Lapu City.
As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor for Naga, Cebu. According to Luzon, he clarified
to Patalinghug that he will be considered resigned and not just on leave once he files a certificate of candidacy
Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he informed them that they cannot work there anymore
because of company policy. As a result, they filed as illegal dismissal suit against ABS-CBN.
Issues:
(1) whether Policy No. HR-ER-016 is valid;
(2) whether the March 25, 1998 Memorandum issued by Luzon superseded Policy No. HR-ER-016; and
(3) whether Ymbong, by seeking an elective post, is deemed to have resigned and not dismissed by ABS-CBN.
Rulings:
(1)
Policy No. HR-ER-016 is valid.
We have consistently held that so long as a company's management prerogatives are exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will
uphold them. In the instant case, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it
maintains its objectivity and credibility and freeing itself from any appearance of impartiality so that the confidence of the viewing and listening public in
it will not be in any way eroded. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise
what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.
(2)
Policy No. HR-ER-016 was not superseded by the March 25, 1998 Memorandum
The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of ABS-CBN, has policy-making powers in relation to his principal
task of administering the network's radio station in the Cebu region, the exercise of such power should be in accord with the general rules and
regulations imposed by the ABS-CBN Head Office to its employees. Clearly, the March 25, 1998 Memorandum issued by Luzon which only requires
employees to go on leave if they intend to run for any elective position is in absolute contradiction with Policy No. HR-ER-016 issued by the ABS-CBN
Head Office in Manila which requires the resignation, not only the filing of a leave of absence, of any employee who intends to run for public office.
Having been issued beyond the scope of his authority, the March 25, 1998 Memorandum is therefore void and did not supersede Policy No. HR-ER016.
(3)
Ymbong is deemed resigned when he ran for councilor.
As Policy No. HR-ER-016 is the subsisting company policy and not Luzon's March 25, 1998 Memorandum, Ymbong is deemed resigned when he ran
for councilor.
Ymbong's overt act of running for councilor of Lapu-Lapu City is tantamount to resignation on his part. He was separated from ABS-CBN not because
he was dismissed but because he resigned. Since there was no termination to speak of, the requirement of due process in dismissal cases cannot be
applied to Ymbong. Thus, ABS-CBN is not duty-bound to ask him to explain why he did not tender his resignation before he ran for public office as
mandated by the subject company policy.
In addition, we do not subscribe to Ymbong's claim that he was not in a position to know which of the two issuances was correct. Ymbong most likely
than not, is fully aware that the subsisting policy is Policy No. HR-ER-016 and not the March 25, 1998 Memorandum and it was for this reason that, as
stated by Luzon in his Sworn Statement, he only told the latter that he will only campaign for the administration ticket and not actually run for an elective
post.
Blue Sky Trading Company vs. Blas
G.R. No. 190559, March 7, 2012
Facts:
Petitioner Blue Sky Trading Company, Inc. (Blue Sky) is a duly registered domestic corporation engaged in the importation and sale of medical supplies
and equipment. The respondents Arlene P. Blas (Arlene) and Joseph D. Silvano (Joseph) were regular employees of Blue Sky and they respectively
held the positions of stock clerk and warehouse helper before they were dismissed from service on February 5, 2005.
An incident occurred where six pairs of intensifying screens were missing. On February 3, 2005, Jean B. De La Paz (Jean), Human Resource
Department Head issued notices to explain/preventive suspension to Arlene, Joseph, delivery personnel Jayde Tano-an (Jayde) and maintenance
personnel/driver Wilfredo Fasonilao (Wilfredo). The notices informed them that they were being accused of gross dishonesty in connection with their
alleged participation in and conspiracy with other employees in committing theft against company property, specifically relative to the loss of the six
intensifying screens.
On February 5, 2005, Jean issued to Arlene, Joseph, Jayde and Wilfredo notices of dismissal for cause stating therein that evidence that they had
conspired with each other to commit theft against company property was too glaring to ignore. Blue Sky had lost its trust and confidence on them and
as an act of self-preservation, their termination from service was in order.

116

On February 8, 2005, Arlene, Joseph, Helario, Jayde and Wilfredo filed with the National Labor Relations Commission (NLRC) a complaint for illegal
dismissal and suspension, underpayment of overtime pay, and non-payment of emergency cost of living allowance (ECOLA), with prayers for
reinstatement and payment of full backwages.
Meanwhile, an entrapment operation was conducted by the police during which Jayde and Helario were caught allegedly attempting to sell to an
operative an ultrasound probe worth around P400,000.00 belonging to Blue Sky. Though eventually, Jayde and Helario executed affidavits of
desistance stating that their dismissal was for cause.
The Labor Arbiter denied the claims of the respondents of illegal suspension and dismissal since they failed in their duties to exercise utmost protection,
care, or custody of respondent's property. Hence, their dismissal from the service is warranted.
The first decision of the NLRC ruled that respondents were not holding positions of trust and must therefore be reinstated and be paid their backwages.
Their second decision on the other hand reversed the previous one which in turn reinstated the Labor Arbiters dismissal of the complaint saying that
respondents were holding positions of trust and that the loss of the companys property are substantially proven. The CA on the other hand found merit
on their claims, though found respondents to have positions of trust and confidence, petitioner in this case failed to sufficiently establish the charge
against respondents which was the basis for its loss of trust and confidence that warranted their dismissal.
Issue: Whether or not respondents Blas and Silvano committed a breach of trust
Ruling:
The rule is long and well settled that, in illegal dismissal cases like the one at bench, the burden of proof is upon the employer to show that the
employee's termination from service is for a just and valid cause. The employer's case succeeds or fails on the strength of its evidence and not on the
weakness of that adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt
in the evidence presented by them. Often described as more than a mere scintilla, the quantum of proof is substantial evidence which is understood as
such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable minds might
conceivably opine otherwise. Failure of the employer to discharge the foregoing onus would mean that the dismissal is not justified and therefore illegal.
We find no error in the CA's findings that the petitioners had not adequately proven by substantial evidence that Arlene and Joseph indeed participated
or cooperated in the commission of theft relative to the six missing intensifying screens so as to justify the latter's termination from employment on the
ground of loss of trust and confidence.
We note that the parties disagree as to what tasks were actually and regularly performed by Arlene and Joseph. They are at odds as to the issue of
whether or not Arlene and Joseph had custody of the missing screens. We observe though that neither of the parties presented any documentary
evidence, such as employment contracts, to establish their claims relative to the actual nature of Arlene and Joseph's daily tasks.
The petitioners also argue that if Arlene and Joseph had not been grossly negligent in the performance of their duties, Blue Sky would not have incurred
the loss. We observe though that in the notices sent to Arlene and Joseph, first charging them with theft, and later, informing them of their dismissal
from service, gross negligence was not stated therein as a ground. Hence, Arlene and Joseph could not have defended themselves against the charge
of gross negligence. They cannot be dismissed on that ground lest due process be violated.
Other Matters: (For Discussion Purposes)

Impropriety of the Preventive Suspension

The purpose of the suspension is to prevent an employee from causing harm or injury to his colleagues and to the employer. The maximum
period of suspension is 30 days, beyond which the employee should either be reinstated or be paid wages and benefits due to him.
While we do not agree with Blue Sky's subsequent decision to terminate them from service, we find no impropriety in its act of imposing
preventive suspension upon the respondents since the period did not exceed the maximum imposed by law and there was a valid purpose for the
same.

In lieu of reinstatement, separation pay

If reinstatement proves impracticable, and hardly in the best interest of the parties, perhaps due to the lapse of time since the employee's
dismissal, or if the employee decides not to be reinstated, the latter should be awarded separation pay in lieu of reinstatement.
In the case at bar, Arlene and Joseph were dismissed from service on February 5, 2005. We find that the lapse of more than seven years
already renders their reinstatement impracticable. Further, from the stubborn stances of the parties, to wit, the petitioners' insistence that dismissal was
valid on one hand, and the respondents' express prayer for the payment of separation pay on the other, we find that reinstatement would no longer be
in the best interest of the contending parties.

Liability of Corporate Officers

As a general rule, a corporate officer cannot be held liable for acts done in his official capacity because a corporation, by legal fiction, has a
personality separate and distinct from its officers, stockholders, and members. In illegal dismissal cases, corporate officers may only be held solidarily
liable with the corporation if the termination was done with malice or bad faith. We find that the aforementioned circumstance did not obtain in the case
of Jose (vice-president) and Linda (secretary) relative to Arlene and Joseph's dismissal from service.
International Management Services vs. Logarta
G.R. No. 163657, April 18, 2012
Facts:
Recruitment agency, International Management Services (IMS), owned and operated by Marilyn C. Pascual, deployed respondent Roel P. Logarta to
work for Petrocon Arabia Limited (Petrocon) in Alkhobar, Kingdom of Saudi Arabia, in connection with general engineering services of Petrocon for the
Saudi Arabian Oil Company (Saudi Aramco). Respondent was employed for a period of two (2) years, commencing on October 2, 1997, with a monthly
salary of eight hundred US Dollars (US$800.00).
On April 29, 1998, Saudi Aramco notified Petrocon that due to changes in the general engineering services work forecast for 1998, the man-hours that
were formerly allotted to Petrocon is going to be reduced by 40% which constrained Petrocon to reduce its personnel.

117

Thus, on June 1, 1998, Petrocon gave respondent a written notice informing the latter that due to the lack of project works related to his expertise, he is
given a 30-day notice of termination, and that his last day of work with Petrocon will be on July 1, 1998. Petrocon also informed respondent that all due
benefits in accordance with the terms and conditions of his employment contract will be paid to respondent, including his ticket back to the Philippines.
Before his departure from Saudi Arabia, respondent received his final paycheck from Petrocon amounting SR7,488.57.
Upon his return, respondent filed a complaint with the Regional Arbitration Branch VII, National Labor Relations Commission (NLRC), Cebu City,
against petitioner as the recruitment agency which employed him for employment abroad. In filing the complaint, respondent sought to recover his
unearned salaries covering the unexpired portion of his employment contract with Petrocon on the ground that he was illegally dismissed.
The Labor Arbiter rendered judgment in favor of the respondent and ordered petitioner to pay the peso equivalent of US$5,600.00 based on the rate at
the time of actual payment, as payment of his wages for the unexpired portion of his contract of employment. The NLRC on appeal affirmed the Labor
Arbiters decision but reduced the award to only US$4,800.00 or its peso equivalent at the time of payment. The CA likewise dismissed the petition and
affirmed the NLRC decision.
Issue: Whether or not respondents dismissal through retrenchment illegal.
Ruling:
No
Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and
wages. It is one of the economic grounds to dismiss employees and is resorted by an employer primarily to avoid or minimize business losses. ISTHED
Retrenchment programs are purely business decisions within the purview of a valid and reasonable exercise of management prerogative. It is one way
of downsizing an employer's workforce and is often resorted to by the employer during periods of business recession, industrial depression, or seasonal
fluctuations, and during lulls in production occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or
introduction of new methods or more efficient machinery or automation. It is a valid management prerogative, provided it is done in good faith and the
employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence.
Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or overseas Filipino worker under Article 283 of the Labor Code.
Thus, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence, to wit: DHSCT
(1)That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2)That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the
intended date of retrenchment;
(3)That the employer pays the retrenched employees separation pay equivalent to one month pay or at least 1/2 month pay for every year of service,
whichever is higher;
(4)That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent
the employees' right to security of tenure; and
(5)That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such
as status,efficiency, seniority, physical fitness, age, and financial hardship for certain workers. 28
Applying the above-stated requisites for a valid retrenchment in the case at bar, it is apparent that the first, fourth and fifth requirements were complied
with by respondent's employer. However, the second and third requisites were absent when Petrocon terminated the services of respondent.
As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to retrench its employees in good faith and the
considerable reduction of work allotments of Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the number of its personnel.
As for the notice requirement, however, contrary to petitioner's contention, proper notice to the DOLE within 30 days prior to the intended date of
retrenchment is necessary and must be complied with despite the fact that respondent is an overseas Filipino worker. In the present case, although
respondent was duly notified of his termination by Petrocon 30 days before its effectivity, no allegation or proof was advanced by petitioner to establish
that Petrocon ever sent a notice to the DOLE 30 days before the respondent was terminated. Thus, this requirement of the law was not complied with.
In the case at bar, despite the fact that respondent was employed by Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to
the provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino workers, whether employed locally or overseas,
enjoy the protective mantle of Philippine labor and social legislations.
Also, respondent is entitled to the payment of his separation pay. However, this Court disagrees with the conclusion of the Labor Arbiter, the NLRC and
the CA, that respondent should be paid his separation pay in accordance with the provision of Section 10 of R.A. No. 8042. A plain reading of the said
provision clearly reveals that it applies only to an illegally dismissed overseas contract worker or a worker dismissed from overseas employment without
just, valid or authorized cause.
In the case at bar, notwithstanding the fact that respondent's termination from his employment was procedurally infirm, having not complied with the
notice requirement, nevertheless the same remains to be for a just, valid and authorized cause, i.e., retrenchment as a valid exercise of management
prerogative. To stress, despite the employer's failure to comply with the one-month notice to the DOLE prior to respondent's termination, it is only a
procedural infirmity which does not render the retrenchment illegal. In Agabon v. NLRC, this Court ruled that when the dismissal is for a just cause, the
absence of proper notice should not nullify the dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for
violation of his statutory rights.
Consequently, it is Article 283 of the Labor Code and not Section 10 of R.A. No. 8042 that is controlling. Thus, respondent is entitled to payment of
separation pay equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher. Considering that
respondent was employed by Petrocon for a period of eight (8) months, he is entitled to receive one (1) month pay as separation pay. In addition,
pursuant to current jurisprudence, for failure to fully comply with the statutory due process of sufficient notice, respondent is entitled to nominal
damages in the amount P50,000.00.

118

Jiao vs. NLRC

G.R. No. 182331, April 18, 2012
Facts:
The petitioners were regular employees of the Philippine Banking Corporation (Philbank), each with at least ten years of service in the company.
Pursuant to its Memorandum dated August 28, 1970, Philbank established a Gratuity Pay Plan (Old Plan) for its employees. The Old Plan provided:
1. Any employee who has reached the compulsory retirement age of 60 years, or who wishes to retire or resign prior to the attainment of such age or
who is separated from service by reason of death, sickness or other causes beyond his/her control shall for himself or thru his/her heirs file with the
personnel office an application for the payment of benefits under the plan
On March 8, 1991, Philbank implemented a new Gratuity Pay Plan (New Gratuity Plan). In particular, the New Gratuity Plan stated thus:
x x x An Employee who is involuntarily separated from the service by reason of death, sickness or physical disability, or for any authorized cause under
the law such as redundancy, or other causes not due to his own fault, misconduct or voluntary resignation, shall be entitled to either one hundred
percent (100%) of his accrued gratuity benefit or the actual benefit due him under the Plan, whichever is greater. [7]
In February 2000, Philbank merged with Global Business Bank, Inc. (Globalbank), with the former as the surviving corporation and the latter as the
absorbed corporation, but the bank operated under the name Global Business Bank, Inc. As a result of the merger, complainants respective positions
became redundant. A Special Separation Program (SSP) was implemented and the petitioners were granted a separation package equivalent to one
and a half months pay (or 150% of one months salary) for every year of service based on their current salary. Before the petitioners could avail of this
program, they were required to sign two documents, namely, an Acceptance Letter and a Release, Waiver, Quitclaim (quitclaim).
As their positions were included in the redundancy declaration, the petitioners availed of the SSP, signed acceptance letters and executed quitclaims in
Globalbanks favor in consideration of their receipt of separation pay equivalent to 150% of their monthly salaries for every year of service.
Subsequently, the petitioners filed separate complaints for non-payment of separation pay with prayer for damages and attorneys fees before the
National Labor Relations Commission (NLRC)
The petitioners asserted that, under the Old Plan, they were entitled to an additional 50% of their gratuity pay on top of 150% of one months salary for
every year of service they had already received. They insisted that 100% of the 150% rightfully belongs to them as their separation pay. Thus, the
remaining 50% was only half of the gratuity pay that they are entitled to under the Old Plan.
The petitioners further argued that the quitclaims they signed should not bar them from claiming their full entitlement under the law. They also claimed
that they were defrauded into signing the same without full knowledge of its legal implications.
Issues: WON there was proper payment of separation pay.
Ruling:
The petitioners receipt of separation pay equivalent to their one and a half months salary for every year of service as provided in the SSP and the New
Gratuity Plan more than sufficiently complies with the Labor Code, which only requires the payment of separation pay at the rate of one month salary for
every year of service.
Globalbanks right to replace the Old Plan and the New Gratuity Plan is within legal bounds as the terms thereof are in accordance with the provisions
of the Labor Code and complies with the minimum requirements thereof. Contrary to the petitioners claim, they had no vested right over the benefits
under the Old Plan considering that none of the events contemplated thereunder occurred prior to the repeal thereof by the adoption of the New
Gratuity Plan. Such right accrues only upon their separation from service for causes contemplated under the Old Plan and the petitioners can only avail
the benefits under the plan that is effective at the time of their dismissal. In this case, when the merger and the redundancy program were implemented,
what was in effect were the New Gratuity Plan and the SSP; the petitioners cannot, thus, insist on the provisions of the Old Plan which is no longer
existent.
The SSP did not revoke or supersede the New Gratuity Plan.
The SSP was not intended to supersede the New Gratuity Plan. On the contrary, the SSP was issued to make the benefits under the New Gratuity Plan
available to employees whose positions had become redundant because of the merger between Philbank and Globalbank, subject to compliance with
certain requirements such as age and length of service, and to improve such benefits by increasing or rounding it up to an amount equivalent to the
affected employees one and a half monthly salary for every year of service. In other words, the benefits to which the redundated employees are entitled
to, including the petitioners, are the benefits under the New Gratuity Plan, albeit increased by the SSP.
Considering that the New Gratuity Plan still stands and has not been revoked by the SSP, does this mean that the petitioners can claim the benefits
thereunder in addition to or on top of what is required under the Article 283 of the Labor Code?
For as long as the minimum requirements of the Labor Code are met, it is within the management prerogatives of employers to come up with separation
packages that will be given in lieu of what is provided under the Labor Code.
Article 283 of the Labor Code provides only the required minimum amount of separation pay, which employees dismissed for any of the authorized
causes are entitled to receive. Employers, therefore, have the right to create plans, providing for separation pay in an amount over and above what is
imposed by Article 283. There is nothing therein that prohibits employers and employees from contracting on the terms of employment, or from entering
into agreements on employee benefits, so long as they do not violate the Labor Code or any other law, and are not contrary to morals, good customs,
public order, or public policy.
In the absence of proof that any of the vices of consent are present, the petitioners acceptance letters and quitclaims are valid; thus, barring them from
claiming additional separation pay.
The Court, in other cases, has upheld quitclaims if found to comply with the following requisites: (1) the employee executes a deed of quitclaim
voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the
contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law.
We hold that Metrobank cannot be held liable for the petitioners claims.
WHEREFORE, the foregoing premises considered, the petition is DENIED

119

Realda vs. New Age Graphics Inc.

G.R. No. 192190, April 25, 2012
Facts
Petitioner Realda was dismissed by Respondent New Age Graphics Inc. for unjustified refusal to render overtime work, unexplained failure to observe
prescribed work standards, habitual tardiness and chronic absenteeism despite warning and non-compliance with the directive for him to explain his
numerous unauthorized absences. The Court of Appeals recognized the existence of just causes for petitioners dismissal, however, the appellate court
found that the respondent failed to observe the procedural requirements of due process and, as a consequence, awarded the petitioner P5,000.00 as
Nominal Damages.
Issues
WoN the dismissal based on the grounds cited constituted just causes; and
WoN the amount awarded as Nominal Damages of P5,000.00 was valid
Ruling
First, the petitioners arbitrary defiance to Graphics, Inc.s order for him to render overtime work constitutes willful disobedience. Taking this in
conjunction with his inclination to absent himself and to report late for work despite being previously penalized, the CA correctly ruled that the petitioner
is indeed utterly defiant of the lawful orders and the reasonable work standards prescribed by his employer.
Second, the petitioners failure to observe Graphics, Inc.s work standards constitutes inefficiency that is a valid cause for dismissal. Failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the alloted reasonable period, or by
producing unsatisfactory results. As the operator of Graphics, Inc.s printer, he is mandated to check whether the colors that would be printed are in
accordance with the clients specifications and for him to do so, he must consult the General Manager and the color guide used by Graphics, Inc. before
making a full run. Unfortunately, he failed to observe this simple procedure and proceeded to print without making sure that the colors were at par with
the clients demands. This resulted to delays in the delivery of output, client dissatisfaction, and additional costs on Graphics, Inc.s part.
While a penalty in the form of suspension had already been imposed on the petitioner for his habitual tardiness and repeated absenteeism, the principle
of totality of infractions sanctions the act of Graphics, Inc. of considering such previous infractions in decreeing dismissal as the proper penalty for his
tardiness and unauthorized absences incurred afterwards, in addition to his refusal to render overtime work and conform to the prescribed work
standards.
This Court cannot likewise agree to the petitioners attempt to brush aside his refusal to render overtime work as inconsequential when Graphics, Inc.s
order for him to do so is justified by Graphics, Inc.s contractual commitments to its clients. Such an order is legal under Article 89 of the Labor Code
and the petitioners unexplained refusal to obey is insubordination that merits dismissal from service.
Nonetheless, while the CA finding that the petitioner is entitled to nominal damages as his right to procedural due process was not respected despite
the presence of just causes for his dismissal is affirmed, this Court finds the CA to have erred in fixing the amount that the Company is liable to pay.
The CA should have taken cognizance of the numerous cases decided by this Court where the amount of nominal damages was fixed at P30,000.00 if
the dismissal was for a just cause.
Kakampi & Its Members, Panuelos, et al. vs. Kingspoint Express and Logistic
G.R. No. 194813 April 25, 2012
Facts:
Victor Pauelos (Pauelos), Bobby Dacara (Dacara), Alson Dizon (Dizon), Saldy Dimabayao (Dimabayao), Fernando Lupangco, Jr. (Lupangco), Sandy
Pazi (Pazi), Camilo Tabarangao, Jr. (Tabarangao), Eduardo Hizole (Hizole) and Reginald Carillo (Carillo) were the former drivers of Kingspoint Express
and Logistic (Kingspoint Express), a sole proprietorship registered in the name of Mary Ann Co (Co) and engaged in the business of transport of goods.
On January 16, 2006, Kingspoint Express issued separate notices to individual petitioners uniformly stating that they have been charged with
dishonesty, serious misconduct, loss of confidence, and acts inimical to the company, by filing with the NLRC false, malicious, and fabricated cases
against the company. In addition, Kingspoint stated that the petitioners refusal to undergo drug testing is unwarranted and against company policy. The
petitioners were given 48 hrs (2 days) to submit their answers and explanation to the charges.
The individual petitioners failed to submit their written explanation within the stated period. Subsequently, Kingspoint Express issued to them separate
yet uniformly worded notices informing them of their dismissal. The charges were allegedly based on these acts:
FABRICATION OF BASELESS MONEY CLAIMS against the company;
MISLEADING FELLOW CO-WORKERS to sign the MALICIOUS COMPLAINT FOR MONEY CLAIMS against the company;
REFUSAL TO UNDERGO THE COMPANYS GENERAL DRUG TEST
EXTORTING MONEY FROM CO-WORKERS TO FUND ACTIVITIES THAT THEY WERE NEVER FULLY INFORMED OF.
A complaint for illegal dismissal was subsequently filed by petitioners, alleging that the charges against them were fabricated and that their dismissal
was prompted by Kingspoint Express aversion to their union activities.
The Labor Arbiter found Dacara, Lupangco, Pazi, Tabarangao, Hizole and Carillo illegally dismissed. On the other hand, the complaint was dismissed
insofar as Panuelos, Dizon and Dimabayao are concerned as they were deemed not to have filed their position papers. While the allegation of antiunionism as the primordial motivation for the dismissal is considered unfounded, the respondents failed to prove that the dismissal was for a just cause.
On appeal, the NLRC affirmed the Labor Arbiters Decision. In addition, the NLRC ruled that the respondents failed to comply with the procedural
requirements of due process considering that the uniformly worded first notice sent by Kingspoint to the petitioners, did not apprise them of the
particular acts or omission for which their dismissal were sought. Respondents moved for reconsideration and the NLRC reversed itself and declared
the individual petitioners legally dismissed.

120

Subsequently, the petitioners filed a petition for certiorari with the CA. The CA reversed and set aside the NLRC Decision. Respondents promptly filed a
motion for reconsideration. Similar to the NLRC, the CA reversed itself and retracted its earlier finding that the individual petitioners were illegally
dismissed. The CA concluded that the 2 notices issued by Kingspoint Express complied with the requirements of the law.
Issue: Whether or not the individual petitioners dismissal is valid.
Ruling:
Yes, the petitioners were legally dismissed.
It is fundamental that in order to validly dismiss an employee, the employer is required to observe both substantive and procedural due process the
termination of employment must be based on a just or authorized cause and the dismissal must be effected after due notice and hearing. The Court
agreed with the CA that the petitioners refusal to submit themselves to drug test is a just cause for their dismissal. An employer may terminate an
employment on the ground of serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work. Willful disobedience requires the concurrence of two elements: (1) the employee's assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee,
and must pertain to the duties which he had been engaged to discharge. Both elements are present in this case.
At no point did the dismissed employees deny Kingspoint Express claim that they refused to comply with the directive for them to submit to a drug test
or, at the very least, explain their refusal. Thus, this gives rise to the impression that their non-compliance is deliberate. The utter lack of reason or
justification for their insubordination indicates that it was prompted by mere obstinacy, hence, willful and warranting of dismissal. Drivers are
indispensable to Kingspoint Express primary business of rendering door-to-door delivery services. It is common knowledge that the use of dangerous
drugs has adverse effects on driving abilities that may render the dismissed employees incapable of performing their duties to Kingspoint Express and
acting against its interests, in addition to the threat they pose to the public.
Nonetheless, while Kingspoint Express had reason to sever their employment relations, the Court found its supposed observance of the requirements
of procedural due process pretentious. While Kingspoint Express required the dismissed employees to explain their refusal to submit to a drug test, the
2 days afforded to them to do so cannot qualify as reasonable opportunity, which the Court construed in King of Kings Transport, Inc. v. Mamac as a
period of at least 5 calendar days from receipt of the notice. Thus, even if Kingspoint Express defective attempt to comply with procedural due process
does not negate the existence of a just cause for their dismissal, it was held that Kingspoint Express is still liable to indemnify the dismissed employees.
Waterfront Cebu City Hotel vs. Jimenez
G.R. No. 174214, June 13, 2012
Facts:
Respondents Ma. Melanie P. Jimenez, Jacqueline C. Baguio, Lovella V. Carillo, and Maila G. Roble were hired for Club Waterfront (the Club), a division
under petitioner Waterfront Cebu City Hotel (the Hotel) which catered to foreign high stakes gamblers, for different positions and dates as indicated
below:
NAME
POSITION
DATE HIRED
Ma. Melanie Jimenez
P. Guest Service Asst
Sept. 4, 1996
Jacqueline Cosep Baguio Treasury Supervisor
June 1, 1996
Lovella V. Carillo
Guest Services Asst
May 26, 1998
Maila G. Roble
Pit Supervisor
Sept. 1, 1996

MONTHLY SALARY
15,148.67
16,082.22
15,652.00
16,452.00

On 12 May 2003, respondents received identical letters of termination from petitioner's Director of Human Resources informing them of the temporary
suspension of business of the Club. A total of 45 employees were notified of the imminent closure. On the following day, petitioner served the notice of
suspension of business with the Department of Labor and Employment (DOLE).
The dismissed employees were offered separation pay equivalent to half-month pay for every year of service. The Club's closure took effect on 15 June
2003.On 26 June 2003, respondents filed a complaint before the Labor Arbiter for illegal dismissal, illegal suspension, and non-payment of salaries and
other monetary benefits. They likewise prayed for damages and attorney's fees.
Respondents refused to believe that the Club was suffering from losses because they knew exactly the number of arrivals as well as junket clients of
the Club. They presented documents to show the arrival of foreign guests at the Club and that ,they are employees of petitioner assigned to the Club,
hence they should have been allowed to work in other departments of the hotel.
Petitioner anchors its arguments mainly on the thesis that retrenchment to prevent losses was undertaken to justify the dismissal of respondents.
Petitioner likened the closure of the Club, which it deemed as a division/department, to retrenchment. Acting on the same premise that the Club is a
division of petitioner, respondents demanded that they should be transferred to another department of petitioner, instead of being dismissed from
employment. Respondents also claim that petitioner failed to prove losses to support retrenchment.
Issue: Whether or not retrenchment of the respondents was valid
Ruling:
Retrenchment is subject to faithful compliance with the substantative and procedural requirements laid down by law and jurisprudence. For a valid
retrenchment, the following elements must be present:
(1)That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2)That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the
intended date of retrenchment;

121

(3)That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least 1/2 month pay for every year of
service, whichever is higher;
(4)That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent
the employees' right to security of tenure; and
(5)That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such
as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
All these elements were successfully proven by petitioner. First, the huge losses suffered by the Club for the past two years had forced petitioner to
close it down to avert further losses which would eventually affect the operations of petitioner. Second, all 45 employees working under the Club were
served with notice of termination. The corresponding notice was likewise served to the DOLE one month prior to retrenchment. Third, the employees
were offered separation pay, most of whom have accepted and opted not to join in this complaint. Fourth, cessation of or withdrawal from business
operations was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees.
Ramirez vs. Mar Fishing Co., Inc.
G.R. No. 168208, June 13, 2012
Facts:
On 28 June 2001, respondent Mar Fishing Co., Inc. (Mar Fishing), engaged in the business of fishing and canning of tuna, sold its principal assets to
co-respondent Miramar Fishing Co., Inc. (Miramar) through public bidding. The proceeds of the sale were paid to the Trade and Investment
Corporation of the Philippines (TIDCORP) to cover Mar Fishing's outstanding obligation in the amount of P897,560,041.26. In view of that transfer, Mar
Fishing issued a Memorandum dated 23 October 2001 informing all its workers that the company would cease to operate by the end of the month. On
29 October 2001 or merely two days prior to the month's end, it notified the Department of Labor and Employment (DOLE) of the closure of its business
operations.
Thereafter, Mar Fishing's labor union, Mar Fishing Workers Union NFL and Miramar entered into a Memorandum of Agreement. The Agreement
provided that the acquiring company, Miramar, shall absorb Mar Fishing's regular rank and file employees whose performance was satisfactory, without
loss of seniority rights and privileges previously enjoyed.
Unfortunately, petitioners, who worked as rank and file employees, were not hired or given separation pay by Miramar. Thus, petitioners filed
Complaints for illegal dismissal with money claims before the Arbitration Branch of the National Labor Relations Commission (NLRC).
In its 30 July 2002 Decision, the Labor Arbiter (LA) found that Mar Fishing had necessarily closed its operations, considering that Miramar had already
bought the tuna canning plant. By reason of the closure, petitioners were legally dismissed for authorized cause. In addition, even if Mar Fishing
reneged on notifying the DOLE within 30 days prior to its closure, that failure did not make the dismissals void. Consequently, the LA ordered Mar
Fishing to give separation pay to its workers.
Aggrieved, petitioners pursued the action before the NLRC, which modified the LA's Decision. Noting that Mar Fishing notified the DOLE only two days
before the business closed, the labor court considered petitioners' dismissal as ineffectual. Hence, it awarded, apart from separation pay, full back
wages to petitioners from the time they were terminated on 31 October 2001 until the date when the LA upheld the validity of their dismissal on 30 July
2002.
Additionally, the NLRC pierced the veil of corporate fiction and ruled that Mar Fishing and Miramar were one and the same entity, since their officers
were the same. Hence, both companies were ordered to solidarily pay the monetary claims. On reconsideration, the NLRC modified its ruling by
imposing liability only on Mar Fishing. The labor court held that petitioners had no cause of action against Miramar, since labor contracts cannot be
enforced against the transferee of an enterprise in the absence of a stipulation in the contract that the transferee assumes the obligation of the
transferor.
Issue: Whether or not Mar Fishing and Miramar should be held solidarily liable to petitioners
Ruling:
For a dismissal based on the closure of business to be valid, three (3) requirements must be established. Firstly, the cessation of or withdrawal from
business operations must be bona fide in character. Secondly, there must be payment to the employees of termination pay amounting to at least onehalf (1/2) month pay for each year of service, or one (1) month pay, whichever is higher. Thirdly, the company must serve a written notice on the
employees and on the DOLE at least one (1) month before the intended termination.
In their Petition for Review on Certiorari, petitioners did not dispute the conclusion of the LA and the NLRC that Mar Fishing had an authorized cause to
dismiss its workers. Neither did petitioners challenge the computation of their separation pay.
Rather, they questioned the holding that only Mar Fishing was liable for their monetary claims.
Basing their conclusion on the Memorandum of Agreement and Supplemental Agreement between Miramar and Mar Fishing's labor union, as well as
the General Information Sheets and Company Profiles of the two companies, petitioners assert that Miramar simply took over the operations of Mar
Fishing. In addition, they assert that these companies are one and the same entity, given the commonality of their directors and the similarity of their
business venture in tuna canning plant operations.
At the fore, the question of whether one corporation is merely an alter ego of another is purely one of fact generally beyond the jurisdiction of this Court.
In any case, given only these bare reiterations, this Court sustains the ruling of the LA as affirmed by the NLRC that Miramar and Mar Fishing are
separate and distinct entities, based on the marked differences in their stock ownership. Also, the fact that Mar Fishing's officers remained as such in
Miramar does not by itself warrant a conclusion that the two companies are one and the same. As this Court held in Sesbreo v. Court of Appeals, the
mere showing that the corporations had a common director sitting in all the boards without more does not authorize disregarding their separate juridical
personalities. Neither can the veil of corporate fiction between the two companies be pierced by the rest of petitioners' submissions, namely, the
alleged take-over by Miramar of Mar Fishing's operations and the evident similarity of their businesses. At this point, it bears emphasizing that since
piercing the veil of corporate fiction is frowned upon, those who seek to pierce the veil must clearly establish that the separate and distinct personalities
of the corporations are set up to justify a wrong, protect a fraud, or perpetrate a deception. This, unfortunately, petitioners have failed to do. In Indophil
Textile Mill Workers Union vs. Calica, we ruled thus:

122

In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the corporation is a devi[c]e to evade the
application of the CBA between petitioner Union and private respondent company. While we do not discount the possibility of the similarities of the
businesses of private respondent and Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact
that the businesses of private respondent and Acrylic are related, that some of the employees of the private respondent are the same persons manning
and providing for auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is our
considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic. (Emphasis supplied.)
Having been found by the trial courts to be a separate entity, Mar Fishing and not Miramar is required to compensate petitioners. Indeed, the back
wages and retirement pay earned from the former employer cannot be filed against the new owners or operators of an enterprise.
Prudential Guarantee & Assurance Employee Labor Union vs. NLRC
G.R. No. 185335, June 13, 2012
Facts:
On November 11, 2005, PGAI's Human Resource Manager, Atty. Joaquin R. Rillo (Atty. Rillo), invited Union President, Mike Apostol (Apostol) to his
office. Atty. Rillo informed Apostol that PGAI was going to conduct an on-the-spot security check in the Information and Technology (IT) Department.
Atty. Rillo also requested that Union representatives witness the inspection to which Apostol agreed. TDAHCS
The inspection team proceeded to the IT Department, and the EDP head, through PGAI network administrator Angelo Gutierrez (Gutierrez), initiated the
spot check of IT Department computers, beginning with the one assigned to Vallota. After exploring the contents of all the folders and subfolders in the
"My Documents" folder, Gutierrez apparently did not find anything unusual with Vallota's computer and said "Wala naman, saan dito?" Retizos insisted,
"Nandyan yan," and took over the inspection until she found a folder named "MAA." She then exclaimed, "Heto oh! Ano to? Bakit may MAA dito?"
Retizos asked Vallota, "Are you working for MAA?" Vallota replied, "Hindi po, MAA mutual life po yan na makikita po sa internet." Gutierrez saved a
copy of the contents of the MAA folder in a floppy disk.
Sensing that Vallota was being singled out, Apostol insisted that all the computers in the IT Department, including that of Retizos, be also subjected to a
spot security check. Later, at Retizos' office, and in the presence of Atty. Rillo, Vallota was informed that Retizos and Atty. Rillo would print the files
found in his computer under the folder "MAA." Vallota did not object. After the files were printed, Vallota and the Union Secretary were asked to sign
each page of the printout. Vallota, however, was not given a copy of the printed file.
On November 14, 2005, Vallota received a memorandum directing him to explain within 72 hours why highly confidential files were stored in his
computer.
Meanwhile, the Union sent a letter 11 to PGAI President Philip K. Rico (Rico) requesting that a grievance committee be convened and that the contents
of the computers of other IT personnel be similarly produced. The request for the convening of a grievance committee was ignored. On December 21,
2005, Vallota was given a notice of termination of his employment effective January 10, 2006 on the ground of loss of trust and confidence. The
decision (AC-05-02) was embodied in a memorandum dated December 21, 2005.
Thus, the petitioners filed a complaint for illegal dismissal with claims for full backwages, moral and exemplary damages, and attorney's fees. The case
was docketed as NLRC-NCR Case No. 00-01-00387-06.
On March 31, 2006, Labor Arbiter Aliman D. Mangandog (LA) rendered a decision in favor of the petitioners.
NLRC granted the respondents' motion for reconsideration and reversed and set aside the decision of the LA.
Issue: Whether Vallota was validly dismissed on the ground of loss of trust and confidence; and (2) whether the requirements of procedural due
process for termination were observed.
Ruling:
The Court's discussion in Mabeza v. National Labor Relations Commission is instructive: ISAcHD
Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for terminating their employees. Such a
vague, all-encompassing pretext as loss of confidence, if unqualifiedly given the seal of approval by this Court, could readily reduce to barren form the
words of the constitutional guarantee of security of tenure. Having this in mind, loss of confidence should ideally apply only to cases involving
employees occupying positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the
employer's money or property. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such
managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of
their functions, regularly handle significant amounts of money or property. Evidently, an ordinary chambermaid who has to sign out for linen and other
hotel property from the property custodian each day and who has to account for each and every towel or bedsheet utilized by the hotel's guests at the
end of her shift would not fall under any of these two classes of employees for which loss of confidence, if ably supported by evidence, would normally
apply. Illustrating this distinction, this Court, in Marina Port Services, Inc. vs. NLRC, has stated that:
To be sure, every employee must enjoy some degree of trust and confidence from the employer as that is one reason why he was employed in the first
place. One certainly does not employ a person he distrusts. Indeed, even the lowly janitor must enjoy that trust and confidence in some measure if only
because he is the one who opens the office in the morning and closes it at night and in this sense is entrusted with the care or protection of the
employer's property. The keys he holds are the symbol of that trust and confidence.
By the same token, the security guard must also be considered as enjoying the trust and confidence of his employer, whose property he is
safeguarding. Like the janitor, he has access to this property. He too, is charged with its care and protection.
Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting that property. The employer's trust and confidence
in him is limited to that ministerial function. He is not entrusted, in the Labor Arbiter's words, 'with the duties of safekeeping and safeguarding company
policies, management instructions, and company secrets such as operation devices.' He is not privy to these confidential matters, which are shared only

123

in the higher echelons of management. It is the persons on such levels who, because they discharge these sensitive duties, may be considered holding
positions of trust and confidence. The security guard does not belong in such category.
More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what would otherwise be, under the
provisions of law, an illegal dismissal. "It should not be used as a subterfuge for causes which are illegal, improper and unjustified. It must be genuine,
not a mere afterthought to justify an earlier action taken in bad faith."
In Bristol Myers Squibb (Phils.), Inc. v. Baban, the Court discussed the requisites for a valid dismissal on the ground of loss of trust and confidence:
It is clear that Article 282(c) of the Labor Code allows an employer to terminate the services of an employee for loss of trust and confidence. The right of
employers to dismiss employees by reason of loss of trust and confidence is well established in jurisprudence.
The first 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. Verily, We must first determine if respondent holds such a position.
There are two (2) classes of positions of trust. The first class consists of managerial employees. They 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 second class consists of cashiers, auditors, property custodians, etc. They are defined as those who in the
normal and routine exercise of their functions, regularly handle significant amounts of money or property.
xxx xxx xxx
The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss of trust and confidence to be a valid cause for
dismissal must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and
convincingly established but proof beyond reasonable doubt is not necessary.
Thus, the first question to be addressed is whether Vallota held a position of trust and confidence.
Based on the standards set by previous jurisprudence, Vallota's position as Junior Programmer is analogous to the second class of positions of trust
and confidence. Though he did not physically handle money or property, he became privy to confidential data or information by the nature of his
functions. At a time when the most sensitive of information is found not printed on paper but stored on hard drives and servers, an employee who
handles or has access to data in electronic form naturally becomes the unwilling recipient of confidential information. HEDSIc
Having addressed the nature of his position, the next question is whether the act complained of justified the loss of trust and confidence of Vallota's
employer so as to constitute a valid cause for dismissal. It must, thus, be determined whether the alleged basis for dismissal was based on clearly
established facts.
To be a valid ground for dismissal, loss of trust and confidence 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. It must rest on substantial grounds and not on the employer's arbitrariness, whims, caprices or suspicion; otherwise, the
employee would remain eternally at the mercy of the employer. Further, in order to constitute a just cause for dismissal, the act complained of must be
work-related and show that the employee concerned is unfit to continue working for the employer. Such ground for dismissal has never been intended
to afford an occasion for abuse because of its subjective nature.
It must also be remembered that in illegal dismissal cases like the one at bench, the burden of proof is upon the employer to show that the employee's
termination from service is for a just and valid cause. The employer's case succeeds or fails on the strength of its evidence and not the weakness of
that adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt in the
evidence presented by them. Often described as more than a mere scintilla, the quantum of proof is substantial evidence which is understood as such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable minds might conceivably
opine otherwise. Failure of the employer to discharge the foregoing onus would mean that the dismissal is not justified and, therefore, illegal. TADCSE
In this case, there was no other evidence presented to prove fraud in the manner of securing or obtaining the files found in Vallota's computer. In fact,
aside from the presence of these files in Vallota's hard drive, there was no other evidence to prove any gross misconduct on his part. There was no
proof either that the presence of such files was part of an attempt to defraud his employer or to use the files for a purpose other than that for which they
were intended. If anything, the presence of the files reveals some degree of carelessness or neglect in his failure to delete them, but it is an extremely
farfetched conclusion bordering on paranoia to state that it is part of a larger conspiracy involving corporate espionage.
2. In this case, the two-notice requirement was complied with. By the petitioners' own admission, PGAI issued to Vallota a written Notice of Charges &
Preventive Suspension (Ref. No. AC-05-02) dated November 14, 2005. After an exchange of memoranda, PGAI then informed Vallota of his dismissal
in its decision dated December 21, 2005.
Given, however, that the petitioners expressly requested a conference or a convening of a grievance committee, following the Court's ruling in the Perez
case, which was later cited in the recent case of Lopez v. Alturas Group of Companies, such formal hearing became mandatory. After PGAI failed to
affirmatively respond to such request, it follows that the hearing requirement was not complied with and, therefore, Vallota was denied his right to
procedural due process.
In light of the above discussion, Vallota is entitled to reinstatement and backwages, reckoned from the date he was illegally dismissed until the finality of
this decision in accordance with jurisprudence.
Paulino vs. NLRC
G.R. No. 176184, June 13, 2012
Facts:
On 16 January 1995, petitioner, who was then employed by private respondent Philippine Long Distance Telephone Company, Inc. (PLDT) as Cable
Splicer III, surrendered his service vehicle to PLDT's motor pool for body repairs. For this reason, he unloaded the company-issued plant materials
contained in the vehicle and stored them at his residence for safekeeping.
For 1 month and 11 days, PLDT's properties were in the custody of petitioner. Thus, on 27 February 1995, members of the Philippine National Police
(PNP), armed with a search warrant, searched his house.
At that time, based on the investigation by the PNP, petitioner did not present any documents or requisition slips that would justify his possession of the
materials. Consequently, PLDT caused the filing of an Information for qualified theft against him.

124

The next day, PLDT issued an invitation to V. Pesayco, the manager of petitioner, requesting him to make petitioner available to clarify certain matters.
Petitioner attended this meeting along with his lawyer, but PLDT's investigators merely talked with the counsel. PLDT then received a security report
stating that petitioner had engaged in the illicit disposal of its plant materials, which were recovered during the search conducted at his residence.
jur2005
On 3 April 1995, PLDT issued an Inter-Office Memo requiring petitioner to explain why he should not be terminated from employment for serious
misconduct (theft of company property). The Memo also gave him the option to ask for a formal hearing of his case. In reply, he requested that the
proceedings be held in abeyance until the criminal case against him had been concluded.
Then, on 26 May 1995, Pesayco informed petitioner in writing that since his reply did not provide any clarification whatsoever that would have
warranted an evaluation of his case, the company was terminating his services effective on the said date.
Three years later, after the criminal case for qualified theft had been terminated for failure of the prosecution to prove his guilt beyond reasonable doubt,
petitioner filed a Complaint for Illegal Dismissal which the Labor Arbiter (LA) dismissed for utter lack of merit.
Both the NLRC and the CA upheld the dismissal of petitioner.
Issue: Petitioner raises the sole issue of whether or not the CA gravely erred in upholding his dismissal as valid based on just cause.
Ruling:
The Labor Code recognizes that an employer, for just cause, may validly terminate the services of an employee for serious misconduct or willful
disobedience of the lawful orders of the employer or representative in connection with the employee's work. Fraud or willful breach by the employee of
the trust reposed by the employer in the former, or simply loss of confidence, also justifies an employee's dismissal from employment.
The LA, the NLRC and the CA all acknowledged that, notwithstanding petitioner's acquittal in the criminal case for qualified theft, respondent PLDT had
adequately established the basis for the company's loss of confidence as a just cause to terminate petitioner. This Court finds that approach to be
correct, since proof beyond reasonable doubt of an employee's misconduct is not required in dismissing an employee. Rather, as opposed to the "proof
beyond reasonable doubt" standard of evidence required in criminal cases, labor suits require only substantial evidence to prove the validity of the
dismissal.
Willful breach of trust or loss of confidence requires that the employee (1) occupied a position of trust or (2) was routinely charged with the care of the
employer's property. As correctly appreciated by the CA, petitioner was charged with the care and custody of PLDT's property.
To warrant dismissal based on loss of confidence, there must be some basis for the loss of trust or the employer must have reasonable grounds to
believe that the employee is responsible for misconduct that renders the latter unworthy of the trust and confidence demanded by his or her position.
Here, petitioner disputes the sufficiency of PLDT's basis for loss of trust and confidence. He alleges that he did not steal the plant materials, considering
that he had lawful possession.
However, assuming that he lawfully possessed the materials, PLDT still had ample reason or basis to already distrust petitioner. For more than a month,
he did not even inform PLDT of the whereabouts of the plant materials. Instead, he stocked these materials at his residence even if they were needed
in the daily operations of the company. In keeping with the honesty and integrity demanded by his position, he should have turned over these materials
to the plant's warehouse.
The fact that petitioner did not present any documents or requisition slips at the time that the PNP took the plant materials logically excites suspicion. In
addition, PLDT received a security report stating that petitioner had engaged in the illicit disposal of its plant materials, which were recovered during the
search conducted at his residence.
Thus, PLDT reasonably suspected petitioner of stealing the company's property. At that juncture, the employer may already dismiss the employee since
it had reasonable grounds to believe or to entertain the moral conviction that the latter was responsible for the misconduct, and the nature of his
participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position.
Given these circumstances, it would have been unfair for PLDT to keep petitioner in its employ. Petitioner displayed actions that made him
untrustworthy. Thus, as a measure of self-protection, PLDT validly terminated his services for serious misconduct and loss of confidence.
Manila Electric Co. vs. Dejan
G.r. No. 194106, June 18, 2012
Facts:
Respondent Herminigildo Dejan commenced employment with the Manila Electric Company (Meralco) on July 7, 1992. He was then Meralco's branch
representative in its San Pedro, Laguna branch, with a monthly salary of P30,500.00. His work consisted of accepting payments of the required fees
from applicants for electric service installation and issuing the corresponding meter sockets/bases after payment of a deposit, preceded by an
inspection of the premises to be energized by a Meralco field personnel.
In the mid-afternoon of March 18, 2005, the security guard on duty at the branch, Warlito Silverio, noticed a certain Estanislao Gozarin a.k.a. Mang
Islao, a private electrician, take out from the branch premises 20 pieces of meter sockets which were then loaded into a parked Meralco contracted jeep
belonging to one Cesar Reyes. Reyes brought the meter sockets to his house. The meter sockets were thereafter allegedly picked up by Gil Duenas, a
Meralco field representative. Dejan was asked to explain the incident. aCITEH
In his letter-explanation, dated March 23, 2005, to a certain Emilia SJ Reaso, Dejan admitted that he released the meter sockets in question because
the deposit fees had already been paid. The payor, a certain Antonio A. Depante a.k.a. Bruce, also an electrician, asked for the release of the items.
Allegedly, he had several contracts for service installation with the branch. Dejan indicated the list of contracts covering the released meter sockets.
Sometime in September, October and November 2005, Meralco asked Gozarin, Dejan, and Reyes to give their sworn statements on the incident.
On February 10, 2006, Dejan received a letter from Marcelino Rosario, head of Meralco's Investigation-Paralegal Services, charging him with the
unauthorized taking of 20 meter sockets, in violation of Section 7, paragraphs 4 and 11 of the Company Code of Employee Discipline, in relation to
Article 282 of the Labor Code. On February 17, 2006, Meralco conducted a formal investigation where Dejan admitted issuing the meter sockets without
the authorization of the applicants for electric connection. He alleged that he released the items even without authorization as it had been the accepted
practice in the office, provided the deposit fee had been paid. He claimed that he talked with Depante, through the cell phone of Duenas, about it, after

125

Duenas himself requested him (Dejan) to release the meter sockets to Gozarin. When Dejan released the meter sockets, Duenas instructed Gozarin to
take them out of the Meralco premises and load them in Reyes' jeep.
Also testifying at the investigation, Depante corroborated Dejan's account of the incident. He alleged that he made the request for the release of the
meter sockets due to his inability to pick up the items himself as he was busy with another project at the time. He and Duenas retrieved the meter
sockets from Reyes' house the next day.
Unconvinced with Dejan's explanation, Meralco served Dejan a letter on April 6, 2006, 9 terminating his employment effective the following day, with
forfeiture of all rights and privileges. On April 20, 2006, Dejan filed his complaint with the National Labor Relations Commission (NLRC).
Issue: the validity of dejans termination.
Ruling:
We found for petitioner.
Dejan is liable as charged. More specifically, he is liable for violation of Section 7, paragraphs 4 and 11 of the Company Code of Employee Discipline,
constituting serious misconduct, fraud and willful breach of trust of the employer, just causes for termination of employment under the law. The facts
and the evidence on record clearly bear this out and we wonder how the CA could have missed the seriousness or gravity of Dejan's transgressions.
There is no dispute about the release of the meter sockets. Also, the persons involved were clearly identified Dejan; Gozarin or Mang Islao, a private
electrician who received the meter sockets; Reyes, the owner of the jeep where the meter sockets were loaded by Gozarin; Duenas, a Meralco field
representative; and Depante, another private electrician who purportedly owned the meter sockets.
There is also no question that Dejan released the meter sockets to Gozarin without the written authority or SPA from the customer or customers who
applied for electric connection (as a matter of company policy). Dejan released the meter sockets to Gozarin on the mere say-so of Depante, as he
claimed, through a call to Duenas' cell phone, and justified his act to be in accord with accepted company practice.
Dejan tried to minimize the gravity of his offense by denying that the meter sockets were lost and that he issued them without authority since they were
all contracted, as shown by the SINs he submitted in evidence.
Dejan's tale fails to convince us. While the meter sockets might not have been lost, their issuance or release was highly irregular, perpetrated to defraud
the company. As we see it, the release of the meter sockets served as a key element in a private contracting activity for electric service connection of
Dejan and Duenas. AEaSTC
On the day of the release of the meter sockets, March 18, 2005, a Friday, Duenas was in the branch office, interceding for private electrician Depante.
Gozarin, Depante's emissary, was there also, waiting for the release. Dejan had then already put the 20 meter sockets in boxes when he received a call
from Depante on Duenas' cell phone requesting for the release of the meter sockets to Gozarin, saying that he could not pick them up as he was
attending to another project.
After Depante's call, Dejan released the meter sockets to Gozarin who had them loaded in Reyes' jeep; Reyes, in turn, brought them to his house. On
the Sunday of that week, March 20, 2005, the meter sockets were picked up. Reyes testified that Duenas picked them up; Duenas, on the other hand,
stated that it was Depante who retrieved the meter sockets.
While there was no unanimity as to who picked up the meter sockets, it appears that it was Duenas who was the most active or the most interested in
having the meter sockets released. Gozarin, who had known Duenas for quite some time, testified that it was Duenas who told him to get the meter
sockets from Dejan and load them in Reyes' jeep.
Questioned as to whether Dejan asked him for a written authorization, Gozarin answered no. Reyes, like Gozarin, had also known Duenas for some
time; in fact, since 1993. Also, it was Duenas who asked him to load the meter sockets in his jeep.
Given Duenas' involvement in the release of the meter sockets on March 18, 2005, there is reason to believe that it was more through his intervention
than Depante's representation that the meter sockets were released. There is reason to believe, too, that it was Duenas who picked the meter sockets
from Reyes' house and that Depante made a call to Dejan to accommodate the latter and Duenas, whom he likewise knew very well, in taking the meter
sockets out of the branch premises for reason or reasons only known to them. Depante is a private contractor for electric services and it would work to
his favor if he cooperated with the two Meralco employees.
It was bad enough that Dejan failed to ask for a written authorization for the release of the meter sockets as required by company policy. His apparent
motive behind the move to mislead the company, in concert with Duenas, as to the real recipient of the meter sockets made it worse. It could only
result in a loss to Meralco as it was not the customer, who applied for electric service, or his authorized representative who received the meter sockets.
As the circumstances strongly indicate, it was Duenas who retrieved the meter sockets. It was obviously an act intended to defraud the company. It
lends credence to Meralco's submission that Duenas was engaged in private contracting for electric connection, together with Dejan. TSDHCc
The above impression is bolstered by Dejan's false claim that the meter sockets were all accounted for because they were issued for Depante's service
applications. As the company discovered, however, the SINs Dejan submitted in evidence covered applications which had already been inspected,
approved and provided (installed) with meters even before March 18, 2005, the date when the 20 meter sockets were released. Meralco argued before
the NLRC 27 that if Depante's service applications had already been installed with meters, it could only be that the meter sockets Dejan issued were
intended for purposes which the company had not approved or authorized. It added that there was clear indication of Dejan's intent to gain from and to
defraud the company. Meralco reiterated the same argument before the CA.
The CA brushed aside the argument, relying on Dejan's explanation that Depante's "practice of leaving the deposit with him whenever customers
abounded often resulted in the accumulation of contracts for the meter base."
We disagree with this finding. Dejan stated in his Sinumpaang Salaysay given on October 21, 2005:
T:Bakit ikaw ang kinausap ni Bruce na mag-issue ng 20 meter sockets?
S:Kasi po ako po ang gumawa ng mga kontrata niya.
T:Kung gayon ay kaya mo ito ibinigay ay bayad na lahat ng mga deposito nito?
S:Opo.
Further, in the Malayang Salaysay given by Dejan and Depante on February 17, 2006, Dejan said:
T:Anong masasabi mo Ginoong Dejan hinggil sa paratang sa iyo?
S:Hindi po totoo na sinasabi nila na nawala po ang meter base at hindi rin po totoo na ito ay aking inisyu ng walang pahintulot dahil ang lahat nito ay
kontrata. Akin po[ng] isinusumite ang ilan sa mga kontratang ukol sa mga SIN na siyang dahilan kaya ko ini-issue ang mga ito.

126

Based on the above depositions, we cannot accept the CA's insinuation that Dejan mixed up the SINs he submitted in evidence (to cover for the
released 20 meter sockets) with the SINs pertaining to other service applications which Depante contracted. There could not have been room for
confusion as far as Dejan is concerned. He was the one preparing Depante's contracts, as he himself admitted. He knew or should have known the
contracts' status (whether they had already been acted upon or not). It would be gross negligence on his part if it were otherwise.
Under the circumstances, we believe that Dejan submitted the SINs in question to make it appear that the released meter sockets pertained to
outstanding service applications contracted by Depante; in other words, to give a semblance of regularity in the transaction and to avoid liability for their
unauthorized release. He released the meter sockets with intent to defraud the company.
We cannot blame Meralco for losing its trust and confidence in Dejan. He is no ordinary employee. As branch representative, "he was principally
charged with the function and responsibility to accept payment of fees required for the installation of electric service and facilitate issuance of meter
sockets." The duties of his position require him to always act with the highest degree of honesty, integrity and sincerity, as the company puts it. In light
of his fraudulent act, Meralco, an enterprise imbued with public interest, cannot be compelled to continue Dejan's employment, as it would be inimical to
its interest. Needless to say, "[t]he law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer." For
sure, Dejan was validly dismissed for serious misconduct, and loss of trust and confidence.
The procedural question
Dejan posits that the petition is improper because it raises only questions of facts. We do not see this as a legal problem. As we stressed earlier, the CA
grossly misapprehended the facts and the evidence on record. The case falls within the exceptions to the rule on the conclusiveness of the CA findings,
thereby opening the CA rulings to the Court's discretionary review authority
Apo Cement Corporation vs. Baptisma
G.R. No. 176671, June 20, 2012
Facts:
On June 16, 1998, respondent Zaldy E. Baptisma was employed by petitioner Apo Cement Corporation, a duly registered corporation maintaining and
operating a cement manufacturing plant in Tinaan, Naga, Cebu. 4
Sometime in September 2003, petitioner received information from one of its employees, Armando Moralda (Moralda), that some of its personnel,
including respondent who was then the manager of petitioner's Power Plant Department, were receiving commissions or "kickbacks" from suppliers. 5
To ascertain the veracity of the information given by Moralda, the top management of petitioner conducted an investigation during which Jerome
Lobitaa (Lobitaa), one of petitioner's accredited suppliers, doing business under the name and style "Precision Process," came forward to corroborate
the statement of Moralda. 6
On October 10, 2003, Moralda and Lobitaa executed separate affidavits 7 to substantiate their claims. Pertinent portions of the affidavits read:
Lobitaa's Affidavit:
xxx xxx xxx
8.1.There were times when Mr. Tinoco himself talked directly to the end-user [to] negotiate for the amount or percentage of the kickback that they would
get from me. There was one time when Mr. Tinoco informed me that he has negotiated with Mr. Zaldy Baptisma, the Power Plant Manager, and
committed to give him a ten percent (10%) "commission" or kickback for all transactions which would be awarded to me. Upon the award of the contract
amounting to approximately Two Hundred Thousand Pesos (P200,000.00) and the remittance by Apo of the payment, I met with Mr. Baptisma outside
the Apo plant and personally handed to him his ten percent (10%) "commission"/kickback in cash.
Having been implicated in the irregularities, respondent, on November 3, 2003, received a Show Cause Letter with Notice of Preventive Suspension.
Respondent submitted his written explanation 12 denying the accusations hurled against him.
To further afford respondent ample opportunity to defend himself, petitioner conducted a series of administrative investigation hearings during which
respondent was able to face his accusers.
For his part, respondent presented his co-employees Bobby Banzon (Banzon), Reno Cedeo (Cedeo) and Chrstopher Navarro. 16 Banzon testified
that sometime in December 2002, he, along with respondent and other Apo employees, went to Papa's Grill; that on said occasion, he saw Lobitaa
with some companions at another table; and that Lobitaa did not approach them but only gave food and bottles of beer through a waiter. 17 Cedeo,
on the other hand, denied meeting Lobitaa at Papa's Grill. 18
On March 22, 2004, respondent received the Notice of Termination 19 dated March 19, 2004 informing him of his dismissal from employment effective
immediately on the ground of loss of trust and confidence.
The Labor Arbiter favored the respondent. Commissioner reversed the decision. However, CA reinstated the Decision of the Labor Arbiter. It ruled that
petitioner failed to prove the existence of a just cause to warrant the termination of respondent as the alleged loss of trust and confidence was not
based on established facts.
Issue: Whether there was just cause for the dismissal of respondent.
Ruling:
To validly dismiss an employee on the ground of loss of trust and confidence under Article 282 (c) of the Labor Code of the Philippines, the following
guidelines must be observed: "1) loss of confidence should not be simulated; 2) it should not be used as subterfuge for causes which are improper,
illegal or unjustified; 3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and 4) it must be genuine, not a mere
afterthought to justify earlier action taken in bad faith." More important, it "must be based on a willful breach of trust and founded on clearly established
facts."

127

In this case, we agree with the NLRC that the termination of respondent on the ground of loss of trust and confidence was justified. Unlike the Labor
Arbiter and the CA, we find the testimony of Lobitaa credible and truthful.
All told, we find that the testimony of Lobitaa constitutes substantial evidence to prove that respondent, as the then Power Plant Manager, accepted
commissions and/or "kickbacks" from suppliers, which is a clear violation of Section 2.04 of petitioner's Company Rules and Regulations. Jurisprudence
consistently holds that for managerial employees "the mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal." As we then see it, respondent's termination was for a just and valid cause.
Cosmos Bottling vs. Fermin
G.R. No. 193676, June 20, 2012
Facts:
-Wilson B. Fermin (Fermin) was a forklift operator at Cosmos Bottling Corporation (COSMOS), where he started his employment on 27 August 1976. 4
On 16 December 2002, he was accused of stealing the cellphone of his fellow employee, Luis Braga (Braga). 5 Fermin was then given a Show Cause
Memorandum, requiring him to explain why the cellphone was found inside his locker. In compliance therewith, he submitted an affidavit the following
day, explaining that he only hid the phone as a practical joke and had every intention of returning it to Braga. Braga executed a handwritten narration of
events.
After conducting an investigation, COSMOS found Fermin guilty of stealing Braga's phone in violation of company rules and regulations. Consequently,
on 2 October 2003, the company terminated Fermin from employment after 27 years of service.
Meanwhile, Fermin filed a Complaint for Illegal Dismissal, which the Labor Arbiter (LA) dismissed for lack of merit on the ground that the act of taking a
fellow employee's cellphone amounted to gross misconduct. Further, the LA likewise took into consideration Fermin's other infractions, namely: (a)
committing acts of disrespect to a superior officer, and (b) sleeping on duty and abandonment of duty. This was affirmed by the Commission.Court of
Appeals reversed the rulings of the LA and the NLRC and awarded him his full retirement benefits. Although the CA accorded with finality the factual
findings of the lower tribunals as regards Fermin's commission of theft, it nevertheless held that the penalty of dismissal from service was improper on
the ground that the said violation did not amount to serious misconduct or willful disobedience.
Issue: Whether or not the imposition of the penalty of dismissal was appropriate.
Ruling:
Affirmative. Theft committed against a co-employee is considered as a case analogous to serious misconduct, for which the penalty of dismissal from
service may be meted out to the erring employee, viz.:
Article 282 of the Labor Code provides:
Article 282.Termination by Employer. An employer may terminate an employment for any of the following causes:
(a)Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or his representatives in connection with his work.
Misconduct involves "the transgression of some established and definite rule of action, forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment."
In this case, the LA has already made a factual finding, which was affirmed by both the NLRC and the CA, that Fermin had committed theft when he
took Braga's cellphone. Thus, this act is deemed analogous to serious misconduct, rendering Fermin's dismissal from service just and valid.
Further, the CA was correct in ruling that previous infractions may be cited as justification for dismissing an employee only if they are related to the
subsequent offense. However, it must be noted that such a discussion was unnecessary since the theft, taken in isolation from Fermin's other violations,
was in itself a valid cause for the termination of his employment.
Finally, it must be emphasized that the award of financial compensation or assistance to an employee validly dismissed from service has no basis in
law. Therefore, considering that Fermin's act of taking the cellphone of his co-employee is a case analogous to serious misconduct, this Court is
constrained to reverse the CA's ruling as regards the payment of his full retirement benefits. In the same breath, neither can this Court grant his prayer
for backwages.
Reyes-Ravel vs. Philippine Luen Thai Holdings
G.R. No. 174893, July 11, 2012
Facts:
In February 2000, PLTHC hired petitioner as Corporate Human Resources (CHR) Director for Manufacturing for its subsidiary/affiliate company, L&T. In
the employment contract, 5 petitioner was tasked to perform functions in relation to administration, recruitment, benefits, audit/compliance, policy
development/structure, project plan, and such other works as may be assigned by her immediate superior, Frank Sauceda (Sauceda), PLTHC's
Corporate Director for Human Resources.
On September 6, 2001, petitioner received a Prerequisite Notice from Sauceda and the Corporate Legal Counsel of PLTHC, Ma. Lorelie T. Edles with
reference to her failure to perform in accordance with management directives in various instances, which collectively have resulted in loss of confidence

128

because on numerous occasions. Also, in the presence of colleagues and subordinates, she made statements that serve to undermine the Company's
efforts at pursuing the HR2 Program of which the other colleagues complained about her.
She explained that her alleged failure to perform management directives could be attributed to the lack of effective communication with her superiors
due to malfunctioning email system. This caused her to miss certain directives coming from her superiors and likewise, for her superiors to overlook the
reports she was submitting. She denied uttering negative comments about the HR2 Program and instead claimed to have intimated her support for it.
Petitioner was dismissed from the service for loss of confidence on her ability to promote the interests of the company. This led petitioner to file a
Complaint for illegal dismissal, payment of separation pay, 13th month pay, moral and exemplary damages, attorney's fees, and other unpaid company
benefits against respondents and its officers.
Issue: Whether or not there was a valid dismissal.
Ruling:
There exists a valid ground for petitioner's termination for employment.
Jurisprudence provides that an employer has a distinct prerogative and wider latitude of discretion in dismissing a managerial personnel who performs
functions which by their nature require the employer's full trust and confidence. As distinguished from a rank and file personnel, mere existence of a
basis for believing that a managerial employee has breached the trust of the employer justifies dismissal. Loss of confidence as a ground for dismissal
does not require proof beyond reasonable doubt as the law requires only that there be at least some basis to justify it.
Petitioner was L&T's CHR Director for Manufacturing. As such, she was directly responsible for managing her own departmental staff. It is therefore
without question that the CHR Director for Manufacturing is a managerial position saddled with great responsibility. Because of this, petitioner must
enjoy the full trust and confidence of her superiors. Not only that, she ought to know that she is "bound by more exacting work ethics" and should live up
to this high standard of responsibility.
records show that petitioner indeed unreasonably failed to effectively communicate with her immediate superior. There was an apparent neglect in her
obligation to maintain constant communication with Sauceda in order to ensure that her work is up to par. Second, the affidavits of petitioner's coworkers revealed her negative attitude and unprofessional behavior towards them and the company. The third and most important is petitioner's display
of inefficiency and ineptitude in her job.
An employer has the right to regulate, according to its discretion and best judgment, all aspects of employment, including work assignment, working
methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and
recall of workers soo long as they are exercised in good faith.
Omar Verdadero vs. Barney Autolines Group of Companies Transport, Inc.
G.R. No. 195428, August 29, 2012
Facts:
Jomar Verdadero is a bus conductor of Barney Autolines. In January 2008, he had an altercation with Gerardo Gimenez, a Disciplinary Officer
employed by Barney Autolines. The altercation resulted from a misunderstanding when Verdadero failed to give Gimenezs wife a free ride (under
Barney Autoliness guidelines, employees and their wives are given free rides in Barney buses). Later, Gimenez filed an administrative complaint
against Verdadero. Barney and Rosela Chito, owners of Barney Autolines, presided over the case. The administrative case however was fruitless and
thereafter Verdadero failed to report to work as he allegedly feared Gimenez and his friends Gimenez has a higher rank than Verdadero. Verdadero
would only report to Barney Autolines premises if Gimenez is not around and would only sign the logbook. He also failed to meet with the Chitos.
Despite this, the Chitos advised Verdadero to report to work and also to submit a letter of apology to Gimenez (as requested by Gimenez). But instead
of complying, Verdadero filed a case for illegal dismissal against Barney Autolines as he claimed that he was constructively dismissed when he was not
given any more work assignments and when he was berated by Gimenez during their altercation. Verdadero is praying that due to his strained relations
with the owners, he should be awarded separation pay and backwages.
Issue: Whether or not Verdadero was illegally dismissed (constructively dismissed) and as such entitled to separation pay and backwages.
Ruling:
No. As a rule, reinstatement and backwages are reliefs available to an illegally dismissed employee. Reinstatement restores the employee who was
unjustly dismissed to the position from which he was removed, that is, to his status quo ante dismissal, while the grant of backwages allows the same
employee to recover from the employer that which he had lost by way of wages as a result of his dismissal. If reinstatement is not possible due to
strained relations, separation pay as well as backwages are in order. HOWEVER, in this case, there is no constructive or illegal dismissal. Verdadero
brought this to himself. He was being ordered to return to work but he refused to do so based on his unfounded fear of Gimenez. How can the Chitos
assign him any work when he refused to appear before them? Further, the alleged act of Gimenez berating him cannot be imputed as an act of illegal
dismissal on the part of the Chitos. Gimenez and Verdadero are both employees of the Chitos. Unlawful acts committed by a co-employee will not bring
the matter within the ambit of constructive dismissal. Gimenez may be of higher rank than Verdadero but his functions as a disciplinary officer do not
involve the power or authority to dismiss or even suspend an employee. Such power is exclusively lodged in the Barney Autolines management.
Without such illegal dismissal, there can be no strained relations to speak of, hence there can be no award of separation pay or backwages in favor of
Verdadero. In fact, the Chitos intimated that they are willing take back Verdadero as their employee without any demotion should he report for work.

129

Naranjo vs. Biomedica Health Care, Inc.

G.R. No. 193789, September 19, 2012
Facts:
Respondent Biomedica Health Care, Inc. (Biomedica) was, during the material period, engaged in the distribution of medical equipment. Petitioners
were former employees of Biomedica who November 7, 2006, with two (2) other employees, were all absent for various personal reasons. Notably,
these are the same employees who filed a letter to the National Director, National Capital Region-Department of Labor and Employment (DOLE)
against Biomedica for lack of salary increases, failure to remit Social Security System and Pag-IBIG contributions, and violation of the minimum wage
law, among other grievances. Later that day, petitioners reported for work after receiving text messages for them to proceed to Biomedica. They were,
however, refused entry and told to start looking for another workplace. The next day, petitioners allegedly came in for work but were not allowed to enter
the premises. Motol purportedly informed petitioners, using foul language, to just find other employment.
Biomedica issued a notice of preventive suspension and notices to explain within 24 hours to petitioners. In the Notices, Biomedica accused the
petitioners of having conducted an illegal strike and were accordingly directed to explain why they should not be held guilty of and dismissed for
violating the company policy against illegal strikes. Thereafter, Biomedica served Notices of Termination on petitioners.
Issue: WON there was a valid dismissal.
Ruling:
Petitioners were not afforded procedural due process.
It bears pointing out that in the dismissal of an employee, the law requires that due process be observed. Such due process requirement is two-fold,
procedural and substantive, that is, "the termination of employment must be based on a just or authorized cause of dismissal and the dismissal must be
effected after due notice and hearing." In the instant case, petitioners were not afforded both procedural and substantive due process.
Art. 277 (b) of the Labor Code contains the procedural due process requirements in the dismissal of an employee:
Art. 277.Miscellaneous Provisions. . . .
(b)Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized
cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought
to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment.
Thus, the Court elaborated in King of Kings Transport, Inc. v. Mamac that a mere general description of the charges against an employee by the
employer is insufficient to comply with the above provisions of the law:
. . . Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the
notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against
the employees.
Clearly, petitioners were charged with conducting an illegal strike, not a mass leave, without specifying the exact acts that the company considers as
constituting an illegal strike or violative of company policies. Such allegation falls short of the requirement in King of Kings Transport, Inc. of "a detailed
narration of the facts and circumstances that will serve as basis for the charge against the employees." A bare mention of an "illegal strike" will not
suffice.
Further, it failed to quote the provisions in the company rules in the notice so petitioners can be adequately informed of the nature of the charges
against them and intelligently file their explanation and defenses to said accusations. It is incumbent upon respondent company to show that petitioners
were duly informed of said company policies at the time of their employment and were given copies of these policies. No such proof was presented by
respondents. Worse, respondent Biomedica did not even quote or reproduce the company policies referred to in the notice while on trial. Moreover, the
period of 24 hours allotted to petitioners to answer the notice was severely insufficient and in violation of the implementing rules of the Labor Code.
In addition, Biomedica did not set the charges against petitioners for hearing or conference in accordance with Sec. 2, Book V, Rule XIII of the
Implementing Rules and Regulations of the Labor Code and in line with ruling in King of Kings Transport, Inc., where the Court explained:
(2)After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the
opportunity to: (1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their defenses; and (3) rebut the
evidence presented against them by the management.
While petitioners did not submit any written explanation to the charges, it is incumbent for Biomedica to set the matter for hearing or conference to hear
the defenses and receive evidence of the employees.
Lastly, Biomedica again deviated from the dictated contents of a written notice of termination as laid down in Sec. 2, Book V, Rule XIII of the
Implementing Rules that it should embody the facts and circumstances to support the grounds justifying the termination. As amplified in King of Kings
Transport, Inc.:
(3)After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that:
(1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the
severance of their employment.
Petitioners were denied substantive due process.

130

Serious misconduct, as a justifying ground for the dismissal of an employee, has been explained in Aliviado v. Procter & Gamble, Phils., Inc.:
Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, unlawful in character implying wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave
and aggravated character and not merely trivial and unimportant. To be a just cause for dismissal, such misconduct (a) must be serious; (b) must relate
to the performance of the employee's duties; and (c) must show that the employee has become unfit to continue working for the employer. AacCIT
Clearly, to justify the dismissal of an employee on the ground of serious misconduct, the employer must first establish that the employee is guilty of
improper conduct, that the employee violated an existing and valid company rule or regulation, or that the employee is guilty of a wrongdoing. In the
instant case, Biomedica failed to even establish that petitioners indeed violated company rules, failing to even present a copy of the rules and to prove
that petitioners were made aware of such regulations. In fact, from the records of the case, Biomedica has failed to prove that petitioners are guilty of a
wrongdoing that is punishable with termination from employment. In the instant case, Biomedica failed to overcome such burden. As will be shown,
petitioners' absence on November 7, 2006 cannot be considered a mass leave, much less a strike and, thus, cannot justify their dismissal from
employment.
But setting aside from the nonce the facts established above, the most pivotal argument against the dismissal of petitioners is that the penalty of
dismissal from employment cannot be imposed even if we assume that petitioners went on an illegal strike. It has not been shown that petitioners are
officers of the Union. The convergence of these facts coupled with the filing by petitioners of their complaint with the DOLE shows a relationship
governed by antipathy and antagonism as to justify the award of separation pay in lieu of reinstatement. Thus, in addition to backwages, owing to the
strained relations between the parties, separation pay in lieu of reinstatement would be proper. And in line with prevailing jurisprudence, petitioners are
entitled to nominal damages in the amount of PhP30,000 each for Biomedica's violation of procedural due process.
The New Philippine Skylanders, Inc. vs. Dakila
G.R. No. 199547, September 24, 2012
Facts:
Respondent Dakila was employed by petitioner corporation as early as 1987 and terminated for cause in April 1997 when the corporation was sold. In
May 1997, he was rehired as consultant by the petitioners under a Contract for Consultancy Services dated April 30, 1997.
Thereafter, in a letter dated April 19, 2007, respondent Dakila informed petitioners of his compulsory retirement effective May 2, 2007 and sought for the
payment of his retirement benefits pursuant to the Collective Bargaining Agreement. His request, however, was not acted upon. Instead, he was
terminated from service effective May 1, 2007.
Consequently, respondent Dakila filed a complaint for constructive illegal dismissal, non-payment of retirement benefits, under/non-payment of wages
and other benefits of a regular employee, and damages against petitioners.
On the other hand, petitioners, in their position paper, 8 asserted that respondent Dakila was a consultant and not their regular employee. The latter
was not included in petitioners' payroll and paid a fixed amount under the consultancy contract. He was not required to observe regular working hours
and was free to adopt means and methods to accomplish his task except as to the results of the work required of him. Hence, no employer-employee
relationship existed between them.
The Labor Arbiter declared respondent Dakila to be a regular employee on the basis of the unrebutted documentary evidence showing that he was
under the petitioners' direct control and supervision and performed tasks that were either incidental or usually desirable and necessary in the trade or
business of petitioner corporation for a period of ten years.
Issue: WON there was a valid dismissal.
Ruling:
The issue of illegal dismissal is premised on the existence of an employer-employee relationship between the parties herein.Records reveal that both
the LA and the NLRC, as affirmed by the CA, have found substantial evidence to show that respondent Dakila was a regular employee who was
dismissed without cause.
Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages computed from the time he was illegally dismissed. However, considering that respondent Dakila was
terminated on May 1, 2007, or one (1) day prior to his compulsory retirement on May 2, 2007, his reinstatement is no longer feasible. Accordingly, the
NLRC correctly held him entitled to the payment of his retirement benefits pursuant to the CBA. On the other hand, his backwages should be computed
only for days prior to his compulsory retirement which in this case is only a day.
Morales Vs. Metropolitan Bank and Trust Company
G.R. No. 182475, November 21, 2012
Facts:
Petitioner Lenn Morales was hired by Solidbank as Teller for its Rizal Avenue Branch in Tacloban City. With said bank's merger with respondent
Metropolitan Bank & Trust Company (Metrobank) the latter, as surviving entity, absorbed Morales and assigned him to its Customer Service Relations-

131

Reserve Pool (CSR-RP) which was composed of employees who, with no permanent places of assignment, acted as relievers whenever temporary
vacancies arise in other branches. Morales was subsequently promoted to the position of Customer Service Representative. It was while occupying the
latter position that Morales was informed by Federico Mariano, the Senior Manager of Metrobank's Tacloban City Main Branch, that he was covered by
the bank's Special Separation Program (SSP) and that, in accordance therewith, his employment was going to be terminated on the ground of
redundancy. 5
Assured that his termination was through no fault of his own but mainly due to business exigencies and developments in the banking industry, Morales
was notified that he shall be paid the following: (a) a redundancy premium/separation pay, on top of his entitlements under the bank's retirement plan;
(b) proportionate 13th month pay; (c) cash conversion of his outstanding vacation and sick leave credits; and, if applicable, (d) the return of his
Provident Fund contributions; and, (e) cash surrender value of his Insurance.
Morales filed against Metrobank a complaint for illegal dismissal, separation pay, backwages, moral and exemplary damages as well as attorney's fees.
In its position paper, Metrobank averred that it had adopted the SSP since 1995 as a way of addressing worsening economic conditions and stiff
competition with strategies designed to make its operations efficient but cost-effective. Morales was duly informed of the management's decision more
than one month ahead of his actual severance from service, Metrobank claimed to have served the Department of Labor and Employment (DOLE) the
required Establishment Termination Report on 29 August 2003.
Issue: WON Morales was validly dismissed on the ground of reduncy.
Ruling:
One of the authorized causes for the dismissal of an employee, redundancy exists when the service capability of the workforce is in excess of what is
reasonably needed to meet the demands of the business enterprise. 21 A position is redundant when it is superfluous, and superfluity of a position or
positions could be the result of a number of factors, such as the overhiring of workers, a decrease in the volume of business or the dropping of a
particular line or service previously manufactured or undertaken by the enterprise. 22 Time and again, it has been ruled that an employer has no legal
obligation to keep more employees than are necessary for the operation of its business. 23 For the implementation of a redundancy program to be
valid, however, the employer must comply with the following requisites: (1) written notice served on both the employees and the DOLE at least one
month prior to the intended date of termination of employment; (2) payment of separation pay equivalent to at least one month pay for every year of
service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished. 24
Our perusal of the record shows that Metrobank has more than amply proven compliance with the above-enumerated requisites for the validity of his
termination from service on the ground of redundancy. Under the SSP which Metrobank adopted in 1995, employees who voluntarily gave up their
employment were paid the amount of separation pay they were entitled under the law and a premium equivalent to 50%-75% of their salaries. It
appears that employees "whose work evaluation showed consistent poor performance and/or those who had not been promoted for five years" were
also considered primary candidates for optional separation from service. 25 In order to meet the challenges of the business and to make its operations
efficient and cost effective, however, it was shown that Metrobank further conducted a bank-wide operational review and study.
In implementing a redundancy program, it has been ruled that the employer is required to adopt a fair and reasonable criteria, taking into consideration
such factors as (a) preferred status; (b) efficiency; and (c) seniority, 27 among others. Consistent with this principle, Metrobank established that, as a
direct result of the adoption of the HRP, it was determined that the volume of transactions in Visayas Region III required the further reduction of its eightman reserve pool by two employees. 28As these employees had no permanent place of assignment and merely acted as relievers whenever temporary
vacancies arise in other branches, they were the most logical candidates for inclusion in the SSP. Already lacking preferred status in Metrobank's
hierarchy of positions, Morales was included in the SSP because of his poor work performance which reportedly caused complaints from the branches
where he was temporarily assigned as reliever.
Given Morales' previous record of not reporting for work for one whole week without prior leave of absence while assigned as reliever in its Borongan,
Samar Branch,33 we find that Metrobank cannot be faulted for including him in the list of employees covered by the SSP. The rule is settled that "the
determination that the employee's services are no longer necessary or sustainable and, therefore, properly terminable for being redundant is an
exercise of business judgment of the employer." 34 "While it is true that management may not, under the guise of invoking its prerogative, ease out
employees and defeat their constitutional right to security of tenure," 35 the wisdom and soundness of such characterization or decision is not subject to
discretionary review unless a violation of law or arbitrary or malicious action is shown.
Kakampi & Its Members Panuelos et al. vs. Kingspoint Express And Logistics
G.R. No. 194813, April 25, 201
Facts:
Victor Pauelos (Pauelos), Bobby Dacara (Dacara), Alson Dizon (Dizon), Saldy Dimabayao (Dimabayao), Fernando Lupangco, Jr. (Lupangco), Sandy
Pazi (Pazi), Camilo Tabarangao, Jr. (Tabarangao), Eduardo Hizole (Hizole) and Reginald Carillo (Carillo) were the former drivers of Kingspoint Express
and Logistic (Kingspoint Express), a sole proprietorship registered in the name of Mary Ann Co (Co) and engaged in the business of transport of goods.
On January 16, 2006, Kingspoint Express issued separate notices to individual petitioners uniformly stating that they have been charged with
dishonesty, serious misconduct, loss of confidence, and acts inimical to the company, by filing with the NLRC false, malicious, and fabricated cases
against the company. In addition, Kingspoint stated that the petitioners refusal to undergo drug testing is unwarranted and against company policy. The
petitioners were given 48 hrs (2 days) to submit their answers and explanation to the charges.
The individual petitioners failed to submit their written explanation within the stated period. Subsequently, Kingspoint Express issued to them separate
yet uniformly worded notices informing them of their dismissal. The charges were allegedly based on these acts:

132

FABRICATION OF BASELESS MONEY CLAIMS against the company;

MISLEADING FELLOW CO-WORKERS to sign the MALICIOUS COMPLAINT FOR MONEY CLAIMS against the company;
REFUSAL TO UNDERGO THE COMPANYS GENERAL DRUG TEST
EXTORTING MONEY FROM CO-WORKERS TO FUND ACTIVITIES THAT THEY WERE NEVER FULLY INFORMED OF.

A complaint for illegal dismissal was subsequently filed by petitioners, alleging that the charges against them were fabricated and that their dismissal
was prompted by Kingspoint Express aversion to their union activities.
The Labor Arbiter found Dacara, Lupangco, Pazi, Tabarangao, Hizole and Carillo illegally dismissed. On the other hand, the complaint was dismissed
insofar as Panuelos, Dizon and Dimabayao are concerned as they were deemed not to have filed their position papers. While the allegation of antiunionism as the primordial motivation for the dismissal is considered unfounded, the respondents failed to prove that the dismissal was for a just cause.
On appeal, the NLRC affirmed the Labor Arbiters Decision. In addition, the NLRC ruled that the respondents failed to comply with the procedural
requirements of due process considering that the uniformly worded first notice sent by Kingspoint to the petitioners, did not apprise them of the
particular acts or omission for which their dismissal were sought. Respondents moved for reconsideration and the NLRC reversed itself and declared
the individual petitioners legally dismissed.
Subsequently, the petitioners filed a petition for certiorari with the CA. The CA reversed and set aside the NLRC Decision. Respondents promptly filed a
motion for reconsideration. Similar to the NLRC, the CA reversed itself and retracted its earlier finding that the individual petitioners were illegally
dismissed. The CA concluded that the 2 notices issued by Kingspoint Express complied with the requirements of the law.
Issue: Whether or not the individual petitioners dismissal is valid.
Ruling:
Yes, the petitioners were legally dismissed.
It is fundamental that in order to validly dismiss an employee, the employer is required to observe both substantive and procedural due process the
termination of employment must be based on a just or authorized cause and the dismissal must be effected after due notice and hearing. The Court
agreed with the CA that the petitioners refusal to submit themselves to drug test is a just cause for their dismissal. An employer may terminate an
employment on the ground of serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work. Willful disobedience requires the concurrence of two elements: (1) the employee's assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee,
and must pertain to the duties which he had been engaged to discharge. Both elements are present in this case.
At no point did the dismissed employees deny Kingspoint Express claim that they refused to comply with the directive for them to submit to a drug test
or, at the very least, explain their refusal. Thus, this gives rise to the impression that their non-compliance is deliberate. The utter lack of reason or
justification for their insubordination indicates that it was prompted by mere obstinacy, hence, willful and warranting of dismissal. Drivers are
indispensable to Kingspoint Express primary business of rendering door-to-door delivery services. It is common knowledge that the use of dangerous
drugs has adverse effects on driving abilities that may render the dismissed employees incapable of performing their duties to Kingspoint Express and
acting against its interests, in addition to the threat they pose to the public.
Nonetheless, while Kingspoint Express had reason to sever their employment relations, the Court found its supposed observance of the requirements
of procedural due process pretentious. While Kingspoint Express required the dismissed employees to explain their refusal to submit to a drug test, the
2 days afforded to them to do so cannot qualify as reasonable opportunity, which the Court construed in King of Kings Transport, Inc. v. Mamac as a
period of at least 5 calendar days from receipt of the notice. Thus, even if Kingspoint Express defective attempt to comply with procedural due process
does not negate the existence of a just cause for their dismissal, it was held that Kingspoint Express is still liable to indemnify the dismissed employees.
Sampaguita Auto Transport Corp. vs. NLRC
G.r. No. 197384, January 30, 2013
Facts:
On May 14, 2006, Sagad was hired by the company hired him as a regular bus driver until his dismissal on November 5, 2006 for allegedly conniving
with conductor Vitola in issuing tickets outside their assigned route
However, the company claimed that it employed Sagad as a probationary bus driver (evidenced by a probationary employment contract) from May 14,
2006 to October 14, 2006; he was duly informed of his corresponding duties and responsibilities. He was further informed that during the probationary
period, his attendance, performance and work attitude shall be evaluated to determine whether he would qualify for regular employment. For this
purpose and as a matter of company policy, an evaluator was deployed on a company bus (in the guise of a passenger) to observe the driver's work
performance and attitude.
On September 21, 2006, an evaluator boarded Sagad's bus. The evaluator described Sagad's manner of driving as "reckless driver, nakikipaggitgitan,
nakikipaghabulan, nagsasakay sa gitna ng kalsada, sumusubsob ang pasahero[.]" Sagad disputed the evaluator's observations. In an explanation, he
claimed that he could not have been driving as reported because his wife (who was pregnant) and one of his children were with him on the bus. He
admitted though that at one time, he chased an "Everlasting" bus to serve warning on its driver not to block his bus when he was overtaking. He also
admitted that once in a while, he sped up to make up for lost time in making trips.
The company further alleged that on October 13, 2006, it conducted a thorough evaluation of Sagad's performance. It requested conductors who had
worked with Sagad to comment on his work. Conductors A. Hemoroz and Israel Lucero revealed that Sagad proposed that they cheat on the company
by way of an unreported early bus trip. Dispatcher E. Castillo likewise submitted a negative report and even recommended the termination of Sagad's

133

employment. The company also cited Sagad's involvement in a hit-and-run accident on September 9, 2006 along Commonwealth Avenue in Quezon
City while on a trip (bus with Plate No. NYK-216 and Body No. 3094). Allegedly, Sagad did not report the accident to the company.
On October 15, 2006, upon conclusion of the evaluation, the company terminated Sagad's employment for his failure to qualify as a regular employee.
Issues:
I.
II.
III.

WON the employee was dismissed as a regular employee, and not as a probationary.
WON the employee was dismissed for just cause.
WON the employer failed to observe procedural due process. Hence, the employee is entitled to nominal damages.

Ruling:
I. The employee was dismissed as a regular employee, and not as a probationary.
The employer was not able to clearly establish that the employee was a probationary. The employee denied having signed any probationary contract.
Moreover, the employer had retained the employee beyond the supposed probationary period of employment. The payslips presented by the employee
evidences such extension.
In labor law, it is an elementary rule that "an employee who is allowed to work after a probationary period shall be considered a regular employee."
II. The employee was dismissed for just cause.
The employee was evidently dismissed for just cause.
First, it was established that the employer called the employee's attention to his "negative actuations as a bus driver". These were reported by a
company evaluator who boarded the employee's bus. The evaluator reported that the employee was "driving recklessly, racing and jostling for position
on the road, thereby jarring the passengers on their seats, and picking up passengers on the middle of the road."
By way of reply, the employee claimed that he could not have been driving recklessly as his wife and one of his children were with him on the bus at the
time of evaluation. However, he admitted to two things: (a) that, on one occasion, he chased on "Everlasting" bus in order "to warn the driver not to
block him", and (b) that, once in a while, "he sped up to compensate for lost time in his trips".
"Sagad's explanation reveals more than what is stated. During his brief employment with the company, he exhibited the tendency to speed up when he
finds the need for it, very obviously in violation of traffic rules, regulations and company policy. Instead of negating the evaluator's observations, his
admissions make them credible."
Second, the two conductors who had worked with the employee commented that the employee "proposed to them that they cheat on the company by
making early trips (but not to be reported) bus trips". The two conductors had no ax to grind against the employee. Furthermore, the evaluator's
evaluation report rated the employee's work performance as poor on account of: "(1) the low revenue of Sagad's bus; (2) his inability to make all his
scheduled trips; and (3) his habit of bringing his wife with him on trips". He likewise heard of talks of the employee's orders to the conductors "to earn
money in a questionable way".
As the two conductors have no ax to grind with the employee, their testimony is credible. In addition, their testimony validates the evaluator's
observation that he heard talks of the employee's orders to the conductors "for them to cheat on the company".
"x x x The scheme, contrary to Sagad's explanation, can only be committed with the corporation, or even at the behest of the driver, as the proposed
scheme is for the bus to make unscheduled, but unreported, early trips.
Third, the employee's involvement in a hit-and-run incident while driving his assigned bus was clearly established. The following were the substantial
evidence presented: (1) the Traffic Accident Investigation Report; (2) Sworn Statement of the driver of the Elf truck, which was hit; (3) Sworn Statement
of the driver of the White Honda City (owned by Purefoods Hormel Co.), the first party to the vehicular accident; and, (4) Demand Letter by the
insurance company demanding reimbursement it paid to Purefoods.
In view of the above-mentioned grounds, the "irregularities or infractions committed by Sagad in connection with his work as a bus driver constitutes a
serious misconduct under Article 282 of the Labor Code.
"The irregularities or infractions committed by Sagad in connection with his work as a bus driver constitutes serious misconduct or, at the very least,
conduct analogous to serious misconduct, under the above-cited Article 282 of the Labor Code. To be sure his tendency to speed up during his trips, his
reckless driving, his picking up passengers in the middle of the road, his racing with other buses and his jostling for vantage positions do not speak well
of him as a bus driver. While he denies being informed when he was hired, of the duties and responsibilities of a driver contained in a document
submitted in evidence by the company - the requirement "3. to obey traffic rules and regulations as well as the company policies. 4. to ensure the safety
of the riding public as well as the other vehicles and motorist (sic)" is so fundamental and so universal that any bus driver is expected to satisfy the
requirement whether or not he has been so informed." (Citations omitted.)
While the employee tried to minimize the adverse effect of the evaluator's report by claiming that he had already been penalized by a 5-day suspension,
the same is of no moment. "He was penalized for one reckless driving incident, but it does not erase all other infractions he committed."
III. The employer failed to observe procedural due process. Hence, the employee is entitled to nominal damages.

134

While the employee was dismissed based on a just cause, the employer failed to comply with the two-notice rule.That is to say, the employer failed to
serve: (1) the initial notice - stating the particular acts on which the employee is being dismissed on 05 November 2006, and (2) the termination notice.
Following Agabon v. NLRC, the violation of the employee's right to procedural due process entitles him to nominal damages in the amount of
Php30,000.00.
Philippine Holdings Inc. vs. Episcope
G.R. No. 192826, February 27, 2013
Facts:
Petitioner Philippine Plaza Holdings, Inc. (PPHI) is the owner and operator of the Westin Philippine Plaza Hotel (Hotel). Respondent Ma. Flora M.
Episcope (Episcope) was employed by PPHI since July 24, 1984 until she was terminated on November 4, 2004 for dishonesty, willful disobedience and
serious misconduct amounting to loss of trust and confidence.
In order to check the performance of the employees and the services in the different outlets of the Hotel, PPHI regularly employed the services of
independent auditors and/or professional shoppers. For this purpose, Sycip, Gorres and Velayo auditors dined at the Hotel's Caf Plaza on August 28,
2004. After dining, the auditors were billed the total amount of P2,306.65, representing the cost of the food and drinks they had ordered under Check
No. 565938. 4 Based on the audit report 5 submitted to PPHI, Episcope was one of those who attended to the auditors and was the one who handed
the check and received the payment of P2,400.00. She thereafter returned Check No. 565938, which was stamp marked "paid," together with the
change.
Upon verification of the foregoing check receipt with the sales report of Caf Plaza, it was discovered that the Hotel's copy of the receipt bore a discount
of P906.45 6 on account of the use of a Starwood Privilege Discount Card registered in the name of Peter A. Pamintuan, while the receipt issued by
Episcope to the auditors reflected the undiscounted amount of P2,306.65 considering that none of the auditors had such discount card. In view of the
foregoing, the amount actually remitted to the Hotel was only P1,400.20 thus, leaving a shortage of P906.45.
On September 30, 2004, the Hotel issued a Show-Cause Memo 7 directing Episcope to explain in writing why no disciplinary action should be taken
against her for the questionable and invalid discount application on the settlement check issued to the auditors on August 28, 2004.
Finding Episcope to have failed to sufficiently explain the questionable discount application on the settlement bill of the auditors, her employment was
terminated for committing acts of dishonesty, which was classified as a Class D offense under the Hotel's Code of Discipline, as well as for willful
disobedience, serious misconduct and loss of trust and confidence. 12
Aggrieved, Episcope filed a complaint 13 for illegal dismissal with prayer for payment of damages and attorney's fees against PPHI before the NLRC
docketed as NLRC-NCR Case No. 00-12-13621-04.
Issue: WON there was illegal dismissal.
Ruling:
Article 293 (formerly Article 279) of the Labor Code 25 provides that the employer shall not terminate the services of an employee except only for a just
or authorized cause. If an employer terminates the employment without a just or authorized cause, then the employee is considered to have been
illegally dismissed and is thus, entitled to reinstatement or in certain instances, separation pay in lieu thereof, as well as the payment of backwages.
Among the just causes for termination is the employer's loss of trust and confidence in its employee. Article 296 (c) (formerly Article 282 [c]) of the Labor
Code provides that an employer may terminate the services of an employee for fraud or willful breach of the trust reposed in him. But in order for the
said cause to be properly invoked, certain requirements must be complied with namely, (1) the employee concerned must be holding a position of trust
and confidence and (2) there must be an act that would justify the loss of trust and confidence.
It is noteworthy to mention that there are two classes of positions of trust: on the one hand, there are managerial employees whose primary duty
consists of the management of the establishment in which they are employed or of a department or a subdivision thereof, and to other officers or
members of the managerial staff; on the other hand, there are fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or
those who, in the normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rank-and-file,
are routinely charged with the care and custody of the employer's money or property, and are thus classified as occupying positions of trust and
confidence. 27 Episcope belongs to this latter class and therefore, occupies a position of trust and confidence.
As may be readily gleaned from the records, Episcope was employed by PPHI as a service attendant in its Caf Plaza. In this regard, she was tasked
to attend to dining guests, handle their bills and receive their payments for transmittal to the cashier. It is also apparent that whenever discount cards
are presented, she maintained the responsibility to take them to the cashier for the application of discounts. Being therefore involved in the handling of
company funds, Episcope is undeniably considered an employee occupying a position of trust and confidence and as such, was expected to act with
utmost honesty and fidelity.
Anent the second requisite, records likewise reveal that Episcope committed an act which justified her employer's (PPHI's) loss of trust and confidence
in her.
Primarily, it is apt to point out that proof beyond reasonable doubt is not required in dismissing an employee on the ground of loss of trust and
confidence; it is sufficient that there lies some basis to believe that the employee concerned is responsible for the misconduct and that the nature of the
employee's participation therein rendered him absolutely unworthy of trust and confidence demanded by his position.

135

Perforce, having substantially established the actual breach of duty committed by Episcope and the due observance of due process, no grave abuse of
discretion can be imputed against the NLRC in sustaining the finding of the LA that her dismissal was proper under the circumstances.
Finally, with respect to Episcope's other monetary claims, namely, service incentive leave credits and 13th month pay, the Court finds no error on the
part of the LA when it denied the foregoing claims considering that Episcope failed to proffer any legitimate basis to substantiate her entitlement to the
same.
The Orchard Golf And Country Club vs. Francisco
G.R. No. 178125, March 13, 2013

Facts:
On March 17, 1997, respondent was employed as Club Accountant, to head the Club's General Accounting Division and the four divisions under it.
On May 18, 2000, Famy directed Francisco to draft a letter to SGV & Co. (SGV), the Club's external auditor, inquiring about the accounting treatment
that should be accorded property that will be sold or donated to the Club. Francisco failed to prepare the letter, even after Famy's repeated verbal and
written reminders, the last of which was made on June 22, 2000.
Francisco went to the Club's General Manager, Tomas B. Clemente III (Clemente), and personally explained to the latter that due to the alleged heavy
volume of work that needed her attention, she was unable to draft the letter. Because Francisco did not submit the required written explanation, Famy
issued a June 29, 2000 memorandum suspending Francisco without pay for a period of 15 days.
On July 3, 2000 Francisco wrote to the Club's General and Administrative Manager, Ma. Irma Corazon A. Nuevo (Nuevo), questioning Famy's act of
charging, investigating, and suspending her without coursing the same through the Club's Personnel Department. Nuevo exonerated Famy and justified
Famys actions as falling within his power and authority as department head.
On July 20, 2000, or a day after Francisco's period of suspension expired, Famy issued separate memoranda to Francisco and Clemente informing
them of Francisco's transfer, without diminution in salary and benefits, to the Club's Cost Accounting Section.
Issue: WON the transfer of respondent form the position of club accountant to cost accountant was tantamount to a demotion
Ruling:
Yes, there was constructive dismissal when Francisco was transferred to the cost accounting section as there was not valid basis that it amounted to a
demotion in rank
When Francisco was placed on forced leave and transferred to the Cost Accounting Section, not once was Francisco given the opportunity to contest
these company actions taken against her. It has also not escaped our attention that just when one penalty has been served by Francisco, another
would instantaneously take its place. And all these happened even while the supposed case against her, the alleged charge of "betrayal of company
trust", was still pending and remained unresolved.
As for her October 12, 2000 permanent transfer, the same is null and void for lack of just cause. Also, the transfer is a penalty imposed on a charge that
has not yet been resolved. Definitely, to punish one for an offense that has not been proved is truly unfair; this is deprivation without due process.
Finally, the Court sees no necessity for Francisco's transfer; on the contrary, such transfer is outweighed by the need to secure her office and
documents from Famy's possible intervention on account of the complaint she filed against him.
Torres vs. Rural Bank of San Juan Inc. et al.
G.R. No. 184520, March 13, 2013
Facts:
PETITIONER Rolando Torres was temporarily assigned as the manager of the N. Domingo branch of respondent Rural Bank of San Juan Inc. (RBSJI),
in view of the resignation of Jacinto Figuroa.
Three days after his assignment, Figuroa requested and the petitioner signed a standard employment clearance pertaining to the formers
accountabilities with RBSJI.
Petitioner was dismissed from the service by RBSJI on the ground of loss of trust and confidence, for issuing without authority and audit a clearance to
Figuroa, who turned out to be still liable for unpaid cash advances and for an P11-million fraudulent transaction that exposed the bank to a lawsuit.
Issue: WON the dismissal was justified.
Ruling:
No.
As correctly argued by the petitioner, the onus of submitting a copy of the clearance allegedly exonerating Figuroa from all his accountabilities fell on
the respondents. It was the single and absolute evidence of the petitioners act that purportedly kindled the respondents loss of trust.
Without it, the respondents allegation of loss of trust and confidence has no leg to stand on and must thus be rejected. Moreover, one can reasonably
expect that a copy of the clearance, an essential personnel document, is with the respondents. Their failure to present it and the lack of explanation for
such failure or the documents unavailability props up the presumption that its contents are unfavorable to the respondents assertions.

136

At any rate, the absence of the clearance upon which the contradicting claims of the parties could ideally be resolved should work against the
respondents. With only sworn pleadings as proof of their opposite claims on the true contents of the clearance, the Court is bound to apply the principle
that the scales of justice should be tilted in favor of labor in case of doubt in the evidence presented.
The Orchard Golf & Country Club vs. Francisco
G.R. No. 178125, March 15, 2013
Facts:
On March 17, 1997, respondent was employed as Club Accountant, to head the Club's General Accounting Division and the four divisions under it.
On May 18, 2000, Famy directed Francisco to draft a letter to SGV & Co. (SGV), the Club's external auditor, inquiring about the accounting treatment
that should be accorded property that will be sold or donated to the Club. Francisco failed to prepare the letter, even after Famy's repeated verbal and
written reminders, the last of which was made on June 22, 2000.
Francisco went to the Club's General Manager, Tomas B. Clemente III (Clemente), and personally explained to the latter that due to the alleged heavy
volume of work that needed her attention, she was unable to draft the letter. Because Francisco did not submit the required written explanation, Famy
issued a June 29, 2000 memorandum suspending Francisco without pay for a period of 15 days.
On July 3, 2000 Francisco wrote to the Club's General and Administrative Manager, Ma. Irma Corazon A. Nuevo (Nuevo), questioning Famy's act of
charging, investigating, and suspending her without coursing the same through the Club's Personnel Department. Nuevo exonerated Famy and justified
Famys actions as falling within his power and authority as department head.
On July 20, 2000, or a day after Francisco's period of suspension expired, Famy issued separate memoranda to Francisco and Clemente informing
them of Francisco's transfer, without diminution in salary and benefits, to the Club's Cost Accounting Section.
Issue: WON the transfer of respondent form the position of club accountant to cost accountant was tantamount to a demotion
Ruling:
Yes, there was constructive dismissal when Francisco was transferred to the cost accounting section as there was not valid basis that it amounted to a
demotion in rank
When Francisco was placed on forced leave and transferred to the Cost Accounting Section, not once was Francisco given the opportunity to contest
these company actions taken against her. It has also not escaped our attention that just when one penalty has been served by Francisco, another
would instantaneously take its place. And all these happened even while the supposed case against her, the alleged charge of "betrayal of company
trust", was still pending and remained unresolved.
As for her October 12, 2000 permanent transfer, the same is null and void for lack of just cause. Also, the transfer is a penalty imposed on a charge that
has not yet been resolved. Definitely, to punish one for an offense that has not been proved is truly unfair; this is deprivation without due process.
Finally, the Court sees no necessity for Francisco's transfer; on the contrary, such transfer is outweighed by the need to secure her office and
documents from Famy's possible intervention on account of the complaint she filed against him.
Banares vs. Tabaco Womens Transport Service Cooperative
G.R. No. 197353, April 1, 2013
Facts:
PETITIONER Alexander B. Baares worked for some time as general manager of respondent Tabaco Womens Transport Service Cooperative
(TAWTRASCO). He filed a complaint for illegal dismissal and payment of monetary claims against TAWTRASCO. Among others, the Labor Arbiter
ordered TAWTRASCO to immediately reinstate petitioner to his former position.
In compliance with the decision, TAWTRASCO directed the petitioner to report at the companys Virac, Catanduanes terminal. Petitioner asked for a
lodging allowance, which he used to enjoy in his previous assignment but was told to just stay at the Virac office.
He, however, found the Virac office very dilapidated and empty of an office table, chairs, filing cabinet and other office supplies. He asked for expenses
for renovation, which respondents turned deaf ears to. Hence, he stopped reporting to work and filed a complaint for non-payment of salaries.
Issue: WON the complaint will prosper.
Ruling:
Yes.
Under Article 223 of the Labor Code, an employee entitled to reinstatement shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation x x x. An illegally dismissed employee is entitled to reinstatement without loss of seniority rights and to
other established employment privileges, and to his full back wages. The boarding house privilege, being an established perk accorded to petitioner,
ought to have been granted him if a real and authentic reinstatement to his former position as general manager is to be posited.

137

It cannot be stressed enough that TAWTRASCO withheld petitioners salaries for and after his purported refusal to report for work at the Virac terminal.
The reality, however, is that TAWTRASCO directed petitioner to work under terms and conditions prejudicial to him, the most hurtful cut being that he
was required to work without a decent office, partly performing a checkers job. This embarrassing work arrangement is what doubtless triggered the
refusal to work, which under the premises appears justified.
Generally, employees have a demandable right over benefits voluntarily granted to them by their employers. And if the grant or benefit is founded on an
express policy or has, for a considerable period, been given regularly and deliberately, then the grant ripens into a vested right that the employer cannot
unilaterally diminish, discontinue or eliminate. So it must be here with respect, at the minimum, to the lodging accommodation which TAWTRASCO, as
found by the National Labor Relations Commission, appears to have regularly extended for free for some time to petitioner.
Reyes, et al., vs. RP Guardians security Agency Inc.
G.R. No. 193756, April 10, 2013
Facts:
PETITIONERS were hired by the respondent, RP Guardians Security Agency, Inc., as security guards. Their last assignments were in the different
branches of Banco Filipino Savings and Mortgage Bank. In September 2006, the respondents security contract with Banco Filipino was terminated.
Petitioners were individually informed of the termination.
In a complaint for constructive dismissal, the labor arbiter (LA), the National Labor Relations Commission (NLRC) and the Court of Appeals (CA) found
that petitioners were constructively dismissed.
The CA, however, reduced the computation of the LA and NLRC of the separation pay from one month to one-half month per year of service.
Issue: WON the CA err in determining the separation pay.
Ruling:
Yes.
There is no doubt that petitioners were constructively dismissed. The LA, the NLRC and the CA were one in their conclusion that respondent was guilty
of illegal dismissal when it placed petitioners on floating status beyond the reasonable six-month period after the termination of their service contract
with Banco de Oro.
Temporary displacement or temporary off-detail of security guard is, generally, allowed in a situation where a security agencys client decided not to
renew their service contract with the agency and no post is available for the relieved security guard. Such situation does not normally result in a
constructive dismissal.
Nonetheless, when the floating status lasts for more than six (6) months, the employee may be considered to have been constructively dismissed.
xxx
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of back wages
computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one month salary for every year of service should be awarded as an alternative. The payment of separation pay is in
addition to payment of back wages.
xxx
In this case, respondent would have been liable for reinstatement and payment of back wages. Reinstatement, however, was no longer feasible
because, as found by the LA, respondent had already ceased operation of its business. Thus, back wages and separation pay, in the amount of one
month
for
every
year
of
service,
should
be
paid
in
lieu
of
reinstatement.
Celdran vs. Forza Integrated Services et al.
G.R. No. 189460, June 5, 2013, Res.
Facts:
Petitioner Leo Mario C. Celdran was hired by private respondent City Service as Vice-President for the Visayas Regional Office in Cebu City. Private
respondents City Service Corporation and Peerless Integrated Services, Incorporated are affiliate companies of respondent FORZA Integrated
Corporation. According to petitioner, his compensation package included a car plan wherein they would assume the remaining balance of his car plan,
with 50% by the company and the other 50% by Celdran himself; but, to private respondents, it was a car lease arrangement. Celdran consistently
refused to sign the said lease contract as it was contrary to what he allegedly agreed with private respondent Valentin B. Prieto, Jr. during his
employment interview way back in May 2005.
On November 10, 2005, Celdran was accused of dishonesty, for charging a personal lunch to the company, and was demanded to resign by the Chief
Operating Officer Santiago. Celdran received a termination notice signed by private respondent Santiago which led the former to file a complaint for
illegal dismissal on November 22, 2005, before the Regional Arbitration Branch of the National Labor Relations Commission. However, the said case
was settled as he was reinstated to his position on December 27, 2005.
However, upon his return, Celdran was told to occupy the last open cubicle at the ground floor ands given a new copy of the motor vehicle lease
contract for his signature which he refused to sign. He was relieved as Mancom Chairman for no reason at all. He was subjected to check and
inspection by the security guard and his transportation and cellular phone allowances were subjected to new guidelines. Private respondent City

138

Service Corporation gave Celdran the option to buy the Honda CRV at its residual value until February 9, 2006, otherwise, the former would recover the
vehicle from the latter.
On February 14, 2006, Celdran filed a complaint with the Regional Arbitration Branch of the NLRC charging private respondents with violation of the
terms of the car plan. On March 2, 2006, Celdran was placed under preventive suspension for 30 days due to his belligerent attitude and required to
explain why he should not be terminated. He was not asked to return to work after his suspension for which reason he amended his complaint on April
11, 2006, to include charges of illegal suspension, constructive dismissal and unpaid money claims.
In a letter dated April 11, 2006, private respondent City Service Corporation informed all its employees, including Celdran, that by virtue of a board
resolution dated March 17, 2006, the company decided to replace the Visayas Regional Office with a small Liaison Office. Consequently, Celdran made
a second amendment of his complaint on April 18, 2006 to include charges of illegal lay-off/downsizing.
Issues:
1. Whether or not there was constructive dismissal.
2. Whether or not the petitioner was illegally dismissed.
3. Whether or not individual respondents may not be held solidarily liable with respondent corporations.
Ruling:
There was no constructive dismissal in the case at bar.
According to petitioner, he had been experiencing a kind of treatment that rendered "employment impossible and unreasonable" as early as in the last
quarter of 2005. However, he never resigned. In fact, when he filed a complaint in March 2006 regarding his car plan benefit, he did not make any
allegation concerning his inability to continue working for respondents due to an alleged ill working environment. We thus find that he was still willing
and able to continue his employment despite any alleged ill treatment. For there to be constructive dismissal, the employer must be shown to have
committed an act of clear discrimination, insensibility, or disdain, which had become so unbearable on the part of the employee that it foreclosed any
choice other than for the latter to forego continued employment.
Petitioner was not illegally dismissed when respondent company implemented a downsizing program for their Visayas regional office.
Pursuant to Article 283 of the Labor Code, an employer may reduce the number of its employees based on economic grounds in order to protect and
preserve the employer's viability and ensure its survival. Consequently, employers are given the management prerogative to implement a retrenchment
program for the purpose of preventing losses or cessation of business operations due to business recession, industrial depression, seasonal
fluctuations, lack of work, or considerable reduction in the volume of their business.
Respondents were able to prove that their retrenchment program was justified and not implemented in bad faith. As found by the ELA and the NLRC,
respondents had been experiencing a downtrend in their Visayas operations since three years before they decided to downsize. In fact, City Service
was suffering from continuous defeats in numerous biddings it had participated in. Furthermore, they showed that they had complied with the
requirement of written notice to the employees and to the DOLE at least one month prior to the intended date of downsizing or retrenchment.
Individual respondents may not be held personally liable.
As a general rule, corporate directors, trustees, or officers are not personally liable for their official acts, unless they have exceeded the scope of their
authority. Indeed, personal liability may attach when directors, trustees, or officers assent to a patently unlawful act of the corporation, or when they act
in bad faith, resulting in damages to the corporation, its stockholders, or other persons. However, there was no substantial evidence on record proving
bad faith in the termination of petitioner's employment due to retrenchment.
Surigao Del Norte Electric Cooperative Inc. vs. Gonzaga
G.R. No. 187722, June 10, 2013
Facts:
Respondent Gonzaga was a lineman of the petitioner Surigao Del Norte Electric Cooperative, Inc. (SURNECO). However, on February 15, 2000, he
was assigned as Temporary Teller at SURNECO's sub-office in Gigaquit, Surigao Del Norte. On June 26, 2001, petitioner Danny Escalante, General
Manager of SURNECO, issued Memorandum 34-01, with Collection Report and two (2)sets of summaries of collections and remittances, seeking an
explanation from Gonzaga regarding his remittance shortages in the total amount of P314,252.23, covering the period from February 2000 to May
2001. Gonzaga denied any unremitted amount on his part and states that the report cannot accurately establish any remittance shortage on his part
since it was not supported by any bills or official receipts. SURNECO formed an Investigation Committee to investigate Gonzaga's alleged remittance
shortages, in which he participated. Pending investigation, Gonzaga was placed under preventive suspension from July 31 to August 29, 2001.
On August 9, 2001, the Committee tendered its report, finding Gonzaga guilty of (a) gross and habitual neglect of duty under Section 5.2.15 of the Code
of Ethics and Discipline for Rural Electric Cooperative (REC) Employees; (b) misappropriation of REC funds under Section 7.2.1 of the Code of Ethics;
and (c) failure to remit collections/monies under Section 7.2.2 of the Code of Ethics. Thereafter, a notice of termination was served on Gonzaga on
September 13, 2001. Gonzaga sought reconsideration before SURNECO's Board of Directors but the latter denied the same after he presented his
case. On October 25, 2001, Final Notice of Termination was served on Gonzaga. Consequently, he was dismissed from the service on November 26,
2001.
Gonzaga filed a complaint with the NLRC Regional Arbitration for illegal dismissal with payment of backwages including damages and attorney's fees,
claiming that he was denied due process and dismissed without just cause. He alleged that he was nonetheless denied due process since the actual
grounds for his dismissal were not indicated in the memorandum. He also claimed that petitioners' evidence failed to show any missing collection.

139

In defense, petitioners maintained that Gonzaga's dismissal was attended with due process and founded on a just and valid cause. Petitioners further
argued that Gonzaga was given enough opportunity to defend himself during the investigation. Likewise, he was properly informed of the accusation
against him since the charge of cash shortage has a direct and logical relation to the findings of gross and habitual neglect of duties and
responsibilities, misappropriation of REC funds and failure to remit collections/monies. In this regard, there was no conflict between the charge stated in
Memorandum 34-01 and the grounds cited in the Final Notice of Termination.
In reply, Gonzaga added that the cooperative's proper procedure for the conduct of investigation, as outlined in Section 16.5 of the Code of Ethics was
not followed; hence, he was denied due process.
Issues:
1. Whether or not there was a valid cause of termination.
2. Whether or not there was statutory compliance of termination procedure.
3. Whether or not there was a breach in the companys procedure in investigating employees.
Ruling:
There was a valid cause of termination.
The petitioners evidence which consists of the Collection Report, the Summaries, and the September 15, 2003 Audit Report with attached Cash Flow
Summary adequately supports the conclusion that Gonzaga misappropriated the funds of the cooperative. The data indicated therein show gaping
discrepancies between Gonzaga's collections and remittances, of which he was accountable for. In this accord, the burden of evidence shifted to
Gonzaga to prove that the reflected shortage was not attributable to him. However, despite being allowed to peruse the bills and receipts on record
together with the assistance of an accountant and a counsel during the investigation proceedings, Gonzaga could not reconcile the amounts of his
collections and remittances and, instead, merely interposed bare and general denials.
Considering the totality of circumstances in this case, the evidence presented by the petitioners, as opposed to the bare denial of Gonzaga, is sufficient
to constitute substantial evidence to prove that he committed serious misconduct and gross and habitual neglect of duty to warrant his dismissal from
employment. Such are just causes for termination which are explicitly enumerated under Article 296 of the Labor Code. At any rate, Gonzaga had
admitted that he failed to remit his collections daily in violation of SURNECO's company policy, rendering such fact conclusive and binding upon him.
Therefore, for his equal violation of Section 7.2.2 of the Code of Ethics (failure to remit collections/monies), his dismissal is justified altogether.
There was statutory compliance in the termination procedure of Gonzaga.
The statutory procedure for terminating an employee is found in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code
(Omnibus Rules) consists of (a) a first written notice stating the intended grounds for termination; (b) a hearing or conference where the employee is
given the opportunity to explain his side; and (c) a second written notice informing the employee of his termination and the grounds therefor. Records
disclose that petitioners were able to prove that they sufficiently complied with these procedural requirements.
First, petitioners have furnished Gonzaga a written first notice specifying the grounds on which his termination was sought, in particular, Memorandum
34-01. While the actual grounds of Gonzaga's dismissal were not explicitly stated in Memorandum 34-01, these infractions are, however, implicit in the
charge of cash shortage. Due to the direct and logical relation between these grounds, any defense to the charge of cash shortage equally constitutes
an adequate defense to the charges of gross and habitual neglect of duties and responsibilities, misappropriation of REC funds and failure to remit
collections/monies. Therefore, based on these considerations, the Court finds that the first notice requirement had been properly met
Second, petitioners have conducted an informal inquiry in order to allow Gonzaga to explain his side. SURNECO formed an investigation committee to
investigate Gonzaga's alleged remittance shortages. Gonzaga never denied his participation during the said proceedings. Perforce, the second
requirement had been equally complied with.
Third, second written notice was sent to Gonzaga informing him of the company's decision to relieve him from employment, as well as the grounds. A
notice of termination was served on Gonzaga on September 13, 2001, stating the aforesaid grounds. Thereafter, Gonzaga tried to appeal his dismissal
before SURNECO's Board of Directors which was, however, denied after again being given an adequate opportunity to present his case. On October
25, 2001, a Final Notice of Termination was served on Gonzaga.
SURNECO failed to adhere to their established policy in investing employees.
At this juncture, it must be pointed out that while petitioners have complied with the procedure laid down in the Omnibus Rules, they, however, failed to
show that the established company policy in investigating employees was adhered to. In this regard, SURNECO's breach of its company procedure
necessitates the payment of nominal damages.
Jurisprudence dictates that it is not enough that the employee is given an "ample opportunity to be heard" if company rules or practices require a formal
hearing or conference. The rationale behind this mandatory characterization is premised on the fact that company rules and regulations which regulate
the procedure and requirements for termination, are generally binding on the employer.
Records reveal that while Gonzaga was given an ample opportunity to be heard within the purview of the foregoing principles, SURNECO, however,
failed to show that it followed its own rules which mandate that the employee who is sought to be terminated be afforded a formal hearing or
conference. SURNECO remains bound by and hence, must faithfully observe its company policy embodied in Section 16.5 of its own Code of
Ethics. Accordingly, since only an informal inquiry was conducted in investigating Gonzaga's alleged cash shortages, SURNECO failed to comply with
its own company policy, violating the proper termination procedure altogether.

140

In this relation, case law states that an employer who terminates an employee for a valid cause but does so through invalid procedure is liable to pay
the latter nominal damages. Hence, although the dismissal stands, the Court deems it appropriate to award Gonzaga nominal damages in the amount
of P30,000.00.
Univac Developments Inc. vs. Soriano
G.R. No. 182072, June 19, 2013
Facts:
William M. Soriano was hired on August 23, 2004 by Univac Development, Inc. on probationary basis as legal assistant of the company with a monthly
salary of P15,000.00. He claimed that on February 15, 2005, or eight (8) days prior to the completion of his six months probationary period, Castro
allegedly informed him that he was being terminated from employment due to the company's cost-cutting measures. He allegedly asked for a thirty-day
notice but his termination was ordered to be effective immediately. Thus, he was left with no choice but to leave the company.
Petitioner, on the other hand, denied the allegation of respondent and claimed instead that prior to his employment, respondent was informed of the
standards required for regularization and also supposedly informed him of his duties and obligations. Petitioner recalled that on January 5, 2005, a
company meeting was held where respondent allegedly expressed his intention to leave the company because he wanted to review for the bar
examinations. It was also in that meeting where he was informed of his unsatisfactory performance in the company. Thus, when respondent did not
report for work on February 16, 2005, petitioner assumed that he pushed through with his plan to leave the company. In other words, petitioner claimed
that respondent was not illegally dismissed from employment; rather, he in fact abandoned his job by his failure to report for work.
The CA gave more credence to respondent's claim that he was illegally dismissed rather than petitioner's theory of abandonment. Contrary to the LA
and NLRC conclusions, the appellate court held that petitioner failed to apprise respondent of the standards required for regularization, coupled with the
fact that it failed to make an evaluation of his performance, making his dismissal illegal. Petitioner's employment of another person to replace
respondent on the day of the alleged abandonment was taken by the appellate court against petitioner as it negates the claim of abandonment. In sum,
the CA considered respondent's dismissal from employment illegal because he was not informed of the standards required for regularization; petitioner
failed to show proof that respondent's performance was poor and unsatisfactory constituting a just cause for termination; and that the evidence
presented negates petitioner's claim that respondent abandoned his job. As a consequence of the illegal dismissal, the CA awarded respondent
backwages, separation pay in lieu of reinstatement and attorney's fees. Hence, the petition.
Issue: Whether or not the respondent was illegally dismissed from employment by the petitioner.
Ruling:
The respondent was illegally dismissed from employment.
It is undisputed that respondent was hired as a probationary employee. As such, he did not enjoy a permanent status. Nevertheless, he is accorded the
constitutional protection of security of tenure which means that he can only be dismissed from employment for a just cause or when he fails to qualify as
a regular employee in accordance with reasonable standards made known to him by the employer at the time of his engagement.
In this case, petitioner failed to present adequate evidence to substantiate its claim that respondent was apprised of said standards. Equally important is
the requirement that in order to invoke "failure to meet the probationary standards" as a justification for dismissal, the employer must show how these
standards have been applied to the subject employee. In this case, aside from its bare allegation, it was not shown that a performance evaluation was
conducted to prove that his performance was indeed unsatisfactory.
The power of the employer to terminate a probationary employee is subject to three limitations, namely: (1) it must be exercised in accordance with the
specific requirements of the contract; (2) the dissatisfaction on the part of the employer must be real and in good faith, not feigned so as to circumvent
the contract or the law; and (3) there must be no unlawful discrimination in the dismissal. In this case, not only did petitioner fail to show that respondent
was apprised of the standards for regularization but it was likewise not shown how these standards had been applied in his case.
Pursuant to well-settled doctrine, petitioner's failure to specify the reasonable standards by which respondent's alleged poor performance was
evaluated as well as to prove that such standards were made known to him at the start of his employment, makes respondent a regular employee. In
other words, because of this omission on the part of petitioner, respondent is deemed to have been hired from day one as a regular employee.
The respondent's termination from employment is without just and valid ground. Neither was due process observed, making his termination illegal. He
is, therefore, entitled to the twin relief of reinstatement and backwages granted under the Labor Code. However, considering the strained relations
between petitioner and respondent, separation pay should be awarded in lieu of reinstatement. Backwages shall be computed from the time of illegal
dismissal until the date the decision becomes final. Separation pay, on the other hand, is equivalent to at least one month pay, or one month pay for
every year of service, whichever is higher (with a fraction of at least six months being considered as one whole year), computed from the time of
employment or engagement up to the finality of the decision.
Having been forced to litigate in order to seek redress of his grievances, respondent is entitled to the payment of attorney's fees equivalent to 10% of
his monetary award. Pursuant to prevailing jurisprudence, legal interest shall be imposed on the monetary awards herein granted at the rate of 6% per
annum from date of termination until full payment.
Unilever Phils vs. Rivera
G.R. No. 201701, June 3, 2013

141

Facts:
ON OCT. 19, 2007, respondent Maria Ruby M. Rivera filed a complaint for illegal dismissal and other monetary claims against petitioner Unilever
Philippines, Inc. (Unilever).
When the case reached the National Labor Relations Commission (NLRC), Unilever was ordered to pay respondent P30,000 as nominal damages,
retirement benefits and separation pay. Upon a motion for reconsideration filed by Unilever, the NLRC, in a resolution of March 31, 2009, modified its
ruling by deleting the award of separation pay and reducing the nominal damages from P30,000 to P20,000 but affirmed the award of retirement
benefits.
Unilever elevated the case to the Court of Appeals (CA), Cagayan de Oro City, via a petition for certiorari under Rule 65 of the Rules of Court.
Respondent Rivera did not appeal the decision of the NLRC. The CA deleted the award for retirement benefit but awarded separation pay as a measure
of social justice.
Issue: WON CA was correct in awarding separation pay.
Ruling:
Yes.
In this case, Rivera was dismissed from work because she intentionally circumvented a strict company policy, manipulated another entity to carry out
her instructions without the companys knowledge and approval, and directed the diversion of funds, which she even admitted doing under the guise of
shortening the laborious process of securing funds for promotional activities from the head office. These transgressions were serious offenses that
warranted her dismissal from employment and proved that her termination from work was for a just cause. Hence, she is not entitled to separation pay.
More importantly, Rivera did not appeal the March 31, 2009 ruling of the NLRC disallowing the award of separation pay to her. It was Unilever who
elevated the case to the CA. It is axiomatic that a party who does not appeal, or file a petition for certiorari, is not entitled to any affirmative relief.
Due process prevents the grant of additional awards to parties who did not appeal. An appellee who is not an appellant may assign errors in his brief
where his purpose is to maintain the judgment, but he cannot seek modification or reversal of the judgment or claim affirmative relief unless he has also
appealed. It was, therefore, erroneous for the CA to grant an affirmative relief to Rivera who did not ask for it.
Samar-med Distribution vs. NLRC, et al.
G.R. No. 162385, July 15, 2013
Facts:
RESPONDENT Josafat Gutang filed a complaint for money claims against petitioner Samar-Med Distribution, a sole proprietorship registered in the
name of Danilo V. Roleda. He claimed that Samar-Med had difficulty paying his compensation during his employment, resulting in his not being paid
salaries since November 1995, allowances since June 1994 and commissions from sales, and 13th month pay in 1996. He also alleged that SamarMed made illegal deductions in June 1994 and February 1995. Consequently, he had been compelled to look for other sources of income beginning on
March 26, 1996 in order to survive.
Roleda contended that since Gutangs complaint before the labor arbiter did not include illegal dismissal as his cause of action, this means that the
instant case does not involve the issue of illegal dismissal.
Issue: WON ther was illegal dismissal.
Ruling:
No.
The petitioners contention that the validity of Gutangs dismissal should not be determined because it had not been included in his complaint before the
National Labor Relations Commission (NLRC) is bereft of merit.
The complaint of Gutang was a mere checklist of possible causes of action that he might have against Roleda. Such manner of preparing the complaint
was obviously designed to facilitate the filing of complaints by employees and laborers who are thereby enabled to expediently set forth their grievances
in a general manner.
But the non-inclusion in the complaint of the issue of dismissal did not necessarily mean that the validity of the dismissal could not be an issue. The
rules of the NLRC require the submission of verified position papers by the parties should they fail to agree upon an amicable settlement, and bar the
inclusion of any cause of action not mentioned in the complaint or position paper from the time of their submission by the parties.
With Gutangs position paper having alleged not only the bases for his money claims, but also that he had been compelled to look for other sources of
income in order to survive and that his employment had not been formally terminated, thereby entitling him to full backwages aside from his other
claims for unpaid monies, the consideration and ruling on the propriety of Gutangs dismissal by the Labor Arbiter and the NLRC were proper.
Naranjo et al, vs. Biomedica Health Care Inc.
G.R. No. 193789, Sept. 19, 2012
Facts:
On November 7, 2006, petitionerswith two (2) other employees were all absent for various personal reasons. Notably, these are the same employees
who filed a letter-complaint dated October 31, 2006 against Biomedica for lack of salary increases, failure to remit Social Security System and Pag-IBIG
contributions, and violation of the minimum wage law, among other grievances.

142

Later that day, petitioners were allegedly to told to start looking for another workplace and were not allowed to enter the premises. Biomedica issued a
notice of preventive suspension and notices to explain within 24 hours to petitioners, with accusation that petitioners conducted an illegal strike and
were accordingly directed to explain why they should not be held guilty of and dismissed for violating the company policy.
Petitioners, without submitting their written explanations, filed a Complaint with the NLRC for constructive dismissal.
Thereafter, Biomedica served Notices of Termination on petitioners.
Issue: WON the petitioners were illegally dismissed.
Ruling:
This petition is meritorious. In the instant case, petitioners were not afforded both procedural and substantive due process.
Notice of Charge, Reasonable Opportunity
Rule XIII, Book V, Sec. 2 I (a) of the Implementing Rules and Regulations of the Labor Code states:
xxx
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within
which to explain his side.
In King of Kings Transport, Inc. v. Mamac that a mere general description of the charges against an employee by the employer is insufficient to comply
with the above provisions of the law:
x x x Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration
of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice . Lastly,
the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.
Clearly, petitioners were charged with conducting an illegal strike, not a mass leave, without specifying the exact acts that the company considers as
constituting an illegal strike or violative of company policies.
Moreover, the period of 24 hours allotted to petitioners to answer the notice was severely insufficient and in violation of the implementing rules of the
Labor Code. King of Kings Transport, Inc. elucidates in this wise:
(Reasonable Opportunity) should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an
opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint.
Hearing
In addition, Biomedica did not set the charges against petitioners for hearing or conference in accordance with Sec. 2, Book V, Rule XIII of the
Implementing Rules and Regulations of the Labor Code and in line with ruling in King of Kings Transport, Inc., where the Court explained:
(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the
opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the
evidence presented against them by the management.
While petitioners did not submit any written explanation to the charges, it is incumbent for Biomedica to set the matter for hearing or conference to hear
the defenses and receive evidence of the employees. More importantly, Biomedica is duty-bound to exert efforts, during said hearing or conference, to
hammer out a settlement of its differences with petitioners. These prescriptions Biomedica failed to satisfy.
Notice of Termination
Lastly, Biomedica again deviated from the dictated contents of a written notice of termination as laid down in Sec. 2, Book V, Rule XIII of the
Implementing Rules that it:
(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that:
(1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the
severance of their employment.
The Notice of Termination issued by Biomedica miserably failed to satisfy the requisite contents of a valid notice of termination, as it simply mentioned
the failure of petitioners to submit their respective written explanations without discussing the facts and circumstances to support the alleged violations
Petitioners were denied substantive due process
Serious misconduct, as a justifying ground for the dismissal of an employee, has been explained in Aliviado v. Procter & Gamble, Phils., Inc.:
Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, unlawful in character implying wrongful intent and not mere error of judgment.

143

The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. To be a just cause for dismissal,
such misconduct (a) must be serious; (b) must relate to the performance of the employees duties; and (c) must show that the employee has become
unfit to continue working for the employer.
Petitoners failed to show that there was a mass leave or illegal strike, with the Court concluding that there were only individual availment of their leaves
by petitioners. And they cannot be held guilty of any wrongdoing, much less anything to justify their dismissal from employment. On this ground alone,
the petition must be granted.
Given the illegality of their dismissal, petitioners are entitled to reinstatement and backwages.
Manila Jockey Club Inc. vs. Trajano
G.R. No. 160982, June 26, 2013
Facts:
MJCI had employed Trajano as a selling teller of betting tickets. On one occasion, two regular bettors gave their respective bets. One of the bettors
however requested her to cancel his bet. As she had authority to do so, she complied. It happened however that she had mistakenly cancelled the other
bettors ticket.
Later that day, Trajano and told her to submit a written explanation about the ticket cancellation incident which she submitted the next day. She then
resumed her work as a selling teller, until she notified that she was being placed under preventive suspension. When she reported back 30 days laters,
she was no longer admitted. She later learned about her termination through a memo posted in a selling station of MJCI.
MJCI maintained that Trajanos dismissal was justified because the unauthorized cancellation of the ticket had constituted a serious violation of
company policy amounting to dishonesty; that her action had also constituted a just cause for terminating her employment under Article 282 of the
Labor Code, particularly paragraph (a) on serious misconduct or willful disobedience and paragraph (b) on gross and habitual neglect of duty.
MJCI also posits that Trajano held a position of trust and confidence; that the unauthorized cancellation of the ticket was a serious misconduct on her
part considering that had the bet of P2,000.00 won the daily double race, the dividend to be paid could have been such a big amount that she would be
unable to pay on her own; that the repercussions of her act to MJCI would have been disastrous had the bet won.
Issue: Whether or not there was just cause when Petitioner (MJCI) dismissed Respondent Aimee O. Trajano from the service; And Whether or not
Petitioner MJCI complied with the due process requirement.
Ruling:
The appeal lacks merit.
Loss of Trust and Confidence
Loss of the employers trust and confidence is a just cause under Article 282 (c), a provision that ideally applies only to cases involving an employee
occupying a position of trust and confidence, or to a situation where the employee has been routinely charged with the care and custody of the
employers money or property. But the loss of trust and confidence, to be a valid ground for dismissal, must be based on a willful breach of trust and
confidence founded on clearly established facts. "A breach is willful," according to AMA Computer College, Inc. v. Garay, "if it is done intentionally,
knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. 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."An ordinary breach is not enough.
Moreover, the loss of trust and confidence must be related to the employees performance of duties. As held in Gonzales v. National Labor Relations
Commission:
xxx. But in order to constitute a just cause for dismissal, the act complained of must be "work-related" such as would show the employee concerned to
be unfit to continue working for the employer.
As a selling teller, Trajano held a position of trust and confidence. The nature of her employment required her to handle and keep in custody the tickets
issued and the bets made in her assigned selling station. The bets were funds belonging to her employer. MJCI however, did not establish that the
unauthorised cancellation of the ticket was intentional, knowing and purposeful on her part in order for her to have breached the trust and confidence
reposed in her by MJCI, instead of being only out of an honest mistake.
Speculative and Unrealized Prejudice
The contention of MJCI that the unauthorized cancellation of the ticket could have greatly prejudiced MJCI for causing damage to both its income and
reputation is unwarranted.
MJCIs prejudice remained speculative and unrealized. To dismiss an employee based on speculation as to the damage the employer could have
suffered would be an injustice. The injustice in the case of Trajano would be greater if the supposed just cause for her dismissal was not even
sufficiently established.

144

The loss of trust and confidence as a ground for the dismissal of an employee must also be shown to be genuine: x x x loss of confidence should not
be simulated in order to justify what would otherwise be, under the provisions of law, an illegal dismissal. It should not be used as a subterfuge for
causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith."
Insufficient Notice
As for the last procedural requirement of giving the second notice, the posting of the notice of termination at MJCI s selling stations did not satisfy it, and
the fact that Trajano was eventually notified of her dismissal did not cure the infirmity.
There is no question that an illegally dismissed employee is entitled to her reinstatement without loss of seniority rights and other privileges, and to full
backwages, inclusive of allowances and other benefits or their monetary equivalent.
Fianza vs. NLRC et al.
G.R. No. 163061, June 26, 2013
Facts:
PETITIONER Alfonso L. Fianza was employed as officer for social acceptance of respondent Binga Hydroelectric Plant, Inc. In February 1999, he did
not receive his salary of P15,000 for the first 15 days of the month. He was advised not to report for work until his status was officially clarified by the
Manila office.
Petitioner made several inquiries concerning his status and was told by a supervisor to report for work. However, he was told that the new management
committee had to concur in his reappointment before he could be reinstated in the payroll. It also wanted an opportunity to determine whether his
services would still be necessary. Meanwhile, the chief of the rehabilitation department of the company recommended his return.
As the management committee did not act on his inquiries for several months, on May 24, 1999, petitioner filed a complaint for illegal dismissal against
respondent. Respondent invoked the defense that petitioner abandoned his job.
Issue: Whether or not petitioner abandoned his job.
Ruling:
No.
It is clear that respondent company failed to prove the necessary elements of abandonment. Additionally, the National Labor Relations Commission
(NLRC) and the Court of Appeals (CA) failed to take into account the strict requirements set by jurisprudence when they determined the existence of
abandonment on the basis of mere allegations that were contradicted by the evidence shown.
The very act of filing the complaint for illegal dismissal should have negated any intention on petitioners part to sever his employment. In fact, it should
already have been sufficient evidence to declare that there was no abandonment of work. Moreover, petitioner went back to the company several times
to inquire about the status of his employment. The fact that his inquiries were not answered does not prejudice this position.
Throughout the entire ordeal, petitioner was vigilant in protecting himself from any claim that he had abandoned his work.
The following circumstances evinced his intent to return to work: his continuous inquiry with respondent about the status of his work; his willingness to
return to work at any time, subject to the approval of respondent, and his visits to the plant to apply for work; and his filing of an illegal dismissal case.
Considering all these facts, established by the labor arbiter and confirmed by the NLRC and the CA, the Supreme Court concluded that both appellate
bodies were remiss in declaring the existence of abandonment.
Pasos vs. Phil National Construction Corp.
G.R. No. 192394, July 3, 2013
Facts:
Pasos started working for PNCC, under a Project Employment Contract which was to last three month. His employment was however extended two
years, and thereafter severally rehired under similar contracts. Despite the termination of his last contract, he was instructed to report back as he will be
employed again.
Pasos underwent medical examination for purposes of reemployment. He was advised to take a 14-day sick leave, and on a subsequent check-up, was
advised to take a 60-day sick leave. It was at this circumstance that petitioner was told he was not entitled to sick leave as he was not a regular
employee. And when petitioner was finally given a clean bill of health and reported to work, he was no longer admitted and told his contract ended on
October 19, 2000.
This prompted petitioner to file a complaint for illegal dismissal against PNCC. He argued that he is deemed a regular employee of PNCC due to his
prolonged employment as a project employee as well as the failure on the part of PNCC to report his termination every time a project is completed.
PNCC countered that petitioner was hired as a project employee in several projects with specific dates of engagement and termination and had full
knowledge and consent that his appointment was only for the duration of each project.
Issue: WON petitioner is a regular employee with right to security of tenure.
Ruling:

145

This Court is convinced however that although petitioner started as a project employee, he eventually became a regular employee of PNCC.
Under Article 280 of the Labor Code, as amended, a project employee is one whose "employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season." Thus, the principal test used to determine whether employees
are project employees is whether or not the employees were assigned to carry out a specific project or undertaking, the duration or scope of which was
specified at the time the employees were engaged for that project.
In the case at bar, petitioner worked continuously for more than two years after the supposed three-month duration of his project employment for the
NAIA II Project.
The failure of an employer to file termination reports after every project completion proves that an employee is not a project employee.
Records clearly show that PNCC did not report the termination of petitioners supposed project employment to the DOLE. Department Order No. 19, or
the "Guidelines Governing the Employment of Workers in the Construction Industry," requires employers to submit a report of an employee s
termination to the nearest public employment office every time an employees employment is terminated due to a completion of a project.
A regular employee dismissed for a cause other than the just or authorized causes provided by law is illegally dismissed.
Petitioners regular employment was terminated by PNCC due to contract expiration or project completion, which are both not among the just or
authorized causes provided in the Labor Code, as amended, for dismissing a regular employee.
Thus, petitioner was illegally dismissed.
Universal Robina Corp. vs. Castillo
G.R. No. 189686, July 10, 2013
Facts:
Respondent Wilfredo Z. Castillo (Castillo) was hired by petitioner Universal Robina Corporation (URC) as a truck salesman on 23 March 1983 with a
monthly salary of P4,000.00. He rose from the ranks and became a Regional Sales Manager, until his dismissal on 12 January 2006.
As Regional Sales Manager, respondent was responsible for planning, monitoring, leading and controlling all activities affecting smooth sales
operation. His area of responsibility covered some parts of Laguna, including Lianas Supermart (Liana) in San Pablo City, Laguna. On 19 August 2005,
URCs Credit and Collection Department (CCD) Analyst in Silangan, Laguna Branch noted an outright deduction in the amount of P72,000.00 tagged as
Gift Certificate (GC) per Original Receipt No. 625462 dated 18 August 2005. The CCD Analyst found the issuance of GCs as unusual. This finding
prompted URCs Corporate Internal Audit (CIA) to conduct a routine audit of the unresolved accounts of Lianas account receivables.
On 14 November 2005, respondent was asked to explain in writing why the company should not institute the appropriate disciplinary action against him
for possible violation of Offenses Subject to Disciplinary Action 2.04. On 17 November 2005, respondent submitted his explanation. Respondent
repeatedly denied that he signed two (2) blank Charge invoices intended for GCs. He also admitted that only two (2) cut-cases should have been
charged and he assumed liability for the undue payment of one (1) cut-case display. Clarification inquiries were likewise held on 8 December 2005. On
9 January 2006, respondent was served a written notice of termination.
MR. CASTILLO WAS DISMISSED AS REGIONAL SALES MANAGER OF ROBINA SALES CORPORATION FOR JUST CAUSE, SPECIFICALLY,
LOSS OF TRUST AND CONFIDENCE UNDER ART. 282. The principal charge against petitioner Castillo was hinged upon unauthorized
arrangements which he allegedly entered into. Petitioner Castillos unauthorized dealing with respect to the changes in the Account Development
Agreement is exactly the offending cause of the host of infractions he committed, i.e., his neglect in signing the blank charge invoices and his improper
receipt of gift certificates for his personal gain. These acts taken together constitute a breach of the trust and confidence reposed on petitioner Castillo
by private respondent URC. Indeed, petitioner Castillos acts of receiving the gift certificates and signing the blank invoices are closely intertwined and
inextricably connected with each other. In other words, petitioner Castillos acquisition of the gift certificates could not have been facilitated without him
signing the blank invoices. Such signing was a ruse to cover up his receipt of the gift certificates. Oddly enough, petitioner Castillo readily admitted to
signing receipt on Charge Invoices Nos. 2189 and 2190 covering the gift certificates in the amounts of P60,000.00 and P12,000.00, respectively, but
made the qualification that the same were in blank when he signed on them. Such claim was obviously to create the impression that he was really not
aware of any gift certificates and that whatever misstep he committed was merely brought about by his good faith.
Issue: Whether or not a validly dismissed employee is entitled to separation pay.
Ruling:
NO.
THE AWARD OF SEPARATION PAY IS AUTHORIZED IN THE SITUATIONS DEALT WITH IN ARTICLE 283 AND 284 OF THE LABOR CODE, BUT
NOT IN TERMINATIONS OF EMPLOYMENT BASED ON INSTANCES ENUMERATED IN ARTICLE 282.
x x x [L]abor adjudicatory officials and the CA must demur theaward of separation pay based on social justice when an employees dismissal is based
on serious misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the
person of the employer or his immediate family grounds under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most

146

judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to
be an instrument to oppress the employers. The commitment of the Court to the cause of labor should not embarrass us from sustaining the employers
when they are right, as here. In fine, we should be more cautious in awarding financial assistance to the undeserving and those who are unworthy of
the liberality of the law.
Martinez vs. Central Pangasinan Electric Cooperative
G.R. No. 192306, July 15, 2013
Facts:
In 1991, CENPELCO employed Martinez on a contractual basis and in 1993, was subsequently regularized as a billing clerk at the former's main office
in San Carlos City, Pangasinan. On January 7, 2002, CENPELCO gave Martinez the position of teller at Area VI in Malasiqui, Pangasinan.
On April 26, 2002, CENPELCOs Internal Audit Department (IAD) conducted a cash count audit concluded that there was an error in the breakdown of
collection turned over by Martinez for April 23, 2002. On June 30 2002, the Companys Grievance Committee, which was commissioned to investigate
the charges imputed to Martinez, submitted its report recommending Martinezs termination from employment as well as the filing of the appropriate
case in court.
It was found that a closer scrutiny of the audit report reveals that on April 25, 2002, Martinez indeed had a shortage in the amount of P44,846.77, which
he himself admitted in his letter-explanation dated May 15, 2002. Further, Martinez was not able to account for such shortage and instead, tried to offset
the same with his April 23, 2002 overage in the amount of P45,682.58.
On November 26, 2002, Martinez was dismissed from service, prompting him to file a complaint for illegal dismissal with money claims for 13 th month
pay, service incentive leave pay and allowances, as well as moral and exemplary damages.
The Labor Arbiter (LA) opined that there is no ascribable offense against Martinez which may constitute the charges of misappropriation and loss of
confidence against him and ruled Martinezs dismissal illegal. The NLRC reversed the LAs ruling, declaring Martinezs dismissal valid but nevertheless,
upheld the award for 13th month pay and cash equivalent of leave credits. Martinez moved for reconsideration but was denied.
The CA affirmed the NLRCs ruling. The CA held that the anomalies charged against Martinez are duly substantiated as such finding is supported by
an audit. It echoed the NLRCs finding that Martinez cannot offset his April 25, 2002 shortage with his April 23, 2002 overage because the latter is
dubious and that the practice of offsetting shortages with overages is highly improper. Aggrieved, Martinez moved for reconsideration but was denied.
Issue: Whether Martinezs dismissal on the ground of loss of trust and confidence is valid.
Ruling:
The petition is DENIED.
To validly dismiss an employee on the ground of loss of trust and confidence under Article 296(c) (formerly Article 282[c]) of the Labor Code, 26 the
following guidelines must be observed:
(1) the employee concerned must be holding a position of trust and confidence; and
(2)
there
must
be
an
act
that
would
justify
the
loss
of
trust
and
confidence. 27
Anent the first requisite, it is noteworthy to mention that there are two classes of positions of trust, namely:
(1) managerial employees whose primary duty consists of the management of the establishment in which they are employed or of a department or a
subdivision thereof, and to other officers or members of the managerial staff; and
(2) fiduciary rank-and-file employees such as cashiers, auditors, property custodians, or those who, in the normal exercise of their functions, regularly
handle significant amounts of money or property.
Being an employee tasked to collect payments and remit the same to CENPELCO, Martinez belongs to the latter class and thus, occupies a position of
trust and confidence.
Anent the second requisite, Martinez not only admitted the same but even tried to exculpate himself from liability by attempting to offset said shortage
with his alleged overage on April 23, 2002 in the amount of P45,682.58. The Court agrees with the CA that this practice should never be countenanced
because it would allow the employees to patch up inaccuracies or even their own wrongdoings and thus, the true revenues or losses of the company
will never be conectly identified. Verily, this irregular practice would be detrimental to the interests of the employer whose bread and butter depends
solely on realized profits. 30 Perforce, Martinez's failure to properly account for his shortage of such a significant amount is enough reason for
CENPELCO
to
lose
trust
and
confidence
in
him.
Properly adduced evidence which substantially supports the conclusion that on April 25, 2002, Martinez had a shortage in the amount of P44,846.77.
As Martinez was accountable for the discrepancies in his collections vis-a-vis his remittances, the burden of evidence shifted to him to prove that the
reflected shortage was not attributable to any form of negligence or infraction on his part. However, records disclose that instead of properly explaining
the reason for such shortage, Martinez merely admitted its existence. Worse, he even tried to offset such shortage with his purported April 23, 2002
overage. In fine, CENPELCO had every right to dismiss Martinez on the ground of loss of trust and confidence for the latter's inability to account for the
shortages imputed to him.

147

Zuellig Pharma Corp vs. Sibal et al.

G.R. No. 173587, July 15, 2013
Facts:
Petitioner , Zuellig Corporation, is a domestic Corporation engaged in the manufacture and distribution of pharmaceutical products. It also distributes
pharmaceutical products manufactured by other companies like Syntex Pharmaceuticals (Syntex). Respondents (36 in all), on the other hand, were the
employees of Zuellig at its Syntex Division. In 1995 Roche Philippines purchased Syntex and took over Zuellig the distribution of Syntex Products.
Consequently, Zuellig closed its Syntex Division and terminated the services of respondents due to redundancy. They were properly notified of their
termination and were paid separation pay according to their CBA and which individually signed Release and Quitclaim in full settlement of all claims
arising from their employment with Zuellig. Controversy arose when respondents filed in the NLRC separate complaints for payment of retirement
gratuity and monetary equivalent of their unused sick leave .
Issues:
WON the respondents can recover both their separation pay and retirement pay.
WON the respondents can claim their award of monetary equivalent of respondents unused sick leave.
WON the Release and Quitclaim executed between the parties is valid .
Ruling:
1.)

2.)

3.)

No, The CBA does not allow recovery of both separation pay and retirement gratuity. the CBA contains specific provisions which effectively
bar the availment of retirement benefits once the employees have chosen separation pay or vice versa. Section 2 of Article XIV explicitly
states that any payment of retirement gratuity shall be chargeable against separation pay. Clearly, respondents cannot have both retirement
gratuity and separation pay, as selecting one will preclude recovery of the other. If the employees choose to retire, whatever amount they
will receive as retirement gratuity will be charged against the separation pay they would have received had their separation from
employment been for a cause which would entitle them to severance pay. These causes are enumerated in Section 3, Article XIV of the
CBA (i.e., retrenchment, closure of business, merger, redundancy, or installation of labor-saving device). However, if the cause of the
termination of their employment was any of the causes enumerated in said Section 3, they could no longer claim retirement gratuity as the
fund from which the same would be taken had already been used in paying their separation pay. Put differently, employees who were
separated from the company cannot have both retirement gratuity and separation pay as there is only one fund from which said benefits
would be taken. Consequently, respondents are entitled only to one.
No, Respondents are not entitled to the monetary equivalent of their unused sick leave credits. The CAs ruling in effect put something into
the CBA that is not written in it, contrary to the old and familiar Latin maxim of expressio unius est exclusio alterius. In this case, Article VIII
of the CBA covers only (1) an employee who is 60 years old and due for compulsory retirement; (2) an employee who retires prior to
attaining the compulsory retirement age but has served at least 25 years; and, (3) an employee who retires before attaining compulsory
retirement age due to illness or disability. Necessarily, the enumeration cannot be extended to include those who will be leaving the
company due to redundancy, death, merger, installation of labor cost-saving device, retrenchment, or closure of business as mistakenly
ruled by the CA. As the law between the parties, the CBA must be strictly complied with. It is a familiar and fundamental doctrine in labor law
that the CBA is the law between the parties and they are obliged to comply with its provisions.
Yes, It is true that quitclaims executed by employees are often frowned upon as contrary to public policy. However, in this case, there is no
showing that Zuellig coerced or forced respondents to sign the Release and Quitclaim. In fact, there is no allegation that Zuellig employed
fraud or deceit in making respondents sign the Release and Quitclaim.

Zuellig Freight & Cargo System vs. NLRC,

G.R. No. 157900, July 22, 2013
Facts:
San Miguel brought a complaint for unfair labor practice, illegal dismissal, non-payment of salaries and moral damages against petitioner. He alleged
that he had been a checker/customs representative of Zeta since December 16, 1985; that in January 1994, he and other employees of Zeta were
informed that Zeta would cease operations, and that all affected employees, including him, would be separated. By letter dated February 28, 1994, Zeta
informed him of his termination effective March 31, 1994; that he reluctantly accepted his separation pay subject to the standing offer to be hired to his
former position by petitioner; and that on April 15, 1994, he was summarily terminated, without any valid cause and due process.. San Miguel
contended that the amendments of the articles of incorporation of Zeta were for the purpose of changing the corporate name, broadening the primary
functions, and increasing the capital stock; and that such amendment could not mean that Zeta had been thereby dissolved.
Issue: WON the cessation of business by Zeta was valid to be regarded as a valid ground for termination of employment of San Miguel.
Ruling:
No, Verily, the amendments of the articles of incorporation of Zeta to change the corporate name to Zuellig Freight and Cargo Systems, Inc. did not
produce the dissolution of the former as a corporation. The changing of the name of a corporation is no more the creation of a corporation than the
changing of the name of a natural person is begetting of a natural person. The act, in both cases, would seem to be what the language which we use to
designate it imports a change of name, and not a change of being. In short, Zeta and petitioner remained one and the same corporation. The change
of name did not give petitioner the license to terminate employees of Zeta like San Miguel without just or authorized cause. 18Petitioner, despite its new
name, was the mere continuation of Zetas corporate being, and still held the obligation to honor all of Zetas obligations, one of which was to respect
San Miguels security of tenure. The dismissal of San Miguel from employment on the pretext that petitioner, being a different corporation, had no
obligation to accept him as its employee, was illegal and ineffectual.

148

Abbott Laboratrories Phils et al., Vs. Alcaraz

G.R. No. 192571, July 23, 2013 En banc
Facts:
Alcaraz applied for and was accepted as Medical and Regulatory Affairs Manager of Abbott Laboratories, Philippines. In her employment contract, she
was placed on probation for a period of six (6) months beginning February 15 to August 14, 2005. During her pre-employment orientation, she was
briefed of her duties and responsibilities for the said position. During her employment, she was considered as too strict by some of the staff as she
would reprimand the latter for their unprofessional behavior. Months later, she was informed that she failed to meet the regularization standards for the
position of Regulatory Affairs Manager. Hence, she filed a complaint for illegal dismissal and damages against Abbott and its officers contending that
she was unjustly terminated from her employment. She claimed that she should have already been considered as a regular and not a probationary
employee for Abbotts failure to appraise her of the reasonable standards for her regularization upon her engagement as required under Art. 295 of the
Labor Code. Abbott countered saying that Alcaraz was validly terminated given her failure to satisfy the prescribed standards which were made known
to him at the time of her engagement.
Issue:

Whether or not Alcaraz was validly terminated.

Ruling:
YES. A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of probationary employment, aside from just or
authorized causes of termination, an additional ground is provided under Article 295 of the Labor Code, i.e., the probationary employee may also be
terminated for failure to qualify as a regular employee in accordance with the reasonable standards made known by the employer to the employee at
the time of the engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated for any of the
following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
Corollary thereto, Section 6 (d), Rule I, Book VI of the Implementing Rules of the Labor Code provides that if the employer fails to inform the
probationary employee of the reasonable standards upon which the regularization would be based on at the time of the engagement, then the said
employee shall be deemed a regular employee. In other words, the employer is made to comply with two (2) requirements when dealing with a
probationary employee: first, the employer must communicate the regularization standards to the probationary employee; and second, the employer
must make such communication at the time of the probationary employee's engagement. If the employer fails to comply with either, the employee is
deemed as a regular and not a probationary employee.
The records reveal that Abbott had indeed complied with the above-stated requirements. This conclusion is largely impelled by the fact that Abbott
clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior to, during the time of her engagement, and the incipient
stages of her employment. Circumstances show that Alcaraz was well-aware that her regularization would depend on her ability and capacity to fulfill
the requirements of her position as Regulatory Affairs Manager and that her failure to perform such would give Abbott a valid cause to terminate her
probationary employment.
Manila Polo Club Employees Union vs. Manila Polo Club
G.R. No. 172846, July 24, 2013
Facts:
The Board of Directors of Manila Polo Club Inc. unanimously resolved to completely terminate the entire operation of its Food and Beverage (F & B)
outlets due to yearly losses and award its operations to a qualified restaurant operator or caterer. A retrenchment program was then implemented
against the 117 employees who are directly and indirectly involved with the operations of the F & B outlets with payment of their separation pay.
Unaware yet of the termination notice sent to them, the affected employees were surprised when they were prevented from entering the Club premises
as they report for work. They later learned that the F & B operations had already been awarded to Makati Skyline, Inc. Aggrieved, the union
representing the employees filed a Notice of Strike before the National Conciliation and Mediation Board (NCMB) for illegal dismissal, violation/nonimplementation of the Collective Bargaining Agreement (CBA), union busting, and other unfair labor practices (ULP).
Issue: Whether or not the retrenchment of the 117 union members was legal.
Ruling:
YES. This case involves a closure of business undertaking, not retrenchment. Retrenchment is the reduction of personnel for the purpose of cutting
down on costs of operations in terms of salaries and wages resorted to by an employer because of losses in operation of a business occasioned by lack
of work and considerable reduction in the volume of business. On the other hand, closure of a business or undertaking due to business losses is the
reversal of fortune of the employer whereby there is a complete cessation of business operations to prevent further financial drain upon an employer
who cannot pay anymore his employees since business has already stopped.
Hereunder are the guidelines for a valid termination of employees as a result of closure of business:
1.Closure or cessation of operations of establishment or undertaking may either be partial or total.
2.Closure or cessation of operations of establishment or undertaking may or may not be due to serious business losses or financial reverses. However,
in both instances, proof must be shown that: (1) it was done in good faith to advance the employer's interest and not for the purpose of defeating or

149

circumventing the rights of employees under the law or a valid agreement; and (2) a written notice on the affected employees and the DOLE is served
at least one month before the intended date of termination of employment. EHCcIT
3.The employer can lawfully close shop even if not due to serious business losses or financial reverses but separation pay, which is equivalent to at
least one month pay as provided for by Article 283 of the Labor Code, as amended, must be given to all the affected employees.
4.If the closure or cessation of operations of establishment or undertaking is due to serious business losses or financial reverses, the employer must
prove such allegation in order to avoid the payment of separation pay. Otherwise, the affected employees are entitled to separation pay.
5.The burden of proving compliance with all the above-stated falls upon the employer.
In this case, the closure of the F & B Department was due to legitimate business considerations, a resolution which the Court has no business
interfering with. The characterization of the employee's service as no longer necessary or sustainable, and therefore, properly terminable, is an exercise
of business judgment on the part of the employer; the determination of the continuing necessity of a particular officer or position in a business
corporation is a management prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion or arbitrary or
malicious action on the part of the employer is shown. Just as no law forces anyone to go into business, no law can compel anybody to continue the
same.
Canedo vs. Kampilan Security & Detective Agency Inc. et al
G.R. No. 179326, July 31, 2013
Facts:
Luciano Canedo was assigned by Kampilan Security and Detective Agency as security guard of the National Power Corporation (NPC) at Toledo City.
However, for not wearing a uniform while on duty as per report of Allan Alfafara of the NPC. Canedo was suspended for a month. NPC thereafter
informed Kampilan that it was no longer interested in Canedos service and thus requested for his replacement. In the meantime, Canedo requested
from Arquiza of Kampilan to issue a certification in connection with his intended retirement to which the latter acceded. Days later, Canedo filed before
the labor arbiter a complaint for illegal dismissal, illegal suspension and non-payment of monetary benefits against Kampilan. He claimed that his
suspension was without a valid ground and effected without due process, hence, illegal. Kampilan countered that Canedo was not dismissed from
service but he was just pulled put from NPC in view of NPCs request for his replacement.
Issue: Whether or not Canedo was dismissed from service.
Ruling:
NO. In illegal dismissal cases, "while the employer bears the burden to prove that the termination was for a valid or authorized cause, the employee
must first establish by substantial evidence the fact of dismissal from service." The burden of proving the allegations rests upon the party alleging and
the proof must be clear, positive and convincing. Thus, in this case, it is incumbent upon petitioner to prove his claim of dismissal. While it is true that he
was not allowed to report for work after the period of his suspension expired, the same was due to NPC's request for his replacement as NPC was no
longer interested in his services. And as correctly argued by Kampilan, Canedo from that point onward is not considered dismissed but merely on a
floating status. "Such a 'floating status' is lawful and not unusual for security guards employed in security agencies as their assignments primarily
depend on the contracts entered into by the agency with third parties."
A floating status can ripen into constructive dismissal only when it goes beyond the six-month maximum period allowed by law. In this case, Canedo
filed the Complaint for illegal dismissal even before the lapse of the six-month period. Hence, his claim of illegal dismissal lacks basis. It was in fact
Canedo who intended to terminate his relationship with Kampilan through his planned retirement. This circumstance negates his claim that he was
terminated. Clearly, there is no dismissal to speak of this case.
Ang vs. San Joaquin Jr et al.
G.R. No. 185549, Aug. 7, 2013
Facts:
Respondents San Joaquin, Jr. and Fernandez were regular employees of Virose which Ang is the proprietor of the business. San Joaquin was hired in
1974 as helper, while Fernandez was employed in 1982 as driver. Respondents attended the court hearing relative to the 41 criminal cases filed by
former Virose employee Abrera against Ang for the latters non-remittance of Social Security System (SSS) Contributions. During that hearing,
respondents testified against Ang; it was the second time for San Joaquin to testify, while it was Fernandezs first Previously, respondents joined Abrera
in questioning Angs procedure in remitting their SSS contributions. After the said hearing Ang began to treat respondents with hostility and antagonism.
On August 28, 1999, a salesclerk who was Instructed to find a helper by Angs wife to transfer monoblock chairs to her restaurant asked San Joaquin to
help, but the latter refused, saying that he was not an employee of the restaurant but a glass installer of Virose. A heated argument ensued between
San Joaquin on the one hand and Rosa, her son Jonathan, and the salesclerk on the other. San Joaquin left the store, shouting invectives. San
Joaquin returned to the store, only to find out that Ang had torn his DTR to pieces that day while the DTR of Fernandez was torn to pieces by
Ang immediately after the August 24, 1999 hearing in which the respondents testified. On the same day, Fernandez reported for work and
received a memorandum of even date issued by Ang informing him that he was placed on a one-week suspension for insubordination. The
memorandum did not specify the act of insubordination. Respondents filed against Ang Complaints for illegal constructive dismissal with claims for
backwages and separation pay. Fernandez confronted Ang, demanding that the latter sign certain documents which the former had with him. Ang
refused, and Fernandez who was then intoxicated left uttering unsavory remarks and threatening to sue Ang. San Joaquin received a memorandum
from Ang placing the former under preventive suspension and ordering him to explain in writing, within three days, why no disciplinary action should be

150

imposed against him for his refusal to obey instructions to transfer the monobloc chairs. Fernandez received another memorandum from Ang, ordering
him to report for work after being absent for a week. Ang issued a memorandum terminating San Joaquins employment.
Issue: WON there was constructive dismissal
Held:
Respondents were illegally dismissed.
Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an
offer involving a demotion in rank and a diminution in pay. It is a dismissal in disguise or an act amounting to dismissal but made to appear as if it were
not. Constructive dismissal may likewise exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the
part of the employee that it could foreclose any choice by him except to forego his continued employment. Constructive dismissal exists when the
employee involuntarily resigns due to the harsh, hostile, and unfavorable conditions set by the employer. The test of constructive dismissal is whether a
reasonable person in the employees position would have felt compelled to give up his position under
the circumstances.
The CA is correct in its pronouncement that respondents were constructively dismissed from work. Moreover, by destroying respondents time cards,
Ang discontinued and severed his relationship with respondents. The purpose of a time record is to show an employees attendance in office for work
and to be paid accordingly, taking into account the policy of no work, no pay. A daily time record is primarily intended to prevent damage or loss to the
employer, which could result in instances where it pays an employee for no work done; it is a mandatory requirement for inclusion in the payroll, and in
the absence of an employment agreement, it constitutes evidence of employment. Thus, when Ang tore the respondents time cards to pieces, he
virtually removed them from Viroses payroll and erased all vestiges of respondents employment; respondents were effectively dismissed from work.
The act may be considered an outright not only symbolic termination of the parties employment relationship ; the last straw that finally
broke the camels back, as respondents put it in their Position Paper. In addition, such tearing of respondents time cards confirms petitioners vindictive
nature and oppressive conduct, as well as his reckless disregard for respondents rights.
For a termination of employment on the ground of abandonment to be valid, the employer must prove, by substantial evidence, the
concurrence of [the employees] failure to report for work for no valid reason and his categorical intention to discontinue employment. In
the present case, it appears that there is no intention to abandon employment; respondents repeated absence were caused by Angs oppressive
treatment and indifference which respondents simply grew tired of and wanted a break from. Indeed, an employee cannot be expected to work
efficiently in an atmosphere where the employers hostility pervades; certainly, it is too stressful and depressing the threat of immediate termination
from work, if not aggression, is a heavy burden carried on the employees shoulder. Respondents may have stayed away from work to cool off, but not
necessarily to abandon their employment. The fact remains that respondents returned to work, but then their time cards had been torn to pieces.
Sanoh Fulton Phils Inc. et al., vs. Bernardo et al.
G.R. No. 187214, Aug. 14, 2013
Facts:
Sanoh is a domestic corporation engaged in the manufacture of automotive parts and wire condensers for home appliances. Its Wire Condenser
Department employed 61 employees including respondents. In view of job order cancellations relating to the manufacture of wire condensers by
Matsushita, Sanyo and National Panasonic, Sanoh decided to phase out the Wire Condenser Department. On 22 December 2003, the Human
Resources Manager of Sanoh informed the 17 employees, 16 of whom belonged to the Wire Condenser Department, of retrenchment effective 22
January 2004. All 17 employees are union members. A grievance conference was held where the affected employees were informed of the following
grounds for retrenchment:1) Lack of local market.2) Competition from imported products.3) Phasing out of Wire Condenser Department. Two
succeeding conciliation conferences were likewise held but the parties failed to reach an amicable settlement. The complainants alleged that there was
no valid cause for retrenchment and in effecting retrenchment, there was a violation of the "first in-last out" and "last in-first out" (LIFO) policy embodied
in the Collective Bargaining Agreement. Sanoh, on the other hand, asserted that retrenchment was a valid exercise of management prerogative. Sanoh
averred that some employees who were hired much later were either assigned to other departments or were bound by the terms of their job training
agreement to stay with the company for 3 years.
Issue: WON there was valid retrenchment
Held:
There was no valid retrenchment. Nor was there closure of business
For retrenchment, the three (3) basic requirements are: (a) proof that the retrenchment is necessary to prevent losses or impending losses; (b) service
of written notices to the employees and to the Department of Labor and Employment at least one (1) month prior to the intended date of retrenchment;
and (c) payment of separation pay equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher. In
addition, jurisprudence has set the standards for losses which may justify retrenchment, thus:(1) the losses incurred are substantial and not de minimis;
(2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected
losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing
evidence. Upon the other hand, in termination, the law authorizes termination of employment due to business closure, regardless of the underlying
reasons and motivations therefore, be it financial losses or not. However, to put a stamp to its validity, the closure/cessation of business must be bona
fide, i.e., its purpose is to advance the interest of the employer and not to defeat or circumvent the rights of employees under the law or a valid
agreement. In termination cases either by retrenchment or closure, the burden of proving that the termination of services is for a valid or
authorized cause rests upon the employer. Not every loss incurred or expected to be incurred by an employer can justify retrenchment. The
employer must prove, among others, that the losses are substantial and that the retrenchment is reasonably necessary to avert such losses.
Sanoh asserts that cancelled orders of wire condensers led to the phasing out of the Wire Condenser Department which triggered retrenchment. Sanoh
presented the letters of cancellation given by Matsushita and Sanyo as evidence of cancelled orders. The evidence presented by Sanoh barely
established the connection between the cancelled orders and the projected business losses that may be incurred by Sanoh. Sanoh failed to prove that

151

these cancelled orders would severely impact on their production of wire condensers. We held in Lambert Pawnbrokers and Jewelry Corporation v.
Binamira that the losses must be supported by sufficient and convincing evidence and the normal method of discharging this is by the submission of
financial statements duly audited by independent external auditor. It was aptly observed by the appellate court that no financial statements or
documents were presented to substantiate Sanohs claim of loss of P7 million per month. Contrarily, respondents amply proved that the cancelled
orders did not seriously create a dent on Sanohs financial standing. Respondents further presented the production target and actual production of the
Wire Condenser Department for the year 2005, to prove that the department had realized income for that year.
As the Wire Condenser Department is still in operation and no business losses were proven by Sanoh, the dismissal of respondents was unlawful.
Respondents are entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, computed from the time the
compensation was withheld up to the time of actual reinstatement. Present law says that if reinstatement is not feasible, the payment of full backwages
shall be made from the date of dismissal until finality of judgment. Reinstatement is no longer practical in view of the length of time that had elapsed. As
held in EDI Staff Builders International Inc. v. Magsino, apart from backwages, respondents should be awarded separation pay.
Daabay vs.Coca-Cola Bottlers Phils
G.R. No. 199890, Aug. 19, 2013
Facts:
The case stems from a complaint for illegal dismissal, illegal suspension, unfair labor practice and monetary claims filed by Daabay against respondent
Coca-Cola Bottlers Phils., Inc. (Coca-Cola) and three officers of the company. The records indicate that the employment of Daabay with Coca-Cola as
Sales Logistics Checker was terminated by the company in June 2005, following receipt of information from one Cesar Sorin (Sorin) that Daabay was
part of a conspiracy that allowed the pilferage of company property. Coca-Cola then served upon Daabay a Notice to Explain with Preventive
Suspension. In compliance therewith, Daabay submitted an explanation denying said allegations.
Formal Investigation was ensued. Eventually, Coca-Cola served upon Daabay a Notice of Termination that cited pilferage, serious misconduct and loss
of trust and confidence as grounds. At the time of his dismissal, Daabay had been a regular employee of Coca-Cola for eight years.
Daabay then filed the subject labor complaint against Coca-Cola. The Executive Labor Arbiter ruled in favor of Daabay because the alleged participation
was not proven with substantial evidence. In lieu of reinstatement and considering the already strained relations between the parties, ELA Magbanua
ordered the payment of backwages and separation pay or retirement benefits.
Dissatisfied, Coca-cola appealed the decision to NLRC. NLRC reversed ELA decision and held that here is a reasonable and well-founded basis to
dismiss Daabay but awarded retirement benefits. The NLRC, in awarding retirement benefits, explained that there was a need "to humanize the severe
effects of dismissal" and "tilt the scales of justice in favor of labor as a measure of equity and compassionate social justice."
Coca-cola appealed to CA regarding the award of retirement benefits. CA agreed that Daabay should not be entitled to it considering he was dismissed
for just cause.
Aggrieved, Daabay filed this petition to SC.
Issue: Whether or not Daabay is entitled to retirement benefits.
Ruling:
No. Daabay was declared by the NLRC to have been lawfully dismissed by Coca-Cola on the grounds of serious misconduct, breach of trust and loss of
confidence. SC pronouncement in Philippine Airlines, Inc. v. NLRC was applied in this case. SC held:
private respondent was not separated from petitioner's employ due to mandatory or optional retirement but, rather, by termination of
employment for a just causeEven private respondent's assertion that, at the time of her lawful dismissal, she was already qualified for retirement
does not aid her case because the fact remains that private respondent was already terminated for cause thereby rendering nugatory any
entitlement to mandatory or optional retirement pay that she might have previously possessed.
Also, the Court has ruled, time and again, that financial assistance, or whatever name it is called, as a measure of social justice is allowed only in
instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.||| Clearly,
considering that Daabay was dismissed on the grounds of serious misconduct, breach of trust and loss of confidence, the award based on equity was
unwarranted.
MZR Industries et al., vs. Colambot
G.R. No. 179001, Aug. 28, 2013
Facts:
On February 8, 2000, petitioner Marilou Quiroz, Owner and Vice-President for Finance and Marketing of MZR, hired respondent Majen Colambot
(Colambot) as messenger. Colambots duties and responsibilities included field, messengerial and other liaison work.
However, beginning 2002, Colambots work performance started to deteriorate. Petitioners issued several memoranda to Colambot for habitual
tardiness, negligence, and violations of office policies, including insubordinations, among others.
Petitioners claimed that despite written warnings for repeated tardiness and insubordination, Colambot failed to mend his ways. Hence, in a
Memorandum (October 25, 2004) issued by petitioner Lea Timbal, MZRs Administrative Manager, Colambot was given a notice of suspension for
insubordination and negligence.
Again, in a Memorandum (November 25, 2004), Colambot was suspended from November 26, 2004 until December 6, 2004 for insubordination.
Petitioners claimed they waited for Colambot to report back for work on December 7, 2004, but they never heard from him anymore.
Later, petitioners were surprised to find out that Colambot had filed a complaint for illegal dismissal, illegal suspension, underpayment of salaries,
holiday pay, service incentive pay, 13th month pay and separation pay.

152

Petitioner insisted that while Colambot was suspended due to insubordination and negligence, they maintained that they never terminated Colambots
employment. Colambot, meanwhile, argued that contrary to petitioners claim that he abandoned his job, he claimed that he did not report back to work
after the expiration of his suspension on December 6, 2004, because Quiroz told him that his employment was already terminated effective December
7, 2004.
Labor Arbiter declared petitioner guilty of illegal dismissal. LA held that there was no abandonment as there was no deliberate intent on the part of
Colambot to sever the employer-employee relationship and petitioner failed to notify Colambot to return to work. | Aggrieved, petitioner appealed to
NLRC. NLRC ruled in favor of Quiroz. But CA reversed.
Issues:
1. Whether or not petitioner Quiroz is guilty of Illegal Dismissal
2. Whether or not Colambot is guilty of abandonment
Ruling:
1. No.
There was no illegal dismissal, no dismissal having actually taken place. In illegal dismissal cases, the employer bears the burden of proving that the
termination was for a valid or authorized cause. However, before the employer must bear the burden of proving that the dismissal was legal, the
employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to
the legality or illegality thereof. In the present case, however, the facts and the evidence do not establish a prima facie case that the employee was
dismissed from employment.
Other than Colambot's unsubstantiated allegation of having been verbally terminated from his work, there was no evidence presented to show that he
was indeed dismissed from work or was prevented from returning to his work. In the absence of any showing of an overt or positive act proving that
petitioners had dismissed respondent, the latter's claim of illegal dismissal cannot be sustained. The Notice of Suspension shows that he is merely
suspended from work. It was also apparent that there was a specific instruction for him to return back to work on Dec. 7.
There were no wordings whatsoever implying actual or constructive dismissal. Thus, Colambot's general allegation of having been orally dismissed
from the service as against the clear wordings and intent of the notice of suspension which he signed, we are then inclined to believe that there was no
dismissal.
2. No.
To constitute abandonment of work, two elements must be present:
a. the employee must have failed to report for work or must have been absent without valid or justifiable reason; and
b. there must have been a clear intention on the part of the employee to sever the employer-employee relationship manifested by some overt act.
Mere absence or failure to report for work, even after notice to return, is not tantamount to abandonment.
The burden of proof to show that there was unjustified refusal to go back to work rests on the employer. Abandonment is a matter of intention and
cannot lightly be presumed from certain equivocal acts. To constitute abandonment, there must be clear proof of deliberate and unjustified intent to
sever the employer-employee relationship.
In the instant case, other than Colambot's failure to report back to work after suspension, petitioners failed to present any evidence which tend to show
his intent to abandon his work. Petitioner failed to discharge the burden.
These circumstances, taken together, the lack of evidence of dismissal and the lack of intent on the part of the respondent to abandon his work, the
remedy is reinstatement but without backwages. However, considering that reinstatement is no longer applicable due to the strained relationship
between the parties and that Colambot already found another employment, each party must bear his or her own loss.
Integrated Micorelctronics Inc. vs. Pionella
G.R. No. 200222, Aug. 28, 2013
Facts:
Adonis Pionilla was hired by IMI as its production worker. On May 5, 2005, Pionilla received a notice from IMI requiring him to explain the incident which
occurred the day before where he was seen escorting a lady to board the company shuttle bus at the Alabang Terminal. It was reported by the bus
marshall that the lady was wearing a company identification card (ID) which serves as a free pass for shuttle bus passengers even if she was just a
job applicant at IMI. In this regard, Pionilla admitted that he lent his ID to the lady who turned out to be his relative. He further intimated that he risked
lending her his ID to save on their transportation expenses. Nevertheless, he apologized for his actions.
During the Conscience Committee hearing, Pionilla admitted that at the time of the incident, he had two IDs in his name as he lost his original ID in
November 2004 but was able to secure a temporary ID later. Based on the foregoing, IMI found Pionilla guilty of violating Article 6.12 of the Company
Rules and Regulations (CRR) which prohibits the lending of ones ID since the same is considered a breach of its security rules and carries the penalty
of dismissal. Subsequently, Pionilla received a letter informing him of his dismissal from service.
Three days after, he filed a complaint for illegal dismissal with damages against IMI.
LA ruled in favor of Pionilla ordering reinstatement and payment of backwages. Dissatisfied, IMI elevated the matter to the National Labor Relations
Commission (NLRC).
NLRC reversed the LAs ruling, finding Pionillas dismissal to be valid. It pointed out that Pionillas act of lending his temporary ID was willful and
intentional as he, in fact, admitted and apologized for the same. The NLRC further ruled that Pionillas attitude in violating the CRR could be treated as
perverse as bolstered by his failure to surrender his temporary ID despite locating the original one. Dissatisfied, Pionilla filed a petition for certiorari
before the CA.

153

CA ruled in favor of Pionilla. It found that while IMIs regulations on company IDs were reasonable, the penalty of dismissal was too harsh and not
commensurate to the misdeed committed. It also stated that the while the right of the employer to discipline is beyond question, it, nevertheless,
remains subject to reasonable regulation. It further noted that Pionilla worked with IMI for a period of nine years without any derogatory record and even
observed that his performance rating had always been "outstanding."
Hence, the present motion for reconsideration.
Issue: Whether or not Pionilla is entitled to reinstatement and full backwages.
Ruling:
The motion for reconsideration is partly granted. Court ordered his reinstatement but without backwages.
As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation pay, if reinstatement is not viable) and payment of full
backwages. In certain cases, however, the Court has carved out an exception to the foregoing rule and thereby ordered the reinstatement of the
employee without backwages on account of the following:
(a) the fact that dismissal of the employee would be too harsh of a penalty; and
(b) that the employer was in good faith in terminating the employee.
In this case, the Court observes that: (a) the penalty of dismissal was too harsh of a penalty to be imposed against Pionilla for his infractions; and (b)
IMI was in good faith when it dismissed Pionilla as his dereliction of its policy on ID usage was honestly perceived to be a threat to the company's
security.
The Court finds it proper to accord the same disposition and consequently directs the deletion of the award of back wages in favor of Pionilla,
notwithstanding the illegality of his dismissal.
Asia Brewery Inc. vs. Tunay na Pagkakaisa ng Manggagawa sa Asia
G.R. No. 171594-96, September 18, 2013
Facts:
Tunay Na Pagkakaisa ng mga Manggagawa sa Asia (TPMA) is a legitimate labor organization, certified as the sole and exclusive bargaining agent of all
regular rank and file employees of [petitioner corporation] Asia Brewery, Incorporated (ABI). The [petitioner corporation], on the other hand, is a
company engaged in the manufacture, sale and distribution of beer, shandy, glass and bottled water products. It employs about 1,500 workers and has
existing distributorship agreements with at least 13 companies.
Since their old collective bargaining agreement had already expired, the two are now negotiating for a new CBA which will apply for the next 3 years.
After about 18 sessions or negotiations, the parties were still unable to reconcile their differences on their respective positions on most items,
particularly on wages and other economic benefits. TPMA declared a deadlock and filed for a strike.
The Secretary of Labor, Patricia Sto. Tomas, assumed jurisdiction over the matter resolved the deadlock between the parties. She gave an arbitral
award on the Wage increase that will take effect for the next 3 years and on the Health care premiums.
Thereafter, on February 9, 2004, the parties executed and signed the Collective Bargaining Agreement with a term from August 1, 2003 to July 31,
2006.
However, TPMA questions the award rendered by the Secretary of Labor and imputing grave abuse of discretion upon the public respondent because
such awards were based on unaudited financial statements. The Court of Appeals vacated the decision of the Secretary of Labor and and remanded it
back to render the proper awards based on the correct approach on deciding the dispute.
Issue: Whether or not the CA erred when it remanded to the Secretary of Labor the issue on wage increase?
Ruling:
The Secretary of Labor gravely abused her discretion when she relied on the unaudited financial statements of ABI in determining the wage award
because such evidence is self-serving and inadmissible. This may have resulted to a wage award that is based on an inaccurate and biased picture of
ABIs capacity to pay one of the more significant factors in making a wage award. Petitioner corporation has offered no reason why it failed and/or
refused to submit its audited financial statements for the past five years relevant to this case. This only further casts doubt as to the veracity and
accuracy of the unaudited financial statements it submitted to the Secretary of Labor. Verily, we cannot countenance this procedure because this could
unduly deprive labor of its right to a just share in the fruits of production and provide employers with a means to understate their profitability in order to
defeat the right of labor to a just wage.
As can be seen when it gave the wage award, the Secretary of Labor failed to indicate the actual data upon which the wage award was based. It even
appears that she utilized the "middle ground approach which we precisely warned against in Meralco. Factors such as the actual and projected net
operating income, impact of the wage increase on net operating income, the company's previous CBAs, and industry trends were not discussed in
detail so that the precise bases of the wage award are not discernible on the face of the Decision. The contending parties are effectively precluded from
seeking a review of the wage award, even if proper under our ruling in Meralco, because of the general but unsubstantiated statement in the Decision
that the wage award was based on factors like the bargaining history, trends of arbitrated and agreed awards, and industry trends. In fine, there is no
way of determining if the Secretary of Labor utilized the proper evidence, figures or data in arriving at the subject wage award as well as the
reasonableness thereof. This falls short of the requirement of administrative due process obligating the decision-maker to adjudicate the rights of the
parties in such a manner that they can know the various issues involved and the reasons for the decision rendered.
Based on the foregoing, we hold that the Secretary of Labor gravely abused her discretion in making the subject wage award. The appellate court, thus,
correctly remanded this case to the Secretary of Labor for the proper determination of the wage award which should utilize, among others, the audited
financial statements of petitioner corporation and state with sufficient clarity the facts and law on which the wage award is based.

154

Hormillosa vs. Coca-Cola Bottlers Phils

GR No. 198699, October 9, 2013
Facts:
Hormillosa was employed as a route salesman by Coca-Cola Bottlers Phils., Inc. (CBPI). His duties included, among others, selling CBPI's soft drink
products, either on cash or on credit basis; receiving payments from proceeds of the sale or payments of past due or current accounts; issuing sales
invoices; and receiving empty bottles and cases of soft drinks (empties).
Sometime in the early part of 1999, the then CBPI District Sales Supervisor, Tiosayco, conducted a verification and audit of the accounts handled by
Hormillosa. He discovered transactions in violation of CCBPI Employee Code of Disciplinary Rules and Regulations, specifically "Fictitious sales
transactions; Falsification of company records/data/documents/invoices/reports; fictitious issuances of TCS/COL (Temporary Credit Sales/Container on
Loan); non-issuance or mis-issuance of invoices and receipts as well as commercial documents to dealers; forgery; misuse, abuse or defalcation of
funds from market development program." On March 8, 1999, Tiosayco issued a memorandum to Hormillosa informing him that he was being placed on
grounded status and would be subjected to an investigation.
The investigation showed a number of fictitious transactions that were denied by its clients such as the extended credits that were extended to them
through forged or tampered sales invoices.
Tiosayco directed Hormillosa to report to his office to submit an explanation on his alleged violations and warned him that his failure to answer on said
allegations is a waiver of his opportunity to be heard. Homillosa failed to report after a number of chances that were given to him. Instead, Homillosa
informed Tiosayco that he filed a case against CBPI for Unfair Labor Practice (ULP).
On March 22, 1999, Tiosayco submitted his findings and recommendations to the Regional Sales Manager, proposing the termination of Hormillosa
which CBPI gave credence to the report and approved his recommendation. Hormillosa was informed of his termination on the ground of Falsification of
Invoices, Misappropriation of Company funds, violation of company rules and loss of trust and confidence.
On May 24, 1999, Hormillosa filed a complaint for ULP (harassment due to union activities and union busting), Illegal Dismissal, Illegal Deduction,
Illegal Grounding, Non-payment of Commission, Non-payment of 13th Month pay, Violation of CBA, Damages, and Attorney's Fees against CBPI before
the Sub-Regional Arbitration Branch No. VI(SRAB). Hormillosa averred in his position paper that prior to his dismissal, he was a member of the Board
of Directors of CBPI's employees union and he became its secretary on March 7, 1999. As secretary, he sent a copy of the new list of union officers to
the management with a warning that if CBPI would not stop harassing the members of the union, it would declare a strike.
Hormillosa denied the allegations on the anomalous transactions he was charged. He claimed however, that the verification and audit were contrary to
Section 2 (d), Article III of the Collective Bargaining Agreement (CBA) which provides: "The Company shall coordinate with the Union authorized
representative to witness the account verification that the company will conduct with respect to questionable accounts issued to Company customers by
route salesman or relief salesmen under investigation." He likewise alleged that as part of the design to destroy the union, CBPI discriminated against
the officers until they were pressured to resign.
Issues:
Whether or not Hormillosa was illegally dismissed?
Whether or not Hormillosa is entitled to separation pay?
Ruling:
Art. 282.Termination by employer. An employee may terminate an employment for any of the following causes:
(c)Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
There are substantial evidence to justify the dismissal of Hormillosa.
Hormosilla was considered an employee who regularly handled significant amounts of money and property in the normal and routine exercise of his
functions. He occupies a position of trust. There was a high degree of trust and confidence reposed on him and when this confidence was breached, the
employer was justified in taking the appropriate disciplinary action.
The Court finds that Hormillosa committed acts which warranted his dismissal from employment.
Hormillosa was given a chance to confront the witnesses against him and refute the evidence on record against him. Except for the affidavits of Cecilia
Palmes, Fely Paneiro and Shirley Jardeleza, the evidence against him remained in the records, particularly the documents and invoices he submitted to
CBPI. The falsified invoices remained unexplained by him.
Hormillosa's act of issuing sales invoices to Arnold Store could not have been performed without intent and knowledge on his part as such act could not
have been done without planning or merely through negligence. Hence, the breach was willful.
Regarding the issue of separation pay, "The only cases when separation pay shall be paid, although the employee was lawfully dismissed, are when
the cause of termination was not attributable to the employee's fault but due to: (1) the installation of labor saving devices, (2) redundancy, (3)
retrenchment, (4) cessation of employer's business, or (5) when the employee is suffering from a disease and his continued employment is prohibited
by law or is prejudicial to his health and to the health of his co-employees (Articles 283 and 284, Labor Code.) Other than these cases, an employee
who is dismissed for a just and lawful cause is not entitled to separation pay even if the award were to be called by another name." From our discussion
above, Hormillosa is not entitled to separation pay.
Abbott Laboratories Phils. vs. Alcaraz
GR No. 192571, April 22, 2013, En banc; see also Resolution, dated April 22, 2014
Facts:
Alcaraz was hired as Regulatory Affairs Manager of petitioner Abbott Laboratories, which was an item under the companys Hospira Affiliate Local
Surveillance Unit (ALSU) department. In Abbotts offer sheet, it was stated that Alcaraz was to be employed on a probationary basis. During her pre-

155

employment orientation, she was briefed on her duties and responsibilities which include the management, evaluation, and discipline of the staff of
Hospira. Days later, she received an e-mail which contained an explanation of the procedure for evaluating the performance of probationary employees
and further indicated that Abbott had only one evaluation system for all of its employees. She was also given copies of Abbotts Code of Conduct and
Probationary Performance Standards and Evaluation (PPSE) and Performance Excellence Orientation Modules (Performance Modules).
On May 16, 2005, Alcaraz was called to a meeting with the general manager of Abbott where she was informed that she failed to meet the
regularization standards for the position of Regulatory Affairs Manager. Thereafter, she was requested Alcaraz to tender her resignation, else they be
forced to terminate her services. She was also told that, regardless of her choice, she should no longer report for work and was asked to surrender her
office identification cards.
On May 23, 2005, Abbott's officers personally handed to Alcaraz a letter stating that her services had been terminated effective May 19, 2005. The letter
detailed the reasons for Alcarazs termination particularly, that Alcaraz: (a) did not manage her time effectively; (b) failed to gain the trust of her staff
and to build an effective rapport with them; (c) failed to train her staff effectively; and (d) was not able to obtain the knowledge and ability to make sound
judgments on case processing and article review which were necessary for the proper performance of her duties. Alcaraz also received another copy of
the said termination letter via registered mail.
Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint for illegal dismissal and damages against Abbott and its
officers. She claimed that she should have already been considered as a regular and not a probationary employee given Abbotts failure to inform her of
the reasonable standards for her regularization upon her engagement as required under Article 29525 of the Labor Code. In this relation, she
contended that while her employment contract stated that she was to be engaged on a probationary status, the same did not indicate the standards on
which her regularization would be based.
The LA dismissed Alcaraz' petition for lack of merit while the NLRC reversed the same and was affirmed by the CA. Thus, the petition.
Issues:
a. WON Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular employee;
b. WON Alcaraz was validly terminated from her employment
Ruling:
a.) A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of probationary employment, aside from just or
authorized causes of termination, an additional ground is provided under Article 295 of the Labor Code, i.e., the probationary employee may also be
terminated for failure to qualify as a regular employee in accordance with the reasonable standards made known by the employer to the employee at
the time of the engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated for any of the
following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides that if the employer fails to inform the
probationary employee of the reasonable standards upon which the regularization would be based on at the time of the engagement, then the said
employee shall be deemed a regular employee, viz.: (d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at
that time, he shall be deemed a regular employee.
In other words, the employer is made to comply with two (2) requirements when dealing with a probationary employee: first , the employer must
communicate the regularization standards to the probationary employee; and second , the employer must make such communication at the time of the
probationary employees engagement. If the employer fails to comply with either, the employee is de emed as a regular and not probationary
employee.
An examination of the records reveals that Abbott had indeed complied with the above-stated requirements. This conclusion is largely impelled by the
fact that Abbott clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior to, during the time of her engagement,
and the incipient stages of her employment, as evidenced by the offer sheet and employment contract among others. SC ruled that Alcaraz was a
probationary employee and that her consequent dismissal must stand.
b.) Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code states that [i]f the termination is brought about by the x x x failure of an
employee to meet the standards of the employer in case of probationary employment, it shall be sufficient that a written notice is served the employee,
within a reasonable time from the effective date of termination.
Alcaraz's dismissal was effected through a letter dated May 19, 2005 which she received on May 23, 2005 and again on May 27, 2005. Stated therein
were the reasons for her termination, i.e., that after proper evaluation, Abbott determined that she failed to meet the reasonable standards for her
regularization considering her lack of time and people management and decision-making skills, which are necessary in the performance of her functions
as Regulatory Affairs Manager. Undeniably, this written notice sufficiently meets the criteria set forth above, thereby legitimizing the cause and manner
of Alcarazs dismissal as a probationary employee under the parameters set by the Labor Code.
Gemina Jr vs. bankwise Inc. et al.
GR No. 175365, October 23, 2013
Facts:

156

Petitioner Gemina signed an employment contract with respondent Bankwise as Marketing Officer with the rank of Senior Manager, with an annual
salary of P750,000.00 b ased on a fifteen-month scheme or P50,000.00 per month and a service vehicle for his field work. The same contract stipulated
for a fund level commitment of P100,000,000.00 for the first six (6) months of employment.
During his first months in Bankwise, Gemina's performance was satisfactory. However, when the former got involved in a controversy, he had difficulty
in soliciting new depositors and after 5 months, he had the lowest performance among the members of the fund management group. This prompted his
supervisors to call his attention and warn him of his obligations under the contract of employment and failure to comply with those constitute breach of
his contractual obligations.
Despite the warning, Gemina went on leave for eleven (11) days. Thereafter, he incurred absences without leave and did not bother to inform the bank
regarding the reason therefor. Pascua and Galapate, petitioner's seniors tried to contact him to inquire about the reason of his long absence and
requested him to return the company vehicle but to no avail. Instead, petitioner filed a complaint for illegal dismissal against Bankwise.
LA held that Gemina was illegally dismissed while the NLRC held that there was no constructive dismissal, rather Gemina abandoned his employment.
CA on the other hand denied the petition for certiorari filed by the petitioner.
Issues:
a. WON the fund level commitment is a condition for Geminas employment to warrant breach of his contractual obligations
b. WON Gemina was constructively dismissed
Ruling:
a. The fund level commitment is a condition for Gemina's employment. A fund level commitment was stipulated as a term or condition on Geminas
contract of employment. Though not per se a ground for dismissal, it is the standard by which Geminas performance will be evaluated by Bankwises
management. Thus, the contract states, "your performance relative to your ability to generate deposits shall be monitored monthly and reviewed on
your 6th month." The stated amount of funds sets the goal or target amount of funds which Gemina should strive to generate within a specific number of
months.
It must be clear, however, that the fund level commitment is not the sole basis of Geminas employment. In the same manner, the failure to comply with
this undertaking does not automatically lead to dismissal from employment. Gemina will still be subjected to the managements evaluation to determine
his performance based on the amount of funds he was able to bring in to the coffers of Bankwise. Even then, Gemina may not conveniently brush aside
compliance with the fund level commitment, thinking that it does not have any implication on employment. It bears stressing that while not an automatic
ground for dismissal, the failure to generate the funds translates to a poor performance rating which may ultimately jeopardize his continued
employment. Depending on the results of the periodic evaluation undertaken by the management, the failure to comply with the fund level commitment
may eventually justify his dismissal from employment. Thus, Gemina must put forth all his efforts in order to fulfill his fund level commitment.
b. There was no constructive dismissal. There is constructive dismissal when "there is cessation of work, because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay and other benefits. Aptly called a dismissal in
disguise or an act amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear
discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him
except to forego his continued employment."

Baguio Central University vs. Gallente,

GR No. 188267, December 2, 2013
Facts:
Respondent was hired by BCU as instructor in 1991 and was eventually promoted to dean of the Universitys College of Arts, Sciences and Public
Administration. While still serving as dean, he organized GRC Review and Language Center under the name Genesis Gallente and listed under the
Articles of Incorporation that its purpose is to conduct review classes for PRC and CSC exams and also provided the address of BCU as its primary
address. BCUs President, Dr. Fernandez called the respondents attention on the matter and conducted grievance meetings but he resigned from the
BCU and then filed before the LA a complaint for illegal (constructive) dismissal. LA decided in favor of Gallente then it was reversed by the NLRC. CA
then reinstated the ruling of the LA.
Issue: WON Gallente was validly dismissed with loss of trust and confidence as ground thereof.
Ruling:
SC finds for the petitioner. For an employees dismissal to be valid it must comply with two basic requirements; 1) just or authorized cause, being the
substantive aspect, and 2) the observance of due process, being the procedural aspect. Article 282 (c) of the Labor Code provides that an employer
may terminate an employment for fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative
provided that these two conditions are present: 1) the employee holds a position of trust or a managerial employee and 2) the act constituting such shall
be established.
Being the dean of two departments, Gallente was tasked to assist the school head on matters of policy affecting the entire institution which would then
grant him discretion and powers equivalent to a managerial employee and as such, the first requirement is satisfied. For the second requirement, the
Court found that Gallente engaged in a venture that would have directly conflicted with BCUs interest as he now placed himself in a position to perform

157

substantially the same task of formulating and updating the programs of learning for both institutions. Further, the fact that BCU suffered no damage
because of the failure of GRC to fully operate is beside the point as the heart of the loss-of-trust charge is the betrayal of the employee of the
employers trust. Finally, Gallente invalidly appropriated BCUs property by listing its address as that of GRC without authority and worse, it created the
notion for the public that it is a BCU sponsored venture.
Sangwoo Phils Inc. et al., vs. Sangwoo Phils Inc Employees Union
GR No. 173154, December 9, 2013
Facts:
This is a consolidated petition where both parties seek to set aside or modify the CA ruling pertaining to their dispute. On July 25, 2003 while both
parties are in the midst of negotiations for a CBA, SPI filed with the DOLE a letter-notice of temporary suspension of operations due to lack of orders for
one month beginning Sept 15. SPI then asked for extension until March 15, 2004 which prompted the filing of a complaint on Oct 28, 2003 by SPEU
with the RAB for unfair labor practice with illegal closure and dismissal. On Feb 12, 2004, SPI posted notices in the company premises of its cessation
of business operations effective March 16 and furnished the DOLE and SPEU a copy of said notice. SPI offered separation pay for its employees and
234 accepted the same and executed quitclaims while the rest was given until March 25 but still refused. The LA found that SPI was experiencing
economic losses and complied with the notice requirement, thus cannot be held liable for separation pay. The NLRC upheld but modified the same to
grant separation pay as SPI already paid 234 employees. SPI offered to pay the employees 15,000 pesos each as a settlement but they refused to
accept the same. CA then upheld the ruling but stated that SPI is not liable for separation pay. Instead, SPI should pay the 15,000 settlement offer.
Issues:
1. WON the employees are entitled to separation pay;
2. WON SPI complied with the notice requirement of Article 297 of the Labor Code.
Ruling:
1. SPI is not liable for separation pay. Generally, closure of business as an authorized cause for termination of employment requires the employer to
give out separation pay to the employees except when the closure is due to serious business losses. The LA, NLRC and CA all ruled that SPI was
suffering from serious business losses which resulted in its permanent shutdown. To require an employer to be generous when it is no longer in a
position to do so would be oppressive, unjust and unfair to the employer. The 15,000 offer made by SPI as settlement was a calculated move to avoid
further litigation expenses but was not accepted by the employees, said offer did not ripen into an enforceable obligation.
2. The notice posted by the employer in the company premises does not comply with the requirement, it being necessary that the one month notice be
served on each employee personally. The LA, NLRC and CA erred therefore in ruling that SPI complied with the notice requirement. Employers with a
valid cause for termination but conducts such with a procedural infirmity is liable for nominal damages amounting to 50,000 for authorized cause and
30,000 for just causes. Jurisprudence however, exhorts that such damages may be modified if the payment thereof is unjust, impossible or too
burdensome. The Court awarded nominal damages for the employees for 10,000 each.
International School Manila et al., vs. International School Alliance of Educators et al.
GR No. 167286, February 5, 2014
Facts:
Evangeline Santos, herein respondent was a faculty of the International School Manila since 1978. In the year 1992 she applied for a leave of absence.
When she returned in 1993, only one teaching load for Spanish was available, thus she agreed to teach 4 Filipino classes. As per evaluation during the
year 1993, respondents evaluation stated that she needed improvement in key areas such as use of effective questioning techniques and enforcement
of academic and classroom behavior among others. The following school year, Santos expressed that she will be teaching for the school year and that
she did not prefer a change in the teaching assignments. For said school year, she was again evaluated and her evaluation results mirrored those
areas in which she needed improvement. The situation was the same for school year 1995-1996.
In 1996, a Professional Growth Plan designed by Asst. Principal Peter Loy was signed by Santos wherein she undertook to focus and improve on the
specifically stated areas of her teaching that she need to improve on. Phase 1 was Planning. But even with the Professional Growth Plan and the series
of meetings and consultations conducted for the benefit of Santos, her over-all performance did not improve. In fact, 8 months into the implementation
of the Professional Growth Plan, she was still in Phase 1.
In April 10, 1997, the school then wrote a letter to Santos asking her to explain why she her services should not be terminated in view of her
performance way below the standards set by said school. Santos was given the chance to answer. A meeting was thereafter conducted wherein Santos
was allowed to bring counsel or representative. Santos was accompanied by Raquel Ching, President of the International School Alliance of Educators.
Positions of the parties were clarified in the meeting and was held, Santos was being charged by the school with gross inefficiency or negligence in the
performance of duties. An administrative investigation followed. The committee who conducted the investigation recommended that the employment of
Santos cannot be continued.
Adopting the recommendation by the investigating committee, Santos was informed in a letter of her termination effective June 7, 1997. Bases of which
was the finding of the committee that despite three years of numerous consultations with her supervisors, no appreciable improvement was seen in the
performance of Santos.
Issues:
1.
2.

Whether or not Santos was illegally dismissed?

Whether or not Santos is entitled to reinstatement or separation pay with backwages?

158

Ruling:
1.

Santos was not illegally dismissed.

To constitute a valid dismissal from employment, two requisites must concur: (1) the dismissal must be for any of the causes provided in Article 282 of
the Labor Code; and, (2) the employee must be given an opportunity to be heard and to defend himself.
Dismissal Must be for any causes provided in Art. 282
In the collective bargaining agreement (CBA) between the School and ISAE for the years 1992-1995, Section 13 of Appendix A thereof expressly states
that "termination of employment shall be in accordance with the laws of the Philippines as presented in the LABOR CODE.
ART. 282. Termination by employer. An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.
The Court had occasion to explain in Century Iron Works, Inc. v. Baas the concept of gross and habitual neglect of duties. Thus:
Gross negligence connotes want or absence of or 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. Fraud and willful neglect of duties imply bad faith of the employee in failing to
perform his job, to the detriment of the employer and the latters business. Habitual neglect, on the other hand, implies repeated failure to perform ones
duties for a period of time, depending upon the circumstances.
On gross inefficiency, we ruled in Lim v. National Labor Relations Commission that:
Gross inefficiency falls within the purview of "other causes analogous to the foregoing," and constitutes, therefore, just cause to terminate an employee
under Article 282 of the Labor Code. One is analogous to another if it is susceptible of comparison with the latter either in general or in some specific
detail; or has a close relationship with the latter. "Gross inefficiency" is closely related to "gross neglect," for both involve specific acts of omission on the
part of the employee resulting in damage to the employer or to his business. In Buiser vs. Leogardo, this Court ruled that failure to observe prescribed
standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal.
Viewed in light of the above doctrines, the Court is not convinced that the actuations of Santos complained of by the petitioners constituted gross and
habitual neglect of her duties.
What can be gathered from a thorough review of the records of this case is that the inadequacies of Santos as a teacher did not stem from a reckless
disregard of the welfare of her students or of the issues raised by the School regarding her teaching. Far from being tainted with bad faith, Santoss
failings appeared to have resulted from her lack of necessary skills, in-depth knowledge, and expertise to teach the Filipino language at the standards
required of her by the School.
Be that as it may, we find that the petitioners had sufficiently proved the charge of gross inefficiency, which warranted the dismissal of
Santos from the School.
The Court enunciated in Pea v. National Labor Relations Commission73 that "it is the prerogative of the school to set high standards of efficiency for
its teachers since quality education is a mandate of the Constitution. As long as the standards fixed are reasonable and not arbitrary, courts are not at
liberty to set them aside." Moreover, the prerogative of a school to provide standards for its teachers and to determine whether these standards have
been met is in accordance with academic freedom, which gives the educational institution the right to choose who should teach.
The Court finds that, not only did the petitioners documentary evidence sufficiently prove Santoss inefficient performance of duties, but the same also
remained unrebutted by respondents own evidence. On the contrary, Santos admits in her pleadings that her performance as a teacher of Filipino had
not been satisfactory but she prays for leniency on account of her prior good record as a Spanish teacher at the School. Indeed, even the Labor Arbiter,
the NLRC and the Court of Appeals agreed that Santos was not without fault but the lower tribunals deemed that termination was too harsh a penalty.
Nonetheless, the Court finds that petitioners had satisfactorily discharged the burden of proving the existence of gross inefficiency on the
part of Santos, warranting her separation from the school.
As regards the requirements of procedural due process:
Section 2(d) of Rule 1 of The Implementing Rules of Book VI states that:
For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within
which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the
charge, present his evidence, or rebut the evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination

159

In this case, the School complied with the above requirements. After a thorough evaluation of Santoss performance, the School held a series of
conferences and meetings with Santos, in order to improve her performance. On March 29, 1996, the School required Santos to undertake a
Professional Growth Plan. Thereafter, when the intervention of the School failed to yield any considerable improvement on Santos, McCauley wrote her
a letter on April 10, 1997, which required her to explain in writing within forty-eight (48) hours why her employment should not be terminated in view of
her failure to meet the standards of the School on very specific areas of concern. On April 16, 1997, Santos responded to McCauleys letter, asking why
she was being required to explain. On April 21, 1997, McCauley wrote Santos a letter informing her that an administrative investigation would be
conducted on April 23, 1997 where she would be given the opportunity to be heard. On April 23, 1997, an administrative investigation was conducted.
Santos appeared therein with the assistance of ISAE President Ching. In a letter dated May 29, 1997, the School informed Santos of its decision to
terminate her employment on the ground of her failure to meet the standards of the School, which as discussed was tantamount to gross inefficiency.
2.

In view of the finding that Santos was validly dismissed from employment, she would not ordinarily be entitled to separation pay. An
exception to this rule is when the court finds justification in applying the principle of social justice according to the equities of the case.

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed
for causes other than serious misconduct or those reflecting on his moral character.
In the instant case, the Court finds equitable and proper the award of separation pay in favor of Santos in view of the length of her service with the
School prior to the events that led to the termination of her employment. To recall, Santos was first employed by the School in 1978 as a Spanish
language teacher. During this time, the records of this case are silent as to the fact of any infraction that she committed and/or any other administrative
case against her that was filed by the School. Thus, an award of separation pay equivalent to one-half (1/2) month pay for every year of service is
awarded in favor of Santos on grounds of equity and social justice.
Dreamland Hotel Resort vs. Johnson
GR No. 191455, March 12, 2014
Facts:
Dreamland is a corporation engaged in the hotel, restaurant, and allied business and is duly registered with the Securities and Exchange Commission.
Prentice is its current President and Chief Executive Officer. Respondent Stephen B. Johnson is an Australian citizen who came to the Philippines as a
businessman/investor.
Sometime on June 21, 2007, Prentice and Johnson entered into an Employment Agreement, which stipulates among others, that Johnson shall serve
as Operations Manager of Dreamland from August 1, 2007 and shall serve as such for a period of three (3) years.
From the start of August 2007, as stipulated in the Employment Agreement, respondent Johnson already reported for work. It was then that he found
out to his dismay that the resort was far from finished. However, he was instructed to supervise construction and speak with potential guests. He also
undertook the overall preparation of the guestrooms and staff for the opening of the hotel, even performing menial tasks (i.e. inspected for cracked tiles,
ensured proper grout installation, proper lighting and air-conditioning unit installation, measured windows for curtain width and showers for shower
curtain rods, unloaded and installed mattresses, beddings, furniture and appliances and even ironed and hung guest room curtains).
As Johnson remained unpaid since August 2007 and he has loaned all his money to petitioners, he asked for his salary after the resort was opened in
October 2007 but the same was not given to him by petitioners. Johnson became very alarmed with the situation as it appears that there was no
intention to pay him his salary, which he now depended on for his living as he has been left penniless. He was also denied the benefits promised him as
part of his compensation such as service vehicles, meals and insurance.
Thus, on November 3, 2007 respondent Johnson was forced to submit his resignation. In deference to the Employment Agreement signed, [Johnson]
stated that he was willing to continue work for the three month period stipulated therein.
However, in an SMS or text message sent by Prentice to [Johnson] on the same day at around 8:20 pm, he was informed that " I consider your
resignation as immediate". Despite demand, petitioners refused to pay Johnson the salaries and benefits due him.
On January 31, 2008, Johnson filed a Complaint for illegal dismissal and non-payment of salaries, among others, against the petitioners.
Issue: Whether or not Johnson was illegally dismissed?
Ruling:
Johnson was illegally dismissed.
As regards the NLRC findings that Johnson was constructively dismissed and did not abandon his work, the Court is in consonance with this
conclusion with the following basis:
Even the most reasonable employee would consider quitting his job after working for three months and receiving only an insignificant fraction of his
salaries. There was, therefore, not an abandonment of employment nor a resignation in the real sense, but a constructive dismissal, which is defined as
an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely.
"There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it would foreclose any choice by him except to forego his continued employment. It exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.

160

It is impossible, unreasonable or unlikely that any employee, such as Johnson would continue working for an employer who does not pay him his
salaries. Applying the Courts pronouncement in Duldulao v. CA, the Court construes that the act of the petitioners in not paying Johnson his salaries for
three months has become unbearable on the latters part that he had no choice but to cede his employment with them.
The Court quotes the pertinent sections of Johnsons resignation letter which reflects the real reason why he was resigning as operations manager of
the hotel:
I hereby tender my resignation to you, Mr[.] Wes Prentice, Dreamland Resort, Subic, Zambales, Philippines.
Since joining Dreamland Resort & Hotel over three months ago I have put my heart and soul into the business. I have donated many hours of my
personal time. I have frequently worked seven days a week and twelve to thirteen hours a day. I am now literally penniless, due totally to the fact that I
have lent you and your resort/hotel well over $200,000AU (approx 8million pesos) and your non-payment of wages to me from 1st August 2007 as per
Employment Agreement.
The above preceding statement only goes to show that while it was Johnson who tendered his resignation, it was due to the petitioners acts that he
was constrained to resign. The petitioners cannot expect Johnson to tolerate working for them without any compensation.
Since Johnson was constructively dismissed, he was illegally dismissed.
Relief Granted:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. In
instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted.
In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and
backwages.
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is
no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.
In the present case, the NLRC found that due to the strained relations between the parties, separation pay is to be awarded to Johnson in lieu of his
reinstatement.
Accordingly, the award of backwages should be computed from November 3, 2007 to August 1, 2010 - which is three years from August 1, 2007.
Furthermore, separation pay is computed from the commencement of employment up to the time of termination, including the imputed service for which
the employee is entitled to backwages. As one-month salary is awarded as separation pay for every year of service, including imputed service, Johnson
should be paid separation pay equivalent to his three-month salary for the three-year contract.
Castillo et al., vs. Prudentialife Plans Inc.
GR No. 196142, March 26, 2014
Facts:
Individual petitioners Castillo, Evangelista, Dolendo, and Sy were regular employees of respondent Prudentialife Plans, Inc. The individual petitioners
are members of PPEU-FFW. Under Section 4, Article X of the parties' Collective Bargaining Agreement, Prudentialife employees were granted an
optical benefit allowance of P2,500.00 to subsidize prescription eyeglasses for those who have developed vision problems in the course of employment.
Many Prudentialife employees petitioners included availed thereof and Prudentialife was flooded with requests for reimbursement for eyeglasses
the employees supposedly purchased from a single outfit/supplier, Alavera Optical. Suspecting fraud, Prudentialife began an investigation into the
matter, and on February 22, 2006, it sent individual written Notices to Explain to petitioners and other employees who availed of the benefit. In her
written explanation, Castillo claimed that she acted in good faith in availing of the optical benefit allowance; that she did not conspire with Alavera
Optical in the overpricing of her eyeglasses; that she was made to believe that her transaction with Alavera Optical whereby the latter would issue an
official receipt for the eyeglasses even without actual payment thereof, which Castillo would then claim from Prudentialife was regular; that she was
unaware that Alavera Optical was using a fictitious address and telephone number; and that she had no intention to defraud Prudentialife. Other
Prudentialife employees admitted that the eyeglasses they obtained cost only so much, yet were overpriced for purposes of reimbursement.
Prudentialife through their investigation discovered that the employees who availed of the optical benefit allowance obtained their eyeglasses from
Alavera Optical, based on the employees' reimbursement requests/petty cash vouchers and that Alavera Optical issued prescriptions, released the
eyeglasses, and issued the official receipts therefor even though they have not been paid for.
Thus, Prudentialife concluded that petitioners and other employees knowingly availed of the optical benefit allowance to obtain a refund of the
maximum P2,500.00 benefit even though they did not have vision problems, or that their eyeglasses were worth less than P2,500.00. On April 10, 2006,
Prudentialife issued individual Notices of Termination to petitioners and other employees.
Petitioners filed a Complaint for illegal dismissal, money claims and damages (illegal dismissal case) against respondents, In their Position Paper,
petitioners mainly contended that they were illegally dismissed based on a charge of dishonesty that was not proved, but was mainly founded on
suspicion, conjecture and suppositions.
Issue:
(1) Whether or not an affidavit of the co-employee can serve as basis for proving an employee's guilt or wrongdoing.
(2) Whether or not there was a valid ground for their dismissal.
Ruling:
(1) Yes. The written statements of petitioners' co-employees admitting their participation in the scheme are admissible to establish the plan or scheme
to defraud Prudentialife; the latter had the right to rely on them for such purpose. The argument that the said statements are hearsay because the

161

authors thereof were not presented for cross-examination does not persuade; the rules of evidence are not strictly observed in proceedings before the
NLRC, which are summary in nature and decisions may be made on the basis of position papers. Besides, these written declarations do not bear
directly on petitioners' participation in the scheme; their guilt has been established by evidence other than these statements.
Petitioners' reliance on Garcia v. Malayan Insurance Co., Inc. is misplaced. Far from declaring that the statement of a co-employee may not be used to
prove the guilt of an employee accused of theft of company property, the Court held therein that the affidavit of the co-employee cannot serve as basis
for the finding that said petitioner conspired in the theft because it was so lacking in crucial details. The opposite is thus true: the affidavit or statement
of a co-employee in a labor case may prove an employee's guilt or wrongdoing if it recites crucial details of his involvement.
(2) Yes. By presenting the false receipt to their employer to obtain reimbursement for an expense which they did not in fact incur, this constituted
dishonesty. By availing of the benefit, the employee represents to Prudentialife that he has developed vision problems. If this is not true, then he has
committed an act of dishonesty as well. Given the circumstances then obtaining, the same principle holds true with respect to eyeglasses whose
lenses do not match the corresponding prescription.
For their dishonesty, the penalty of dismissal is justified pursuant to Section 2.6 (i) of the Prudentialife Personnel Manual which prescribes the penalty of
dismissal for acts of padding receipts for reimbursement or liquidation of advances or expenses. Dishonesty is a serious offense, and "no employer will
take to its bosom a dishonest employee." Dishonesty implies a "[d]ispposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity;
[l]ack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray." Acts of dishonesty
have been held to be sufficient grounds for dismissal as a measure of self-protection on the part of the employer.
Unibersidad De Sta Isabel vs. Sambajon, Jr.
GR No. 196280 & 196286, April 2, 2014, citing 2010 Mercado vs. AMA Computer College
Facts:
Universidad de Sta. Isabel (petitioner) is a non-stock, non-profit religious educational institution in Naga City. Petitioner hired Marvin-Julian L.
Sambajon, Jr. (respondent) as a full-time college faculty member with the rank of Assistant Professor on probationary status effective November 1, 2002
up to March 30, 2003.After the aforesaid contract expired, petitioner continued to give teaching loads to respondent who remained a full-time faculty
member of the Department of Religious Education for the two semesters of school-year (SY) 2003-2004 (June 1, 2003 to March 31, 2004); and two
semesters of SY 2004-2005 Sometime in June 2003, after respondent completed his course in Master of Arts in Education, major in Guidance and
Counseling, he submitted the corresponding Special Order from the Commission on Higher Education (CHED), together with his credentials for the said
master's degree, to the Human Resources Department of petitioner for the purpose of salary adjustment/increase. Subsequently, respondent's salary
was increased, as reflected in his pay slips starting October 1-15, 2004. He was likewise re-ranked from Assistant Professor to Associate Professor.
In a letter addressed to the President of petitioner, Sr. Ma. Asuncion G. Evidente, D.C., respondent vigorously argued that his salary increase should be
made effective as of June 2003 and demanded the payment of his salary differential. The school administration replied by explaining its policy on reranking of faculty members:
xxx xxx xxx
Please be informed that teachers in the Universidad are not re-ranked during their probationary period. The Faculty Manual as revised for school year
2002-2003 provides (page 38) "Re-ranking is done every two years, hence the personnel hold their present rank for two years. Those undergoing
probationary period and those on part-time basis of employment are not covered by this provision."
However, respondent found the above explanation insufficient and not clear enough. In his letter dated January 12, 2005, he pointed out the case of
another faculty member whom he did not name also on probationary status whose salary was supposedly adjusted by petitioner at the start of
school year (June) after he/she had completed his/her master's degree in March. Respondent thus pleaded for the release of his salary differential, or at
the very least, that petitioner give him categorical answers to his questions.
Apparently, to resolve the issue, a dialogue was held between respondent and Sr. Evidente. Respondent claimed that Sr. Evidente told him that the
school administration had decided to shorten his probationary period to two years on the basis of his satisfactory performance. This was categorically
denied by Sr. Evidente though the latter admitted having informed respondent "that he was made Associate Professor on account of his incessant
requests for a salary increase which the Universidad de Santa Isabel eventually accommodated . . . considering that [respondent] had obtained a
Master's Degree in June 2003." She further informed respondent that "his appointment as Associate Professor did not affect his status as a
probationary employee" and that petitioner "was not and did not exercise its prerogative to shorten his probationary period to only two years." Sr. Stella
O. Real, D.C., who issued a Certificate of Employment to respondent, likewise denied that she confirmed to respondent that petitioner has shortened
his probationary employment.
On February 26, 2005, respondent received his letter of termination which stated:
Xxxxxxxxxxxx
We regret to inform your good self that your full time probationary appointment will not be renewed when it expires at the end of this coming March 31,
2005.
Xxxxxxxxxxxxxxx
On April 14, 2005, respondent filed a complaint for illegal dismissal against the petitioner.
In his Decision dated August 22, 2006, Labor Arbiter Jesus Orlando M. Quinones ruled that there was no just or authorized cause in the termination of
respondent's probationary employment. Consequently, petitioner was found liable for illegal dismissal.

162

Petitioner appealed to the NLRC. On August 1, 2008, the NLRC rendered its Decision affirming the Labor Arbiter and holding that respondent had
acquired a permanent status pursuant to Sections 91, 92 and 93 of the 1992 Manual of Regulations for Private Schools, in relation to Article 281 of the
Labor Code, as amended. Both parties filed separate appeals before the CA. The CA sustained the conclusion of the NLRC that respondent had
already acquired permanent status when he was allowed to continue teaching after the expiration of his first appointment-contract on March 30, 2003.
However, the CA found it necessary to modify the decision of the NLRC to include the award of back wages to respondent.
Issue: Whether the Marvin Julian L. Sambajon, Jr. was illegally dismissed from the Universidad De Sta. Isabel.
Ruling:
Yes. The probationary employment of teachers in private schools is not governed purely by the Labor Code. The Labor Code is supplemented with
respect to the period of probation by special rules found in the Manual of Regulations for Private Schools. On the matter of probationary period, Section
92 of the 1992 Manual of Regulations for Private Schools regulations states:
Section 92.Probationary Period. Subject in all instances to compliance with the Department and school requirements, the probationary period for
academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six
(6) consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service
for those in the tertiary level where collegiate courses are offered on a trimester basis. (Emphasis supplied.)
Thus, it is the Manual of Regulations for Private Schools, and not the Labor Code, that determines whether or not a faculty member in an educational
institution has attained regular or permanent status. Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time teachers
who have satisfactorily completed their probationary period shall be considered regular or permanent.
Since it was explicitly provided in the above contract that unless renewed in writing respondent's appointment automatically expires at the end of the
stipulated period of employment, the CA erred in concluding that simply because the word "probationary" no longer appears below the designation (FullTime Faculty Member), respondent had already become a permanent employee. There can be no dispute that the period of probation may be reduced
if the employer, convinced of the fitness and efficiency of a probationary employee, voluntarily extends a permanent appointment even before the threeyear period ends. But absent any circumstances which unmistakably show that an abbreviated probationary period has been agreed upon, the threeyear probationary term governs. Petitioner argues that respondent's probationary period expires after each semester he was contracted to teach and
hence it was not obligated to renew his services at the end of the fifth semester (March 2005) of his probationary employment. Plainly, petitioner
considered the subject appointment contracts as fixed-term contracts such that it can validly dismiss respondent at the end of each semester for the
reason that his contract had expired.
The Court finds no merit in petitioner's interpretation of the Manual of Regulations, supplemented by DOLE-DECS-CHED-TESDA Order No. 01, series
of 1996. In the case of Mercado v. AMA Computer College-Paraaque City, Inc. 39 the Court, recognized the right of respondent school to determine for
itself that it shall use fixed-term employment contracts as its medium for hiring its teachers. Nevertheless, the Court held that the teachers' probationary
status should not be disregarded simply because their contracts were fixed-term. Thus:
The
and Fixed-term Employment

Conflict:

Probationary

Status

That in a situation where the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers , Article 281 should
assume primacy and the fixed-period character of the contract must give way.
Illegal Dismissal
Notwithstanding the limited engagement of probationary employees, they are entitled to constitutional protection of security of tenure during and before
the end of the probationary period. The services of an employee who has been engaged on probationary basis may be terminated for any of the
following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
Thus, while no vested right to a permanent appointment he enjoys a limited tenure. During the said probationary period, he cannot be terminated
except (1) for just or authorized causes, or (2) if he fails to qualify in accordance with reasonable standards prescribed by petitioner for the acquisition of
permanent status of its teaching personnel.
In a letter dated February 26, 2005, petitioner terminated the services of respondent stating that his probationary employment as teacher will no longer
be renewed upon its expiry on March 31, 2005, respondent's fifth semester of teaching. No just or authorized cause was given by petitioner. Prior to
this, respondent had consistently achieved above average rating based on evaluation by petitioner's officials and students. He had also been promoted
to the rank of Associate Professor after finishing his master's degree course on his third semester of teaching. Clearly, respondent's termination after
five semesters of satisfactory service was illegal.
Bluer Than Blue Joint Ventures Co., vs. Esteban
GR No. 192582, April 7, 2014
Facts:

163

Respondent Glyza Esteban (Esteban) was employed in January 2004 as Sales Clerk, and assigned at Bluer Than Blue Joint Ventures Company's
(petitioner) EGG boutique in SM City Marilao, Bulacan, beginning the year 2006. Part of her primary tasks were attending to all customer needs,
ensuring efficient inventory, coordinating orders from clients, cashiering and reporting to the accounting department. In November 2006, the petitioner
received a report that several employees have access to its point-of-sale (POS) system through a universal password given by Elmer Flores (Flores).
Upon investigation, it was discovered that it was Esteban who gave Flores the password. The petitioner sent a letter memorandum to Esteban on
November 8, 2006, asking her to explain in writing why she should not be disciplinary dealt with for tampering with the company's POS system through
the use of an unauthorized password. Esteban was also placed under preventive suspension for ten days.
In her explanation, Esteban admitted that she used the universal password three times on the same day in December 2005, after she learned of it from
two other employees who she saw browsing through the petitioner's sales inquiry. She inquired how the employees were able to open the system and
she was told that they used the "123456" password. On November 13, 2006, Esteban's preventive suspension was lifted, but at the same time, a notice
of termination was sent to her, finding her explanation unsatisfactory and terminating her employment immediately on the ground of loss of trust and
confidence.
On December 6, 2006, Esteban filed a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and separation pay. The Labor Arbiter
(LA) ruled in favor of Esteban and found that she was illegally dismissed. The NLRC reversed the decision of the LA and dismissed the case for illegal
dismissal. The CA granted Esteban's petition and reinstated the LA decision
The petitioner argues that it had just cause to terminate the employment of Esteban, that is, loss of trust and confidence. Esteban, the petitioner
believes, is a rank-and-file employee whose nature of work is reposed with trust and confidence. Her unauthorized access to the POS system of the
company and her dissemination of the unauthorized password, which Esteban admitted, is a breach of trust and confidence, and justifies her dismissal.
Esteban, on the other hand, avers that the competency clause she signed with the petitioner merely states the following functions: (1) attend to and
assist the customer in all their needs; (2) conduct physical inventory; (3) clean and tidy up the merchandise and store; and (4) coordinate with the
stockroom for orders. As regards the cashiering function, it merely states "to follow." As such, her main task is that of a sales clerk.
Issues:
(1) Whether or not she occupies a position of trust and confidence;
(2) Whether or not Esteban's acts constitute just cause to terminate her employment.
Ruling:
(1) Yes. Esteban was a sales clerk. Her duties, however, were more than that of a sales clerk. Aside from attending to customers and tending to the
shop, Esteban also assumed cashiering duties. As consistently ruled by the Court, it is not the job title but the actual work that the employee performs
that determines whether he or she occupies a position of trust and confidence. She had in her care and custody the store's property and funds, she is
considered as a rank-and-file employee occupying a position of trust and confidence.
(2) No. Loss of trust and confidence is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence. The
employee must be invested with confidence on delicate matters, such as the custody, handling, care and protection of the employer's property and
funds. "[W]ith respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged
events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient."
In this case, the Court finds that the acts committed by Esteban do not amount to a wilful breach of trust. She admitted that she accessed the POS
system with the use of the unauthorized "123456" password. She did so, however, out of curiosity and without any obvious intention of defrauding the
petitioner. As professed by Esteban, "she was acting in good faith in verifying what her co-staff told her about the opening of the computer by the use of
the "123456" password. She even told her co-staff not to open again said computer, and that was the first and last time she opened said computer."
The Court is not saying that Esteban is innocent of any breach of company policy. That she relayed the password to another employee is likewise
demonstrative of her mindless appreciation of her duties as a sales clerk in the petitioner's employ. But absent any showing that her acts were done
with "moral perverseness" that would justify the claimed loss of trust and confidence attendant to her job, the Court must sustain the conclusion that
Esteban was illegally dismissed.
Wenphil Corp., vs. Abing, et al.
GR No. 207983, April 7, 2014
Facts:
On December 8, 2000, LA Geobel A. Bartolabac ruled 8 that the respondents had been illegally dismissed by Wenphil. According to the LA, the
allegation of serious misconduct against the respondents had no factual and legal basis. 9 Consequently, LA Bartolabac ordered Wenphil to immediately
reinstate the respondents to their respective positions or to equivalent ones, whether actuall or in the payroll. Also, the LA ordered Wenphil to pay the
respondents their backwages from February 3, 2000 until the date of their actual reinstatement. 10
Because of the unfavorable LA decision, Wenphil appealed to the NLRC on April 16, 2001 11. In the meantime, the respondents moved for the immediate
execution of the LAs December 8, 2000 decision.12
On October 29, 2001, Wenphil and the respondents entered into a compromise agreement 13 before LA Bartolabac. They agreed to the respondents
payroll reinstatement while Wenphils appeal with the NLRC was ongoing. Wenphil also agreed to pay the accumulated salaries of the respondents for

164

the payroll period from April 5, 2001 until October 15, 2001. 14 As for the remaining payroll period starting October 16, 2001, Wenphil committed itself to
credit the respective salaries of the respondents to their ATM payroll accounts until such time that the questioned decision of LA Bartolabac is either
modified, amended or reversed by the Honorable National Labor Relations Commission. 15
On January 30, 2002, the NLRC issued a resolution 16 affirming LA Bartolabacs decision with modifications. Instead of ordering the respondents
reinstatement, the NLRC directed Wenphil to pay the respondents their respective separation pay at the rate of one (1) month salary for every year of
service. Also, the NLRC found that while the respondents had been illegally dismissed, they had not been illegally suspended. Thus, the period from
February 3 to February 28, 2000 during which the respondents were on preventive suspension was excluded by the NLRC in the computation of the
respondents backwages.17
Subsequently, Wenphil moved for the reconsideration 18 of the NLRCs January 30, 2002 resolution, but the NLRC denied the motion in another
resolution dated September 24, 2002.19
Wenphil thereafter went up to the CA via a petition for certiorari to question the NLRCs January 30, 2002 and September 24, 2002 resolutions. 20 On
August 27, 2003, the CA rendered its decision 21 reversing the NLRCs finding that the respondents had been illegally dismissed. According to the CA,
there was enough evidence to show that the respondents had been guilty of serious misconduct; thus, their dismissal was for a valid cause. 22The
respondents moved for the reconsideration of the CAs decision. 23 In a resolution24 dated February 23, 2004, the CA denied the respondents motion.
Issue: WON there was illegal dismissal
Ruling:
We resolve to DENY the petition. An order of reinstatement is immediately executory even pending appeal. The employer has the obligation to reinstate
and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court.
Under Article 223 of the Labor Code, "the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation, or at the option of the employer, merely reinstated in the payroll. The posting of a bond by
the employer shall not stay the execution for reinstatement."
The Court discussed reason behind this legal policy in Aris v. NLRC, 45 where it explained:
In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee,
the law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the
working-man. These provisions are the quintessence of the aspirations of the workingman for recognition of his role in the social and economic life of
the nation, for the protection of his rights, and the promotion of his welfare These duties and responsibilities of the State are imposed not so much to
express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary social and economic force, which the
Constitution also expressly affirms with equal intensity. Labor is an indispensable partner for the nation's progress and stability. [emphasis ours]
Since the decision is immediately executory, it is the duty of the employer to comply with the order of reinstatement, which can be done either actually
or through payroll reinstatement. As provided under Article 223 of the Labor Code, this immediately executory nature of an order of reinstatement is not
affected by the existence of an ongoing appeal. The employer has the duty to reinstate the employee in the interim period until a reversal is decreed by
a higher court or tribunal.
In the case of payroll reinstatement, even if the employers appeal turns the tide in its favor, the reinstated employee has no duty to return or reimburse
the salary he received during the period that the lower court or tribunals governing decision was for the employees illegal dismissal.
Otherwise, the situation would run counter to the immediately executory nature of an order of reinstatement. The case of Garcia v. Philippine Airlines 46 is
enlightening on this point:
Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the "refund doctrine" easily demonstrates
how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends meet, would
necessarily have to use up the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of a final
unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll reinstatement and simply find work
elsewhere in the interim, if any is available.1wphi1 Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able
and raring to return to work.
We see the situation discussed above to be present in the case before us as Wenphil observed the mandate of Article 223 to immediately comply with
the order of reinstatement by the LA. On October 29, 2001, while Wenphils appeal with the NLRC was pending, it entered into a compromise
agreement with the respondents. In this agreement, Wenphil committed to reinstate the respondents in its payroll. However, the commitment came with
a condition: Wenphil stipulated that its obligation to pay the wages due to the respondents would cease if the decision of the LA would be "modified,
amended or reversed" by the NLRC.47
Thus, when the NLRC rendered its decision on the appeal affirming the LAs finding that the respondents were illegally dismissed, but modifying the
award of reinstatement to payment of separation pay, Wenphil stopped paying the respondents wages.
The reinstatement salaries due to the respondents were, by their nature, payment of unworked backwages. These were salaries due to the respondents
because they had been prevented from working despite the LA and the NLRC findings that they had been illegally dismissed.
We point out that reinstatement and backwages are two separate reliefs available to an illegally dismissed employee. The normal consequences of a
finding that an employee has been illegally dismissed are: first, that the employee becomes entitled to reinstatement to his former position without loss

165

of seniority rights; and second, the payment of backwages covers the period running from his illegal dismissal up to his actual reinstatement. 48These
two reliefs are not inconsistent with one another and the labor arbiter can award both simultaneously.
Moreover, the relief of separation pay may be granted in lieu of reinstatement but it cannot be a substitute for the payment of backwages. In instances
where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay should be granted. In
effect, an illegally dismissed employee should be entitled to either reinstatement if viable, or separation pay if reinstatement is no longer be viable,
plus backwages in either instance.49 The rationale for such policy of distinction was vividly explained in Santos v. NLRC under these terms: 50
Though the grant of reinstatement commonly carries with it an award of backwages, the inappropriateness or
non-availability of one does not carry with it the inappropriateness or non-availability of the other.
Apparently, when the NLRC changed the LAs decision (specifically, the order to award separation pay in lieu of reinstatement), Wenphil read this to
mean to be the "modification" envisioned in the compromise agreement, Wenphil likewise effectively concluded that separation pay and backwages are
the same or are interchangeable reliefs. This conclusion can be deduced from Wenphils insistence not to pay the respondents remaining backwages
under its erroneous reasoning that this was the effect of the NLRCs order to Wenphil to pay separation pay in lieu of reinstatement.
We emphasize that the basis for the payment of backwages is different from that of the award of separation pay. Separation pay is granted where
reinstatement is no longer advisable because of strained relations between the employee and the employer. Backwages represent compensation that
should have been earned but were not collected because of the unjust dismissal. The basis for computing separation pay is usually the length of the
employees past service, while that for backwages is the actual period when the employee was unlawfully prevented from working. 51
Had Wenphil really wanted to put a stop to the running of the period for the payment of the respondents backwages, then it should have immediately
complied with the NLRCs order to award the employees their separation pay in lieu of reinstatement. This action would have immediately severed the
employer-employee relationship. However, the records are bereft of any evidence that Wenphil actually paid the respondents separation pay. Thus, the
employer-employee relationship between Wenphil and the respondents never ceased and the employment status remained pending and uncertain until
the CA actually rendered its decision that the respondents had not been illegally dismissed. In the context of the parties agreement, it was only at this
point that the payment of backwages should have stopped.
A compromise agreement should not be contrary to law, morals, good customs and public policy.
While it is true that a compromise agreement is binding between the parties and becomes the law between them, 52 it is also a rule that to be valid, a
compromise agreement must not be contrary to law, morals, good customs and public policy. 53
The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part
of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. It settles the
view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same
terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative,
employer must pay the employees salaries.
This ruling embodies a principle and policy of the law that cannot be watered down by any lesser agreement except perhaps when backwages are
already earned entitlements that the employee chooses to surrender for a valuable consideration (and even then, the consideration must at least be
equitable). This legal policy emphasizes, too, the rule that separation pay cannot be a substitute for backwages but only for reinstatement. The award of
separation pay is not inconsistent with the payment of backwages. Thus, until a higher courts or tribunals reversal of the finding that an employee had
been illegally dismissed, the employee would be entitled to receive his reinstatement salary or backwages during the period of appeal until such
reversal. This is in line with the Labor Codes policy that an order of reinstatement, which can either be actual or through the payroll, is immediately
executory and is not affected by the period of appeal.
Arabit et al., vs. Jardine Pacific Finance Inc.
GR No. 181719, April 21, 2014
Facts:
Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc. (formerly MB Finance) (Jardine). The petitioners were also
officers and members of MB Finance Employees Association-FFW Chapter (the Union), a legitimate labor union and the sole exclusive bargaining
agent of the employees of Jardine. The table below shows the petitioners previously occupied positions, as well as their total length of service with
Jardine before their dismissal from employment.
Petitioner

Position

Number
Service

Eugene S. Arabit

Field Collector

20 years

Edgardo C. Sadsad

Field Collector

3 years

Lowell C. Funtanoz

Field Collector

7 years

Gerardo F. Punzalan

Field Collector

16 years

of

Years

of

166

Freddie M. Mendoza

Field Collector

Emilio B. Belen

Senior
Credit
Collector- San Pablo Branch

Violeta C. Diumano

Senior
Clerk/Documentation Clerk-San Pablo Branch

20 years
Investigator/Field 18 years
Accounting 19 years

On the claim of financial losses, Jardine decided to reorganize and implement a redundancy program among its employees. The petitioners were
among those affected by the redundancy program. Jardine thereafter hired contractual employees to undertake the functions these employees used to
perform.
The Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB), questioning the termination of employment of the
petitioners who were also union officers. The Union alleged unfair labor practice on the part of Jardine, as well as discrimination in the dismissal of its
officers and members.
Negotiations ensued between the Union and Jardine under the auspices of the NCMB, and both parties eventually reached an amicable settlement. In
the settlement, the petitioners accepted their redundancy pay without prejudice to their right to question the legality of their dismissal with the NLRC.
Jardine paid the petitioners a separation package composed of their severance pay, plus their grossed up transportation allowance. 7
On June 1, 1999, the petitioners and the Union filed a complaint against Jardine with the NLRC for illegal dismissal and unfair labor practice.
Issue: WON there was illegal dismissal.
Ruling:
In this context, the primary question we confront is: did the CA correctly rule that the NLRC committed grave abuse of discretion when it found that
Jardine validly terminated the petitioners employment because of redundancy?
Redundancy in contrast with retrenchment
Jardine, in its petition for certiorari with the CA, posited that the distinction between redundancy and retrenchment is not material. 48 It contended that
employers resort to these causes of dismissal for purely economic considerations. 49 Jardine further argued that the immateriality of the distinction
between these two just causes for dismissal is shown by the fact that redundancy and retrenchment are found and lumped together in just one single
provision of the Labor Code (Article 283 thereof).
This Court has already ruled before that retrenchment and redundancy are two different concepts; they are not synonymous; thus, they should not be
used interchangeably. 50 The clear distinction between these two concepts was discussed in Andrada, et al., v. NLRC, 51 citing the case of Sebuguero v.
NLRC,52 where this Court clarified:
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A
position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of
workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the
enterprise.
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the termination of employment initiated by the employer through
no fault of the employees and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or
seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because of
losses in the operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and
affirmed by this Court.
These rulings appropriately clarify that redundancy does not need to be always triggered by a decline in the business. Primarily, employers resort to
redundancy when the functions of an employee have already become superfluous or in excess of what the business requires. Thus, even if a business
is doing well, an employer can still validly dismiss an employee from the service due to redundancy if that employees position has already become in
excess of what the employers enterprise requires.
From this perspective, it is illogical for Jardine to terminate the petitioners employment and replace them with contractual employees. The replacement
effectively belies Jardines claim that the petitioners positions were abolished due to superfluity. Redundancy could have been justified if the functions
of the petitioners were transferred to other existing employees of the company.
To dismiss the petitioners and hire new contractual employees as replacements necessarily give rise to the sound conclusion that the petitioners
services have not really become in excess of what Jardines business requires. To replace the petitioners who were all regular employees with
contractual ones would amount to a violation of their right to security of tenure.
Guidelines in implementing redundancy
We recognize that management has the prerogative to characterize an employees services as no longer necessary or sustainable, and therefore
properly terminable.54
In De Ocampo, this Court held that, in the absence of proof that the management abused its discretion or acted in a malicious or arbitrary manner in
replacing dismissed employees with contractual ones, judicial intervention should not be made in the companys exercise of its management
prerogative.57

167

The employers exercise of its management prerogative, however, is not an unbridled right that cannot be subjected to this Courts scrutiny. The
exercise of management prerogative is subject to the caveat that it should not performed in violation of any law and that it is not tainted by any arbitrary
or malicious motive on the part of the employer.58
This Court, in several cases, sufficiently explained that the employer must follow certain guidelines to dismiss employees due to redundancy. These
guidelines aim to ensure that the dismissal is not implemented arbitrarily and is not tainted with bad faith against the dismissed employees.
In Golden Thread Knitting Industries, Inc. v. NLRC, 59 this Court laid down the principle that the employer must use fair and reasonable criteria in the
selection of employees who will be dismissed from employment due to redundancy. Such fair and reasonable criteria may include the following, but are
not limited to: (a) less preferred status (e.g. temporary employee); (b) efficiency; and (c) seniority. The presence of these criteria used by the employer
shows good faith on its part and is evidence that the implementation of redundancy was painstakingly done by the employer in order to properly justify
the termination from the service of its employees.60
As the petitioners pointed out, the records are bereft of indications that Jardine employed clear criteria when it decided who among its employees, who
held similar positions as the petitioners, should be removed from their posts because of redundancy. Jardine never bothered to explain how and why
the petitioners were the ones dismissed. Jardines acts became more suspect given that the petitioners were all union officers and some of them were
panel members in the scheduled CBA negotiations between Jardine and the Union.
For the implementation of a redundancy program to be valid, the employer must comply with the following requisites: (1) written notice served on both
the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (2) payment of separation
pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the
redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. 62
Admittedly, Jardine complied with guidelines 1 and 2 of the guidelines in Asian Alcohol. Jardine informed the Department of Labor and Employment of
the petitioners separation from the service due to redundancy on April 30, 1999, one month before their terminations effectivity. Also, the petitioners
were given their individual separation packages, composed of their severance pay, plus their grossed up transportation allowance.
Guidelines 3 and 4 of Asian Alcohol, however, are different matters. These last two guidelines are interrelated to ensure good faith in abolishing
redundant positions; the employer must clearly show that it used fair and reasonable criteria in ascertaining what positions are to be declared
redundant.
Mirant (Philippines) Corp., et al., vs. Caro
GR No. 181490, April 23, 2014
Facts:
Respondent filed a complaint10 for illegal dismissal and money claims for 13th and 14th month pay, bonuses and other benefits, as well as the payment
of moral and exemplary damages and attorneys fees. Respondent posits the following allegations in his Position Paper: 11
On January 3, 1994, respondent was hired by petitioner corporation as its Logistics Officer and was assigned at petitioner corporations corporate office
in Pasay City. At the time of the filing of the complaint, respondent was already a Supervisor at the Logistics and Purchasing Department with a monthly
salary of P39,815.00.
On November 3, 2004, petitioner corporation conducted a random drug test where respondent was randomly chosen among its employees who would
be tested for illegal drug use. Through an Intracompany Correspondence, 12 these employees were informed that they were selected for random drug
testing to be conducted on the same day that they received the correspondence. Respondent was duly notified that he was scheduled to be tested after
lunch on that day. His receipt of the notice was evidenced by his signature on the correspondence.
Respondent avers that at around 11:30 a.m. of the same day, he received a phone call from his wifes colleague who informed him that a bombing
incident occurred near his wifes work station in Tel Aviv, Israel where his wife was then working as a caregiver. Respondent attached to his Position
Paper a Press Release13 of the Department of Foreign Affairs (DFA) in Manila to prove the occurrence of the bombing incident and a letter 14 from the
colleague of his wife who allegedly gave him a phone call from Tel Aviv.
Respondent claims that after the said phone call, he proceeded to the Israeli Embassy to confirm the news on the alleged bombing incident.
Respondent further claims that before he left the office on the day of the random drug test, he first informed the secretary of his Department, Irene
Torres (Torres), at around 12:30 p.m. that he will give preferential attention to the emergency phone call that he just received. He also told Torres that he
would be back at the office as soon as he has resolved his predicament. Respondent recounts that he tried to contact his wife by phone but he could
not reach her. He then had to go to the Israeli Embassy to confirm the bombing incident. However, he was told by Eveth Salvador (Salvador), a lobby
attendant at the Israeli Embassy, that he could not be allowed entry due to security reasons.
On that same day, at around 6:15 p.m., respondent returned to petitioner corporations office. When he was finally able to charge his cellphone at the
office, he received a text message from Tina Cecilia (Cecilia), a member of the Drug Watch Committee that conducted the drug test, informing him to
participate in the said drug test. He immediately called up Cecilia to explain the reasons for his failure to submit himself to the random drug test that
day. He also proposed that he would submit to a drug test the following day at his own expense. Respondent never heard from Cecilia again.
On November 8, 2004, respondent received a Show Cause Notice 15 from petitioner corporation through Jaime Dulot (Dulot), his immediate supervisor,
requiring him to explain in writing why he should not be charged with "unjustified refusal to submit to random drug testing." Respondent submitted his
written explanation16 on November 11, 2004. Petitioner corporation further required respondent on December 14, 2004 to submit additional pieces of
supporting documents to prove that respondent was at the Israeli Embassy in the afternoon of November 3, 2004 and that the said bombing incident
actually occurred. Respondent requested for a hearing to explain that he could not submit proof that he was indeed present at the Israeli Embassy
during the said day because he was not allegedly allowed entry by the embassy due to security reasons. On January 3, 2005, respondent submitted the
required additional supporting documents.17

168

On January 13, 2005, petitioner corporations Investigating Panel issued an Investigating Report 18 finding respondent guilty of "unjustified refusal to
submit to random drug testing" and recommended a penalty of four working weeks suspension without pay, instead of termination, due to the presence
of mitigating circumstances. In the same Report, the Investigating Panel also recommended that petitioner corporation should review its policy on
random drug testing, especially of the ambiguities cast by the term "unjustified refusal."
On January 19, 2005, petitioner corporations Asst. Vice President for Material Management Department, George K. Lamela, Jr. (Lamela),
recommended19 that respondent be terminated from employment instead of merely being suspended. Lamela argued that even if respondent did not
outrightly refuse to take the random drug test, he avoided the same. Lamela averred that "avoidance" was synonymous with "refusal."
On February 14, 2005, respondent received a letter 20 from petitioner corporations Vice President for Operations, Tommy J. Sliman (Sliman), terminating
him on the same date. Respondent filed a Motion to Appeal 21 his termination on February 23, 2005. The motion was denied by petitioner corporation on
March 1, 2005.
It is the contention of respondent that he was illegally dismissed by petitioner corporation due to the latters non-compliance with the twin requirements
of notice and hearing. He asserts that while there was a notice charging him of "unjustified refusal to submit to random drug testing," there was no
notice of hearing and petitioner corporations investigation was not the equivalent of the "hearing" required under the law which should have accorded
respondent the opportunity to be heard.
Issue: WON there was illegal dismissal.
Ruling:
It is beyond debate that petitioner corporations enforcement of its Anti-Drugs Policy is an exercise of its management prerogative. It is also a conceded
fact that respondent "failed" to take the random drug test as scheduled, and under the said company policy, such failure metes the penalty of
termination for the first offense. A plain, simple and literal application of the said policy to the omission of respondent would have warranted his outright
dismissal from employment if the facts were that simple in the case at bar. Beyond debate the facts of this case are not and this disables the Court
from permitting a straight application of an otherwise prima facie straightforward rule if the ends of substantial justice have to be served.
We agree with the disposition of the appellate court that there was illegal dismissal in the case at bar.
While the adoption and enforcement by petitioner corporation of its Anti-Drugs Policy is recognized as a valid exercise of its management prerogative
as an employer, such exercise is not absolute and unbridled. Managerial prerogatives are subject to limitations provided by law, collective bargaining
agreements, and the general principles of fair play and justice. 46 In the exercise of its management prerogative, an employer must therefore ensure that
the policies, rules and regulations on work-related activities of the employees must always be fair and reasonable and the corresponding penalties,
when prescribed, commensurate to the offense involved and to the degree of the infraction. 47 The Anti-Drugs Policy of Mirant fell short of these
requirements.
Petitioner corporations subject Anti-Drugs Policy fell short of being fair and reasonable.
First. The policy was not clear on what constitutes "unjustified refusal" when the subject drug policy prescribed that an employees "unjustified refusal"
to submit to a random drug test shall be punishable by the penalty of termination for the first offense. To be sure, the term "unjustified refusal" could not
possibly cover all forms of "refusal" as the employees resistance, to be punishable by termination, must be "unjustified." To the mind of the Court, it is
on this area where petitioner corporation had fallen short of making it clear to its employees as well as to management as to what types of acts
would fall under the purview of "unjustified refusal." Even petitioner corporations own Investigating Panel recognized this ambiguity, viz.:
It is not a mere jurisprudential principle, but an enshrined provision of law, that all doubts shall be resolved in favor of labor. Thus, in Article 4 of the
Labor Code, as amended, "[a]ll doubts in the implementation and interpretation of the provisions of [the Labor] Code, including its implementing rules
and regulations, shall be resolved in favor of labor." In Article 1702 of the New Civil Code, a similar provision states that "[i]n case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer." Applying these provisions of law to the
circumstances in the case at bar, it is not fair for this Court to allow an ambiguous policy to prejudice the rights of an employee against illegal dismissal.
To hold otherwise and sustain the stance of petitioner corporation would be to adopt an interpretation that goes against the very grain of labor protection
in this jurisdiction. As correctly stated by the Labor Arbiter, "when a conflicting interest of labor and capital are weighed on the scales of social justice,
the heavier influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the underprivileged worker." 49
Second. The penalty of termination imposed by petitioner corporation upon respondent fell short of being reasonable. Company policies and regulations
are generally valid and binding between the employer and the employee unless shown to be grossly oppressive or contrary to law 50 as in the case at
bar.
To be sure, the unreasonableness of the penalty of termination as imposed in this case is further highlighted by a fact admitted by petitioner corporation
itself: that for the ten-year period that respondent had been employed by petitioner corporation, he did not have any record of a violation of its company
policies.
Flight Attendants and Steward Assoc. of the Phils. Vs. Phil. Airlines;
G.R. No. 178083. July 23, 2008
Facts:
Petitioner FASAP is the duly certified collective bargaining representative of PAL flight attendants and stewards, or collectively known as PAL cabin crew
personnel. Respondent PAL is a domestic corporation organized and existing under the laws of the Republic of the Philippines, operating as a common
carrier transporting passengers and cargo through aircraft.

169

On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its cabin crew personnel, to take effect on July 15, 1998. PAL
adopted the retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline industry brought
about by the Asian financial crisis. During said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood at P85 billion
Prior to the full implementation of the assailed retrenchment program, FASAP and PAL conducted a series of consultations and meetings and explored
all possibilities of cushioning the impact of the impending reduction in cabin crew personnel. However, the parties failed to agree on how the scheme
would be implemented. Thus PAL unilaterally resolved to utilize the criteria set forth in Section 112 of the PAL-FASAP Collective Bargaining Agreement
(CBA) in retrenching cabin crew personnel: that is, that retrenchment shall be based on the individual employee's efficiency rating and seniority.
While consultations between FASAP and PAL were ongoing, the latter began implementing its retrenchment program by initially terminating the services
of 140 probationary cabin attendants only to rehire them in April 1998. Moreover, their employment was made permanent and regular.
On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crew personnel.
Meanwhile, in June 1998, PAL was placed under corporate rehabilitation and a rehabilitation plan was approved per Securities and Exchange
Commission (SEC) Order dated June 23, 1998 in SEC Case No. 06-98-6004.
On June 22, 1998, FASAP filed a Complaint against PAL and Patria T. Chiong (Chiong) for unfair labor practice, illegal retrenchment with claims for
reinstatement and payment of salaries, allowances and backwages of affected FASAP members, actual, moral and exemplary damages with a prayer
to enjoin the retrenchment program then being implemented.
Issue:
Whether or not PAL's retrenchment scheme was justified.
Ruling:
Under the Labor Code, retrenchment or reduction of employees is authorized as follows:
ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry
of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices
or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which
would endanger its existence or stability.
The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting evidence. Its failure to prove these reverses
or losses necessarily means that the employee's dismissal was not justified. Any claim of actual or potential business losses must satisfy certain
established standards, all of which must concur, before any reduction of personnel becomes legal. These are:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the
intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half () month pay for every
year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent
the employees' right to security of tenure; and,
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such
as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
In the instant case, PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more than
1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis, however, it cannot be assumed
that it has likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate rehabilitation does not automatically justify
the retrenchment of its cabin crew personnel.
To prove that PAL was financially distressed, it could have submitted its audited financial statements but it failed to present the same with the Labor
Arbiter. Instead, it narrated a litany of woes without offering any evidence to show that they translated into specific and substantial losses that would
necessitate retrenchment.

170

We find that PAL had implemented its retrenchment program in an arbitrary manner and with evident bad faith, which prejudiced the tenurial rights of
the cabin crew personnel.
In sum, PAL's retrenchment program is illegal because it was based on wrongful premise (Plan 14, which in reality turned out to be Plan 22, resulting in
retrenchment of more cabin attendants than was necessary) and in a set of criteria or rating variables that is unfair and unreasonable when
implemented. It failed to take into account each cabin attendant's respective service record, thereby disregarding seniority and loyalty in the evaluation
of overall employee performance.
LIBCAP MARKETING CORP. vs. BAQUIAL
Facts:
The respondent was employed in the petitioner corporation as an accounting clerk. One of her functions was to deposit in the bank account of the
petitioner its daily sales and collections. During an audit conducted by the petitioner it was found out that the respondent made a double reporting of a
single deposit. This was later found out by the petitioner to be a fact and thus the amount double posted was deducted from the respondents salary.
The petitioner then sent notice to the respondent requiring her to appear for investigation. The respondent, however, failed to do so despite of a second
notice. Respondent was then placed on preventive suspension and was later sent a notice for termination. Consequently, the respondent filed a
complaint for illegal dismissal for lack of non-compliance with the procedural due process requirement. The Labor Arbiter ruled that the lag of noncompliance did not invalidate the termination but only gave rise to the petitioners liability to pay the respondent for nominal damages caused amounting
to P100,000.
Issues:
1. Whether there was non-compliance with the procedural due process requirement?
2. Whether the nominal damage awarded was absent of any justifiable compelling circumstance to depart from the standard P30,000
established by jurisprudence?
Held:
The following are the guiding principles in connection with the hearing requirement in dismissal cases:
(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee to answer the charges
against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way.
(b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes
exist or a company rule or practice requires it, or when similar circumstances justify it.
(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference" requirement in the
implementing rules and regulations.
1. There was already non-compliance when the petitioners already pre-judged the respondents case. The pre-judging could be
seen through the act, of the petitioner, of deducting the amount from the respondents salary. By pre-judging respondents case it
could not be expected that she would obtain a fair resolution of her case. In a democratic system, the infliction of punishment
before trial is fundamentally abhorred. What petitioners did was clearly illegal and improper.
2.

We cannot subscribe to the CAs ratiocination that since respondent rendered overtime work for four years without receiving any
overtime pay, she is entitled to P100,000.00 nominal damages. Nominal damages are awarded for the purpose of vindicating or
recognizing a right and not for indemnifying a loss. Hence, the CA should have limited the justification of the award of nominal
damages to petitioners violation of respondents right to due process in effecting her termination. It should not have considered
the claimed unpaid overtime pay.

Ampeloquio vs. Jaka Distribution Inc.

GR No. 196936, July 2, 2014
Facts:
Petitioner Monchito R. Ampeloquio (Ampeloquio) is a reinstated employee of respondent Jaka Distribution, Inc. (JAKA), formerly RMI Marketing
Corporation (RMI).
Ampeloquio resumed work as merchandiser at JAKA and reported at JAKAs outlets within Metro Manila, Shopwise Makati and Alabang. He received a
daily wage of P252.00, without meal and transportation allowance.
On 4 April 2005, Ampeloquio was transferred outside of Metro Manila, to Lucena City and subsequently to San Pablo City. At that time, he was
receiving the same daily wage of 252.00, without meal and transportation allowance. Ampeloquio was given a monthly cost of living allowance (COLA)
of P720.00.
Petitioner, then wrote a letter to manager requesting for salary adjustment and benefits retroactive to the date of his reinstatement.
Because of the discrepancy in wages, Ampeloquio filed anew before the NLRC, a complaint for underpayment of wages, COLA, non-payment of meal
and transportation allowances docketed as NLRC NCR Case No. 00-06-04702-06.
In its defense, respondents avers that it is engage in the business of distribution of consumer goods, that petitioner is their only regular employee as
merchandiser; that at the filling of this case petitioner is still working in a supermarket with a monthly salary of P 7,985; that their other merchandisers
are outsourced from manpower agencies or are seasonal employees hired during peak season; that the salary of petitioner was based on the minimum
wage of P 250 and ECOLA of P 50 per day; that it is in the process of computing wage distortion in the implementation of 2005 wage increase of P25;
that their exemption in wage increase expired in the implementation of wage increase expired at June 2006 prior to the filling of this compliant; that
they did not act due to the pendency of this case.
Issue:
The issue for our resolution is the scope viz-a-viz wages of reinstatement without loss of seniority rights and other privileges.

171

Ruling:
Seniority rights refer to the creditable years of service in the employment record of the illegally dismissed employee as if he or she never ceased
working for the employer. In other words, the employees years of service is deemed continuous and never interrupted. Such is likewise the rationale
for reinstatements twin relief of full backwages.
Attached to the recognition of seniority rights of a reinstated employee who had been illegally dismissed is the entitlement to wages appurtenant
thereto.
The case of Ampeloquio is outside the ordinary. His reinstatement was ordered when merchandisers like him were no longer employed by JAKA.
He is not entitled to the same terms and conditions of employment as that which was offered to the other regular employees (not merchandisers)
subsequently hired by JAKA.
JAKAs decision to grant or withhold certain benefits to other employees is part of its management prerogative as a function of an employers
constitutionally protected right to reasonable return on investments.
In all, the labor tribunals were right in using as guidepost the existing statutory minimum wages and COLA during the three (3) year prescriptive period
within which Ampeloquio can make his money claims.
The option of reinstatement to a substantially equivalent position does not apply herein as reinstatement to a substantially equivalent position entails the
same or similar job functions and not just same wages or salary. As applied to this case, Ampeloquio cannot be reinstated to a messengerial position
although such is a regular employment enjoying the same employment benefits and privileges. His employment cannot likewise be converted into a
contractual employment as such is actually a downgrade from his regular employment enjoying security of tenure with JAKA.
The reduction of the salary differential award to Ampeloquio by the NLRC, and affirmed by the appellate court, was correct given the exemption to Wage
Order Nos. 10 & 11 granted to JAKA.
Given our holding herein, we likewise uphold the deletion by the NLRC and the appellate court of the award of moral and exemplary damages absent a
showing of bad faith on the part of JAKA in its corrected payment of wages to Ampeloquio.
Lim v. HNR Philippines
G.R. No. 201483, August 04, 2014
Facts: On February 2001, petitioner (Lim) filed a case for illegal dismissal and money claims against respondents (HMR Phil Inc.) and its officers,
Teresa G. Santos-Castro, Henry G. Bunag and Nelson S. Camiller. The LA dismissed the complaint for lack of merit. On April 2003, the NLRC reversed
the LA Decision and declared Lim to have been illegally dismissed. Respondents were then ordered to pay the Lim his full backwages reckoned from
his dismissal on February 3, 2001 up to the promulgation of this Decision.
Lim and HMR Phil Inc. appealed to CA. The CA affirmed the NLRC Decision with modification. Consequently, HMR Phil Inc. appealed to SC and was
denied.
On September 2007, Lim moved for execution. On November 2007, the Computation and Research Unit (CRU) of the NLRC computed the backwages
from February 3, 2001, the date of the illegal dismissal, up to October 31, 2007, the date of actual reinstatement.
HMR opposed the computation arguing that the back wages should be computed until April 11, 2003 (the date of promulgation of the NLRC decision),
as stated in the dispositive portion of the NLRC decision, which provided that backwages shall be reckoned from his dismissal on February 3, 2001 up
to the promulgation of this Decision. Lim argued that the body of the NLRC decision explicitly stated that he was entitled to full backwages from the
time he was illegally dismissed until his actual reinstatement, which was also in accord with Article 279 of the Labor Code and all prevailing
jurisprudence.
The LA issued the order granting the motion for execution filed by Lim. Holding that the backwages should be reckoned until April 11, 2003 only in
accordance with the NLRC decision and not up to his actual reinstatement. The NLRC sustained the computation of the LA.
Issue: WON backwages should be computed from the time the employee was illegal dismissed until his actual reinstatement.
Held: Yes. Under Article 279 of the Labor Code it is clear that an illegally dismissed employee is entitled to his full backwages computed from the time
his compensation was withheld up to the time of his actual reinstatement, to wit:
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.
The April 2003 NLRC decision expressly recognizes that Lim is entitled to his full backwages until his actual reinstatement, as follows:
In fine, the act of complainant-appellant herein, do not constitute a serious misconduct as to justify his dismissal. As such, he is, thus, entitled to
reinstatement to his former position as Assistant Technical Manager, unless such position no longer exists, in which case, he shall be given a

172

substantially equivalent position without loss of seniority rights. He is, likewise, entitled to his full backwages from the time he was illegally dismissed
until his actual reinstatement.
There is nothing in the NLRC decision that restricted the award of backwages. Nonetheless, the fallo of the said decision limited the computation of the
backwages up to its promulgation on April 11, 2003, in this wise:
WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed Decision REVERSED and SET ASIDE; that the dismissal of
herein complainant-appellant was illegal and the respondent-appellee Company is hereby ordered to reinstate immediately the said employee to his
former position without loss of seniority rights and other privileges. Furthermore, the respondent-appellee Company is hereby ordered to pay the
complainant-appellant his full backwages, reckoned from his dismissal on February 3, 2001 up to the promulgation of this Decision.
All other claims are hereby DISMISSED for lack of merit.
The Computation and Research Unit (CRU) of this Commission is hereby directed to compute the backwages and the 10% annual increase from 1998
to 2000.
SO ORDERED.
A re-computation, or an original computation, if no previous computation was made, as in the present case, is a part of the law that is read into the
decision, namely, Article 279 of the Labor Code and established jurisprudence. Article 279 provides for the consequences of illegal dismissal, one of
which is the payment of full backwages until actual reinstatement, qualified only by jurisprudence when separation pay in lieu of reinstatement is
allowed, where the finality of the illegal dismissal decision instead becomes the reckoning point.
The nature of an illegal dismissal case requires that backwages continue to add on until full satisfaction. The computation required to reflect full
satisfaction does not constitute an alteration or amendment of the final decision being implemented as the illegal dismissal ruling stands. Thus, in this
case, a computation of backwages until actual reinstatement is not a violation of the principle of immutability of final judgments.
The respondents aver that the recoverable backwages cannot go beyond December 26, 2007, the date HMR offered to reinstate Lim, who allegedly
refused to be reinstated and abandoned his job.
HMR sent the petitioner a letter, dated December 22, 2007, directing him to report for work on December 26, 2007, with an offer of separation pay in the
amount of P150,000.00 in lieu of reinstatement which he could avail of not later than December 26, 2007. Lim replied in a letter, dated December 24,
2007, requesting for a meeting in January 2008, considering that his counsel was out of the country; that the NLRC was still in the process of computing
the amount of the award which was necessary to consider the offer of separation pay; and that a writ of execution had not yet been issued. HMR never
responded to the petitioners request, and up to the present, the latter has yet to be reinstated.
From the above, it is apparent that the petitioner cannot be deemed to have refused reinstatement or to have abandoned his job. HMRs offer of
reinstatement appeared superficial and insincere considering that it never replied to the petitioners letter. It did not make any further attempt to reinstate
the petitioner either. The recoverable backwages, thus, continue to run, and must be reckoned up until the petitioners actual reinstatement.
Benson Industries Employees Union v. Benson Industries
Facts: The Respondent Benson Industries, Inc. is engaged in the manufacturing of green coils with the brand name Lion-Tiger Mosquito Killer. On
February 12, 2008, Benson informed its employees including the petitioner of their intended termination from employment, to be effected on March 15,
2008 on the ground of closure and /or cessation of business operations. In consequence, the majority of Bensons employees resigned. Meanwhile, the
petitioner through its Union, filed a notice of strike claiming that the companys supposed closure was merely a ploy to replace the union members with
lower paid workers but it did not push through due to the parties amicable settlement during the conciliation proceedings. This notwithstanding,
petitioners proffered a claim for the payment of additional separation pay at the rate of 4 days for every year of service and it invoked Section 1, Article
VIII of the existing collective bargaining agreement (CBA). The voluntary arbitrator ruled in favor of the petitioner using the provision in the CBA as the
basis; while the Court of Appeals reversed on the ground of Bensons current financial status. Hence, this petition.
Issue: Whether or not the employees are entitled to the additional separation benefits equivalent to 4 days of work for every year of service.
Ruling: Yes. The law provided that generally the employers are required to pay its employees separation benefits, except when the closure is due to
serious business losses or retrenchment is done to prevent losses. When the obligation to pay separation pay, however, is not sourced from law but
from contract such as the collective bargaining agreement between the employer and its employees, an examination of the latters provisions becomes
necessary in order to determine the governing parameters for the said obligation. For the same exemption to obtain in the contract the tenor of the
parties agreement ought to be similar to the laws tenor. When the parties, however, agree to deviate therefrom, and unqualifiedly covenant the
payment of separation benefits irrespective of the employers financial position, then the obligatory force of the contract prevails and its terms should be
carried out to its full effect. Hence if the CBA are clear and there is no doubt as to the intention of the contracting parties, the literal meaning of its
stipulations shall prevail.
In this case, it was undisputed that the CBA was forged by the employer and the union and equally undisputed that Benson agreed to and was thus
obligated under the CBA to pay its employees who had been terminated without any fault attributable to them separation benefits at the rate of 19 days
for every year of service. Hence, the court disagreed with the CAs ruling negating Bensons obligation to pay petitioners their full separation benefits
under the said agreement and granted the petition.

173

Montinola vs. PAL, G.R. No. 198656, Sept. 8, 2014

Facts:
On January 29, 2008, Montinola and other flight crew members were subjected to custom searches in Honolulu, Hawaii, USA. Items from
the airline were recovered from the flight crew by customs officials.
PAL conducted an investigation. Montinola was among those implicated because she was mentioned in the customs officials email to PAL. On
February 1, 2008, PALs Cabin Services Sub-Department required Montinola to comment on the incident. She gave a handwritten explanation three
days after, stating that she did not take anything from the aircraft. She also committed to give her full cooperation should there be any further inquiries
on the matter.
On February 22, 2008, PALs International Cabin Crew Division Manager, Jaime Roberto A. Narciso (Narciso), furnished Montinola the emails from the
Honolulu customs official followed by a notice of administrative charge on March 25, 2008. On April 12, 2008, there was a clarificatory hearing
conducted by a panel of PALs Administrative Personnel.
Montinola alleged that her counsel objected during the clarificatory hearing regarding PALs failure to specify her participation in the alleged pilferage.
Atty. Pascual, PALs Senior Labor Counsel, threatened Montinola that a request for clarification would result in a waiver of the clarificatory hearing. This
matter was not reflected in the transcript of the hearing. Despite her counsels objections, Montinola allowed the clarificatory hearings to proceed
because she wanted to extend her full cooperation [in] the investigation[s].
PAL, found Montinola guilty of 11 violations of the companys Code of Discipline and Government Regulation. She was meted with suspension for one
(1) year without pay. Montinola asked for a reconsideration but this was denied.
Montinola brought the matter before the Labor Arbiter (LA).
Issue: Whether Montinolas illegal suspension entitled her to an award of moral and exemplary damages and attorneys fees
Held: Montinola is entitled to moral and exemplary damages. She is also entitled to attorneys fees.
Security of tenure of workers is not only statutorily protected, it is also a constitutionally guaranteed right. Thus, any deprivation of this right must be
attended by due process of law. This means that any disciplinary action which affects employment must pass due process scrutiny in both its
substantive and procedural aspects.
PAL complied with procedural due process as laid out in Article 277, paragraph (b) of the Labor Code. PAL issued a written notice of administrative
charge, conducted a clarificatory hearing, and rendered a written decision suspending Montinola. However, we emphasize that the written notice of
administrative charge did not serve the purpose required under due process. PAL did not deny her allegation that there would be a waiver of the
clarificatory hearing if she insisted on a specific notice of administrative charge. With Montinola unable to clarify the contents of the notice of
administrative charge, there were irregularities in the procedural due process accorded to her.
Moreover, PAL denied Montinola substantial due process. Just cause has to be supported by substantial evidence. Substantial evidence, or such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion, is the quantum of evidence required in administrative
bodies such as the NLRC.
The employee is entitled to moral damages when the employer acted a) in bad faith or fraud; b) in a manner oppressive to labor; or c) in a manner
contrary to morals, good customs, or public policy.
PALs actions in implicating Montinola and penalizing her for no clear reason show bad faith. PALs denial of her request to clarify the charges against
her shows its intent to do a wrongful act for moral obliquity.
PAL apparently granted Montinola procedural due process by giving her a notice of administrative charge and conducting a hearing. However, this was
more apparent than real. There is denial of an opportunity to be heard if the employee is not clearly apprised of the acts she committed that constituted
the cause for disciplinary action. Nothing in PALs action supports the finding that Montinola committed specific acts constituting violations of PALs
Code of Discipline. This act of PAL is contrary to morals, good customs, and public policy. Moral damages are, thus, appropriate.
VI.

SUSPENSION OF BUSINESS OPERATIONS

JPL MARKETING PROMOTIONS VS. COURT OF APPEALS

G.R. No. 151966; July 8, 2005
Facts:
JPL Marketing and Promotions (JPL) is a domestic corporation engaged in the business of recruitment and placement of workers. Private respondents
Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as merchandisers as attendants to the display of California Marketing
Corporation (CMC), one of petitioners clients.
JPL notified private respondents that CMC would stop its direct merchandising activity. They were advised to wait for further notice as they would be
transferred to other clients.

174

Private respondents Abesa and Gonzales filed before the NLRC Regional Arbitration Branch complaints for illegal dismissal, praying for separation pay,
13th month pay, service incentive leave pay and payment for moral damages. Aninipot filed a similar case thereafter.
Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed the complaints for lack of merit. The Labor Arbiter found that Gonzales and Abesa applied with
and were employed by the store where they were originally assigned by JPL even before the lapse of the six (6)-month period given by law to JPL to
provide private respondents a new assignment. Thus, they may be considered to have unilaterally severed their relation with JPL, and cannot charge
JPL with illegal dismissal.
The NLRC agreed with the Labor Arbiters finding that when private respondents filed their complaints, the six-month period had not yet expired, and
that CMCs decision to stop its operations in the areas was beyond the control of JPL, thus, they were not illegally dismissed. However, it found that
despite JPLs effort to look for clients to which private respondents may be reassigned it was unable to do so, and hence they are entitled to separation
pay. Setting aside the Labor Arbiters decision, the NLRC ordered the payment of:
The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution. While conceding that there was no illegal dismissal, it justified
the award of separation pay on the grounds of equity and social justice.
Issue: Whether or not private respondents are entitled to separation pay, 13 th month pay and service incentive leave pay, and granting that they are so
entitled, what should be the reckoning point for computing said awards.
Ruling:
Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months,
wherein an employee/employees are placed on the so-called floating status. When that floating status of an employee lasts for more than six
months, he may be considered to have been illegally dismissed from the service. Thus, he is entitled to the corresponding benefits for his separation,
and this would apply to suspension either of the entire business or of a specific component thereof.
In the instant case, there was no dismissal to speak of. Private respondents were simply not dismissed at all, whether legally or illegally. What they
received from JPL was not a notice of termination of employment, but a memo informing them of the termination of CMCs contract with JPL. More
importantly, they were advised that they were to be reassigned. At that time, there was no severance of employment to speak of. As clearly borne out
by the records of this case, private respondents sought employment from other establishments even before the expiration of the six (6)-month period
provided by law. As they admitted in their comment, all three of them applied for and were employed by another establishment after they received the
notice from JPL. JPL did not terminate their employment; they themselves severed their relations with JPL. Thus, they are not entitled to separation
pay.
Nonetheless, JPL cannot escape the payment of 13 th month pay and service incentive leave pay to private respondents. Said benefits are mandated by
law and should be given to employees as a matter of right.
PIDO VS. NLRC
G.R. No. 169812; February 23, 2007
Facts:
Federito B. Pido was hired by Cherubim Security and General Services, Inc. as a security guard. He was under the operational control and supervision
of the Ayala Security Force (ASF) of the Ayala Group of Companies. Pido then had an altercation with Richard Alcantara of the ASF, arising from a
statement of Alcantara that petitioners security license for his .38 caliber revolver service firearm and duty detail order had already expired. On even
date, Alcantara filed a complaint for Gross Misconduct, claiming that when he directed petitioner to present his security license, petitioner angrily and on
top of his voice questioned his authority. And Alcantara recommended that petitioner be relieved from his post, and that immediate disciplinary action
against him be taken.
Cherubim Security then conducted an investigation during which petitioner echoed his tale in his information report. Pido was later to claim that he was
suspended by respondent following his argument with Alcantara.
He filed a complaint for illegal constructive dismissal, illegal suspension, and non-payment and underpayment of salaries, holiday pay, rest day, service
incentive leave, 13th month pay, meal and travel allowance and night shift differential against respondent, along with its employee Rosario K. Balais
(Rosario) who was allegedly responsible for running the day to day affairs of respondents business.
Pido likewise prayed for reinstatement and payment of full backwages, attorneys fees and other money claims.
Issues:
(1) Whether or not the petitioners nine-month suspension is tantamount to constructive dismissal.
(2) Whether or not petitioner should be paid his backwages aside from his separation pay.
Ruling:

175

ART. 286. When employment not deemed terminated. - The bona fide suspension of the operation of a business or undertaking for a period not
exceeding six (6) months, or the fulfillment of the employee of a military or civic duty shall not terminate employment. In all such cases, the employer
shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1)
month from the resumption of operations of his employer or from his relief from the military or civic duty.
When a security guard is placed on a "floating status," he does not receive any salary or financial benefit provided by law. Due to the grim economic
consequences to the employee, the employer should bear the burden of proving that there are no posts available to which the employee temporarily out
of work can be assigned. This, respondent failed to discharge.
SEC. 8. Preventive suspension. - The employer may place the worker concerned under preventive suspension if his continued employment poses a
serious and imminent threat to the life or property of the employer or of his co-workers.
SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker in
his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he
pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the
extension if the employer decides, after completion of the hearing, to dismiss the worker.
Respondent did not inform petitioner that it was extending its investigation, nor did it pay him his wages and other benefits after the lapse of the 30-day
period of suspension. Neither did respondent issue an order lifting petitioners suspension, or any official assignment, memorandum or detail order for
him to assume his post or another post. Respondent merely chose to dawdle with the investigation, in absolute disregard of petitioners welfare.
This Court thus rules that petitioners prolonged suspension, owing to respondents neglect to conclude the investigation, had ripened to constructive
dismissal. Petitioner, who is a regular employee of respondent, is entitled to reinstatement without loss of seniority and payment of backwages from the
time his compensation was withheld up to the time of his actual reinstatement.
MEGAFORCE SECURITY AND ALLIED SERVICES, INC. VS. HENRY LACTAO
G.R. No. 160940; July 21, 2008
Facts:
Megaforce Security and Allied Services, Inc. hired Henry Lactao as a security guard. He was detailed at Merville Park Subdivision in Paraaque City.
Lactao later filed with the Arbitration Branch of the NLRC a complaint against Megaforce for underpayment of wages, non-payment of overtime pay,
service incentive leave pay and 13th month pay.
On May 3, 2000, Lactao was reassigned to ABB Industry, Inc. in Sucat, Paraaque City
Megaforce Operations Manager, Lt. Col. Nicomedes P. Olaso, issued a Recall Order, recalling Lactao from his assignment at ABB Industry, Inc.
effective May 31, 2000 and directing him to report to the Headquarters for proper disposition and new assignment.
Lactao reported to the Headquarters but he was not given a new assignment. Believing he was terminated, Lactao amended his complaint to one for
illegal dismissal with prayer for reinstatement with the same prayer for underpayment of wages, non-payment of overtime pay, service incentive leave
pay and 13th month pay, plus moral and exemplary damages and attorney's fees.
Megaforce General Manager Raul U. Manalo, denied the illegal dismissal charge. It alleged that Lactao had committed various offenses such as
abandoning his post and sleeping on duty during his detail at Merville Park Subdivision; when Lactao was reassigned to ABB Industry, Inc., the
Management thereof requested that he be relieved of his post because of improper discipline and appearance, i.e., for incomplete or worn-out
paraphernalia and unshaved moustache;
The Labor Arbiter rendered a Decision dismissing the complaint for lack of merit. Dissatisfied, Lactao filed an Appeal Memorandum with the NLRC.
The NLRC ordered Megaforce to reinstate Lactao to his former or equivalent position and to pay his backwages from the time of his dismissal until he
was actually reinstated. Lactao's other claims were denied for lack of merit.
Issue: Whether or not Megaforce was guilty for illegally dismissing the respondent.
Ruling:
In the present case, while the charge of illegal dismissal may have been premature because Lactao has not been given a new assignment or temporary
"off-detail" for a period of seven days only when he amended his complaint, the continued failure of Megaforce to offer him a new assignment during the
proceedings of the case before the LA and beyond the reasonable six-month period makes it liable for constructive dismissal. It exists where there is
cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay.
The Court cannot accept the contention of Megaforce that Lactao did not report to work after his recall and had abandoned his job since it failed to
present credible proof of any act on the part of Lactao to abandon his employment. Moreover, it is a settled doctrine that the filing of a complaint for
illegal dismissal is inconsistent with abandonment of employment. An employee who takes steps to protest his dismissal cannot logically be said to
have abandoned his work. The filing of such complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment.

176

Under Article 279 of the Labor Code, as amended, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges; to his full backwages, inclusive of allowances; and to other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement. Thus, Lactao is entitled to reinstatement and backwages as a
necessary consequence.
NATIONAL MINES AND ALLIED WORKERS UNION VS. MARCOPPER MINING CORP.
G.R. No. 119381; March 11, 1996
Facts:
DENR ordered the indefinite suspension of MARCOPPER's operations for causing damage to the environment of the Province of Marinduque by
spilling the company's mine waste or tailings from an old underground impounding area into the Boac River, in violation of its Environmental
Compliance Certificate (ECC).
NAMAWU was the exclusive bargaining representative of the rank-and-file workers of MARCOPPER. it filed a complaint with the Regional Arbitration
Branch No. IV of the NLRC against MARCOPPER for nonpayment of wages, separation pay, damages, and attorney's fees; the case is hereinafter
referred to as the "environmental incident case." NAMAWU claimed that due to the indefinite suspension of MARCOPPER's operations, its members
were not paid the wages due them for six months.
MARCOPPER denied liability, contending that NAMAWU had not been authorized by the individual employees - the real parties-in-interest - to file the
complaint; and that the complaint should be dismissed for lack of certification of non-forum shopping, for the pendency of another action between the
same parties, and for lack of factual and legal basis.
Issue: Whether or not the suspension of operation entitles the employee for separation pay.
Ruling:
The suspension of MARCOPPER's operations was decreed in an Ex-Parte Order dated April 1, 1996 issued by the Pollution Adjudication Board of the
DENR pursuant to Presidential Decree (P.D.) No. 984 and Section 36 of its Implementing Rules.
Because the initial suspension of operations that the DENR imposed eventually turned into an involuntary closure. Article 283 of the Labor Code comes
into play entitling the three remaining employees the payment of separation pay computed under the terms of that Article. The termination of
employment date, for separation pay purposes, should be computed from June 21, 1996 and not from October 12, 1996 (or six months from the April
12, 1996 suspension of operation date); June 21, 1996 must be the closure date as it is from this date that MARCOPPER, by law, ceased to have any
authority to conduct its mining operations.
EAGLE STAR SECURITY SERVICES INC. VS. MIRANDO ET AL.
G.R. No. 179512; July 30, 2009
Facts:
Bonifacio Mirando, who was hired by Eagle Star Security Services, Inc. as a security guard on July 29, 1997, was posted at the Heroes Hill Branch of
Equitable-PCI Bank (now Banco de Oro-EPCI Bank) with a 9:00 a.m.-to-5:00 p.m. shift and a daily wage of P250.00.
On December 14, 2001, respondent was made to sign a duty schedule for December 15 (a Saturday). When he reported for work on December 15,
2001, he was told by the detachment commander, Juanito Endencio, not to report for duty per instruction of the head office. Respondent thus called up
the head office and was told that he was removed from duty by petitioners operations manager.
As Mirando was no longer asked to report for duty, he filed a complaint for illegal dismissal. He later amended his complaint to include a prayer for
reinstatement and payment of full backwages, damages and attorneys fees.
Responding to the complaint, petitioner alleged that respondent went on absence without official leave (AWOL) on December 16, 2001 and had not
since reported for work, drawing it to send him a notice on December 26, 2001 to explain his absence, but he failed to respond thereto.
Issue: Whether or not he was illegally dismissed.
Ruling:
The petition must be denied.
AT ALL EVENTS, on the merits, the appellate court did not commit any reversible error in affirming the congruent findings of the Labor Arbiter and the
NLRC that respondent was illegally dismissed.

177

The persistence of respondent to resume his duties, not to mention his immediate filing of the illegal dismissal complaint, should dissipate any doubt
that he did not abandon his job.
Clutching at straws, petitioner argues that respondent was on temporary "off-detail," the period of time a security guard is made to wait until he is
transferred or assigned to a new post or client; and since petitioners business is primarily dependent on contracts entered into with third parties, the
temporary "off-detail" of respondent does not amount to dismissal as long as the period does not exceed 6 months, following Art. 286 of the Labor
Code.
Petitioners citation of Article 286 of the Labor Code is misplaced.
Article 286 applies only when there is a bonafide suspension of the employers operation of a business or undertaking for a period not exceeding six (6)
months. In such a case, there is no termination of employment but only a temporary displacement of employees, albeit the displacement should not
exceed six (6) months. The paramount consideration should be the dire exigency of the business of the employer that compels it to put some of its
employees temporarily out of work. In security services, the temporary "off-detail" of guards takes place when the security agencys clients decide not to
renew their contracts with the security agency, resulting in a situation where the available posts under its existing contracts are less than the number of
guards in its roster.
In the present case, there is no showing that there was lack of available posts at petitioners clients or that there was a request from the client-bank,
where respondent was last posted and which continued to hire petitioners services, to replace respondent with another. Petitioner suddenly prevented
him from reporting on his tour of duty at the bank on December 15, 2001 and had not thereafter asked him to report for duty.
NATIONWIDE SECURITY & ALLIED SERVICES VS.VALDERAMA
G.R. No. 186614 February 23, 2011
Facts:
Ronald Valderama was hired by petitioner as security guard. He was assigned at the Philippine Heart Center (PHC) until his relief on January 30, 2006.
His relief from the assignment was allegedly because of respondents serious violations of the security rules in the workplace. On February 10, 2006, he
got his cash bond and firearm deposit. Valderama was not given any assignment thereafter.
Thus, on August 2, 2006, he filed a complaint for constructive dismissal against petitioner.
Nationwide Security alleged that respondent was not constructively or illegally dismissed, but had voluntarily resigned. The Labor Arbiter rendered a
decision in favor of respondent, finding that the latter was constructively dismissed. The NLRC modified the decision ruling that there neither was
constructive dismissal nor voluntary resignation. The CA set aside the ruling of the NLRC and reinstated that of the Labor Arbiters.
Issue: Whether or not the Court of Appeals erred in sustaining respondents claim for constructive dismissal.
Ruling:
The appeal lacks merit.
In cases involving security guards, a relief and transfer order in itself does not sever employment relationship between a security guard and his agency.
An employee has the right to security of tenure, but this does not give him a vested right to his position as would deprive the company of its prerogative
to change his assignment or transfer him where his service, as security guard, will be most beneficial to the client. Temporary "off-detail" or the period of
time security guards are made to wait until they are transferred or assigned to a new post or client does not constitute constructive dismissal, so long as
such status does not continue beyond six months.
When a security guard is placed on a "floating status," he does not receive any salary or financial benefit provided by law. Due to the grim economic
consequences to the employee, the employer should bear the burden of proving that there are no posts available to which the employee temporarily out
of work can be assigned.
Respondent claims that he was relieved from PHC on January 30, 2006; thereafter, he was not given a new assignment. Petitioner, on the other hand,
asserts that respondent refused to report to petitioner for his reassignment. Otherwise stated, petitioner claims that respondent abandoned his job.
The jurisprudential rule on abandonment is constant. It is a matter of intention and cannot lightly be presumed from certain equivocal acts. To constitute
abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intent,
manifested through overt acts, to sever the employer-employee relationship.
In this case, petitioner failed to establish clear evidence of respondent's intention to abandon his employment. It is a settled doctrine that the filing of a
complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee who takes steps to protest his dismissal cannot by logic
be said to have abandoned his work.

178

In Mobile Protective & Detective Agency v. Ompad and Mora v. Avesco Marketing Corporation,we ruled that should the employer interpose the defense
of resignation, it is incumbent upon the employer to prove that the employee voluntarily resigned. On this point, petitioner failed to discharge the
burden. It failed to present the alleged resignation letter of respondent. We also note that, in its March 24, 2006 letter, petitioner required respondent to
report at its office for reassignment. It strains credulity that petitioner would require respondent to report for reassignment if the latter already tendered
his resignation effective February 10, 2006.
It would have been illogical for herein petitioner to resign and then file a complaint for illegal dismissal. Resignation is inconsistent with the filing of the
said complaint.
NIPPON HOUSING PHILS. VS. LEYNES
G.R. No. 177816; August 3, 2011
Facts:
Petitioner, originally engaged in the business of providing building maintenance From its original ventured into building management and gained Bay
Gardens Condominium Project (the Project) of the Bay Gardens Condominium Corporation (BGCC) as its first and only building maintenance client. In
this regard, petitioner hired respondent Maiah Angela Leynes on 26 March 2001 for the position of Property Manager, with a salary of P40,000.00 per
month. Her responsibilities include surveying the requirements of the government and the client for said project, the formulation of house rules and
regulations, the preparation of the annual operating and capital expenditure budget, hiring and deployment of manpower, salary and position
determination as well as the assignment of the schedules and responsibilities of employees.
Leynes had a misunderstanding with the building engineer of the project (Cantuba) and barred the latters entry to the site. The Engr. also accused the
former of conceit, pride and poor managerial skills. Takada, the NHPI's Vice President issued a memorandum attributing the incident to "simple
personal differences" and directing Leynes to allow Engr. Cantuba to report back for work. Disappointed with this management decision, she submitted
a letter to NHPIs President (Ota) asking for an emergency leave of absence for the supposed purpose of coordinating with her lawyer regarding her
resignation letter. NHPI offered the Property Manager position to Engr. Carlos Jose as a consequence Leynes' signification of her intention to resign.
However, she sent another letter expressing her intention to return to work and to call off her planned resignation. However, she received a letter from
the management to report instead to the main office as one in a floating status because someone already occupies her post.
Aggrieved, Leynes filed a complaint against petitioner for illegal dismissal, unpaid salaries, benefits, damages and attorney's fees. The Labor arbiter
found that the petitioners act of putting Leynes on a floating status was equivalent to termination without just cause. The NLRC ruled that NHPI's
placement of Leynes on floating status was necessitated by the client's contractually guaranteed right to request for her relief. However, this was later
on reversed by the CA, hence, this present petition before the SC.
Issue: WON petitioners' decision to place respondent on floating status is tantamount to constructive dismissal. (Alternative: what is the effect of
withdrawn resignation?)
Ruling:
No, the placement of Leynes on a floating status due to redundancy is valid. There is no constructive dismissal.
The factual antecedents suggest that NHPI's immediate hiring of Engr. Jose as the new Property Manager for the Project was brought about by Leynes'
own rash announcement of her intention to resign from her position. Although she subsequently changed her mind and sent Reyes a letter by telefax
announcing the reconsideration of her planned resignation and her intention to return to work, Leynes evidently had only herself to blame for
precipitately setting in motion the events which led to NHPI's hiring of her own replacement.
The record, moreover, shows that NHPI simply placed her on floating status "until such time that another project could be secured" for her. Traditionally
invoked by security agencies when guards are temporarily sidelined from duty while waiting to be transferred or assigned to a new post or client, Article
286 of the Labor Code has been applied to other industries when, as a consequence of the bona fide suspension of the operation of a business or
undertaking, an employer is constrained to put employees on floating status for a period not exceeding six months. In brushing aside respondents'
reliance on said provision to justify the act of putting Leynes on floating status, the CA ruled that no evidence was adduced to show that there was
a bona fide suspension of NHPI's business. What said court clearly overlooked, however, is the fact that NHPI had belatedly ventured into building
management and, with BGCC as its only client in said undertaking, had no other Property Manager position available to Leynes.
The rule is settled, however, that "off-detailing" is not equivalent to dismissal, so long as such status does not continue beyond a reasonable time and
that it is only when such a "floating status" lasts for more than six months that the employee may be considered to have been constructively
dismissed. A complaint for illegal dismissal filed prior to the lapse of said six-month and/or the actual dismissal of the employee is generally considered
as prematurely filed.
Since the petitioner has no other client for the building management side of its business, it acted within its prerogatives when it eventually terminated
Leynes' services on the ground of redundancy. One of the recognized authorized causes for the termination of employment, redundancy exists when
the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise. A redundant position
is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product

179

line previously manufactured by the company or phasing out of service activity priorly undertaken by the business An employer has no legal obligation
to keep more employees than are necessary for the operation of its business.
Considering that Leynes was terminated from service upon an authorized cause, we find that the CA likewise erred in faulting NHPI for supposedly
failing to notify said employee of the particular act or omission leveled against her and the ground/s for which she was dismissed from employment.
Where dismissal, however, is for an authorized cause like redundancy, the employer is, instead, required to serve a written notice of termination on the
worker concerned and the DOLE, at least one month from the intended date thereof. For its failure to comply strictly with the 30-day minimum
requirement for said notice and effectively violating Leynes' right to due process, NHPI should be held liable to pay nominal damages in the sum of
P50,000.00.
MINDANAO TERMINAL & BROKERAGE SERVICE, INC. VS. NAGKAHIUSANG MAMUMUO SA MINTERBRO-SOUTHERN PHILS. FEDERATION
OF LABOR
G.R. No. 174300; December 5, 2012
Facts:
It was alleged that the union members/employees were deprived of gainful employment on April 14, 1997 after the last vessel was serviced prior to the
repair of the pier or on August 1, 1997 when repair works on the pier were commenced.
Minterbro is a domestic corporation and is engaged in the business of providing arrastre and stevedoring services to its clientele at Port Area, Sasa,
Davao City. It has a Contract for Use of Pier with Del Monte Philippines, Inc. (Del Monte), which provides for the exclusive use by Del Monte of the
Minterbro pier. Thus, at the time relevant to this controversy, Del Monte was Minterbro's only client.
The docking of vessels at the piers in Davao City, including that of Minterbro, is being carried out by the Davao Pilots' Association, Inc. (DPAI). In a
letter dated January 6, 1996, DPAI requested Minterbro to waive any claim of liability against it for any damage to the pier or vessel. DPAI alleged that
Minterbro's pier vibrates everytime a ship docks due to weak posts at the underwater portion.
In a letter dated January 15, 1997, Minterbro denied the request explaining that DPAI's observation had no basis as any damage to the pier was
actually caused by a vessel under the control of DPAI which bumped the pier on December 28, 1996. DPAI replied in a letter dated January 23, 1997
informing Minterbro of its intention to refrain from docking vessels at Minterbro's pier for security and safety reasons, until such time as Minterbro shall
have caused the restoration of the original independent fenders of the said pier. cHAaCE
Minterbro decided to rehabilitate the pier on August 1, 1997 and, on the same day, sent a letter to the Department of Labor and Employment (DOLE) to
inform DOLE of Minterbro's intention to temporarily suspend arrastre and stevedoring operations. Minterbro alleged that, despite the condition of the
pier, it was able to service 16 vessels from January 1997 to April 13, 1997 and it was ready and awaiting vessels to dock at the pier from April 14, 1997
to July 31, 1997 during which Minterbro's office, motor pool, and field personnel continued operations.
On November 4, 1997, respondent Nagkahiusang Mamumuo sa Minterbro-Southern Philippines Federation of Labor composed of respondents Manuel
Abellana, et al., employees of Minterbro working on a rotation basis and employed for arrastre and stevedoring work depending on the actual
requirements of the vessels serviced by Minterbro, filed a complaint for payment of separation pay against Minterbro and De Castro in the
Regional Arbitration Branch No. XI at Davao City of the National Labor Relations Commission (NLRC).
At the initial hearing before the Labor Arbiter on December 10, 1997, Minterbro and De Castro informed the union and its members that the
rehabilitation of the pier had been completed and that they were just awaiting clearance to operate from the PPA. In a manifestation dated December
12, 1997, the union and its members stated, among others, that "they . . . are not anymore amenable to going back to work with [the] company,
for the reason that the latter has not been operating for more than six (6) months, even if it resumes operation at a later date and would just
demand that they be given Retirement or Separation Pay, as the case may be."
Issue: WON respondents are entitled to separation pay
Ruling:
Lay-off is essentially retrenchment and under Article 283 of the Labor Code a retrenched employee is entitled to separation pay equivalent to one (1)
month salary or one-half (1/2) month salary per year of service, whichever is higher.
The union members/employees were not given work starting April 14, 1997 and that more than six months have elapsed after the union members were
laid off when the next vessel was serviced at the Minterbro pier on December 22 to 28, 1997.
Petitioners' inaction on what they allege to be the unexplained abandonment by Del Monte of its obligations under the Contract for the Use of Pier
coupled with petitioners' belated action on the damaged condition of the pier caused the absence of available work for the union members. As
petitioners were responsible for the lack of work at the pier and, consequently, the layoff of the union members, they are liable for the separation from
employment of the union members on a ground similar to retrenchment.
When petitioners failed to make work available to the union members for a period of more than six months starting April 14, 1997 by failing to call the
attention of Del Monte on the latter's obligations under the Contract of Use of Pier and to undertake a timely rehabilitation of the pier, they are deemed
to have constructively dismissed the union members.

180

LEOPARD SECURITY AND INVESTIGATION AGENCY VS. QUITOY

G.R. No. 186344; February 28, 2013
Facts:
Respondents were hired as security guards by Petitioner (LSIA). They were assigned by the petitioner to the different branches of Union Bank in Cebu
city. On April 1, 2005, Union Bank served notice to LSIA terminating the security service contract effective at the end of business hours of April 30, 2005.
However, the respondents were only informed of the termination of the contract with Union Bank on April 29, 2005. The respondents went to union bank
on April 30, 2005 for the turnover of their service firearms to Cortes, Union Bank Chief security officer. Respondents filed a complaint for illegal
dismissal against LSIA. CA sustained the award of separation pay of NLRC to respondents on the ground that the parties' relationship had already been
strained.
Issues:
WON there was illegal dismissal.
WON the award of separation pay was proper.
Ruling:
NO. Applying Article 286 of the Labor Code of the Philippines by analogy, this Court has repeatedly recognized that security guards may be temporarily
sidelined by their security agency as their assignments primarily depend on the contracts entered into by the latter with third parties. Temporary "offdetail" or "floating status" is the period of time when security guards are in between assignments or when they are made to wait after being relieved
from a previous post until they are transferred to a new one. It takes place when, as here, the security agency's clients decide not to renew their
contracts with the agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its
roster. For as long as such temporary inactivity does not continue for a period exceeding six months, it has been ruled that placing an employee on
temporary "off-detail" or "floating status" is not equivalent to dismissal.
Considering that a security guard is only considered illegally dismissed from service when he is sidelined from duty for a period exceeding six months,
respondents were not illegally dismissed by LSIA. Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to the twin reliefs of
full backwages and reinstatement without loss of seniority rights. Aside from the instances provided under Articles 283 and 284 of the Labor Code,
separation pay is, however, granted when reinstatement is no longer feasible because of strained relations between the employer and the employee. In
cases of illegal dismissal, the accepted doctrine is that separation pay is available in lieu of reinstatement when the latter recourse is no longer practical
or in the best interest of the parties.
As a relief granted in lieu of reinstatement, however, it consequently goes without saying that an award of separation pay is inconsistent with a finding
that there was no illegal dismissal. Even in cases of illegal dismissal, the doctrine of strained relations is not applied indiscriminately as to bar
reinstatement, especially when the employee has not indicated an aversion to returning to work or does not occupy a position of trust and confidence
in or has no say in the operation of the employer's business. Although litigation may also engender a certain degree of hostility, it has likewise been
ruled that the understandable strain in the parties' relations would not necessarily rule out reinstatement which would, otherwise, become the rule rather
than the exception in illegal dismissal cases.
Our perusal of the position paper they filed a quo shows that, despite erroneously believing themselves to have been illegally dismissed, respondents
had alleged no circumstance indicating the strained relations between them and LSIA and had even alternatively prayed for reinstatement alongside the
payment of separation pay. Since application of the doctrine of strained relations presupposes a question of fact which must be demonstrated and
adequately supported by evidence, the CA clearly erred in ruling that the parties' relations had already soured and that an award of separation pay in
favor of respondents is proper.
SKM ART CRAFT CORP. VS. BAUCA
G.R. No. 171282; November 27, 2013
Facts:
RESPONDENTS Efren Bauca and 22 others were employed by petitioner SKM Art Craft Corp. Last Oct. 18, 2000, a fire occurred in the inspection and
receiving, repair and packing area of petitioners premises in Intramuros, Manila. The fire investigation report stated that the structure and the beach
rubber building were destroyed. Also burned were four cargo containers and a trailer truck. The estimated damage was P22 million.
Last May 8, 2000, petitioner informed respondents that it will suspend its operations for six months, effective May 9, 2000. Last May 16, 2000, only
eight days after receiving notice of the suspension of petitioners operations, the 23 respondents (and other co-workers) filed a complaint for illegal
dismissal. They alleged that there was discrimination in choosing the workers to be laid off.
Issue: Was there valid suspension of operations?
Ruling:

181

Yes.
We agree with the National Labor Relations Commission (NLRC) that petitioners suspension of operations is valid because the fire caused substantial
losses to petitioner and damaged its factory. On this point, we disagree with the Court of Appeals (CA) that petitioner failed to prove that its suspension
of operations is bona fide. The list of materials burned was not the only evidence submitted by petitioner.
It was corroborated by pictures and the fire investigation report, and they constitute substantial evidence of petitioners losses.
Under Article 286 of the Labor Code, the bona fide suspension of the operations of a business or undertaking for a period not exceeding six months
shall not terminate employment.
Article 286 provides, When employment not deemed terminated. The bona fide suspension of the operations of a business or undertaking for a period
not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the
employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than
one month from the resumption of operations of his employer or from his relief from the military or civic duty.
The NLRC correctly noted that the complaint for illegal dismissal filed by respondents was premature since it was filed only eight days after petitioner
announced that it will suspend its operations for six months. In Nippon Housing Phil., Inc. v. Leynes, G.R. No. 177816, August 3, 2011, 655 SCRA 77,
88, we said that a complaint for illegal dismissal filed prior to the lapse of said six months is generally considered as prematurely filed.
NAVOTAS SHIPYARD CORP. VS. MONTALLANA
G.R No. 190053; March 24, 2014
Facts:
The case arose when respondents Montellana, et al filed a complaint for illegal (constructive) dismissal, with money claims against
petitioners, Navotas Shipyard Corporation and its President/General Manager, Jesus Villafolor.
According to respondents, on Ocober 20, 2003, the companys employees were called to a meeting where Villaflor told them that he intends
to close the business and that he will just pay them separation pay since he cannot pay them their salary since he still had many debts to pay. Since
then, they were not allowed to report for work but Villaflors promise to give them separation pay never materialized despite persistent demands.
The petitioners argue that the company is suffering financial reverses due to the seasonal lack of fish caught and uncollected receivables. It
was thus constrained to temporarily cease operations but they projected that the company could resume operations before the end of six months. The
company had reported the temporary shutdown to the DOLE-NCR and filed an Establishment Termination Report.
Under Compulsory Arbitration the respondents complaint was dismissed for lack of merit, but they were awarded 13 th month pay and
service incentive leave pay for 2003. The LA considered the temporary shutdown as a suspension of the employment relationship between the parties.
The respondents appealed the ruling and argued before the NLRC that since they were not given work assignments for more than six months, they
should have been considered constructively dismissed and granted backwages as well as separation pay. The NLRC dismissed the appeal for lack of
merit.
When the case was brought before the Court of Appeals, the CA held that the companys shutdown was not temporary, but permanent. It set
aside the challenged NLRC decision and granted the respondents' claims for service incentive leave pay, 13th month pay, separation pay and
backwages. Thus Petitioner now brings the case up to the Supreme Court.
Issues:
1. Whether or not the respondents were illegally dismissed
2. Whether or not they are entitled to backwages, separation pay, incentive leave pay and 13 th month pay.
Ruling:
The Court found the petition to be partially meritorious.
1.

On illegal dismissal

Under the circumstances, we cannot say that the company's employees were illegally dismissed; rather, they lost their employment
because the company ceased operations after failing to recover from their financial reverses.
The respondents' verbal account of what happened during the meeting, particularly the company's imminent closure, to our mind, confirmed the
company's dire situation. The temporary shutdown, it appears, was a last ditch effort on the part of Villaflor to make the company's operations viable
but, as it turned out, the effort proved futile. The shutdown became permanent as the CA itself acknowledged. The CA misappreciated the facts when it
opined that the respondents were illegally dismissed because they were not reinstated by the petitioners after the lapse of the company's temporary
shutdown. It lost sight of the fact that the company did not resume operations anymore, a situation the CA itself recognized. The respondents, therefore,
had no more jobs to go back to; hence, their non-reinstatement.
In these lights, the CA was not only incorrect from the point of law; it likewise disregarded, or at the very least, grossly misappreciated the
evidence on record that the petitioner was in distress and had temporarily suspended its operations, and duly reflected these circumstances to
the DOLE. From this perspective, there was no grave abuse of discretion to justify the CA's reversal of the NLRC's findings and conclusions.

182

2. On backwages/nominal damages
Since there was no illegal dismissal, the respondents are not entitled to backwages. The term "backwages" presupposes illegal
termination of employment. It is restitution of earnings unduly withheld from the employee because of illegal termination. Hence, where there is no
illegal termination, there is no basis for claim or award of backwages.
The lack of basis for backwages notwithstanding, we note that the respondents claimed that they were not given individual written notices of
the company's temporary shutdown or of its closure.. Pursuant to existing jurisprudence, if the dismissal is by virtue of a just or authorized
cause, but without due process, the dismissed workers are entitled to an indemnity in the form of nominal damages
In the present case, the evidence on hand substantially shows that the company closed down due to serious business reverses, an
authorized cause for termination of employment. The failure to notify the respondents in writing of the closure of the company will not invalidate the
termination of their employment, but the company has to pay them nominal damages for the violation of their right to procedural due process. This
amount is addressed to the sound discretion of the court, taking into account the relevant circumstances, as the Court explained in Agabon v. NLRC.
In Jaka Food Processing Corp. v. Pacot, the Court made a distinction between "just" and "authorized" cause in relation to the award of
nominal damages. Thus, the Court said: "if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice
requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to
the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement,
the sanction should be stiffer because the dismissal process was initiated by the employer's exercise of his management prerogative ." The Court
awarded P50,000.00 nominal damages in Jaka.
Although the respondents were not individually served written notice of the termination of their employment, the company, nonetheless, filed
an Establishment Termination Report which included the names of the respondents. The filing of the report indicates that the company made the bona
fide effort to comply with the notice requirement under the law and the rules. Given the circumstances surrounding the company's closure and
guided by the ruling in Industrial Timber, we find it reasonable to award the respondents P10,000.00 in nominal damages.
3. On the award of separation pay,service incentive leave pay and13th month pay
Considering that the company's closure was due to serious financial reverses, it is not legally bound to give the separated
employees separation pay. In Reahs Corporation v. NLRC, the Court explained that "[t]he grant of separation pay, as an incidence of termination of
employment under Article 283, is a statutory obligation on the part of the employer and a demandable right on the part of the employee, except only
where the closure or cessation of operations was due to serious business losses or financial reverses and there is sufficient proof of this fact or
condition."
We note, however, that in his meeting with the employees, including the respondents, on October 20, 2003, Villaflor told them that he would
be giving them separation pay as a consequence of the company's closure. He should now honor his undertaking to the respondents and grant them
separation pay. Except for the petitioners' claim that "they gave the separation pays of their employees," they failed to present proof of actual payment.
In this light, Villaflor's grant of separation pay to the respondents has still to be fulfilled.
Finally, the petitioners did not appeal the LA's award of service incentive leave pay and 13th month pay for the year 2003 to the
respondents. Accordingly, the award stands.
EMERITUS SECURITY & MAINTENANCE SYSTEMS, INC. VS. DAILIG
G.R. No. 204761; April 2, 2014
Facts:
Respondent Dailig is one of the security guards employed by Petitioner Emeritus Security & Maintenance. During his employment,
respondent was assigned to petitioner's various clients, the last of which was Panasonic in Calamba, Laguna starting 16 December 2004.
On December 10, 2005, he was relieved from his post.
On 16 June 2006, respondent filed a complaint for illegal dismissal and payment of separation pay against petitioner before the Conciliation
and Mediation Center of the NLRC. On 14 July 2006, respondent filed another complaint for illegal dismissal, underpayment of salaries and nonpayment of full backwages before the NLRC
Respondent claimed that on various dates in December 2005 and from January to May 2006, he went to petitioner's office to follow-up his
next assignment. After more than six months since his last assignment, still respondent was not given a new assignment. Respondent argued that if an
employee is on floating status for more than six months, such employee is deemed illegally dismissed.
Petitioner admits it relieved respondent from his last assignment on December 10 2005, but it required respondent to report to the head
office within 48 hours from receipts of the order of relief. Petitioner claims that respondent allegedly failed to comply with this notice as well as a second
notice sent to his last known address requiring him to report to the office within 72 hours or else he would be deemed to be no longer interested to
continue his employment. In addition, petitioner claims that there was no termination letter sent to respondent purportedly proved that respondent was
not dismissed.
The Labor Arbiter held that respondent was illegally dismissed and is thus entitled to reinstatement along with backwages, and his claim for
underpayment is denied for lack of merit. Petitioner appealed before the NLRC but was dismissed, and its motion for reconsideration was denied. The
Court of Appeals affirmed the finding of the Labor Arbiter and the NLRC but it set aside the reinstatement order and ordered the payment of separation
pay, invoking the doctrine of strained relations between the parties. The petition thus brought the case before the Supreme Court.
Issues:
1.Whether or not respondent was illegally dismissed by respondent
2. Whether or not respondent is entitled to separation pay, instead of reimbursement.

183

Ruling:
The Court affirms the finding of illegal dismissal of the Labor Arbiter, NLRC, and Court of Appeals. However, the Court sets aside the Court
of Appeals' award of separation pay in favor of respondent, and reinstates the Labor Arbiter's reinstatement order.
Petitioner admits relieving respondent from his post as security guard on 10 December 2005. There is also no dispute that respondent
remained on floating status at the time he filed his complaint for illegal dismissal on 16 June 2006. In other words, respondent was on floating status
from 10 December 2005 to 16 June 2006 or more than six months. Petitioner's allegation of sending respondent a notice sometime in January 2006,
requiring him to report for work, is unsubstantiated, and thus, self-serving
The Court agrees with the ruling of the Labor Arbiter, NLRC and Court of Appeals that a floating status of a security guard, such as
respondent, for more than six months constitutes constructive dismissal. In Nationwide Security and Allied Services, Inc. v. Valderama, the Court held:
The temporary inactivity or "floating status" of security guards should continue only for six months. Otherwise,
the security agency concerned could be liable for constructive dismissal. The failure of petitioner to give respondent a
work assignment beyond the reasonable six-month period makes it liable for constructive dismissal.
On the issue of separation pay:
Reinstatement is the general rule, while the award of separation pay is the exception. The circumstances warranting the grant of
separation pay, in lieu of reinstatement, are laid down by the Court in Globe-Mackay Cable and Radio Corporation v. National Labor Relations
Commission, thus:
Over time, the following reasons have been advanced by the Court for denying reinstatement under the facts of the
case and the law applicable thereto; that reinstatement can no longer be effected in view of the long passage of time
(22 years of litigation) or because of the realities of the situation; or that it would be 'inimical to the employer's
interest;' or that reinstatement may no longer be feasible; or, that it will not serve the best interests of the parties
involved; or that the company would be prejudiced by the workers' continued employment; or that it will not serve
any prudent purpose as when supervening facts have transpired which make execution on that score unjust or
inequitable or, to an increasing extent, due to the resultant atmosphere of 'antipathy and antagonism' or 'strained
relations' or 'irretrievable estrangement' between the employer and the employee.
Contrary to the Court of Appeals' ruling, there is nothing in the records showing any strained relations between the parties to warrant the
award of separation pay. There is neither allegation nor proof that such animosity existed between petitioner and respondent. In fact, petitioner complied
with the Labor Arbiter's reinstatement order.
Considering that (1) petitioner reinstated respondent in compliance with the Labor Arbiter's decision, and (2) there is no ground, particularly
strained relations between the parties, to justify the grant of separation pay, the Court of Appeals erred in ordering the payment thereof, in lieu of
reinstatement.

CRISPIN B. LOPEZ, Petitioner, v. IRVINE CONSTRUCTION CORP. AND TOMAS SY SANTOS,Respondents.

FACTS:
Irvine Construction Corp. (Irvine) is a construction firm with office address at San Juan, Manila.6 It initially hired Lopez as laborer in
November 1994 and, thereafter, designated him as a guard at its warehouse in Dasmarifias. On December 18, 2005, Lopez was purportedly terminated
from his employment.
Respondent denied the said claims and contended that Lopez was employed only as a laborer who, however, sometimes doubled as a
guard. LA concluded that the dismissal of Lopez went beyond the six-month period fixed by Article 286 of the Labor Code and was therefore deemed to
be a permanent one effectuated without a valid cause and due process.
ISSUE:
Whether Lopez was a project or a regular employee, and whether or not there was a valid cause for the termination

RULING:

CA Resolution denied and reinstated.

Case law states that the principal test for determining whether particular employees are properly characterized as "project employees" as
distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the
duration and scope of which were specified at the time the employees were engaged for that project. The project could either be (1) a particular job or

184

undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the
other undertakings of the company; or (2) a particular job or undertaking that is not within the regular business of the corporation.
NLRC found that no substantial evidence had been presented by Irvine to show that Lopez had been assigned to carry out a "specific
project or undertaking," with its duration and scope specified at the time of engagement. In view of the weight accorded by the courts to factual findings
of labor tribunals such as the NLRC, the Court, absent any cogent reason to hold otherwise, concurs with its ruling that Lopez was not a project but a
regular employee.

In this case, Irvine failed to prove compliance with the parameters of Article 286 of the Labor Code. As the records would show, it merely completed one
of its numerous construction projects which does not, by and of itself, amount to a bona fide suspension of business operations or undertaking. In
invoking Article 286 of the Labor Code, the paramount consideration should be the dire exigency of the business of the employer that compels it to put
some of its employees temporarily out of work.51 This means that the employer should be able to prove that it is faced with a clear and compelling
economic reason which reasonably forces it to temporarily shut down its business operations or a particular undertaking, incidentally resulting to the
temporary lay-off of its employees.

EXOCET SECURITY AND ALLIED SERVICES CORPORATION

and/or MA. TERESA MARCELO, VS ARMANDO D. SERRANO
GR NO 198538, Sept. 29, 2014
FACTS:
Exocet assigned respondent Armando D. Serrano (Serrano) on September 24, 1994 as "close-in" security personnel for one of JG Summit's corporate
officers, Johnson Robert L. Go. After eight years, Serrano was re-assigned as close-in security for Lance Gokongwei, and then to his wife, Mary Joyce
Gokongwei.
Apparently Serrano was relieved by JG Summit from his duties. Upon his returned into service, there has been reassignment for more than six (6)
months. This resulted to his filing of a complaint for illegal dismissal against Exocet with the NLRC.
Exocet in its defense said that Serreno after being relieved failed to report as VIP security nd was even demanding for VIP security detail to another
client. However since Exocet did not have clients in need of
VIP security assignment, Serrano was temporarily assigned to general security service which Serreno refused to take.
ISSUE: WHETHER OR NOT Serreno was constructively dismissed
HELD:
While there is no specific provision in the Labor Code which governs the "floating status" or temporary "off-detail" of security guards employed by
private security agencies, Jurisprudence considered such case as a form of temporary retrenchment or lay-off. The concept has been defined as that
period of time when security guards are in between assignments or when they are made to wait after being relieved from a previous post until they are
transferred to a new one. It takes place when the security agency's clients decide not to renew their contracts with the agency, resulting in a situation
where the available posts under its existing contracts are less than the number of guards in its roster. It also happens in instances where contracts for
security services stipulate that the client may request the agency for the replacement of the guards assigned to it, even for want of cause, such that the
replaced security guard may be placed on temporary "off-detail" if there are no available posts under the agency's existing contracts.
As the circumstance is generally outside the control of the security agency or the employer, the Court has ruled that when a security guard is placed on
a "floating status," he or she does not receive any salary or financial benefit provided by law.
As provided for in COLE Department Order No 14, Series of 2001. If after the period of 6 months, the security agency/employer cannot provide work or
give assignment to the reserved security guard, the latter can be dismissed from service and shall be entitled to separation pay as described in
subsection 6.5. Security guards on reserved status who accept employment in other security agencies or employers before the end of the above sixmonth period may not also be given separation pay.
While the Court has recognized the security guards' right to security of tenure under the "floating status" rule, the Court has similarly acknowledged the
management prerogative of security agencies to transfer security guards when necessary in conducting its business, provided it is done in good faith.
There is no question that the security guard, Serrano, was placed on floating status after his relief from his post as a VIP security by his security
agency's client. Yet, there is no showing that his security agency, petitioner Exocet, acted in bad faith when it placed Serrano on such floating status.
The present case is not a situation where Exocet did not recall Serrano to work within the six-month period as required by law and jurisprudence.
Exocet did, in fact, make an offer to Serrano to go back to work. It is just that the assignment although it does not involve a demotion in rank or
diminution in salary, pay, benefits or privileges was not the security detail desired by Serrano. Clearly, Serrano's lack of assignment for more than six
months cannot be attributed to petitioner Exocet.

185

The security guard's right to security of tenure does not give him a vested right to the position as would deprive the company of its prerogative to
change the assignment of, or transfer the security guard to, a station where his services would be most beneficial to the client. Indeed, an employer has
the right to transfer or assign its employees from one office or area of operation to another, or in pursuit of its legitimate business interest, provided
there is no demotion in rank or diminution of salary, benefits, and other privileges, and the transfer is not motivated by discrimination or bad faith, or
effected as a form of punishment or demotion without sufficient cause.
VII.

DISEASE AS A GROUND FOR TERMINATION

SY VS. COURT OF APPEALS

G.R. No. 142293; February 27, 2003
Facts:
Jaime Sahot started working as a truck helper for petitioners family-owned trucking business named Vicente Sy Trucking. In 1965, he became a truck
driver of the same family business. Throughout the changes in names and for 36 years, private respondent continuously served the trucking business of
petitioners.
Sahot was already 59 years old. He had been incurring absences as he was suffering from various ailments. Sahot had filed a week-long leave to be
medically examined and treated for EOR, presleyopia, hypertensive retinopathy G II HPM, UTI, Osteoarthritis and heart enlargement. On said grounds,
Belen Paulino of the SBT Trucking Service management told him to file a formal request for extension of his leave. At the end of his week-long
absence, Sahot applied for extension of his leave for the whole month of June, 1994. It was at this time when petitioners allegedly threatened to
terminate his employment should he refuse to go back to work. Ultimately, petitioners carried out their threat and dismissed him from work. He ended up
sick, jobless and penniless.
Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal, He prayed for the recovery of separation pay and attorneys fees
against herein petitioners.
Petitioners contended that Sahot was not illegally dismissed as a driver because he was in fact petitioners industrial partner and that due to Sahots
refusal to work after the expiration of his authorized leave of absence, he should be deemed to have voluntarily resigned from his work. The NLRC NCR
Arbitration Branch, ruled that there was no illegal dismissal in Sahots case. Private respondent had failed to report to work. Moreover, said the Labor
Arbiter, petitioners and private respondent were industrial partners. On appeal, the NLRC declared that private respondent was an employee, not an
industrial partner, since the start. In its decision the appellate court affirmed with modification the judgment of the NLRC. It held that private respondent
was indeed an employee of petitioners since 1958.
Issues:
Whether or not an employer-employee relationship existed between petitioners and respondent Sahot;
Whether or not there was valid dismissal; and Whether or not respondent Sahot is entitled to separation pay.
Held:
Private respondent Jaime Sahot was not an industrial partner but an employee of petitioners from 1958 to 1994.
In termination cases, the burden is upon the employer to show by substantial evidence that the termination was for lawful cause and validly made.
Article 277(b) of the Labor Code puts the burden of proving that the dismissal of an employee was for a valid or authorized cause on the employer,
without distinction whether the employer admits or does not admit the dismissal. For an employees dismissal to be valid, (a) the dismissal must be for a
valid cause and (b) the employee must be afforded due process.
In order to validly terminate employment under Article 284 of the Labor Code on the ground of a disease, Book VI, Rule I, Section 8 of the Omnibus
Implementing Rules of the Labor Code requires:
Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial
to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by competent public
health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical
treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a
leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health.
In the case at bar, the employer clearly did not comply with the medical certificate requirement before Sahots dismissal was effected. From the records,
it clearly appears that procedural due process was not observed in the separation of private respondent by the management of the trucking company.
The employer is required to furnish an employee with two written notices before the latter is dismissed: (1) the notice to apprise the employee of the
particular acts or omissions for which his dismissal is sought, which is the equivalent of a charge; and (2) the notice informing the employee of his
dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be heard on his defense. These, the petitioners
failed to do, even only for record purposes. What management did was to threaten the employee with dismissal, then actually implement the threat
when the occasion presented itself because of private respondents painful left thigh.
All told, both the substantive and procedural aspects of due process were violated. Clearly, therefore, Sahots dismissal is tainted with invalidity.
On the last issue, respondent Jaime Sahot is entitled to separation pay. An employee who is terminated because of disease is entitled to "separation
pay equivalent to at least one month salary or to one-half month salary for every year of service, whichever is greater.

186

MANLY EXPRESS, INC. VS. PAYONG

G.R. No. 167462; October 25, 2005
Facts:
Romualdo Payong, Jr. was employed as a welder by petitioner. Sometime in December 1999, he was complaining of eyesight problems. Brought to an
eye specialist by private respondent Ching, he was diagnosed to be suffering from eye cataract. Despite having the cataract removed in January of
2000, he was disallowed to return to his work by Ching. Much later, on August 1, 2000, he was given a letter of termination of employment.
Thus, a complaint for illegal dismissal with money claims was filed against Manly.
The Labor Arbiter rendered a judgment ordering the respondent company to pay complainant Payong, the total amount of SEVENTY-FIVE THOUSAND
NINE HUNDRED PESOS (P75, 900.00).
The appellate court observed that considering that the termination was based on his alleged partial blindness, Manly should have presented a
certification by a competent public health authority that Payong was suffering from such a disease and his continued employment is prejudicial to his
health and that of his co-employees. Without the certification, the dismissal was illegal.
Issue:
Whether or not there was a valid termination.
Held:
The petition lacks merit.
Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease, thus:
Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who has been found to be suffering
from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his coemployees: .
The rule is explicit. For a dismissal on the ground of disease to be considered valid, two requisites must concur: (a) the employee suffers from a
disease which cannot be cured within six months and his continued employment is prohibited by law or prejudicial to his health or to the health of his
co-employees, and (b) a certification to that effect must be issued by a competent public health authority.
In the present case, there was no proof that Payongs continued employment was prohibited by law or prejudicial to his health and that of his coemployees. No medical certificate by a competent public health authority was submitted that Payong was suffering from a disease that cannot be cured
within a period of six months. In the absence of such certification, Payongs dismissal must necessarily be declared illegal.
The burden of proving the validity of the dismissal rests on the employer. As such, the employer must prove that the requisites for a valid dismissal due
to a disease have been complied with. In the absence of the required certification by a competent public health authority, this Court has ruled against
the validity of the employees dismissal.
We also note that Manly failed to comply with the procedure for terminating an employee. In dismissing an employee, the employer has the burden of
proving that the employee has been served two notices: (1) one to apprise him of the particular acts or omissions for which his dismissal is sought, and
(2) the other to inform him of his employers decision to dismiss him. The first notice must state that dismissal is sought for the act or omission charged
against the employee, otherwise, the notice cannot be considered sufficient compliance with the rules.
All told, Payongs dismissal did not comply with both the substantive and procedural aspects of due process. Clearly, his dismissal is tainted with
invalidity.
DUTERTE VS. KINGSWOOD TRADING CO.
G.R. No. 160325; October 4, 2007
Facts:
Roque Duterte was hired as truck/trailer driver by respondent Kingswood Trading Company, Inc., of which co-respondent Filemon Lim is the President.
On November 8, 1998, petitioner had his first heart attack and was confined for two weeks at the Philippine Heart Center. This was confirmed by
respondent KTC which admitted that petitioner was declared on sick leave with corresponding notification.
A month later, petitioner returned to work armed with a medical certificate signed by his attending physician at the PHC, attesting to petitioners fitness
to work. However, said certificate was not honored by the respondents who refused to allow petitioner to work.
Respondents refused to declare petitioner fit to work unless physically examined by the company physician. Respondents promise to pay petitioner his
separation pay turned out to be an empty one. Instead, petitioner was presented, for his signature, a document as proof of his receipt of the amount of
P14,375.00 as first installment of his Social Security System (SSS) benefits. Having received no such amount, petitioner refused to affix his signature
thereon and instead requested for the necessary documents from respondents to enable him to claim his SSS benefits, but the latter did not heed his
request.

187

Petitioner filed against his employer a complaint for illegal dismissal and damages.
Issue: Whether or not there was legality of the termination.
Held:
Art. 284. DISEASE AS GROUND FOR TERMINATION. -- An employer may terminate the services of an employee who has been found to be suffering
from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service,
whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.
Corollarily, in order to validly terminate employment on the basis of disease, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor
Code requires:
Disease as a ground for dismissal. -- Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his
health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health
authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical
treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a
leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. (Book VI, Rule 1, Sec. 8
of the Implementing Rules)
The law is unequivocal: the employer, before it can legally dismiss its employee on the ground of disease, must adduce a certification from a competent
public authority that the disease of which its employee is suffering is of such nature or at such a stage that it cannot be cured within a period of six
months even with proper treatment.
Here, the record does not contain the required certification. And when the respondents asked the petitioner to look for another job because he was unfit
to work, such unilateral declaration, even if backed up by the findings of its company doctors, did not meet the quantum requirement mandated by the
law, i.e., there must be a certification by a competent public authority.
The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and
arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public policy on the protection of labor.

VILLARUEL VS. YEO HAN GUAN

G.R. No. 169191; June 1, 2011
Facts:
Petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in the
business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over a period of almost twenty (20)
years, the company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's complaint in 1999, the company was
operating under the name of Yuhans Enterprises. Despite the changes in the company's name, petitioner remained in the employ of
respondent. Petitioner further alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he reported for work
but was no longer permitted to go back because of his illness; he asked that respondent allow him to continue working but be assigned a lighter kind of
work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount corresponds only to the
period between 1993 and 1999; petitioner prayed that he be granted separation pay computed from his first day of employment in June 1963, but
respondent refused. Aside from separation pay, petitioner prayed for the payment of service incentive leave for three years as well as attorney's fees.
The Labor Arbiter found for the respondent, granting him separation pay from the June 1963 up to the time of separation, and service incentive leave
equivalent to 15 days. The NLRC affirmed. On appeal, the CA reversed the NLRC on the issue of separation pay.
Issue: WON petitioner is entitled to separation pay under the provisions of the Labor Code, particularly Article 284
Held:
Article 284 of the Labor Code reads:
An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half () month salary for every year of service whichever is greater, a
fraction of at least six months being considered as one (1) whole year.
A plain reading of the abovequoted provision clearly presupposes that it is the employer who terminates the services of the employee found to be
suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his coemployees. It does not contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the reason why
Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of the

188

employee unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical treatment.
On the other hand, the Court agrees with the CA in its observation of the following circumstances as proof that respondent did not terminate petitioner's
employment: first, the only cause of action in petitioner's original complaint is that he was offered a very low separation pay; second, there was no
allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper; and, third, there was no prayer for reinstatement.
In consonance with the above findings, the Court finds that petitioner was the one who initiated the severance of his employment relations with
respondent. It is evident from the various pleadings filed by petitioner that he never intended to return to his employment with respondent on the ground
that his health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for him to return to work. This is
tantamount to resignation.
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment.
It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award of separation pay is also authorized in the
situations dealt with in Article 283 of the same Code and under Section 4 (b), Rule I, Book VI of the Implementing Rules and Regulations of the said
Code where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, this Court has allowed grants of separation pay to
stand as a measure of social justice where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral
character. However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule is that an
employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or
it is sanctioned by established employer practice or policy. In the present case, neither the abovementioned provisions of the Labor Code and its
implementing rules and regulations nor the exceptions apply because petitioner was not dismissed from his employment and there is no evidence to
show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or policy of herein respondent, his
employer.
Since petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, he is not entitled to separation pay under
the provisions of the Labor Code.
The foregoing notwithstanding, this Court, in a number of cases, has granted financial assistance to separated employees as a measure of social and
compassionate justice and as an equitable concession. Taking into consideration the factual circumstances obtaining in the present case, the Court
finds that petitioner is entitled to this kind of assistance.
In this regard, the Court finds credence in petitioner's contention that he is in the employ of respondent for more than 35 years. In the absence of a
substantial refutation on the part of respondent, the Court agrees with the findings of the Labor Arbiter and the NLRC that respondent company is not
distinct from its predecessors but, in fact, merely continued the operation of the latter under the same owners and the same business venture. The
Court further notes that there is no evidence on record to show that petitioner has any derogatory record during his long years of service with
respondent and that his employment was severed not by reason of any infraction on his part but because of his failing physical condition. Add to this the
willingness of respondent to give him financial assistance. Hence, based on the foregoing, the Court finds that the award of P50,000.00 to petitioner as
financial assistance is deemed equitable under the circumstances.

Deoferio vs. Intel Technology Phils.,

GR No. 202996, June 18, 2014 (Disease as a Ground)
FACTS
Deoferio, an employee of Intel Technology Phils. in the US repatriated for being diagnosed of major depression, underwent a series of medical and
psychiatric treatment at Intels expense after his confinement in the United States. In 2002, Dr. Elizabeth Rondain of Makati Medical Center diagnosed
him to be suffering from mood disorder, major depression, and auditory hallucination.6 He was also referred to Dr. Norieta Balderrama, Intels forensic
psychologist, and to a certain Dr. Cynthia Leynes who both confirmed his mental condition.7 On August 8, 2005, Dr. Paul Lee, a consultant psychiatrist
of the Philippine General Hospital, concluded that Deoferio was suffering from schizophrenia. After several consultations, Dr. Lee issued a psychiatric
report dated January 17,2006 concluding and stating that Deoferios psychotic symptoms are not curable within a period of six months and "will
negatively affect his work and social relation with his co-worker[s]."8 Pursuant to these findings, Intel issued Deoferio a notice of termination on March
10, 2006.9
Deoferio filed a complaint for illegal dismissal.
ISSUES
(1) Whether Deoferio was suffering from schizophrenia and whether his continued employment was prejudicial to his health, as well as to the health of
his co-employees;
(2) Whether the twin-notice requirement in dismissals applies to terminations due to disease; and

189

SC
YES. Intel had an authorized cause to dismiss Deoferio from employment
The present case involves termination due to disease an authorized cause for dismissal under Article 284 of the Labor Code. As substantive
requirements, the Labor Code and its IRR require the presence of the following elements:
(1) An employer has been found to be suffering from any disease.
(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the health of his co-employees.
(3) A competent public health authority certifies that the disease is of such nature or at such a stage that it cannot be cured within a period of six months
even with proper medical treatment. With respect to the first and second elements, the Court liberally construed the phrase "prejudicial to his health as
well as to the health of his co-employees" to mean "prejudicial to his health or to the health of his co-employees." We did not limit the scope of this
phrase to contagious diseases for the reason that this phrase is preceded by the phrase "any disease" under Article 284 of the Labor Code, to wit:
Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That
he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a
fraction of at least six (6) months being considered as one (1) whole year. [underscores, italics and emphases ours]
Consistent with this construction, we applied this provision in resolving illegal dismissal cases due to non-contagious diseases such as stroke, heart
attack, osteoarthritis, and eye cataract, among others.
The third element substantiates the contention that the employee has indeed been suffering from a disease that: (1) is prejudicial to his health as well
as to the health of his co-employees; and (2) cannot be cured within a period of six months even with proper medical treatment. Without the medical
certificate, there can be no authorized cause for the employees dismissal. The absence of this element thus renders the dismissal void and illegal.
Simply stated, this requirement is not merely a procedural requirement, but a substantive one. The certification from a competent public health authority
is precisely the substantial evidence required by law to prove the existence of the disease itself, its non-curability within a period of six months even with
proper medical treatment, and the prejudice that it would cause to the health of the sick employee and to those of his co-employees.
In the current case, we agree with the CA that Dr. Lees psychiatric report substantially proves that Deoferio was suffering from schizophrenia, that his
disease was not curable within a period of six months even with proper medical treatment, and that his continued employment would be prejudicial to
his mental health. This conclusion is further substantiated by the unusual and bizarre acts that Deoferio committed while at Intels employ.
The twin-notice requirement applies to terminations under Article 284 of the Labor Code
The Labor Code and its IRR are silent on the procedural due process required in terminations due to disease. Despite the seeming gap in the law,
Section 2, Rule 1, Book VI of the IRR expressly states that the employee should be afforded procedural due process in all cases of dismissals.
VIII.

OTHER CAUSES OF SEVERANCE OF EMPLOYMENT RELATION

PANTRANCO NORTH EXPRESS, INC. VS. NLRC

259 SCRA 161
Facts:
Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the Pantranco Employees Association-PTGWO. He
continued in petitioner's employ until August 12, 1989, when he was retired at the age of fifty-two (52) after having rendered twenty five years' service.
The basis of his retirement was the compulsory retirement provision of the collective bargaining agreement between the petitioner and the aforenamed
union. Private respondent received P49,300.00 as retirement pay.
On February 15, 1990, private respondent filed a complaint for illegal dismissal against petitioner with the Sub-Regional Arbitration Branch of the
respondent Commission in Dagupan City. The complaint was consolidated with two other cases of illegal dismissal having similar facts and issues, filed
by other employees, non-union members.
Issue:
Whether the CBA stipulation on compulsory retirement after twenty-five years of service is legal and enforceable.
Ruling:
Art. 287 of the Labor Code as worded permits employers and employees to fix the applicable retirement age at below 60 years. Moreover, providing for
early retirement does not constitute diminution of benefits. In almost all countries today, early retirement, i.e., before age 60, is considered a reward for
services rendered since it enables an employee to reap the fruits of his labor particularly retirement benefits, whether lump-sum or otherwise at an
earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer. As a matter of fact, one of the

190

advantages of early retirement is that the corresponding retirement benefits, usually consisting of a substantial cash windfall, can early on be put to
productive and profitable uses by way of income-generating investments, thereby affording a more significant measure of financial security and
independence for the retiree who, up till then, had to contend with life's vicissitudes within the parameters of his fortnightly or weekly wages. Thus we
are now seeing many CBAs with such early retirement provisions. And the same cannot be considered a diminution of employment benefits.
Being a product of negotiation, the CBA between the petitioner and the union intended the provision on compulsory retirement to be beneficial to the
employees-union members, including herein private respondent. When private respondent ratified the CBA with the union, he not only agreed to the
CBA but also agreed to conform to and abide by its provisions. Thus, it cannot be said that he was illegally dismissed when the CBA provision on
compulsory retirement was applied to his case.
Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law," which went into effect on January 7, 1993. Although
passed many years after the compulsory retirement of herein private respondent, nevertheless, the said statute sheds light on the present discussion
when it amended Art. 287 of the Labor Code, to make it read as follows:
"ART. 7.
Retirement. Any employee may be retired upon reaching the retirement age establish in the collective bargaining agreement or other
applicable employment contract.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least
five (5) years in the said establishment may retire x x x."
The aforequoted provision makes clear the intention and spirit of the law to give employers and employees a free hand to determine and agree upon
the terms and conditions of retirement. Providing in a CBA for compulsory retirement of employees after twenty-five (25) years of service is legal and
enforceable so long as the parties agree to be governed by such CBA. The law presumes that employees know what they want and what is good for
them absent any showing that fraud or intimidation was employed to secure their consent thereto.
PAL. VS. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINE
G.R. NO. 143686 JANUARY 15, 2002
Facts:
The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL) and respondent Airline Pilots Association of the Philippines (ALPAP), the
exclusive bargaining representative of all commercial airline pilots of petitioner, stemmed from petitioner's act of unilaterally retiring airline pilot Captain
Albino Collantes under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. Contending, inter alia, that the retirement of Captain Collantes
constituted illegal dismissal and union busting, ALPAP filed a Notice of Strike with the Department of Labor and Employment (DOLE). Pursuant of
Article 263 (g) of the Labor Code, the Secretary of the DOLE (hereafter referred to as Secretary) assumed jurisdiction over the labor dispute.
On June 13, 1998, the Secretary issued the assailed order upholding PAL's action of unilaterally retiring Captain Collantes and recognizing the same as
a valid exercise of its option under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. The Secretary further ordered that the basis of the
computation of Captain Collantes' retirement benefits should be Article 287 of the Labor Code (as amended by Republic Act No. 7641) and not Section
2, Article VII, of the PAL-ALPAP Retirement Plan. The Secretary added that in the exercise of its option to retire pilots, PAL should first consult the pilot
concerned before implementing his retirement.
Issue:
Whether or not the retirement of Collantes constitutes illegal dismissal.
Ruling:
Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other
applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective
bargaining agreement and other agreements: provided, however, That an employee's retirement benefits under any collective bargaining and other
agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement plant providing for retirement benefits of employees in the establishment, an employee upon reaching
the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared as the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for
every year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term 'one-half (1/2) month salary' shall mean fifteen (15) days plus one-twelfth (1/12) of the 13 th
month pay and the cash equivalent of not more than five (5) days of service incentive leaves. xxx xxx xxx.
In short, the retirement benefits that a pilot would get under the provisions of the above-quoted Article 287 of the Labor Code are less than those that he
would get under the applicable retirement plans of petitioner.
Finally, on the issue of whether petitioner should consult the pilot concerned before exercising its option to retire pilots, we rule that this added
requirement, in effect, amended the terms of Article VII, Section 2 of the 1976 PAL-ALPAP Retirement Plan. The option of an employer to retire its
employees is recognized as valid.
Furthermore, when the Secretary of Labor and Employment imposed the added requirement that petitioner should consult its pilots prior to retirement,
he resolved a question which was outside of the issues raised, thereby depriving petitioner an opportunity to be heard on this point.
CAINTA CATHOLIC SCHOOL VS. CAINTA CATHOLIC SCHOOL EMPLOYEES UNION
G.R. NO. 151021 MAY 4, 2006
Facts:

191

On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta Catholic School (School) and the Cainta Catholic School
Employees Union (Union) effective 1 January 1986 to 31 May 1989. This CBA provided, among others, that:
This Collective Bargaining Agreement shall become effective and binding upon the parties from January 1, 1986 up to May 31, 1989. At least sixty (60)
days before the expiration of this Agreement, the parties hereto shall submit written proposals which shall be made the basis of negotiations for the
execution of a new agreement.
If no new agreement is reached by the parties at the expiration of this agreement, all the provisions of this Agreement shall remain full force and in
effect, up to the time a new Agreement shall be executed.
On 15 October 1993, the School retired Llagas and Javier, who had rendered more than twenty (20) years of continuous service, pursuant to Section 2,
Article X of the CBA, to wit:
An employee may be retired, either upon application by the employee himself or by the decision of the Director of the School, upon reaching the age of
sixty (60) or after having rendered at least twenty (20) years of service to the School the last three (3) years of which must be continuous.
Issue:
Whether the forced retirement of Llagas and Javier was a valid exercise of management prerogative.
Ruling:
ART. 287. Retirement.
Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment
contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective
bargaining agreement and other agreements: Provided, however, That an employees retirement benefits under any collective bargaining agreement
and other agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least
five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year
of service, a fraction of at least six (6) months being considered as one whole year.
The CBA in the case at bar established 60 as the compulsory retirement age. However, it is not alleged that either Javier or Llagas had reached the
compulsory retirement age of 60 years, but instead that they had rendered at least 20 years of service in the School, the last three (3) years continuous.
Clearly, the CBA provision allows the employee to be retired by the School even before reaching the age of 60, provided that he/she had rendered 20
years of service. Jurisprudence affirms the position of the School.
We affirm the continued validity of Pantranco and its kindred cases, and thus reiterate that under Article 287 of the Labor Code, a CBA may validly
accord management the prerogative to optionally retire an employee under the terms and conditions mutually agreed upon by management and the
bargaining union, even if such agreement allows for retirement at an age lower than the optional retirement age or the compulsory retirement age.
ALPHA C. JACULBE VS. SILLIMAN UNIVERSITY
G.R. NO. 156934 MARCH 16, 2007
Facts:
Sometime in 1958, petitioner began working for respondents university medical center as a nurse.
In a letter dated December 3, 1992, respondent, through its Human Resources Development Office, informed petitioner that she was approaching her
35th year of service with the university and was due for automatic retirement on November 18, 1993, at which time she would be 57 years old. This was
pursuant to respondents retirement plan for its employees which provided that its members could be automatically retired "upon reaching the age of 65
or after 35 years of uninterrupted service to the university." Respondent required certain documents in connection with petitioners impending
retirement.
Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be
allowed to work until the age of 60 because this was the minimum age at which she could qualify for suspension. But respondent stood pat on its
decision to retire her, citing "company policy."
Issue:
Whether or not respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in its retirement plan?
Ruling:
Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per se repugnant to the
constitutional guaranty of security of tenure. Article 287 of the Labor Code provides:
ART. 287. Retirement - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other
applicable employment contract.
By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years.
However, after reviewing the assailed decision together with the rules and regulations of respondents retirement plan, we find that the plan runs afoul of
the constitutional guaranty of security of tenure contained in Article XIII, also known as the provision on Social Justice and Human Rights.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after
reaching a certain age agrees to sever his or her employment with the former.
The truth was that petitioner had no choice but to participate in the plan, given that the only way she could refrain from doing so was to resign or lose
her job. It is axiomatic that employer and employee do not stand on equal footing, a situation which often causes an employee to act out of need
instead of any genuine acquiescence to the employer. This was clearly just such an instance.

192

Not only was petitioner still a good eight years away from the compulsory retirement age but she was also still fully capable of discharging her duties as
shown by the fact that respondents board of trustees seriously considered rehiring her after the affectivity of her "compulsory retirement."
As already stated, an employer is free to impose a retirement age less than 65 for as long as it has the employees consent. Stated conversely,
employees are free to accept the employers offer to lower the retirement age if they feel they can get a better deal with the retirement plan presented
by the employer. Thus, having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her,
respondent was guilty of illegal dismissal.
GLOBE TELECOM VS. CRISOLOGO
G.R. NO. 17644 AUGUST 10, 2007
Facts:
Respondent Jenette Marie B. Crisologo, a lawyer, joined Globe Telecom (Globe) on November 3, 1998 as a manager in its corporate legal services
department. Her tasks included negotiating, drafting and reviewing the companys supply contracts.
On April 5, 2002, respondent (who was then pregnant) was rushed to the Makati Medical Center due to profuse bleeding. It was later diagnosed as a
possible miscarriage.
After a week-long absence, respondent reported back to work on April 12, 2002.On the same day, she tendered her resignation letter explaining that
she was advised by her doctor to rest for the duration of her pregnancy. She also requested permission to exhaust her unused leaves until the effective
date of her resignation on May 30, 2002. Globe accepted her resignation.
On April 30, 2002, respondent called on her immediate supervisor, petitioner Ma. Caridad Gonzales. In the course of their conversation, petitioner
Gonzales casually informed respondent of an e-mail circulating within the company to the effect that she (respondent) allegedly solicited money from
one of the companys suppliers. Because the e-mail was not forwarded to her (being its subject), respondent requested a copy and an opportunity to
confront the person(s) responsible. Petitioner Gonzales declined as there was no longer any reason to pursue the matter.
On May 2, 2002, respondent sent petitioner Gonzales a letter complaining of her "ill-treatment" by the company after she submitted her resignation
letter.She also confided that she resigned only because the e-mail damaged her name and reputation. For that reason, she requested petitioner
Gonzales to issue a certification clearing her of "any wrongdoing, misconduct or transgression."
Believing that Globe would not comply with her demands, respondent filed a complaint for illegal dismissal against petitioners on July 3, 2002.According
to respondent, petitioners fired her on the basis of a rumor whose veracity was never proven. She was neither furnished a copy of the e-mail nor
allowed to confront the person(s) who circulated it. Petitioner Gonzales immediately closed the matter with finality without conducting any inquiry.
Furthermore, petitioners failed not only to adduce clear and substantial proof of loss of confidence but also to observe due processas petitioner
Gonzales summarily forced her to resign.
Petitioners, on the other hand, contended that respondents clear and unequivocal resignation letter showed her unconditional desire to resign.
Issue:
Whether or not respondent was illegally dismissed by petitioner.
Ruling:
To support their contention that respondent voluntarily resigned, petitioners presented her resignation letter dated April 12, 2002:
This is to inform you that as per my doctors advice, I have to take a long rest due to a very difficult pregnancy and other health reasons. I am therefore
tendering my resignation effective 30 May 2002 and would like to request that I be allowed to exhaust all leaves due to me until such date. Furthermore,
I hereby undertake to turn over all my pending work to other lawyers until said effective date of my termination.
Thank you very much.
Respondent personally drafted her resignation letter in a clear, concise and categorical language. Its content, as quoted above, confirmed her
unequivocal intent to resign.
An employee of respondents accomplished educational background and professional standing will not easily relinquish her legal rights unless she
intends to. Respondents resignation letter without doubt proved petitioners assertion that she voluntarily resigned from her job.
Resignation is the voluntary act of an employee who finds herself in a situation where shebelieves that personal reasons cannot be sacrificed in favor of
the exigency of the service and that she has no other choice but to disassociate herself from employment.
Employees resign for various reasons. A big salary is certainly no hindrance to a voluntary cessation of employment. Human resource studies reveal
that various factors (in and out of the workplace) affect an employees employment decision. In this instance, respondent would have suffered a
miscarriage had she continued to work. She obviously resigned for the sake of her child's well-being, motherhood clearly taking precedence over her
job.
Coercion exists when there is a reasonable or well-grounded fear of an imminent evil upon a person or his property or upon the person or property of
his spouse, descendants or ascendants.No such situation existed in this case.
BMG RECORDS PHILS. VS. APARECIO
G.R. NO. 153290 SEPTEMBER 5, 2007
Facts:
Petitioner BMG Records (Phils.), Inc. (BMG) is engaged in the business of selling various audio records nationwide. On September 2, 1990, it hired
private respondent Aida C. Aparecio (Aparecio) as one of the promo girls in its Cebu branch. For working from Monday to Sunday, she received a salary
of P181.00 per day.
On May 25, 1998, Aparecio filed a complaint against BMG and its Branch Manager, Jose Yap, Jr., co-petitioner herein, for illegal dismissal and nonpayment of overtime pay, holiday pay, premium pay for rest day, 13 th month pay, service incentive leave, and separation pay.

193

Petitioners, however, proffer a different version of the facts. They narrate that Aparecio was initially performing well as an employee but as years passed
by she seemed to be complacent in the performance of her job and had been comparing the salaries of promo girls in other companies. It appeared that
she was no longer interested in her job. In April 1998, Aparecio and two other promo girls, Jovelina V. Soco and Veronica P. Mutya, intimated to their
supervisor that they were intending to resign and were requesting for some financial assistance. BMG made it clear that, as a company policy, an
employee who resigns from service is not entitled to financial assistance, but considering the length of their service and due to humanitarian
consideration it would accede to the request after they secure their respective clearances. Forthwith, the three employees tendered their resignations,
which were accepted. When they processed the required individual clearance, it was found out that they had incurred some shortages after inventory.
Per agreement, said shortages were deducted from the amounts due them. Thus, Soco and Mutya received their last salary, a proportion of the 13 th
month pay, tax refund and financial assistance less the deductions, and they executed their releases and quitclaims. Except for the financial assistance,
Aparecio also obtained the same yet refused to sign the release and quitclaim, protesting the amount of P9,170.12 deducted from the financial
assistance. She was adamant but BMG stood by the previous agreement.
Aparecio submits that fraud, undue influence, intimidation, and/or mistake were attendant upon her resignation from BMG. As her consent was allegedly
vitiated, the act of resigning became involuntary; hence, petitioners are guilty of illegal dismissal.
Issue:
Whether or not respondent voluntarily resigned or illegally dismissed.
Ruling:
Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the
exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an
office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining whether in fact, he or she intended
to sever from his or her employment.
Thus, this Court agrees with petitioners' contention that the circumstances surrounding Aparecio's resignation should be given due weight in
determining whether she had intended to resign. In this case, such intent is very evident:
First, Aparecio already communicated to other people that she was about to resign to look for a better paying job since she had been complaining that
employees like her in other companies were earning much more;
Second, prior to the submission of her resignation letter, Aparecio and two other promo girls, Soco and Mutya, approached their supervisor, intimated
their desire to resign, and requested that they be given financial assistance, which petitioners granted on the condition that deductions would be made
in case of shortage after inventory;
Third, Aparecio, Soco, and Mutya submitted their duly signed resignation letters, which were accepted by petitioners; and
Fourth, Aparecio already initiated the processing of her clearance; thus, she was able to receive her last salary, 13 th month pay, and tax refund but
refused to receive the financial assistance less the deductions made.
The acceptance by petitioners of Aparecio's resignation rendered the same effective. Upon such acceptance, it may not be unilaterally withdrawn
without the consent of petitioners. When the employee later signified the intention of continuing his or her work, it was already up to the employer to
accept the withdrawal of his or her resignation. The mere fact that the withdrawal was not accepted does not constitute illegal dismissal, the acceptance
of the withdrawal of the resignation being the employer's sole prerogative.
Certainly, what transpired here was caused by an employee's error of judgment and not by the employer's application of means vitiating the consent to
resign. It would be utterly unfair to attribute to petitioners the commission of illegal dismissal and to impose upon them the burden of accepting back
Aparecio who unequivocally manifested her intent and willingness to sever her employment ties.
Once an employee resigns and his resignation is accepted, he no longer has any right to the job. If the employee later changes his mind, he must ask
for approval of the withdrawal of his resignation from his employer, as if he were re-applying for the job. It will then be up to the employer to determine
whether or not his service would be continued. If the employer accepts said withdrawal, the employee retains his job. If the employer does not x x x the
employee cannot claim illegal dismissal for the employer has the right to determine who his employees will be. To say that an employee who has
resigned is illegally dismissed, is to encroach upon the right of employers to hire persons who will be of service to them.
A resigned employee who desires to take his job back has to re-apply therefor, and he shall have the status of a stranger who cannot unilaterally
demand an appointment. He cannot arrogate unto himself the same position which he earlier decided to leave. To allow him to do so would be to
deprive the employer of his basic right to choose whom to employ. Such is tantamount to undue oppression of the employer. It has been held that an
employer is free to regulate, according to his own discretion and judgment, all aspects of employment including hiring. The law, in protecting the rights
of the laborer, impels neither the oppression nor self-destruction of the employer.
BLUE ANGEL MANPOWER AND SECURITY SERVICES, INC. VS. CA
G.R. NO. 161196 JULY 28, 2008
Facts:
Blue Angel, a messengerial and security agency, hired private respondents Romel Castillo, Wilson Ciriaco, Gary Garces, and Chesterfield Mercader as
security guards and detailed them at the National College of Business and Arts (NCBA) in Cubao, Quezon City.
On April 20, 1999, Castillo and Mercader, later joined by Ciriaco and Garces, filed a complaint for illegal deductions and other money claims against
Blue Angel. Eventually, they amended their complaint to include illegal dismissal. According to the four guards, they were required, while still with Blue
Angel, to work from 7:00 a.m. to 7:00 p.m. without overtime and premium holiday pay, among other benefits. They also alleged receiving only PhP
5,000 a month or PhP 166 per day and, from this amount, Blue Angel deducted PhP 100 as cash bond. They further averred that Blue Angel, when
apprised of their original complaint, illegally terminated Garces and Ciriaco on April 11 and 12, 1999, respectively, and Castillo and Mercader on April
28, 1999. The four guards prayed for (1) payment of backwages, wage differentials, premium and overtime pay for holidays, and 13th month pay; (2)
reimbursement of their cash bond; (3) reinstatement or separation pay; and (4) damages.

194

Blue Angel, for its part, denied the charges of illegal dismissal. It alleged that, on two occasions, the officer-in-charge (OIC) of the Security Force of
NCBA, Reynaldo Dayag, reported that the four complaining guards had, while on guard duty detail with the school, committed several infractions,
among them: insubordination, sleeping while on duty, and absence without leave (AWOL). When summoned to explain their side on the derogatory
report, only Castillo, Ciriaco, and Garces, according to Blue Angel, showed up, but not Mercader who had since stopped reporting for work and thus
considered on AWOL. Continuing, Blue Angel alleged that when told that they would be subjected to an investigation, Castillo, Ciriaco, and Garces
pleaded that they be allowed to resign instead. The three, so Blue Angel claimed, then tendered their pro-forma letters of resignation followed by
handwritten resignation letters in the nature of quitclaims. To refute the guards claims of non-payment of what was due them, Blue Angel presented the
payrolls and vouchers from July 1997 to April 1999 that showed the four guards respective gross salaries and deductions.
Issue:
Whether or not private respondents were illegally dismissed.
Ruling:
The resignations were involuntary and the termination of private respondents was illegal. We are not unaware that the execution of the resignation
letters was undisputed, but the aforementioned circumstances of this case and the fact that private respondents filed a complaint for illegal dismissal
from employment against Blue Angel completely negate the claim that private respondents voluntarily resigned. Well-entrenched is the rule that
resignation is inconsistent with the filing of a complaint for illegal dismissal. To constitute resignation, the resignation must be unconditional with the
intent to operate as such. There must be clear intention to relinquish the position. In this case, private respondents actively pursued their illegal
dismissal case against Blue Angel such that they cannot be said to have voluntarily resigned from their jobs.
With the finding that private respondents were illegally dismissed, they are entitled to reinstatement to their positions without loss of their seniority rights
and with full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time private respondents
compensation was withheld from them up to the time of their actual reinstatement as provided for in Article 279 of the Labor Code.
As the law now stands, illegally dismissed employees are entitled to two reliefs, namely: backwages and reinstatement. They are entitled to
reinstatement, if viable, or separation pay, if reinstatement is no longer feasible, and backwages. The award of one does not preclude the other as the
Court had, in proper cases, ordered the payment of both. Where an employee would have been entitled to reinstatement with full backwages, but
circumstances, i.e., strained relationships, make reinstatement impossible, the more equitable disposition would be to award separation pay equivalent
to at least one month pay, or one month pay for every year of service, whichever is higher, in addition to full backwages, inclusive of allowances, and
benefits or their monetary equivalent, computed from the time the employees compensation was withheld up to the time of the employees actual
reinstatement.
GUERZON, JR. VS. PASIG INDUSTIES, INC.
G.R. NO. 170266 SEPTEMBER 12, 2008
Facts:
Petitioners Engracio A. Guerzon, Jr., Lilian E. Cruz and Josefina O. Bauyon were employees of respondent Pasig Industries, Inc. (PII) stationed in its
Makati office. Guerzon was PIIs export/import manager for 21 years; Cruz was the companys chief accountant for 20 years and Bauyon was a
member of PIIs accounting staff since 1989.
In 1995, respondent Yoshikitsu Fujita informed petitioners that PIIs parent company had decided to close the Makati office. To streamline operations,
functions performed by the Makati office would be transferred to its facilities in the Bataan Export Processing Zone. For this reason, petitioners were
given the option to resign, in which case they would be entitled to a special separation package (SSP) equivalent to one-month basic salary for each
year of service.
Petitioners decided to resign but requested a recomputation of their respective separation pay based on the monthly gross pay ( i.e., basic pay plus all
allowances). PII, through Fujita, acceded and accordingly paid Guerzon, P548,100; Cruz, P414,500.22 and Bauyon, P10,219.66 on September 25,
1995.
Despite voluntarily availing of the SSP, petitioners filed a complaint for illegal dismissal and payment of separation pay, retirement benefits, leave pay
and 13th month pay against PII, its president Masahiro Fukada and Fujita.
Issue:
Whether or not petitioners were illegally dismissed.
Ruling:
Petitioners held responsible positions in PII. Employees of their educational backgrounds and professional standing do not easily relinquish their legal
rights unless they intend to. In fact, petitioners even bargained to improve the terms of the SSP and, after successfully doing so, voluntarily resigned
from PII.
Consequently, whether the streamlining of PIIs operations constituted an authorized cause for petitioners termination became immaterial in view of
their voluntary resignation.
SUAREZ, JR., ET AL. VS. NATIONAL STEEL CORP.
G.R. NO. 150180 OCTOBER 17, 2008
Facts:
Respondent National Steel Corporation was engaged in the business of manufacturing steel products needed for pipe making, ship building, canmaking and production of appliances. Sometime in 1994, respondent suffered substantial financial losses due to an increase in the volume of steel
products manufactured by foreign countries. With this development, respondent adopted an organizational streamlining program that resulted in the

195

retrenchment of seven hundred (700) employees in its main plant in Iligan City, among whom were herein petitioners. At that time, respondent and the
National Steel Labor Union-Federation of Free Workers (NASLU-FFW), the certified collective bargaining agent of respondents rank-and-file
employees, were negotiating for the renewal of the Collective Bargaining Agreement (CBA) which expired on June 30, 1994.
On July 18, 1994, respondent sent out individual notices to the seven hundred (700) employees affected by the retrenchment, including petitioners.
The notices specifically stated that their services were terminated effective August 18, 1994 and they will each receive a separation package in
accordance with the retrenchment program. The separation package consisted of the following: (1) separation pay equivalent to two (2) months salary
for every year of service; (2) leave balance credits; (3) 13 th month pay; and (4) uniform plus rice subsidy differential. After having been paid their
separation benefits, the employees, including herein petitioners, each executed and signed a release and quitclaim, written in English and containing a
translation in the Visayan dialect in the same document. The release and quitclaims were acknowledged before a notary public.
On October 27, 1994, respondent and NASLU-FFW signed a new CBA, retroactive to July 1, 1994 and effective until June 30, 1996. Pursuant thereto,
the retrenched employees were given their salary differentials, for which they executed and signed another release and quitclaim.
Nothing was heard from the retrenched employees, until February 1997 or about two and half years after their separation from the company, when
herein petitioners wrote respondent demanding payment of retirement benefits under the CBA. They claimed that they were qualified for optional
retirement after having rendered services for at least ten (10) years when they were retrenched on August 18, 1994. Respondent rejected petitioners
claim, forcing petitioners to file a complaint for payment of retirement benefits against respondent.
For its part, respondent maintains that its retirement plan expressly prohibits the payment of retirement benefits to employees terminated for cause.
Thus, retrenched employees who were granted their separation package are already precluded from receiving retirement benefits. Moreover,
petitioners executed valid quitclaims.
Issue:
Whether petitioners who were retrenched employees that had already received their separation pay can still recover retirement benefits.
Ruling:
Petitioners entitlement to retirement benefits in addition to the separation pay they already received would depend upon the provisions of respondents
retirement plan and its CBA with NASLU-FFW.
Contrary to the stance taken by petitioners, the retirement plan of respondent company reveals that an employee who was terminated for cause is not
entitled to retirement benefits, E. Resignations and Terminations. No retirement benefits are payable in instances of resignations or terminations for
cause; provided, however, that an employee who resigns voluntarily after he has qualified for optional early retirement under Article IV, B, 2 or 3 shall be
deemed to have opted to avail of such early retirement and paid the applicable and corresponding retirement pay/benefit provided therein. All
terminations other than for cause will be governed by the applicable provisions of the Labor Code of the Philippines.(Emphasis supplied)
From the foregoing, it is clear that respondents retirement plan explicitly prohibits the recovery of retirement benefits in cases of terminations for cause.
Here, there is no dispute that petitioners were separated from the service for cause, as it was due to a valid retrenchment undertaken by respondent
company. Unarguably, retrenchment is recognized as one of the authorized causes for termination of employment under Article 283 of the Labor Code,
which states:
The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operations of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions
of this title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered as one (1) whole year.
Having been separated from employment due to an authorized cause, petitioners are barred from receiving retirement benefits pursuant to Article X(E)
of respondents retirement plan. With the inclusion of such provision in the retirement plan, respondent categorically disallows payment of retirement
benefits to retrenched employees. They are only entitled to payment of separation pay in accordance with Article 283 of the Labor Code.
We likewise uphold the CAs finding that petitioners voluntarily executed and signed a release and quitclaim after receiving their separation package,
acknowledging full and final payment of all benefits that they may be entitled to in relation to their employment. The validity of quitclaims executed by
laborers has long been recognized in this jurisdiction.
Indubitably, payment to petitioners of both separation pay and retirement benefits is proscribed under Article X of respondents retirement plan, as well
as under Article XIV of the CBA. Both the retirement plan and the CBA are binding agreements, not being contrary to law, morals, good customs, public
order or public policy and must therefore be upheld. Hence, petitioners theory that there is nothing in the retirement plan and the CBA that prohibits
them from receiving the retirement pay over and above their separation package must obviously fail.
GOODRICH MANUFACTURING CORP. VS. ATIVO ET AL.
G.R. NO. 188002 FEBRUARY 1, 2010
Facts:
Emerlina Ativo et al., are former employees of petitioner Goodrich Manufacturing Corporation (Goodrich) assigned as machine or maintenance
operators. In the last quarter of 2004, Goodrich suffered financial constraints and gave all its employees the option to voluntarily resign from the
company. Respondents were among those who availed of that option and were paid their separation pay. Ativo et al., executed their waivers and
quitclaims. However, they changed their minds and filed for illegal dismissal against Goorichwith prayer for payment of their full monetary benefits
before the NLRC. The Labor Arbiter held that there was no illegal dismissal but ruled that Goodrich was still liable for the employees SIL, ECOLA, and
13th month pay, and that the separation pay was insufficient. Mutually unhappy, both parties appealed to the NLRC which reversed the LAs decision.
The NLRC said that the considerations they received are not unreasonable, vis--vis the awards granted [to] them in the assailed Decision. Notably, the
awards even include the 13th month pays for 2002 and 2003 which, by respondents proof appear already paid. We also noted that complainants are

196

not shown to have signed the deeds of waiver and quitclaim involuntarily, without understanding the implication and consequences thereof. The case
was brought before the CA which renderred a decision in favor of Ativo et. al., holding that they are entitled to receive their unpaid 13th month pay, SIL,
and ECOLA. And so the issue is now before the Supreme Court.
Issue:
Whether or not the release, waiver and quitclaim signed by respondents are valid and binding; and whether respondents may still receive the deficiency
amounts due them.
Ruling:
The release, waiver and quitclaim are valid and binding. Capital wins this time.
Requisites of a valid quitclaim
It is true that the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by
unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees. In certain cases, however, the Court has
given effect to quitclaims executed by employees if the employer is able to prove the following requisites, to wit:
(1) the employee executes a deed of quitclaim voluntarily;
(2) there is no fraud or deceit on the part of any of the parties;
(3) the consideration of the quitclaim is credible and reasonable; and
(4) the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a
right recognized by law.
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement,
it is binding on the parties and may not later be disowned simply because of a change of mind.
In their Comment dated October 1, 2009, respondents themselves admitted that they were not coerced to sign the quitclaims. They, however, maintain
that two (2) reasons moved them to sign the said documents: first, they believed Goodrich was terminating its business on account of financial
hardship; and second, they thought petitioners will pay them the full amount of their compensation.Respondents insist that they were deceived into
signing the quitclaims when they learned that they were not paid their full monetary benefits and after discovering that the company did not really close
shop, but instead only assumed a different company name.
Quitclaims were simple, clear and unequivocal
The records of the case are bereft of any substantial evidence to show that respondents did not know that they were relinquishing their right short of
what they had expected to receive and contrary to what they have so declared. Put differently, at the time they were signing their quitclaims,
respondents honestly believed that the amounts received by them were fair and reasonable settlements of the amounts which they would have received
had they refused to voluntarily resign from the said company.
Respondents were not deceived
Ativo and company claim that they were deceived because petitioners did not really terminate their business since Mr. Chua Goy had set up another
company with the same line of business as Goodrich. Such contention, however, was not proven during the hearing before the Labor Arbiter and the
NLRC. Hence, such claim is based only on respondents surmises and speculations which, unfortunately, can never be used as a valid and legal ground
to repudiate respondents quitclaims.
Considerations received were not grossly inadequate
As correctly pointed out by the NLRC, the total awards computed by the Labor Arbiter will definitely even be lesser after deducting the 13th month pay
for the years 2002 and 2003, which have already been received by the respondents prior to the filing of their complaints, but which the Labor Arbiter still
included in his computation. The difference between the amounts expected from those that were received may, therefore, be considered as a fair and
reasonable bargain on the part of both parties.
KOREAN AIR CO. LTD. VS. YUSON
G.R. NO. 170369 JUNE 16, 2010
Facts:
Korean Air Co., Ltd. (Korean Air) hired Adelina A.S. Yuson (Yuson) as reservations agent. Korean Air promoted Yuson to assistant manager in 1993,
and to passenger sales manager in 1999.
Korean Air suffered a net loss of over $367,000,000. Consequently, Korean Air reduced its budget for 2001 by 10 percent.
In order to cut costs, Korean Air offered its employees an early retirement program (ERP). In a memorandum 6dated 21 August 2001, Korean Air stated
that:
MNLSM Management, on its discretion, is hereby offering the said early retirement program to its staff. Availing employees shall
be given ONE AND A HALF MONTHS (1.50%) [sic] salary for every year of service and other benefits. This rate is 50% higher
than the retrenchment pay prevailing in the CBA.
Yuson accepted the offer for early retirement.
However, she was excluded from the ERP because she was retiring on 8 January 2002. That the program is intended to staffs, upon discretion of
management, who still have long years left with the Company before reaching retirement age. You are already due for retirement on January 8, 2002.
This program is being implemented by the Company as a cost saving tool to prevent further losses.
Yuson claimed that Korean Air was bound by the perfected contract and accused the company of harassment and discrimination.
Yuson filed with the arbitration branch of the NLRC a complaint against Korean Air and Suk for payment of benefit under the ERP
On her 60th birthday, Yuson availed of the optional retirement under Article 287 of the Labor Code.
LA ruling: Labor Arbiter Santos denied for lack of merit Yusons claims for benefit under the ERP, for moral and exemplary damages, and for attorneys
fees.
NLRC ruling: NLRC adopted the report and recommendations of Labor Arbiter Tamayo to order Korean Air and Suk to pay Yuson her benefit under the
ERP and to give her 10 Korean Air economy tickets.

197

Issue:
Whether or not the claim for benefit under the ERP became moot when she availed of the optional retirement under Article 287 of the Labor Code, as
amended.
Ruling:
Yusons claim for benefit under the ERP became moot when she availed of the optional retirement under Article 287 and accepted the benefit. By her
acceptance of the benefit, Yuson is deemed to have opted to retire under Article 287.
By her acceptance of retirement benefits the petitioner is deemed to have opted to retire under the third paragraph of Article 287 of the Labor Code, as
amended by R.A. No. 7641. Thereunder he could choose to retire upon reaching the age of 60 years, provided it is before reaching 65 years, which is
the compulsory age of retirement.
CERCADO VS. UNIPROM, INC.
G.R. NO. 188154 OCTOBER 13, 2010
Facts:
Petitioner Lourdes A. Cercado (Cercado) started working for respondent UNIPROM, Inc. (UNIPROM) on December 15, 1978 as a ticket seller assigned
at Fiesta Carnival, Araneta Center, Quezon City. Later on, she was promoted as cashier and then as clerk typist.
On April 1, 1980, UNIPROM instituted an Employees Non-Contributory Retirement Plan which provides that any participant with twenty (20) years of
service, regardless of age, may be retired at his option or at the option of the company. The retirement plan was later on amended on January 1, 2001
wherein UNIPROM reserved the option to retire employees who were qualified to retire under the program.
Respondent implemented a company-wide early retirement program in 2000 for 41 employees, including petitioner who was 47 years old at that time
with 22 years of continuous service to the company. UNIPROM exercised its option under the retirement plan, and decided to retire Cercado effective at
the end of business hours on February 15, 2001. She rejected the early retirement package offered to her and also refused to accept the check issued
to her representing her benefits from the regular retirement package.
Cercado filed a complaint with the Labor Arbiter for illegal dismissal alleging that UNIPROM does not have a bona fide retirement plan, and even if there
was, she did not consent thereto.
Issue:
WON UNIPROM has a bona fide retirement plan; and whether petitioner was validly retired pursuant thereto.
Ruling:
Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the age for compulsory retirement at 65 years, while the minimum age for optional
retirement is set at 60 years. An employer is, however, free to impose a retirement age earlier than the foregoing mandates. This has been upheld in
numerous cases as a valid exercise of management prerogative.
In this case, petitioner was retired by UNIPROM at the age of 47, after having served the company for 22 years, pursuant to UNIPROMs Employees
Non-Contributory Retirement Plan, which provides that employees who have rendered at least 20 years of service may be retired at the option of the
company. At first blush, respondents retirement plan can be expediently stamped with validity and justified under the all encompassing phrase
"management prerogative," which is what the CA did. But the attendant circumstances in this case, vis--vis the factual milieu of the string of
jurisprudence on this matter, impel us to take a deeper look.
It is axiomatic that a retirement plan giving the employer the option to retire its employees below the ages provided by law must be assented to and
accepted by the latter, otherwise, its adhesive imposition will amount to a deprivation of property without due process of law.
The assailed retirement plan of UNIPROM is not embodied in a CBA or in any employment contract or agreement assented to by petitioner and her coemployees. On the contrary, UNIPROMs Employees Non-Contributory Retirement Plan was unilaterally and compulsorily imposed on them. Verily,
petitioner was forced to participate in the plan, and the only way she could have rejected the same was to resign or lose her job. The assailed CA
Decision did not really make a finding that petitioner actually accepted and consented to the plan. The CA simply declared that petitioner was deemed
aware of the retirement plan on account of the length of her employment with respondent. Implied knowledge, regardless of duration, cannot equate to
the voluntary acceptance required by law in granting an early retirement age option to an employer. The law demands more than a passive
acquiescence on the part of employees, considering that an employers early retirement age option involves a concession of the formers constitutional
right to security of tenure.
We reiterate the well-established meaning of retirement in this jurisdiction: Retirement is the result of a bilateral act of the parties, a voluntary agreement
between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former.
Acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. While an employer may unilaterally
retire an employee earlier than the legally permissible ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted
early retirement plan. In other words, only the implementation and execution of the option may be unilateral, but not the adoption and institution of the
retirement plan containing such option. For the option to be valid, the retirement plan containing it must be voluntarily assented to by the employees or
at least by a majority of them through a bargaining representative.
Hence, consistent with the Courts ruling in Jaculbe, having terminated petitioner merely on the basis of a provision in the retirement plan which was not
freely assented to by her, UNIPROM is guilty of illegal dismissal. Petitioner is thus entitled to reinstatement without loss of seniority rights and to full
backwages computed from the time of her illegal dismissal in February 16, 2001 until the actual date of her reinstatement. If reinstatement is no longer
possible because the position that petitioner held no longer exists, UNIPROM shall pay backwages as computed above, plus, in lieu of reinstatement,
separation pay equivalent to one-month pay for every year of service. This is consistent with the preponderance of jurisprudence relative to the award of
separation pay in case reinstatement is no longer feasible.
BILBAO VS SAUDI ARABIAN AIRLINES
G.R. NO. 183915 DECEMBER 14, 2011

198

Facts:
Bilbao was a former employee of respondent Saudia, having been hired as a Flight Attendant on May 13, 1986 until her separation from Saudia in
September 2004. During the course of her employment, Bilbao was assigned to work at the Manila Office, although the nature of her work as a flight
attendant entailed regular flights from Manila to Jeddah, Saudi Arabia, and back.
On August 25, 2004, the In-Flight Service Senior Manager of Saudia assigned in Manila received an inter-office Memorandum dated August 17, 2004
from its Jeddah Office regarding the transfer of 10 flight attendants from Manila to Jeddah effective September 1, 2004. The said memorandum
explained that such transfer was made "due to operational requirements." Bilbao was among the 10 flight attendants to be transferred.
Bilbao initially complied with the transfer order and proceeded to Jeddah for her new assignment. However, on September 7, 2004, she opted to resign
and relinquish her post by tendering a resignation letter.
On October 28, 2004, Bilbao executed and signed an Undertaking similar to that of a Receipt, Release and Quitclaim wherein she acknowledged
receipt of a sum of money as "full and complete end-of-service award with final settlement and have no further claims whatsoever against Saudi
Arabian Airlines."
The Labor Arbiter found that Saudia illegally dismissed Bilbao, while the NLRC and the Court of Appeals are in agreement that Bilbao voluntarily
tendered her resignation.
Issue:
(1) Whether or not Bilbao was illegally dismissed thus entitled to her claims for reinstatement, payment of full backwages; moral, exemplary and actual
damages; and attorney's fees.
(2) Whether or not Undertaking signed by Bilbao was validly and voluntarily executed.
Ruling:
(1)
After a review of the case, we uphold the findings of the Court of Appeals that Bilbao voluntarily resigned from her employment with Saudia.
Her resignation letter and undertaking that evidenced her receipt of separation pay, when taken together with her educational attainment and the
circumstances surrounding the filing of the complaint for illegal dismissal, comprise substantial proof of Bilbao's voluntary resignation.
Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the
exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an
office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act
of relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining whether he or she, in fact,
intended to sever his or her employment.
In the instant case, Bilbao tendered her resignation letter a week after her transfer to the Jeddah office. In the said letter, Bilbao expressed her
gratitude for the support which Saudia had given her for her eighteen years of service. Clearly, her use of words of appreciation and gratitude negates
the notion that she was forced and coerced to resign. Besides, the resignation letter was hand-written by Bilbao on a Saudia form and was in English, a
language she is conversant in.
Additionally, instead of immediately filing a complaint for illegal dismissal after she was allegedly forced to resign, Bilbao executed an Undertaking in
favor of Saudia, wherein she declared that she received her full and complete end-of-service award with final settlement. What is more, Bilbao waited
for more than 10 months after her separation from Saudia to file a complaint for illegal dismissal.
Even assuming that Saudia prepared the form in which Bilbao wrote her resignation letter as claimed, this Court is not convinced that she was coerced
and intimidated into signing it. Bilbao is no ordinary employee who may not be able to completely comprehend and realize the consequences of her
acts. She is an educated individual. It is highly improbable that with her long years in the profession and her educational attainment, she could be
tricked and forced into doing something she does not intend to do. Under these circumstances, it can hardly be said that Bilbao was coerced into
resigning from Saudia.
Besides, Bilbao did not adduce any competent evidence to prove that she was forced or threatened by Saudia. It must be remembered that for
intimidation to vitiate consent, the following requisites must be present: (1) that the intimidation caused the consent to be given; (2) that the threatened
act be unjust or unlawful; (3) that the threat be real or serious, there being evident disproportion between the evil and the resistance which all men can
offer, leading to the choice of doing the act which is forced on the person to do as the lesser evil; and (4) that it produces a well-grounded fear from the
fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury to his person or property. In the instant case,
Bilbao did not prove the existence of any one of these essential elements. Bare and self-serving allegations of coercion or intimidation, unsubstantiated
by evidence, do not constitute proof to sufficiently support a finding of forced resignation. It would be utterly unfair and unjust to hold that Saudia
illegally dismissed Bilbao and to impose upon it the burden of accepting back Bilbao who unequivocally and voluntarily manifested her intent and
willingness to sever her employment ties.
(2)
Periquet v. National Labor Relations Commission, held that:
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable
settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the
waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul
the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing,
and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. x x x.
This Court quotes with approval the finding of the NLRC, to wit:
Having signed the waiver, it is hard to conclude that [Bilbao was] merely forced by the necessity to execute the "undertaking." [Bilbao is] not [a] gullible
nor unsuspecting [person] who can easily be tricked or inveigled and, thus, need the extra protection of law. [She is a] well-educated and highly
experienced flight [attendant]. The "undertaking" executed by [Bilbao is] therefore considered valid and binding on [her] and [Saudia].
Due to [her] voluntary resignation, [Bilbao is] actually not entitled to any separation pay benefits. Thus, the financial package given to [her] is more than
sufficient consideration for [her] execution of the "undertaking."
SAN MIGUEL PROPERTIES PHILIPPINES, INC, VS. GUCABAN
G.R. NO. 153982 JULY 18, 2011

199

Facts:
Respondent Gucaban, civil engineer, joined the workforce of petitioner San Miguel Properties Philippines, Inc. (SMPI) in 1991. Initially engaged as a
construction management specialist, she, by her satisfactory performance on the job, was promoted in 1994 and 1995, respectively, to the position of
technical services manager, and then of project development manager. As project development manager, she also sat as a member of the company's
management committee. She had been in continuous service in the latter capacity until her severance from the company in February 1998.
In her complaint for illegal dismissal, Gucaban alleged that her separation from service was practically forced upon her by management. She claimed
that on January 27, 1998, she was informed by SMPI's President and Chief Executive Officer that the company was planning to reorganize its
manpower in order to cut on costs, and that she must file for resignation or otherwise face termination.
Gucaban complained of the ugly treatment which she had since received from Gonzalez and the management supposedly on account of her refusal to
sign the resignation letter. She claimed she had been kept off from all the meetings of the management committee. Her performance of duties had been
reported to be negligent and unsatisfactory. She found said report to be unfounded and unfair, because no less than the company's Vice-President for
Property Management in a subsequent memorandum, had actually vouched for her competence and efficiency on the job. It was supposedly the
extreme humiliation and alienation that impelled her to submit a signed resignation letter on February 18, 1998.
Gucaban surmised that she had merely been tricked by SMPI into filing her resignation letter because it never actualized its reorganization and
streamlining plan; on the contrary, SMPI allegedly expanded its employee population and also made new appointments and promotions to various other
positions. She felt that she had been dismissed without cause and, hence, prayed for reinstatement and payment of backwages and damages.
The Labor Arbiter dismissed the complaint for lack of merit, finding no proven force, coercion, intimidation or any other circumstance which could
otherwise invalidate Gucaban's resignation. He likewise dismissed her claim that SMPI merely feigned the necessity of reorganization in that while the
company indeed made new other appointments following Gucaban's resignation, still, this measure was an implementation of its reorganization plan.
Gucaban appealed to the NLRC which reversed the ruling of the Labor Arbiter. Finding that Gucaban has been illegally dismissed, it ordered her
reinstatement without loss of seniority rights and with full backwages, as well as ordered the award of damages and attorney's fees. It elevated the
matter to the Court of Appeals via a petition for certiorari.
The Court of Appeals issued the assailed Decision finding partial merit in the petition. It affirmed the NLRC's finding of illegal/constructive dismissal, but
modified the monetary award.
Issue:
Whether or not the resignation of Gucaban was tendered voluntarily.
Ruling:
Resignation the formal pronouncement or relinquishment of a position or office is the voluntary act of an employee who is in a situation where he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and he has then no other choice but to disassociate himself
from employment. The intent to relinquish must concur with the overt act of relinquishment; hence, the acts of the employee before and after the alleged
resignation must be considered in determining whether he in fact intended to terminate his employment. In illegal dismissal cases, fundamental is the
rule that when an employer interposes the defense of resignation, on him necessarily rests the burden to prove that the employee indeed voluntarily
resigned. Guided by these principles, we agree with the Court of Appeals that with the availing evidence, SMPI was unable to discharge this burden.
The question of whether or not there was such reorganization plan in place at the time of Gucaban's separation from the company, is material to the
determination of whether her resignation was of her own volition as claimed by SMPI, inasmuch as the facts of this case tell that Gucaban could not
have filed for resignation had Gonzalez not communicated to her the alleged reorganization plan for the company.
True, while a reorganization of SMPI's corporate structure might have indeed taken place as shown by the notices, nevertheless, it happened only in
the latter part of 1999 or more than a year after Gucaban's separation from the company and incidentally, after she filed the instant complaint.
It is not difficult to see that, shortly prior to and at the time of Gucaban's alleged resignation, there was actually no genuine corporate restructuring plan
in place as yet. In other words, although the company might have been suffering from losses due to market decline as alleged, there was still no
concrete plan for a corporate reorganization at the time Gonzalez presented to Gucaban the seemingly last available alternative options of voluntary
resignation and termination by abolition of her office.
It is then understandable for Gucaban, considering the attractive financial package which SMPI admittedly offered to her, to opt for resignation instead
of suffer termination a consequence the certainty of which she was made to believe.
As respondent was dismissed without cause, the NLRC ruling is correct that she is entitled to reinstatement and backwages, the latter to be computed
from her dismissal up to the time of her actual reinstatement pursuant to Art. 279 of the Labor Code.
However, there is the possibility that Gucaban's rejoining SMPI's workforce would only exacerbate the tension and strained relations which in the first
place had given rise to this incident. Thus, the ruling of the Court of Appeals is modified in this respect. In lieu of reinstatement, an award of separation
pay is in order, equivalent to one (1) month salary for every year of service.
SKIPPERS UNITED PACIFIC VS. DOZA ET. AL.
G.R. NO. 175558 FEBRUARY 8, 2012
Facts:
Petitioner deployed De Gracia, Lata and Aprosta to work on board the vessel MV Wisdom Star.
On December 3 1998, Skippers alleges that De Garcia smelling strongly of alcohol, went to the cabin of Gabriel Oleszek, MV Wisdom Stars Master.
Skippers claims that he was rude and shouted noisily to the master. De Gracia left the masters cabin after a few minutes and was heard shouting very
loudly somewhere down the corridors. The incident was evidenced by the Captains Report sent on said date.
Furthermore, Skippers also claim that on January 22, 1999, Aprosta, De Gracia, Lata and Daza arrived in the masters cabin and demanded immediate
repatriation because they were not satisfied with the ship. De Gracia, et al. threatened that they may become crazy any moment and demanded for all
outstanding payments due to them. The incident is evidenced by a telex of Cosmoship MV Wisdom to skippers but had conflicting dates.

200

De Gracia claims that Skippers failed to remit their respective allotments, compelling them to vent their grievances with the Romanian Seafarers Union.
On January 28, 1999, the Filipino seafarers were unceremoniously discharged and immediately repatriated. Upon arrival in the Philippines, they filed a
complaint for illegal dismissal with the LA.
The LA dismissed the seafarers complaint as the seafarers demand for immediate repatriation due to the dissatisfaction with the ship is considered a
voluntary pre-termination of employment. Such act was deemed akin to resignation recognized under Article 285 of the LC. The LA gave credence to
the telex of the masters report that the seafarers indeed demanded immediate repatriation.
The NLRC agreed with the LAs decision.
The CA however reversed the LAs and the NLRCs decision. The Court deemed the telex message as a self-serving document that does not satisfy the
requirement of substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify the conclusion
that petitioners indeed voluntarily demanded their immediate repatriation.
Aggrieved, Skippers appeals the case with the Supreme Court.
Issue:
WON the seafarers demand for immediate repatriation can be considered an act of voluntary resignation.
Ruling:
For a worker's dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality of the manner of
dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due process.
Procedural due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish the employee with two
written notices before the termination of employment can be effected: (1) the first notice apprises the employee of the particular acts or omissions for
which his dismissal is sought; and (2) the second notice informs the employee of the employer's decision to dismiss him. Before the issuance of the
second notice, the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. It is not necessary that an actual
hearing be conducted.
Substantive due process, on the other hand, requires that dismissal by the employer be made under a just or authorized cause under Articles 282 to
284 of the Labor Code.
In this case, there was no written notice furnished to De Gracia, et al., regarding the cause of their dismissal. Cosmoship furnished a written notice
(telex) to Skippers, the local manning agency, claiming that De Gracia, et al., were repatriated because the latter voluntarily pre-terminated their
contracts. This telex was given credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of the employment
contract "akin to resignation" and no illegal dismissal. However, as correctly ruled by the CA, the telex message is "a biased and self-serving document
that does not satisfy the requirement of substantial evidence." If, indeed, De Gracia, et al., voluntarily pre-terminated their contracts, then De Gracia, et
al., should have submitted their written resignations.
Article 285 of the Labor Code recognizes termination by the employee of the employment contract by "serving written notice on the employer at least
one (1) month in advance." Given that provision, the law contemplates the requirement of a written notice of resignation. In the absence of a written
resignation, it is safe to presume that the employer terminated the seafarers. In addition, the telex message relied upon by the Labor Arbiter and NLRC
bore conflicting dates of 22 January 1998 and 22 January 1999, giving doubt to the veracity and authenticity of the document. In 22 January 1998, De
Gracia, et al., were not even employed yet by the foreign principal.
AUZA, JR. ET AL. VS. MOL PHILS., INC.
G.R. NO. 175481 NOVEMBER, 21, 2012
Facts:
Petitioners were employees of MOL Phils., a common carrier engaged in transporting cargoes to and from the different parts of the world. Petitioners
tendered their resignation, and they received their separation pay and monetary value of their leave credits, 13 th month pay, and other benefits. After
which, they executed a Release and Quitclaims and then issued a separation clearance. However, 15 months after the severance of their employment,
petitioners filed a complaint for illegal dismissal. They alleged that their consent to resign was not voluntarily given but was instead obtained through
mistake and fraud. They claimed that they were led to believe that MOL's Cebu branch would be downsized into a mere skeletal force due to alleged
low productivity and profitability volume. Pressured into resigning prior to the branch's closure as they might be denied separation pay, petitioners were
constrained to resign. Later, they discovered that the planned downsizing of the Cebu branch was a mere malicious scheme to oust them and to
accommodate Tiutan's own people. This is because after they were duped to resign, additional employees were hired by the management as their
replacement; they moved to a bigger office; and more telephone lines were installed.
Issue:
WON there was illegal dismissal.
Ruling:
NO. "Resignation is the formal pronouncement or relinquishment of an office." The overt act of relinquishment should be coupled with intent to
relinquish, which intent could be inferred from the acts of the employee before and after the alleged resignation. It appears that petitioners, on their own
volition, decided to resign from their positions after being informed of the management's decision that the Cebu branch would eventually be manned by
a mere skeletal force. As proven by the email correspondences presented, petitioners were fully aware and had, in fact, acknowledged that Cebu
branch has been incurring losses and was already unprofitable to operate. Note that there was evidence produced to prove that indeed the Cebu
branch's productivity had deteriorated as shown in a Profit and Loss Statement for the years 2001 and 2002. As aptly observed by the CA, no element
of force can be deduced from their letters of resignation as the same even contained expressions of gratitude and thus contradicting their allegations
that same were prepared by their employer. Petitioners aver that right after receiving their separation pay, they found out that the Cebu branch was not
closed but merely transferred to a bigger office and staffed by newly hired employees. Notably, however, despite such knowledge, petitioners did not

201

immediately contest their resignations but waited for more than a year or nearly 15 months before contesting them. This negates their claim that they
were victims of deceit.
GAN VS. GALDERMA PHILIPPINES, INC.
G.R. NO. 177167 JANUARY 17, 2013
Facts:
Galderma is engaged in the business of selling, marketing, and distribution of Cetaphil Brand Product Lines (CBPL) that include Cetaphil liquid and bar
cleansers, and pharmaceutical products, such as Locetar, Benzac and other prescription drugs. Nelson Gan was hired by Galderma as Product
Manager for its Customer Products Division to handle the marketing of CBPL. Gan received a Fully Effective rating for his Overall performance for the
first year. Galderma surpassed their forecasted sales to the extent that it almost reached a 100 percent increase. The increase was due to the excellent
performance of Gan specifically on its marketing skills. The management gave Gan additional product management responsibilities in which it provided
Gan with product knowledge training on Benzac and Locetar brands in December 2001. However, on April 11, 2002, Gan tendered his resignation letter
which was accepted by the management. Three months after the severance of his employment, Gan filed a complaint for illegal constructive dismissal
against Galderma. He alleged that, he was unfairly and falsely accused of being remiss in his duties as Product Manager. That he was lambasted by
the General Manager Veneracion for his alleged negative work behavior and for his poor performance, and that he was required to voluntarily resign by
Veneracion, and that his incentive scheme was revised which lowered its benifits. On the other hand, Galderma on its side alleged that Veneracion did
not lambast him or insinuate that Gan should resign from Galderma. It was alleged also that Gan had a change of attitude from the time the
management decided to include the Benzac and Locetar brands under his responsibility. Despite the fact that the company provided [Gan] with product
knowledge training on the said brands, he initially refused to accept the additional assignment. Labor arbiter and NLRC ruled in favor of Galderma.
Issue:
WON there was illegal dismissal.
Ruling:
NO. To begin with, constructive dismissal is defined as quitting or cessation of work because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or a diminution of pay and other benefits. It exists if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego
his continued employment. There is involuntary resignation due to the harsh, hostile, and unfavorable conditions set by the employer. The test of
constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his employment/position under
the circumstances. On the other hand, "[r]esignation is the voluntary act of an employee who is in a situation where one believes that personal reasons
cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal
pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to
relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in
determining whether he or she, in fact, intended to sever his or her employment."
Since Gan submitted a resignation letter, it is incumbent upon him to prove with clear, positive, and convincing evidence that his resignation was not
voluntary but was actually a case of constructive dismissal; that it is a product of coercion or intimidation. He has to prove his allegations with
particularity. What the records of this case reveal is that Gan deliberately wrote and filed a resignation letter that is couched in a clear, concise, and
categorical language. Its content confirmed his unmistakable intent to resign. The resignation letter indicates that he was resigning "to pursue the
establishment of [his] own business or explore opportunities with other companies." The reasons stated for relinquishing his position are but logical
options for a person of his experience and standing. The instances of "harassment" alleged by Gan are more apparent than real. Aside from the need to
treat his accusations with caution for being self-serving due to lack of substantial documentary or testimonial evidence to corroborate the same, the acts
of "harassment," if true, do not suffice to be considered as "peculiar circumstances" material to the execution of the subject resignation letter. First, the
words allegedly uttered by Veneracion which asked Gan to "reconsider his stay," "make [his] move," or that "[Galderma] will be better off without
him,"are ambivalent and susceptible of varying interpretations depending on one's feelings, bias, and emotional threshold. All these are subjective and
highly speculative or even presumptuous. Second, Gan repeatedly boasts of his "excellent performance" in and "immense contribution" to Galderma's
success. If that is the case, his proper mindset towards Veneracion's attacks on his purported work ethics (such as "slow," "lacking in initiative,"
"uncooperative," "negative attitude," "remiss in duties as product manager," "negative work behaviour," "poor performance," "incompetence,"
"distraction/liability in Galderma") should have been to simply brush them aside and continue doing what he is supposed to do as the product manager
of CBPL, Locetar and Benzac brands. His oversensitivity, which is rather surprising for an experienced sales and marketing manager who should have
been so used to customer rejection or indifference and to superior's assertive or temperamental side due to constant pressure of keeping up and
beating market competition, would not help him make a case. Third, the revision of Gan's 2002 incentive scheme cannot be considered as a form of
harassment. The change is not a diminution of benefits, since Gan would have also received the same sum if he achieved the desired targets for the
Locetar and Benzac brands, the two new products which were added under his watch. Lastly, he also appears to have a good professional track record
that highlights his marketability. At the time he resigned, he had more than a decade of experience in sales and marketing with expertise in product
management. Indeed, it would be absurd to assume that he did not understand the full import of the words he used in his resignation letter and the
consequences of executing the same.
PADILLO VS. RURAL BANK OF NABUNTURAN, INC.
G.R. NO. 199338 JANUARY 21, 2013
Facts:
Padillo was employed by respondent bank as SA bookkeeper. The bank took out insurance plans with Philam life for all its employees in anticipation of
its possible closure and the concomitant severance of its personnel. On October 14, 2004, Mark Oropeza, President of the Bank, bought majority

202

shares of stocks of the bank and took over its management brought about its gradual rehabilitation. The banks liquidity was eventually regained. During
2007, Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to effectively pursue his work. On September 10, 2007,
he wrote a letter addressed to respondent Oropeza expressing his intention to avail of an early retirement package. Despite several follow-ups, his
request remained unheeded. Padillo resigned, at the age of fifty-five due to his poor and failing health. He did not received his claimed retirement
benefits, thus he filed a complaint for the recovery of the unpaid retirement benefits. He asserted, among others, that the Bank had adopted a policy of
granting its aging employees early retirement packages, pointing out that one of his co-employees, Nenita Lusan (Lusan), was accorded retirement
benefits in the amount of P348,672.72 when she retired at
the age of only fifty-three (53).
Issue:
WON Padillo is entitled to retirement benefits.
Ruling:
NO. The Labor Code provision on termination on the ground of disease under Article 297 does not apply in this case, considering that it was the
petitioner and not the Bank who severed the employment relations. As borne from the records, the clear import of Padillo's September 10, 2007
letter and the fact that he stopped working before the foregoing date and never reported for work even thereafter show that it was Padillo who
voluntarily retired and that he was not terminated by the Bank. Art. 300.Retirement. Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract. In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not
beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction
of at least six (6) months being considered as one whole year. Simply stated, in the absence of any applicable agreement, an employee must (1) retire
when he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half
(1/2) month salary for every year of service, with a fraction of at least six (6) months being considered as one whole year. Notably, these age and tenure
requirements are cumulative and non-compliance with one negates the employee's entitlement to the retirement benefits under Article 300 of the Labor
Code altogether.
In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any other equivalent contract between the parties
which set out the terms and condition for the retirement of employees, with the sole exception of the Philam Life Plan which premiums had already been
paid by the Bank. Neither was it proven that there exists an established company policy of giving early retirement packages to the Bank's aging
employees. In the case of Metropolitan Bank and Trust Company v. National Labor Relations Commission, it has been pronounced that to be
considered a company practice, the giving of the benefits should have been done over a long period of time, and must be shown to have been
consistent and deliberate. Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement as he served for twenty-nine (29)
years he, however, fell short with respect to the sixty (60) year age requirement given that he was only fifty-five (55) years old when he retired.
Therefore, without prejudice to the proceeds due under the Philam Life Plan, petitioners' claim for retirement benefits must be denied.
INTEL TECHNOLOGY PHILS INC. VS. NLRC ET AL
G.R. NO. 200575. FEBRUARY 5, 2014
Facts:
Private respondent Jeremias Cabiles (Cabiles) was hired by petitioner Intel Technology Philippines, Inc. (Intel Phil) in April 16, 1997. Throgh the years,
Cabiles was promoted several times and was also assigned to Intel Arizona and Intel Chengdu. He later applied for a position in Intel Hong Kong (Intel
HK). In December of 2006, Cabiles received an offer by Intel HK for the position of Finance Manager. Before accepting such offer, Cabiles inquired with
Intel Phil through an email as to the consequences of him accepting the offer, specifically on his retirement benefits from Intel Phil. Intel Phil, through
Penny Gabronino, replied to Cabiles that he is not yet eligible for the retirement plan as he has not reached the minimum 10 years of service with them
(just over 9 years of service) and such counting of the period will be suspended if he does indeed transfer to Intel HK but will be continued if he decides
to work for Intel Phil again in the future. Despite such, Cabiles signed the job offer on January 31, 2007.
On March 8, 2007, Intel Phil issued his Intel Final Pay Separation Voucher to which he accepted and executed a Waiver and Quitclaim in favor of Intel
Phil. On September8, 2007, after 7 months of employment in Intel HK, he resigned. About 2 years after, or on August 18, 2009, he filed a Complaint for
non-payment of retirement benefits against Intel Phil before the NLRC RAB-IV.
The LA ordered Intel Phil to pay the retirement pay to Cabiles holding that he did not sever his employment with Intel Phil when he moved to Intel HK,
similar to when he was assigned at Intel Arizona and Intel Chengdu. The NLRC affirmed the LA decision. The CA affirmed the findings of the NLRC.
Issue:
Whether or not the transfer of Cabiles to Intel HK was tantamount to resignation from Intel Phil.
Ruling:
The petition is granted and the decision of the CA is reversed and set aside and Cabiles is ordered to restitute to petitioner whatever amount he has
received.
Resignation is the formal relinquishment of an office, the overt act of which is coupled with an intent to renounce. This intent could be inferred from
the acts of the employee before and after the alleged resignation.
In this case, Cabiles, while still on a temporary assignment in Intel Chengdu, was offered by Intel HK the job of a Finance Manager. The words he used
in his inquiry email local hire, close, clearance denote nothing but his firm resolve to voluntarily disassociate himself from Intel Phil. and take on
new responsibilities with Intel HK. Despite a non-favorable reply as to his retirement concerns, Cabiles still accepted the offer of Intel HK. His
acceptance of the offer meant letting go of the retirement benefits he now claims as he was informed through email correspondence that his 9.5 years
of service with Intel Phil. would not be rounded off in his favor.

203

The continuity, existence or termination of an employer-employee relationship in a typical secondment contract or any employment contract for that
matter is measured by the following yardsticks: 1. the selection and engagement of the employee; 2. the payment of wages; 3. the power of dismissal;
and 4.
the employer's power to control the employee's conduct.
As applied, all of the above benchmarks ceased upon Cabiles' assumption of duties with Intel HK on February 1, 2007. Intel HK became the new
employer. It provided Cabiles his compensation. Cabiles then became subject to Hong Kong labor laws, and necessarily, the rights appurtenant
thereto, including the right of Intel HK to fire him on available grounds. Lastly, Intel HK had control and supervision over him as its new Finance
Manager. Evidently, Intel Phil. no longer had any control over him.
Although in various instances, his move to Hong Kong was referred to as an "assignment," it bears stressing that it was categorized as a "permanent
transfer." In Sta. Maria v. Lopez, the Court held that "no permanent transfer can take place unless the officer or employee is first removed from
the position held, and then appointed to another position." Undoubtedly, Cabiles' decision to move to Hong Kong required the abandonment of his
permanent position with Intel Phil. in order for him to assume a position in an entirely different company. Clearly, the "transfer" was more than just an
assignment. It constituted a severance of Cabiles' relationship with Intel Phil., for the assumption of a position with a different employer, rank,
compensation and benefits.
SUTHERLAND & GLOBAL SERVICES PHILS INC., VS. LABRADOR
G.R. NO. 193107. MARCH 24, 2014
Facts:
In August 2006, Sutherland hired Labrador as one of its call center agents with the main responsibility of answering carious queries and complaints
through phoned-in calls. In his two years of working at Sutherland, Labrador committed several infractions. But it was only on June 17, 2008 that
Labrador was finally charged with violation for transgressing the "Non-Compliance Sale Attribute" policy clause stated in the Employee Handbook.
Labrador created a second account for a customer which charged the same customer twice by using the credit card number given supposedly only for
verification purposes.
Under Sutherland's Employee Handbook, Labrador's action is classified as an act of dishonesty or fraud. On May 24, 2008, Sutherland sent Labrador a
Notice to Explain in writing why he should not be held administratively liable. On May 28, 2008, an administrative hearing was conducted that took into
consideration Labrador's past infractions. After investigation, a recommendation was issued finding Labrador guilty of violating the Employee Handbook
due to gross or habitual neglect of duty.
On June 17, 2008, Labrador submitted his resignation letter. On October 27, 2008, Labrador filed a complaint for constructive/illegal dismissal before
the NLRC.
On February 27, 2009, the LA dismissed the complaint for lack of merit. The LA found just cause to terminate Labrador's employment, and that his
resignation letter had been voluntarily executed. The NLRC reversed the LA's ruling on May 21, 2009.
The CA affirmed the NLRCs finding of illegal dismissal. It ruled that Sutherland's decision to terminate Labrador's services was the proximate cause of
his resignation; the resignation letter was submitted solely for the purpose of avoiding any derogatory record that would adversely affect his future
employment. In effect, he cannot be deemed to have voluntarily resigned because he was forced to relinquish his position in order to avoid the
inevitable termination of employment.
Issue:
Whether or not Labradors resignation was a valid termination of his employment.
Ruling:
The appeal is granted and the decision of the CA is reversed and set aside and the complaint for illegal dismissal is dismissed.
In the evidence leading to Labrador's dismissal evidence that Labrador had acknowledged to have received, thus binding him to its terms no
dispute exists that Labrador committed several infractions. In fact, the final infraction that brought on his termination was actually a repetition of the first
offense.
The first offense (committed on September 24, 2007) already gave rise to a "Last Written Warning" with the statement that it was a serious offense,
constituting neglect of duty for deviating from the program/department's standard operating procedures. Under this clear warning, a second similar
offense would necessarily lead to his dismissal; otherwise the purpose of a "Last Written Warning" would have been negated.
The failure to faithfully comply with the company rules and regulations is considered to be a just cause in terminating one's employment,
depending on the nature, severity and circumstances of non-compliance. "An employer 'has the right to regulate, according to its discretion and best
judgment, all aspects of employment, including work assignment, working methods, processes to be followed, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers.'"
It was within Sutherland's prerogative to terminate Labrador's employment when he committed a serious infraction and, despite a previous warning,
repeated it. To Sutherland's credit, it duly complied with the procedural requirement in dismissing an employee; it clearly observed both substantive and
procedural due process. Its action was based on a just and authorized cause, and the dismissal was effected after due notice and hearing. But before
Sutherland could finally pronounce its verdict, Labrador submitted his resignation letter, impelled no doubt, as Sutherland alleged, by the
need to protect his reputation and his future employment chances.
The issue of whether the resignation letter was voluntarily executed is now moot. Even if Labrador had not submitted his resignation letter,
Sutherland could still not be held liable for constructive dismissal given the existing just cause to terminate Labrador's employment.
CHIANG KAI SHEK COLLEGE ET AL., VS. TORRES
G.R. NO. 189456. APRIL 2, 2014
Facts:

204

Respondent had been employed as a grade school teacher of the school from July 1970 until 31 May 2003. She was accused of leaking a copy of a
special quiz given to Grade 5 students in HEKASI (Heograpiya, Kasaysayan at Sibika (Geography, History and Civics)). Ms. Benabese narrated that
after giving a special quiz, she borrowed the book of one of her students, Aileen Regine M. Anduyan (Aileen), for the purpose of making an answer key.
When she opened Aileen's book, a piece of paper fell. Said paper turned out to be a copy of the same quiz she had just given and the same already
contained answers.
Ms. Benabese informed the school's Assistant Supervisor Mrs. Gloria Caneda (Mrs. Caneda) about the incident. Mrs. Caneda conferred with Assistant
Supervisor Encarnacion Koo (Mrs. Koo), who was in charge of the HEKASI area, and Supervisor Luningning Tibi (Ms. Tibi). Mrs. Koo confronted
respondent, who had initially denied leaking the test paper but later on admitted that she gave the test paper to Mrs. Teresita Anduyan (Mrs. Anduyan),
her co-teacher and the mother of Aileen. Respondent and Mrs. Anduyan were both directed to submit their written statement on the incident.
On 5 August 2002, Mrs. Koo, Mrs. Caneda and Ms. Tibi executed a written statement stating that when confronted by Mrs. Koo, respondent initially
denied leaking a copy of the quiz but later on admitted to doing the same. An administrative hearing was conducted on 28 August 2002 wherein
respondent and Mrs. Anduyan were asked questions by the Investigating Committee relative to the leakage of test paper. On 30 August 2002, the
Investigating Committee held a meeting and found respondent and Mrs. Anduyan guilty of committing a grave offense of the school policies by leaking a
special quiz. As shown in the Minutes of the Meeting on 30 August 2002, the Committee decided to impose the penalty of one-month suspension
without pay on respondent and forfeiture of all the benefits scheduled to be given on Teacher's Day.
The Investigating Committee had actually decided to terminate respondent and had in fact prepared a memorandum of termination, but respondent
allegedly pleaded for a change of punishment in a short letter dated 5 September 2002, to wit: Request for change of punishment from termination
to suspension and I am resigning at the end of the school year. - Mrs. Rosalinda M. Torres Petitioners acceded to the request and suspended
respondent and Mrs. Anduyan effective 16 September to October 2002. The duo was directed to report to work on 4 November 2002. Respondent
continued her employment from 4 November 2002 until the end of the school year on 26 March 2003.
However, respondent filed on February 14, 2003 a complaint with the tenor of accusing petitioner school of constructive dismissal alleging that she was
forced and pressured to submit the written request for a change of penalty and commitment to resign at the end of the school year.
The LA dismissed the complaint for lack of merit. The LA deemed respondent's suspension coupled with petitioner's allowance of respondent's
resignation at the end of the school year as generous acts considering the offense committed. The LA held that there was no constructive dismissal
because respondent was not coerced nor pressured to write her resignation letter. The NLRC affirmed the LA's findings but ordering petitioners to pay
respondent separation pay equivalent to one-half (1/2) month salary for every year of service on the grounds of equity and social justice.
The CA reversed the NLRC decision and held that respondent was constructively dismissed as there was no voluntary resignation.
Issue:
Whether or not the school's act of imposing the penalty of suspension instead of immediate dismissal from service at the request of the erring
employee, in exchange for the employee's resignation at the end of the school year, constitutes constructive dismissal.
Ruling:
Petition is granted and the decision of the CA is reversed and set aside and the NLRC decision reinstated.
Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed for the favor of
employment, and opts to leave rather than stay employed. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing
the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the
employee before and after the alleged resignation must be considered in determining whether, he or she, in fact, intended to sever his or her
employment.
Respondent had admitted to leaking a copy of the HEKASI 5 special quiz. On 30 August 2002, the Investigating Committee found respondent guilty of
leaking a copy of the special quiz. Based on this infraction alone, Chiang Kai Shek College would have been justified to validly terminate respondent
from service. Before the Investigating Committee could formalize respondent's dismissal, respondent handwrote a letter requesting that the
penalty be lowered from dismissal to suspension in exchange for respondent's resignation at the end of the school year.
There is nothing irregular with respondent's handwritten letter. The letter came about because respondent was faced with an imminent dismissal
and opted for an honorable severance from employment. That respondent voluntarily resigned is a logical conclusion.
Given the indications of voluntary resignation, therefore there is no constructive dismissal in this case. There was here no discrimination committed by
petitioners. While respondent did not tender her resignation wholeheartedly, circumstances of her own making did not give her any other
option. With due process, she was found to have committed the grave offense of leaking test questions. Dismissal from employment was the justified
equivalent penalty. Having realized that, she asked for, and was granted, not just a deferred imposition of, but also an acceptable cover for the penalty.
Respondent should not be rewarded for reneging on her promise to resign at the end of the school year. Otherwise, employers placed in similar
situations would no longer extend compassion to employees. Compromise agreements, like that in the instant case, which lean towards desired
liberality that favor labor, would be discouraged.
IX.

PRESCRIPTION OF CLAIMS

LUDO & LUYM VS. SAORNIDO

G.R. No. 140960; January 20, 2003
Facts:
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic corporation engaged in the manufacture of coconut oil, corn starch, glucose
and related products. It operates a manufacturing plant located at Tupas Street, Cebu City and a wharf where raw materials and finished products are
shipped out.

205

In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for the loading and unloading
of its finished products at the wharf. Accordingly, several arrastre workers were deployed by CLAS to perform the services needed by LUDO.
These arrastre workers were subsequently hired, on different dates, as regular rank-and-file employees of LUDO every time the latter needed additional
manpower services. Said employees thereafter joined respondent union, the LUDO Employees Union (LEU), which acted as the exclusive bargaining
agent of the rank-and-file employees.
Respondent union entered into a collective bargaining agreement with LUDO which provides certain benefits to the employees, the amount of which
vary according to the length of service rendered by the availing employee.
Thereafter, the union requested LUDO to include in its members period of service the time during which they rendered arrastre services to LUDO
through the CLAS so that they could get higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration.
The parties accordingly executed a submission agreement raising the sole issue of the date of regularization of the workers for resolution by the
Voluntary Arbitrator.
Voluntary Arbitrator ruled that: (1) the respondent employees were engaged in activities necessary and desirable to the business of petitioner, and (2)
CLAS is a labor-only contractor of petitioner.
Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator.
Issue: Whether or not petitioners are considered regular employees from the moment they started working for private respondents thru CLAS.
Held:
Supreme Court upheld the decision of the voluntary arbitrator affirmed by the Court of Appeals that the 214 complainants shall be considered regular
employees of the respondents six (6) months from the first day of service at CLAS. Consequently, the said complainants, being entitled to the CBA
benefits during the regular employment, are awarded sick leave, vacation leave & annual wage and salary increases during such period in the amount
of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY ONE PESOS AND SIXTY ONE CENTAVOS (P5,707,261.61).
The issue of regularization should be viewed as two-tiered issue. While the submission agreement mentioned only the determination of the date or
regularization, law and jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate prerogative to accomplish the reason
for which the law on voluntary arbitration was created speedy labor justice. It bears stressing that the underlying reason why this case arose is to
settle, once and for all, the ultimate question of whether respondent employees are entitled to higher benefits. To require them to file another action for
payment of such benefits would certainly undermine labor proceedings and contravene the constitutional mandate providing full protection to labor.
DEGAMO VS. AVANT LARD SHIPPING LINES
G.R. No. 154460; November 22, 2005
Facts:
Avantgarde, acting in behalf of its foreign principal, Sembawang Johnson Management, Pte., Ltd. (Sembawang), hired Lauro C. Degamo as Oiler of the
vessel for a period of ten months. While working in the vessel's engine room, a spanner dropped and hit petitioner on his right thigh. He was
hospitalized and was repatriated to the Philippines on March 4, 1995.
Upon his arrival, petitioner reported to respondent Avantgarde's office, but there was no one to assist him, so he went to Cebu for operation. Avantgarde
paid all his hospital bills and promised to work out his sickness benefit with Sembawang as soon as he was declared fit to work. Petitioner was treated
until early 1997. Thereafter, petitioner was declared fit to work.
On December 24, 1997, Demago asked Avantgarde to pay his sickness benefits. On January 6, 1998, Avantgarde replied that it could no longer act on
petitioner's claim as he had deviated from the legal procedure. Petitioner wrote a letter to Sembawang regarding his claim but the latter did not reply.
Petitioner filed a complaint for payment of disability benefits and other money claims against the respondents with the RAB. The labor arbiter dismissed
the case without prejudice, stating that the action had already prescribed. On appeal, the NLRC likewise ruled that petitioner's cause of action had
prescribed as a mere letter of demand would not toll the prescriptive period for filing the complaint. Hence this petition.
Issue:Whether petitioner's cause of action had already prescribed.
Held:
YES. Petitioners cause of action has already prescribed.
Petitioner, citing Article 1155 of the New Civil Code, contends that his cause of action had not prescribed as the running of the prescriptive period was
tolled by his extrajudicial demand for unpaid sickness benefits on Dec. 24, 1997.
Respondents counter that the Civil Code provision on extinctive prescription applies only to obligations that are intrinsically civil in nature and is
inapplicable to labor cases. Respondents assert that that petitioner's demand was made more than one year from his date of arrival in the Philippines,
contrary to what is prescribed in Sec. 28 of the POEA Memorandum Circular No. 55, Series of 1996. They add that the institution of the action was

206

beyond the three-year period prescribed in Article 291 of the Labor Code as his employment with the respondents' ended on March 4, 1995 but the
complaint was filed only on March 2, 2001.
POEA Circular No. 55, Series of 1996 became effective only on January 1, 1997 while the employment contract between the parties was entered earlier
on November 8, 1994. The earlier standard employment contract issued by the POEA did not have a provision on prescription of claims. Hence, the
applicable provision in this case is Article 291 of the Labor Code.
In Cadalin v. POEA's Administrator, we held that Article 291 covers all money claims from employer-employee relationship and is broader in scope than
claims arising from a specific law. It is not limited to money claims recoverable under the Labor Code, but applies also to claims of overseas contract
workers.
Article 291 provides that all money claims arising from employer-employee relations shall be filed within three years from the time the cause of action
accrued, otherwise, these shall be forever barred. A cause of action accrues upon the categorical denial of claim. Petitioner's cause of action accrued
only on January 6, 1998, when Avantgarde denied his claim and so breached its obligation to petitioner. Petitioner could not have a cause of action prior
to this because his earlier requests were warded off by indefinite promises. The complaint filed on March 2, 2001 is beyond the three-year period
mandated by the Labor Code.
INTERCONTINENTAL BROADCASTING CORP., VS. PANGANIBAN
G.R. No. 151407; February 6, 2007
Facts:
Ireneo Panganiban was employed as Assistant General Manager of the petitioner Intercontinental Broadcasting Corporation from May 1986 until his
preventive suspension on August 26, 1988. Respondent resigned from his employment on September 2, 1988. On April 12, 1989, respondent filed with
the trial court a case against the members of the Board of Administrators (BOA) of petitioner alleging, among others, non-payment of his unpaid
commissions.
A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack of jurisdiction, as respondent's claim was a labor money
claim, but this was denied by the RTC.
Thus, Santiago filed a petition for certiorari with the CA, which granted Santiago's petition for lack of jurisdiction and set aside the RTC's Orders.
Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July 1992. He resigned in April 1993.
On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal, separation pay, retirement benefits, unpaid commissions, and
damages.
Issue: Whether or not respondent's claim for unpaid commissions has already prescribed.
Held:
Yes.
The applicable law in this case is Article 291 of the Labor Code which provides that "all money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever
barred." The term "money claims" covers all money claims arising from an employer-employee relation.
Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the absence of an equivalent Labor Code
provision for determining whether the said period may be interrupted, Article 1155 of the Civil Code may be applied.
Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written
acknowledgment of the debt by the debtor. On this point, the Court ruled that although the commencement of a civil action stops the running of
the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position
as though no action had been commenced at all.
Hence, while the filing of the civil could have interrupted the running of the three-year prescriptive period, its consequent dismissal by the CA due to lack
of jurisdiction effectively canceled the tolling of the prescriptive period within which to file his money claim, leaving respondent in exactly the same
position as though no civil case had been filed at all. The running of the three-year prescriptive period not having been interrupted by the filing of the
civil case, respondent's cause of action had already prescribed on September 2, 1991, three years after his cessation of employment on September 2,
1988. Consequently, when respondent filed his complaint for illegal dismissal, separation pay, retirement benefits, and damages in July 24, 1996, his
claim, clearly, had already been barred by prescription.
FAR EAST AGRICULTURAL SUPPLY, INC. VS. LEBATIQUE
G.R. No. 162813; February 12, 2007
Facts:
Petitioner Far East Agricultural Supply, Inc. (Far East) hired private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50. He
delivered animal feeds to the companys clients.

207

Lebatique complained of nonpayment of overtime work particularly on January 22, 2000, when he was required to make a second delivery in
Novaliches, Quezon City. That same day, Manuel Uy, brother of Far Easts General Manager and petitioner Alexander Uy, suspended Lebatique
apparently for illegal use of company vehicle. Even so, Lebatique reported for work the next day but he was prohibited from entering the company
premises.
Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public Assistance and Complaints Unit concerning the
nonpayment of his overtime pay. According to Lebatique, two days later, he received a telegram from petitioners requiring him to report for work. When
he did the next day, January 29, 2000, Alexander asked him why he was claiming overtime pay. Lebatique explained that he had never been paid for
overtime work since he started working for the company. He also told Alexander that Manuel had fired him. After talking to Manuel, Alexander
terminated Lebatique and told him to look for another job.
On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor Arbiter found that Lebatique was
illegally dismissed, and ordered his reinstatement and the payment of his full back wages, 13 th month pay, service incentive leave pay, and overtime
pay.
Petitioners contend that, (1) Lebatique was not dismissed from service but merely suspended for a day due to violation of company rules; (2) Lebatique
was not barred from entering the company premises since he never reported back to work; and (3) Lebatique is estopped from claiming that he was
illegally dismissed since his complaint before the DOLE was only on the nonpayment of his overtime pay.
Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field personnel whose time outside the company
premises cannot be determined with reasonable certainty. According to petitioners, the drivers do not observe regular working hours unlike the other
office employees. The drivers may report early in the morning to make their deliveries or in the afternoon, depending on the production of animal feeds
and the traffic conditions. Petitioners also aver that Lebatique worked for less than eight hours a day.
Issue: Whether or not Respondent is Illegally Dismiss and/or was not paid an Overtime pay.
Held:
Even petitioners admit that the drivers can report early in the morning, to make their deliveries, or in the afternoon, depending on the production of
animal feeds. Drivers, like Lebatique, are under the control and supervision of management officers. Lebatique, therefore, is a regular employee whose
tasks are usually necessary and desirable to the usual trade and business of the company. Thus, he is entitled to the benefits accorded to regular
employees of Far East, including overtime pay and service incentive leave pay.
The Decision dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its Resolution dated March 15, 2004 are AFFIRMED
with MODIFICATION to the effect that the case is hereby REMANDED to the Labor Arbiter for further proceedings to determine the exact amount of
overtime pay and other monetary benefits due Jimmy Lebatique which herein petitioners should pay without further delay.
VICTORY LINER VS. RACE; G.R. NO. 164820
March 28, 2007
Facts:
Race was employed by Victory Liner, Inc. as a bus driver. On August 24, 1994, while he was driving his route, he met an accident. As a result, he
suffered a fractured leg and was rushed to the hospital. His confinement lasted for a month. On January 1998, Race reported for work but he was
informed that he was considered resigned from his job. He then filed a complaint for illegal dismissal. Victory Liner contend that respondents action had
already prescribed because when he instituted the complaint on September 1, 1999, more than five years had already lapsed from the accrual his
cause of action on August 24, 1994.
Issue: Whether or not the respondents cause of action had already prescribed.
Held:
Respondents cause of action had not yet prescribed.
In illegal dismissal cases, the employee concerned is given a period of four years from the time of his dismissal within which to institute a
complaint. This is based on Article 1146 of the New Civil Code which states that actions based upon an injury to the rights of the plaintiff must
be brought within four years.
The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker. It is settled that in illegal dismissal
cases, the cause of action accrues from the time the employment of the worker was unjustly terminated. Thus, the four-year prescriptive period
shall be counted and computed from the date of the employees dismissal up to the date of the filing of complaint for unlawful termination of
employment.
Proceeding therefrom, we shall now discuss and determine when the respondents cause of action accrued in order to ascertain whether the same had
already prescribed.
It is error to conclude that the employment of the respondent was unjustly terminated on 10 November 1994 because he was, at that time, still confined
at the Specialist Group Hospital, Dagupan City, for further treatment of his fractured left leg. He must be considered as merely on sick leave at such
time. Likewise, the respondent cannot also be deemed as illegally dismissed from work upon his release from the said hospital in December 1994 up to

208

December 1997 since the records show that the respondent still reported for work to the petitioner and was granted sick and disability leave by the
petitioner during the same period.
The respondent must be considered as unjustly terminated from work in January 1998 since this was the first time he was informed by the petitioner
that he was deemed resigned from his work. During that same occasion, the petitioner, in fact, tried to convince the respondent to accept an amount of
P50,000.00 as a consolation for his dismissal but the latter rejected it. Thus, it was only at this time that the respondents cause of action accrued.
Consequently, the respondents filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year prescriptive period.
It is also significant to note that from 10 November 1994 up to December 1997, the petitioner never formally informed the respondent of the fact of his
dismissal either through a written notice or hearing. Indeed, it cannot be gainfully said that respondent was unlawfully dismissed on 10 November 1994
and that the cause of action accrued on that date.
J.K. MERCADO & SONS AGRICULTURAL ENTERPRISES VS. HON. STO. TOMAS
G.R. No. 158084; August 29, 2008
Facts:
On December 3, 1993, the Regional Tripartite Wages and Productivity Board, Region XI, issued a wage order, granting a Cost of Living Allowance
(COLA) to covered workers. Notwithstanding the said order, private respondents were not given the benefits due them under the wage order. On July
10, 1998, private respondents filed a motion for writ of execution and writ of garnishment.
On October 7, 1998, the OIC-Regional Director, Region XI, issued a writ of execution for the enforcement of the Order dated April 11, 1994 of the
Regional Tripartite Wages and Productivity Board. On November 17, 1998 and November 23, 1998, respectively, petitioner filed a motion to quash the
writ of execution and a supplemental motion to the motion to quash. Petitioner argued that herein private respondents' right had already prescribed due
to their failure to move for the execution of the April 11, 1994 Order within the period provided under Article 291 of the Labor Code, as amended, or
within
three
(3)
years
from
the
finality
of
the
said
order.
Ruling that the benefits which remained unpaid have not prescribed and that the private respondents need not file a claim to be entitled thereto, the
Regional Director denied the motion to quash in an Order dated January 7, 1999.
Petitioner argued that the Regional Director abused his discretion in issuing the writ of execution in the absence of any motion filed by private
respondents. Petitioner claimed that since more than three (3) years have already elapsed from the time of the finality of the order dated April 11, 1994,
the right of private respondents to claim the benefits under the same had already prescribed.
Issue: Whether a money claim must be filed first by private respondents against petitioner for the latter's refusal to pay the COLA granted under the
wage order.
Held:
It must be emphasized that the order dated April 11, 1994 had long become final and executory. Petitioner did not appeal the said order. Having failed to
avail of the remedy of appeal of the said order, petitioner cannot belatedly avoid its duty to comply with the said order by insisting that a money claim
must first be filed by herein private respondents. A contrary ruling would result to absurdity and would even unjustly benefit petitioner who for quite
some time had exerted every effort to avoid the obligation of giving the wage differential or COLA granted under the wage order.
Art. 291 of the Labor Code applies to money claims in general and provides for a 3-year prescriptive period to file them.
On the other hand, respondent employees' money claims in this case had been reduced to a judgment, in the form of a Wage Order, which has become
final and executory. The prescription applicable, therefore, is not the general one that applies to money claims, but the specific one applying to
judgments. Thus, the right to enforce the judgment, having been exercised within five years, has not yet prescribed.
Stated otherwise, a claimant has three years to press a money claim. Once judgment is rendered in her favor, she has five years to ask for execution of
the judgment, counted from its finality. This is consistent with the rule on statutory construction that a general provision should yield to a specific one
and with the mandate of social justice that doubts should be resolved in favor of labor.
REYES VS. NLRC, CCBPI
G.R. No. 180551; February 10, 2009
Facts:
The present Petition arose from a Complaint for illegal dismissal with claims for moral and exemplary damages and attorneys fees filed by petitioner
against respondents Coca Cola Bottlers Philippines (CCBP) and Rotaida Taguibao (Taguibao) before the Labor Arbiter on 14 June 2004. Respondent
CCBP is a corporation engaged in the business of production and distribution of carbonated drinks, and Taguibao is its Human Resource Manager.
In his Complaint, petitioner alleged that he was first employed by respondent CCBP, through Interserve Manpower Agency (Interserve), as a Leadman
in February 1988. Petitioner was initially assigned to the Mendiola Sales Office of respondent CCBP. Petitioners employment contract was renewed
every five months and he was assigned a different task every time. Such an arrangement continued until petitioner was directly hired by respondent
CCBP as a Route Salesman on 15 September 2000. Exactly one year from the time of petitioners employment as a Route Salesman, respondent

209

CCBP, thru Taguibao, terminated his services on 15 September 2001. Since he already acquired the status of a regular employee, petitioner asserted
that his dismissal from employment without the benefit of due process was unlawful.
Issue:
Whether or not respondents claim for backwages has already prescribed.
Held:
The Court was more emphatic in Philippine Industrial Security Agency Corporation v. Dapiton, when it ruled that backwages had to be paid by the
employer as part of the price or penalty he had to pay for illegally dismissing his employee . It was to be computed from the time of the employees
illegal dismissal (or from the time his compensation was withheld from him) up to the time of his reinstatement.
One of the natural consequences of a finding that an employee has been illegally dismissed is the payment of backwages corresponding to the period
from his dismissal up to actual reinstatement. The statutory intent of this matter is clearly discernible. The payment of backwages allows the employee
to recover from the employer that which he has lost by way of wages as a result of his dismissal. Logically, it must be computed from the date of
petitioners illegal dismissal up to the time of actual reinstatement. There can be no gap or interruption, lest we defeat the very reason of the law in
granting the same. That petitioner did not immediately file his Complaint should not affect or diminish his right to backwages, for it is a right clearly
granted to him by law -- should he be found to have been illegally dismissed -- and for as long as his cause of action has not been barred by
prescription.
The law fixes the period of time within which petitioner could seek remedy for his illegal dismissal and for as long as he filed his Complaint within the
prescriptive period, he shall be entitled to the full protection of his right to backwages. In illegal dismissal cases, the employee concerned is given a
period of four years from the time of his illegal dismissal within which to institute the complaint. This is based on Article 1146 of the New Civil Code
which states that actions based upon an injury to the rights of the plaintiff must be brought within four years. The four-year prescriptive period shall
commence to run only upon the accrual of a cause of action of the worker. Here, petitioner was dismissed from service on 15 September 2001. He
filed his complaint for illegal dismissal on 14 June 2004.
Clearly, then, the instant case was filed within the prescriptive period.
LWV CONSTRUCTION CORP. VS. DUPO
G.R. No. 172342; July 13, 2009
Facts:
Petitioner, a domestic corporation which recruits Filipino workers, hired respondent Marcelo Dupo as Civil Structural Superintendent to work in Saudi
Arabia for its principal, Mohammad Al-Mojil Group/Establishment (MMG). On February 26, 1992, respondent signed his first overseas employment
contract, renewable after one year. It was renewed five times on the following dates: May 10, 1993, November 16, 1994, January 22, 1996, April 14,
1997, and March 26, 1998. All were fixed-period contracts for one year. The sixth and last contract stated that respondents employment starts upon
reporting to work and ends when he leaves the work site. Respondent left Saudi Arabia on April 30, 1999 and arrived in the Philippines on May 1, 1999.
Respondent then has signed 6 overseas contracts and worked for seven years in Saudi Arabia.
On July 6, 1999, respondent through a letter resigned from his work and asked MMG to give him his long service award in accordance with the Article
87 of Saudi Law which states that;
Article 87.
Where the term of a labor contract concluded for a specified period comes to an end or where the employer cancels a contract of
unspecified period, the employer shall pay to the workman an award for the period of his service to be computed on the basis of half a
months pay for each of the first five years and one months pay for each of the subsequent years. The last rate of pay shall be taken as
basis for the computation of the award. For fractions of a year, the workman shall be entitled to an award which is proportionate to his
service period during that year. Furthermore, the workman shall be entitled to the service award provided for at the beginning of this article
in the following cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or childbirth.
C. If the workman is leaving the work as a result of a force majeure beyond his control. (Emphasis supplied.)
However, MMG did not reply to the letter of the respondent Dupo which led to the filing of the case before the labor arbiter for the payment of the long
service award in the amount of US$12,640.33.
On the other hand, petitioner presented two defenses namely payment and prescription. Firstly, petitioner said the long service award has already been
paid every time each of the contracts of employment of the respondent comes to an end, since, the contract is for a fixed period of time. In effect, the
severance pay received by the respondent every time each of the 6 contracts of employment comes to an end, is also the longevity service award.
Petitioner claimed that long service award is the same with severance pay. Secondly, petitioner insists that prescription barred respondents claim for
long service award because under Article 13 of the Saudi Labor Law it provides that no case or claim relating to any of the rights provided for under said
law shall be heard after the lapse of 12 months from the date of the termination of the contract. Respondents sixth contract ended on April 30, 1999 the
date he left his work which was also in effect the date of the termination of his contract, and he filed the case on December 11, 2000 which is 1 year and
seven months from the date of the termination of his contract.

210

Issue:
(1) Whether or not CA erred in ruling that respondent is entitled to long service pay which is different from severance pay.
(2) Whether or not the cause of action has prescribed.
Held:
SC said that CA has committed an error in ruling that the long service pay is different from severance pay. According to SC the severance pay received
by the respondent at the end of each of the six contracts of employment is equivalent to the long service pay. This is the reason why the formula in
computing the severance pay is the same with the computation of the long service award. Moreover, SC said that respondents employment contracts
expressly stated that his employment ended upon his departure from work. Each year he departed from work and successively new contracts were
executed before he reported for work anew. His service was not cumulative. Pertinently, in Brent School, Inc. v. Zamora, we said that a fixed term is an
essential and natural appurtenance of overseas employment contracts as in this case. We also said in that case that under American law, [w]here a
contract specifies the period of its duration, it terminates on the expiration of such period. A contract of employment for a definite period terminates by
its own terms at the end of such period. As it is, Article 72 of the Saudi Labor Law is also of similar import. It reads:
A labor contract concluded for a specified period shall terminate upon the expiry of its term. If both parties continue to enforce the contract, thereafter, it
shall be considered renewed for an unspecified period.
(2) SC ruled that the claim has not yet prescribed because the law that should be applied on prescription is not the Saudi Law which grants 12 months
period of time to file the claim from the time of the termination of contract but it should be the Labor Code particularly ART. 291. Money claims. All
money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the
cause of action accrued; otherwise they shall be forever barred. The reason is because prescription is a procedural law and under the conflict of laws
rules of the Philippines the procedural law of the lex fori or law of the forum (law of the place where the case is filed) must be applied. However, an
argument can be raised that even if the conflict of laws rule provides that the procedural law of the lex fori must be followed, Sec. 48 of our Code of Civil
Procedure which is a borrowing statute provides that If by the laws of the state or country where the cause of action arose, the action is barred, it is
also barred in the Philippine Islands. Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270 of said Code
repealed only those provisions of the Code of Civil Procedure as to which were inconsistent with it. There is no provision in the Civil Code of the
Philippines, which is inconsistent with or contradictory to Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws, 104 [7 th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil Procedure] cannot be enforced ex proprio vigore insofar as it ordains the
application in this jurisdiction of [Article] 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forums public policy. To enforce the one-year prescriptive period
of the Saudi Law as regards the claims in question would contravene the public policy on the protection to labor.
Respondents complaint was filed well within the three-year prescriptive period under Article 291 of our Labor Code. This point, however, has already
been mooted by SCs finding that respondents service award had been paid, albeit the payroll termed such payment as severance pay. Petition is
Granted.
PLDT VS. ROBERTO R. PINGOL
G.R. No. 182622; September 8, 2010
Facts:
In 1979, respondent Roberto R. Pingol (Pingol) was hired by petitioner PLDT as a maintenance technician.
From September 16, 1999 to December 31, 1999, Pingol was absent from work without official leave. According to PLDT, notices were sent to him with
a stern warning that he would be dismissed from employment if he continued to be absent without official leave "pursuant to PLDT Systems Practice A007 which provides that Absence without authorized leaves for seven (7) consecutive days is subject to termination from the service." Despite the
warning, he failed to show up for work. On January 1, 2000, PLDT terminated his services on the grounds of unauthorized absences and abandonment
of office.
On March 29, 2004, four years later, Pingol filed a Complaint for Constructive Dismissal and Monetary Claims against PLDT. In his complaint, he
alleged that he was hastily dismissed from his employment
on January 1, 2000.
In response, PLDT filed a motion to dismiss claiming, among others, that respondents cause of action had already prescribed as the complaint was
filed four (4) years and three (3) months after his dismissal.
Issue: Whether or not respondent Pingol filed his complaint for constructive dismissal and money claims within the prescriptive period of four (4) years
as provided in Article 1146 of the Civil Code and three (3) years as provided in Article 291 of the Labor Code, respectively.
Held:
Parties apparently do not dispute the applicable prescriptive period. Article 1146 of the New Civil Code provides:
Art. 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
x xx
x xx
x xx

211

As this Court stated in Callanta v. Carnation, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to
contest the legality of one's dismissal from employment constitutes, in essence, an action predicated "upon an injury to the rights of the plaintiff," as
contemplated under Art. 1146 of the New Civil Code, which must be brought within four (4) years.
With regard to the prescriptive period for money claims, Article 291 of the Labor Code states:
Article 291. Money Claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within
three (3) years from the time the cause of action accrued; otherwise they shall be barred forever.
The pivotal question in resolving the issues is the date when the cause of action of respondent Pingol accrued.
It is a settled jurisprudence that a cause of action has three (3) elements, to wit: (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or
omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.
In the case at bench, Pingol himself alleged the date January 1, 2000 as the date of his dismissal in his complaint filed on March 29, 2004, exactly four
(4) years and three (3) months later. Respondent never denied making such admission or raised palpable mistake as the reason therefor. Thus, the
petitioner correctly relied on such allegation in the complaint to move for the dismissal of the case on the ground of prescription.
The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary claim accrues. Thus, the general law on
prescription applies. Article 1150 of the Civil Code states:
Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day
they may be brought
The day the action may be brought is the day a claim starts as a legal possibility. In the present case, January 1, 2000 was the date that respondent
Pingol was not allowed to perform his usual and regular job as a maintenance technician. Respondent Pingol cited the same date of dismissal in his
complaint before the LA. As, thus, correctly ruled by the LA, the complaint filed had already prescribed.
Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the absence of an equivalent Labor Code provision
for determining whether the said period may be interrupted, Article 1155 of the Civil Code may be applied, to wit:
ART. 1155. The prescription of actions is interrupted when they are filed before the Court, when there is a written extrajudicial demand by
the creditors, and when there is any written acknowledgment of the debt by the debtor.
Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written
acknowledgment of the debt by the debtor.
In this case, respondent Pingol never made any written extrajudicial demand. Neither did petitioner make any written acknowledgment of its alleged
obligation. Thus, the claimed "follow-ups" could not have validly tolled the running of the prescriptive period. It is worthy to note that respondent never
presented any proof to substantiate his allegation of follow-ups.
MEDLINE MANAGEMENT, INC. VS. ROSLINDA
G.R. No. 1687151; Spetember 15, 2010
Facts:
Medline Management, Inc. (MMI), on behalf of its foreign principal, petitioner Grecomar Shipping Agency (GSA), hired Juliano Roslinda (Juliano) to
work on board the vessel MV "Victory." Juliano was previously employed by the petitioners under two successive separate employment contracts of
varying durations. His latest contract was approved by the POEA on September 9, 1998 for a duration of nine months. In accordance with which, he
boarded the vessel MV "Victory" on October 25, 1998 as an oiler and, after several months of extension, was discharged on January 20, 2000.
Months after his repatriation, or on March 6, 2000, Juliano consulted Dr. Pamela R. Lloren (Dr. Lloren) of Metropolitan Hospital. He complained about
abdominal distention which is the medical term for a patient who vomits previously ingested foods. From March 8 to August 24, 2000, Juliano has
undergone Hemodialysis, a method of removing waste products such as creatinine and urea, as well as freeing water from the blood, when the kidneys
are in renal failure.
On August 27, 2001, Juliano died. On September 4, 2003, his wife Gliceria Roslinda and son Ariel Roslinda, respondents herein, filed a complaint
against MMI and GSA for payment of death compensation, reimbursement of medical expenses, damages, and attorney's fees before the Labor
Arbitration Branch of the NLRC.
Instead of filing an answer, they filed a Motion to Dismiss on the grounds of prescription, lack of jurisdiction and prematurity. Petitioners contended that
the action has already prescribed because it was filed three years, seven months and 22 days from the time the deceased seafarer reached the point of
hire.
Issue: Whether or not the claim is not yet barred by prescription despite the fact that it was filed beyond the one-year prescriptive period provided by
the POEA Standard Employment Contract.
Held:

212

The employment contract signed by Juliano stated that "Upon approval, the same shall be deemed an integral part of the Standard Employment
Contract (SEC) for seafarers." Section 28 of the POEA SEC states:
SECTION 28.JURISDICTION
XXX
Recognizing the peculiar nature of overseas shipboard employment, the employer and the seafarer agree that all claims arising from this
contract shall be made within one (1) year from the date of the seafarer's return to the point of hire. (Emphasis supplied)
On the other hand, the Labor Code states:
ART. 291.Money claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be
filed within three (3) years from the time the cause of action accrued; otherwise they shall forever be barred.
In Southeastern Shipping v. Navarra, Jr., we ruled that "Article 291 is the law governing the prescription of money claims of seafarers, a class of
overseas contract workers. This law prevails over Section 28 of the Standard Employment Contract for Seafarers which provides for claims to be
brought only within one year from the date of the seafarer's return to the point of hire." We further declared that "for the guidance of all, Section 28 of
the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period within which the seafarers may file their money claims, is
hereby declared null and void. The applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more in accord
with the State's declared policy to afford full protection to labor. The prescriptive period in the present case is thus three years from the time the cause
of action accrues."
In the present case, the cause of action accrued on August 27, 2001 when Juliano died. Hence, the claim has not yet prescribed, since the complaint
was filed with the arbitration branch of the NLRC on September 4, 2003.

UNIVERSITY OF THE EAST VS. UNIVERSITY OF THE EAST EMPLOYEES' ASSOCIATION

G.R. No. 179593; September 14, 2011
Facts:
Petitioner University of the East (UE) is an educational institution duly organized and existing under Philippine laws. On the other hand, respondent
University of the East Employees' Association (UEEA) is a duly registered labor union of the rank-and-file employees of UE.
It appears from the records that prior to school year (SY) 1983-1984, the 70% incremental proceeds from tuition fee increases as mandated by
Presidential Decree No. 451 (P.D. No. 451), as amended, was distributed by UE in proportion to the average number of academic and non-academic
personnel. The distribution scheme became the subject of an Agreement dated October 18, 1983 signed by the management, faculty association and
respondent. Starting SY 1994-1995, however, the 70% incremental proceeds from the tuition fee increase was distributed by UE to its covered
employees based on a new formula of percentage of salary.
On June 19, 1995, a tripartite meeting was held among the representatives of management, faculty union and UEEA. In the said meeting, it was agreed
that the distribution of the incremental proceeds would now be based on percentage of salary, and not anymore on the average number of personnel.
The Minutes of the June 19, 1995 meeting was signed and attested to by UEEA officers who attended.
On April 27, 1999, UEEA filed a complaint before the NLRC for non-payment/underpayment of the rank-and-file employees' share of the tuition fee
increases against UE pursuant to P.D. No. 451, as amended, and Republic Act (R.A.) No. 6728 otherwise known as Government Assistance to
Students and Teachers in Private Education Act.
UE asserted that the claim of the UEEA was already barred since it was filed three (3) years from the time its supposed cause of action accrued.
Issue: Whether or not prescription has already set in.
Held:
The Court agrees with UE and holds that UEEA's right to question the distribution of the incremental proceeds for SY 1994-1995 has already
prescribed. Article 291 of the Labor Code provides that money claims arising from an employer-employee relationship must be filed within three (3)
years from the time the cause of action accrued. In the present case, the cause of action accrued when the distribution of the incremental proceeds
based on percentage of salary of the covered employees was discussed in the tripartite meeting held on June 19, 1995. UEEA did not question the
manner of its distribution and only on April 27, 1999 did it file an action based therein. Hence, prescription had set in.
X.

JURISDICTION OF THE LABOR ARBITER

TOLOSA VS. NLRC;

G.R. No. 149578; April 10, 2003
Facts:
Evelyn Tolosa is the widow of Captain Virgilio Tolosa who was hired by Qwana-Kaiun, through its manning agent, Asia Bulk Transport Phils. Inc., to be
the master of the vessel named M/V Lady Dona.Capt. Tolosa died while performing his duties during their voyage from Japan to Long Beach California.

213

Because of her husbands death, Evelyn filed a complaint before the POEA against Qwana-Kaiun, through its resident-agent, Mr. Fumio Nakagawa,
Asia Bulk, Pedro Garate and Mario Asis (Lady Donas Chief Mate and Second mate in-charge of the primary medical care of the crew and who took
care of Capt. Tolosa while he was sick). The case was transferred to the NLRC and the Labor Arbiter held the respondents solidarily liable and granted
all the damages as prayed for by petitioner including lost income, moral and exemplary damages, attorneys fees plus interest. On appeal, NLRC
dismissed the case for lack of jurisdiction over the subject matter of the action pursuant to the provision of the Labor Code. Sustaining the NLRC, the
CA ruled that the labor commission had no jurisdiction over the subject matter of the action filed by petitioner. Her cause did not arise from an employeremployee relation, but from a quasi delict or tort. Further, there is no reasonable causal connection between her suit for damages and her claim under
Article 217 (a)(4) of the Labor Code, which allows an award of damages incident to an employer-employee relation.
Issue:
Whether the labor arbiter and the NLRC had jurisdiction over petitioner's action
Held:
The NLRC and the labor arbiter had no jurisdiction over petitioner's claim for damages, because that ruling was based on a quasi delict or tort per
Article 2176 of the Civil Code. The allegations in her complaint are in the nature of an action based on a quasi delict or tort. It is evident that she sued
Pedro Garate and Mario Asis for gross negligence. Petitioner's complaint/position paper refers to and extensively discusses the negligent acts of
shipmates Garate and Asis, who had no employer-employee relation with Captain Tolosa.
The pivotal question is whether the Labor Code has any relevance to the relief sought by petitioner. From her paper, it is evident that the primary reliefs
she seeks are as follows: (a) loss of earning capacity denominated therein as "actual damages" or "lost income" and (b) blacklisting. The loss she
claims does not refer to the actual earnings of the deceased, but to his earning capacity based on a life expectancy of 65 years. This amount is
recoverable if the action is based on a quasi delict as provided for in Article 2206 of the Civil Code, but not in the Labor Code.
While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor laws, but also damages governed by the
Civil Code, these reliefs must still he based on an action that has a reasonable causal connection with the Labor Code, other labor statutes, or
collective bargaining agreements. It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages, overtime
compensation or separation pay, and other labor benefits that are generally cognized in labor disputes. The loss of earning capacity is a relief or claim
resulting from a quasi delict or a similar cause within the realm of civil law. Claims for damages under paragraph 4 of Article 217 must have a
reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. Only if there is such a
connection with the other claims can the claim for damages be considered as arising from employer-employee relations." In the present case,
petitioner's claim for damages is not related to any other claim under Article 217, other labor statutes, or collective bargaining agreements.
Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does not grant or specify a claim or relief. This provision is only
a safety and health standard under Book IV of the same Code. The enforcement of this labor standard rests with the labor secretary. Thus, claims for an
employer's violation thereof are beyond the jurisdiction of the labor arbiter. In other words, petitioner cannot enforce the labor standard provided for in
Article 161 by suing for damages before the labor arbiter.
It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in which the employer-employee relation is merely incidental,
and in which the cause of action proceeds from a different source of obligation such as a tort. Since petitioner's claim for damages is predicated on a
quasi delict or tort that has no reasonable causal connection with any of the claims provided for in Article 217, other labor statutes, or collective
bargaining agreements, jurisdiction over the action lies with the regular courts -- not with the NLRC or the labor arbiters.
AUSTRIA VS. NLRC;
312 SCRA 413
Facts:
Pastor Dionisio V. Austria worked with the SDA for twenty eight (28) years from 1963 to 1991.He held the position of district pastor until his services
were terminated on 31 October 1991.
On various occasions from August up to October, 1991, petitioner received several communications from Mr. Eufronio Ibesate, the treasurer of the
Negros Mission asking him to admit accountability and responsibility for the church tithes and offerings collected by his wife, Mrs. Thelma Austria, in his
district which amounted to P15,078.10, and to remit the same to the Negros Mission.
On 16 October 1991, at around 7:30 a.m., petitioner went to the office of Pastor Buhat, the president of the Negros Mission. During said call, petitioner
tried to persuade Pastor Buhat to convene the Executive Committee for the purpose of settling the dispute between him and the private respondent,
Pastor David Rodrigo. The dispute between Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted his friend, Danny
Diamada, to collect from Pastor Rodrigo the unpaid balance for the repair of the latter's motor vehicle which he failed to pay to Diamada. Due to the
assistance of petitioner in collecting Pastor Rodrigo's debt, the latter harbored ill-feelings against petitioner. When news reached petitioner that Pastor
Rodrigo was about to file a complaint against him with the Negros Mission, he immediately proceeded to the office of Pastor Buhat and asked the latter
to convene the Executive Committee. Pastor Buhat denied the request of petitioner since some committee members were out of town and there was no
quorum. Thereafter, the two exchanged heated arguments. Petitioner then left the office of Pastor Buhat. While on his way out, petitioner overheard
Pastor Buhat saying, "Pastor daw inisog na ina iya (Pador you are talking tough)." Irked by such remark, petitioner returned to the office of Pastor
Buhat, and tried to overturn the latter's table, though unsuccessfully, since it was heavy. Thereafter, petitioner banged the attach case of Pastor Buhat
on the table, scattered the books in his office, and threw the phone.

214

Thereafter, petitioner received a letter inviting him and his wife to attend the Executive Committee meeting at the Negros Mission Conference Room on
21 October 1991, at nine in the morning. To be discussed in the meeting were the non-remittance of church collection and the events that transpired on
16 October 1991. Subsequently, petitioner received a letter of dismissal citing misappropriation of denominational funds, willful breach of trust, serious
misconduct, gross and habitual neglect of duties, and commission of an offense against the person of employer's duly authorized representative, as
grounds for the termination of his services.
Issues:
1.
2.
3.
4.

Whether or not the termination of the services of petitioner is an ecclesiastical affair, and, as such, involves the separation of church and
state and as such, the Labor Arbiter/NLRC has no jurisdiction to try and decide the case
Whether or not the dismissal was valid
Whether or not there was breach of trust
Whether or not there was serious misconduct.

Held:
1. The principle of separation of church and state finds no application in this case.
An ecclesiastical affair is "one that concerns doctrine, creed, or form of worship of the church, or the adoption and enforcement within a religious
association of needful laws and regulations for the government of the membership, and the power of excluding from such associations those deemed
unworthy of membership. Based on this definition, an ecclesiastical affair involves the relationship between the church and its members and relate to
matters of faith, religious doctrines, worship and governance of the congregation. While the matter at hand relates to the church and its religious
minister it does not ipso facto give the case a religious significance. Simply stated, what is involved here is the relationship of the church as an
employer and the minister as an employee. It is purely secular and has no relation whatsoever with the practice of faith, worship or doctrines of the
church.
Under the Labor Code, the provision which governs the dismissal of employees, is comprehensive enough to include religious corporations, such as the
SDA, in its coverage. Article 278 of the Labor Code on post-employment states that "the provisions of this Title shall apply to all establishments or
undertakings, whether for profit or not." Obviously, the cited article does not make any exception in favor of a religious corporation. This is made more
evident by the fact that the Rules Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of Employment and
Retirement, categorically includes religious institutions in the coverage of the law, to wit:
Sec. 1. Coverage. This Rule shall apply to all establishments and undertakings, whether operated for profit or not, including educational, medical,
charitable and religious institutions and organizations, in cases of regular employment with the exception of the Government and its political
subdivisions including government-owned or controlled corporations.
2. The issue being the legality of petitioner's dismissal, the same must be measured against the requisites for a valid dismissal, namely: (a) the
employee must be afforded due process, i.e., he must be given an opportunity to be heard and to defend himself, and; (b) the dismissal must be for a
valid cause as provided in Article 282 of the Labor Code. Without the concurrence of this twin requirements, the termination would, in the eyes of the
law, be illegal.
Before the services of an employee can be validly terminated, Article 277 (b) of the Labor Code and Section 2, Rule XXIII, Book V of the Rules
Implementing the Labor Code further require the employer to furnish the employee with two (2) written notices, to wit: (a) a written notice served on the
employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; and,
(b) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination.
The first notice, which may be considered as the proper charge, serves to apprise the employee of the particular acts or omissions for which his
dismissal is sought. The second notice on the other hand seeks to inform the employee of the employer's decision to dismiss him. This decision,
however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample
opportunity to be heard and defend himself with the assistance of a representative, if he so desires. Private respondent failed to substantially comply
with the above requirements. With regard to the first notice, the letter, dated 17 October 1991, which notified petitioner and his wife to attend the
meeting on 21 October 1991, cannot be construed as the written charge required by law. It never categorically stated the particular acts or omissions on
which petitioner's impending termination was grounded. In fact, the letter never even mentioned that petitioner would be subject to investigation. The
letter merely mentioned that petitioner and his wife were invited to a meeting wherein what would be discussed were the alleged unremitted church
tithes and the events that transpired on 16 October 1991. The alleged grounds for the dismissal of petitioner from the service were only revealed to him
when the actual letter of dismissal was finally issued. For this reason, it cannot be said that petitioner was given enough opportunity to properly prepare
for his defense. While admittedly, private respondents complied with the second requirement, the notice of termination, this does not cure the initial
defect of lack of the proper written charge required by law.
3. The validity of dismissal cannot be sustained based on the ground of breach of trust. Private respondents allege that they have lost their confidence
in petitioner for his failure, despite demands, to remit the tithes and offerings amounting to P15,078.10, which were collected in his district. Settled is the
rule that under Article 282 (c) of the Labor Code, the breach of trust must be willful. 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. It must rest on substantial grounds
and not on the employer's arbitrariness, whims, caprices or suspicion; otherwise the employee would eternally remain at the mercy of the employer.39 It
should be genuine and not simulated. In fact, as admitted by their own witness, Naomi Geniebla, petitioner remitted the amounts which he collected to
the Negros Mission for which corresponding receipts were issued to him. Thus, the allegations of private respondents that petitioner breached their trust
have no leg to stand on.

215

4. No. and, as such, do not warrant petitioner's dismissal from the service.
Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.For misconduct to be considered serious it must be of
such grave and aggravated character and not merely trivial or unimportant. Based on this standard, we believe that the act of petitioner in banging the
attach case on the table, throwing the telephone and scattering the books in the office of Pastor Buhat, although improper, cannot be considered as
grave enough to be considered as serious misconduct. After all, as correctly observed by the Labor Arbiter, though petitioner committed damage to
property, he did not physically assault Pastor Buhat or any other pastor present during the incident. In fact, the alleged offense committed upon the
person of the employer's representatives was never really established or proven by private respondents. Hence, there is no basis for the allegation that
petitioner's act constituted serious misconduct or that the same was an offense against the person of the employer's duly authorized representative. As
such, the cited actuation of petitioner does not justify the ultimate penalty of dismissal from employment.
EVIOTA VS. COURT OF APPEALS;
407 SCRA 394
Facts:
Standard Chartered Bank and petitioner Eduardo G. Eviota executed a contract of employment under which the petitioner was employed by the
respondent bank as Compensation and Benefits Manager, VP (M21). However, the petitioner abruptly resigned from the respondent bank barely a
month after his employment and rejoined his former employer.
Standard Charter Bank filed with the Regional Trial court of Makati a complaint against Eviotas acts which it claimed constitute a clear violation of
Articles 19, 20 and 21 of Republic Act No. 386, as amended (the "Civil Code") and that Eviota not only violated Presidential Decree No. 442, as
amended (the Labor Code), wherein it states that an employee may terminate without just cause the employer-employee relationship by serving written
notice on the employer at least one (1) month in advance But he also violated, Section 13 of the his Employment Contract specifically provides that:
"Your [i.e., Eviota's] employment may be terminated by either party giving notice of at least one month.
According to the bank Eviota is liable for damages. For in good faith the Bank has complied with its part of the agreement, among them were the
purchase of a CRV for Evitas use, making traveling arrangement for him to join a Conference in Singapore for the bank, and furnishing him with a new
office. Aside form Eviotas sudden resignation he also took a diskette with him containing and other papers and documents containing confidential
information on employee compensation and other Bank matters
Although Eviota has already returned his singing bonus and he has paid for the expenses of the CRV but he had induced the Bank to believe that he
was committed to fulfilling his obligations under the Employment Contract. As a result, the Bank incurred expenses in carrying out its part of the
contract. Thus the bank is asking not only for actual damages, but also moral and exemplary damages.
The petitioner filed a motion to dismiss the complaint on the ground that the action for damages of the respondent bank was within the exclusive
jurisdiction of the Labor Arbiter under paragraph 4, Article 217 of the Labor Code of the Philippines, as amended, which states that the Labor Arbiter and
Commission has jurisdiction over claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations.
The petitioner averred that the respondent bank's claim for damages arose out of or were in connection with his employer-employee relationship with
the respondent bank or some aspect or incident of such relationship.
Issue:
Whether or not the Regional Trial Court has jurisdiction
Held:
The action was for breach of a contractual obligation, which is intrinsically a civil dispute. While seemingly the cause of action arose from employeremployee relations, the employer's claim for damages is grounded on "wanton failure and refusal" without just cause to report to duty coupled with the
averment that the employee "maliciously and with bad faith" violated the terms and conditions of the contract to the damage of the employer. Such
averments removed the controversy from the coverage of the Labor Code of the Philippines and brought it within the purview of the Civil Law.
Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must have a
reasonable causal connection with any of the claims provided for in that article. Only if there is such a connection with the other claims can the claim for
damages be considered as arising from employer-employee relations.
Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages agreed upon in the contract as redress for
private respondent's breach of his contractual obligation to its "damage and prejudice". Such cause of action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to the regular courts. More so when we consider that the stipulation refers to the post-employment relations of
the parties.
In this case, the private respondent's first cause of action for damages is anchored on the petitioner's employment of deceit and of making the private
respondent believe that he would fulfill his obligation under the employment contract with assiduousness and earnestness. The petitioner volte face
when, without the requisite thirty-day notice under the contract and the Labor Code of the Philippines, as amended, he abandoned his office and
rejoined his former employer; thus, forcing the private respondent to hire a replacement. The private respondent was left in a lurch, and its corporate
plans and program in jeopardy and disarray. Moreover, the petitioner took off with the private respondent's computer diskette, papers and documents

216

containing confidential information on employee compensation and other bank matters. On its second cause of action, the petitioner simply walked
away from his employment with the private respondent sans any written notice, to the prejudice of the private respondent, its banking operations and
the conduct of its business. Anent its third cause of action, the petitioner made false and derogatory statements that the private respondent reneged on
its obligations under their contract of employment; thus, depicting the private respondent as unworthy of trust.
It is evident that the causes of action of the private respondent against the petitioner do not involve the provisions of the Labor Code of the Philippines
and other labor laws but the New Civil Code. Thus, the said causes of action are intrinsically civil. There is no causal relationship between the causes of
action of the private respondent's causes of action against the petitioner and their employer-employee relationship. The fact that the private respondent
was the erstwhile employer of the petitioner under an existing employment contract before the latter abandoned his employment is merely incidental. In
fact, the petitioner had already been replaced by the private respondent before the action was filed against the petitioner. The Petition is DENIED.
DYNAMIC SIGNMAKER OUTDOOR ADVERTISING SERVICES VS. POTONGAN;
G.R. No. 156589; June 27, 2005
Facts:
Respondent started working for Dynamic Signmaker as a Production Supervisor. In early February 1996, the union of rank and file employees of
petitioner corporation, declared a strike on account of which petitioner corporation replaced all its supervisors and designated, by letter memorandum,
certain persons to take over the operations of the corporation including Rufino Hornilla who took over respondents functions.
Potongans salary was withheld and was advised to take a leave of absence until further notice and later received a letter from petitioner Hernandez,
President/General Manager of the corporation, inviting him to answer the following charges:
1.) that he entered the company fabrication shop where he was assigned as supervisor and caused to create fire by secretly switching on
the idle plastic oven and grounded the 2 electric machine welders while the strike was on-going outside the premises.
2.) that he allegedly on several occasions, urged strongly contractors led by Mr. Luis Mimay, working on some left over jobs at the factory, to
slow down work or not to work at all in sympathy to the strikers who are in the ranking files.
Potongan, through counsel, denied the charges against him and insisted that those were only fabricated to justify his termination due to suspicions that
he was a strike-sympathizer. He later on filed a complaint of illegal dismissal against the corporation contending that although he was not sent a formal
notice of termination, he was effectively dismissed from employment because after he was asked to take a leave of absence, he was not instructed nor
allowed to return to work, nor paid his salaries. On the other hand, petitioners insisted that respondent was not illegally dismissed as the management
[having] merely opted to reorganize. The Labor Arbiter dismissed the complaint on the ground that respondents cause of action was barred by prior
judgment that was rendered on June 24, 1996 by Labor Arbiter Nieves V. De Castro which found respondent among those guilty of committing
prohibited acts and whose employment was consequently declared lost.
Respondent appealed to the NLRC and argued that the Labor Arbiter did not acquire jurisdiction over his person in the above-said consolidated cases
since service of summons to the therein respondents President of the union, of which he is not a member, cannot be considered proper service to him.
Respondent thus concluded that a void judgment such as one rendered without jurisdiction over the person of the party maybe assailed at any time,
either directly or collaterally.
Issues:
1.
2.

Whether or not respondent was illegally or constructively dismissed.

Whether or not the Labor Arbiter in the prior consolidated cases was able to take jurisdiction over the person of respondent.

Held:
1. A letter sent by petitioner to respondent confirmed that respondents employment was terminated as early as February 21, 1996 (when he was
instructed to go on indefinite leave and his salary was since then withheld), not for any of the just or authorized causes under the Labor Code, but on
account of the filing against him by petitioner corporation of a labor case and a criminal case.
Surely, this Court recognizes that management has wide latitude to regulate, according to its own discretion and judgment, all aspects of employment,
including the freedom to transfer and reassign employees according to the requirements of its business. The scope and limits of the exercise of
management prerogatives, must, however, be balanced against the security of tenure given to labor.
If exercised in good faith for the purpose of advancing business interests, not of defeating or circumventing the rights of employees, the managerial
prerogative to transfer personnel from one area of operation to another is justified.
This Court finds it difficult, however, to attribute good faith on the part of petitioners because reespondent was instructed to go on indefinite leave and
was asked to return to work only after more than three years during which period his salaries were withheld, and only after the NLRC promulgated its
decision.
2. Petitioners fault the appellate court for failure to recognize the final and executory nature of the NLRC Decision rendered in the consolidated cases
and for affirming the nullification of said decision, with respect to respondent, which could be attacked only by direct action.
Contrary to petitioners position, the validity of a judgment or order of a court or quasi-judicial tribunal which has become final and executory may be
attacked when the records show that it lacked jurisdiction to render the judgment. For a judgment rendered against one in a case where jurisdiction over

217

his person was not acquired is void, and a void judgment maybe assailed or impugned at any time either directly or collaterally by means of a petition
filed in the same or separate case, or by resisting such judgment in any action or proceeding wherein it is invoked.
Petitioners in fact do not even dispute respondents claim that no summons was ever issued and served on him either personally or through registered
mail as required under Rule III, Sections 3 and 6 of the Rules of Procedure of the NLRC, as amended by Resolution No. 01-02, Series of 2002:
SEC. 3. Issuance of Summons. Within two (2) days from receipt of a case, the Labor Arbiter shall issue the required summons, attaching thereto a copy
of the complaint/petition and supporting documents, if any. The summons, together with a copy of the complaint, shall specify the date, time and place
of the conciliation and mediation conference in two (2) settings.
SEC. 6. Service of Notices and Resolutions. a) Notices or summonses and copies of orders, shall be served on the parties to the case personally by the
bailiff or duly authorized public officer within three (3) days from receipt thereof or by registered mail, provided that in special circumstances, service of
summons may be effected in accordance with the pertinent provisions of the Rules of Court; xxx
Supplementary or applied by analogy to these provisions are the provisions and prevailing jurisprudence in Civil Procedure. Where there is then no
service of summons on or a voluntary general appearance by the defendant, the court acquires no jurisdiction to pronounce a judgment in the cause.
At all events, even if administrative tribunals exercising quasi-judicial powers are not strictly bound by procedural requirements, they are still bound by
law and equity to observe the fundamental requirements of due process.
METROMEDIA TIMES CORP. VS. PASTORIN;
G.R. No. 154295; July 29, 2005
Facts:
Pastorin was employed by Metromedia Times Corporation (Petitioner) as a Field Representative/Collector. His task entailed the periodic collection of
receivables from dealers of petitioner's newspapers. Prior to the subject incident, respondent claimed to have received a termination letter dated 7 May
1998 from management terminating his services for tardiness effective 16 June 1988. Respondent, member of Metro Media Times Employees Union,
was not dismissed due to the intervention of the labor union, the collective bargaining agent in the company.
In May 1998, he obtained a loan from one of the dealers whom he dealt with, De Manuel, amounting to P9,000.00. After paying P1,125.00, respondent
reneged on the balance of his loan. De Manuel wrote a letter to petitioner, and seeking assistance for collection on the remainder of the loan. She
claimed that when respondent became remissed on his personal obligation, he stopped collecting periodically the outstanding dues of De Manuel.
Petitioner sent a letter addressed to respondent, requiring an explanation for the transaction with De Manuel, as well as for his failure to pay back the
loan according to the conditions agreed upon. In his reply letter, respondent admitted having incurred the loan, but offered no definitive explanation for
his failure to repay the same.
Petitioner, through a Memorandum, imposed the penalty of suspension on respondent for 4 days for violating Company Policy and ordered his transfer
to the Administration Department. Respondent wrote a letter to petitioner, stating that he wanted to sign a transfer memo before assuming his new
position. Later, he was handed the Payroll Change Advice indicating his new assignment to the Traffic and Order Department of Metromedia.
Nonetheless, respondent stopped reporting for work. Respondent sent a letter to petitioner communicating his refusal to accept the transfer.
Respondent duly filed a complaint for constructive dismissal, non-payment of back wages and other money claims with the Labor Arbiter.
Issue:
Whether or not Metromedia is estopped from questioning the jurisdiction of the Labor Arbiter over the subject matter of the case for the first time only in
their appeal before the NLRC.
Held:
Applying the general rule that estoppel does not confer jurisdiction, petitioner is not estopped from assailing the jurisdiction of the labor arbiter before
the NLRC on appeal.
Respondent relied solely on estoppel to oppose petitioners claim of lack of jurisdiction on the part of the labor arbiter. He adduced no other legal
ground in support of his contention that the Labor Arbiter had jurisdiction over the case. Thus, his claim falls flat in light of our pronouncement, and
more so considering the NLRCs correct observation that jurisdiction over grievance Issue, such as the propriety of the reassignment of a union member
falls under the jurisdiction of the voluntary arbitrator.

YUSEN AIR & SEA SERVICE PHILS VS. VILLAMOR;

G.R. No. 154942; August 16, 2005
Facts:
Petitioner is engaged in the business of freight forwarding. As such, it is contracted by clients to pick-up, unpack, consolidate, deliver, transport and
distribute all kinds of cargoes, acts as cargo or freight accommodation and enters into charter parties for the carriage of all kinds of cargoes or freight.
On August 16, 1993, petitioner hired respondent as branch manager in its Cebu Office. Later, petitioner reclassified respondents position to that of

218

Division Manager, which position respondent held until his resignation on February 1, 2002. Immediately after his resignation, respondent started
working for Aspac International, a corporation engaged in the same line of business as that of petitioner. On February 11, 2002, in the Regional Trial
Court at Paraaque City, petitioner filed against respondent a complaint for injunction and damages with prayer for a temporary restraining order. The
complaint alleged that [respondent] duly signed an undertaking to abide by the policies of the [Petitioner] which includes the provision on the
employees responsibility and obligation in cases of conflict of interest, which reads:
No employee may engage in any business or undertaking that is directly or indirectly in competition with that of the company and its
affiliates or engage directly or indirectly in any undertaking or activity prejudicial to the interests of the company or to the performance of
his/her job or work assignments. The same provision will be implemented for a period of two (2) years from the date of an employees
resignation, termination or separation from the company.
That in clear violation and breach of his undertaking and agreement with the policies of [petitioner], [respondent] joined Aspac International, within two
years from [his] date of resignation, whose business is directly in conflict with that of [petitioner].
Petitioner thus prayed for a judgment enjoining respondent from further pursuing his work at Aspac International, and awarding it P2,000,000 as
actual damages; P300,000 as exemplary damages; and another P300,000 as attorneys fees. On March 4, 2002, apparently not to be outdone,
respondent filed against petitioner a case for illegal dismissal before the National Labor Relations Commission. Meanwhile, instead of filing his answer
in the civil case, respondent filed a Motion to Dismiss, arguing that the RTC has no jurisdiction over the subject matter of said case because an
employer-employee relationship is involved. On March 20, 2002, the trial court issued the herein first assailed order dismissing petitioners complaint
for lack of jurisdiction over the subject matter thereof on the ground that the action was for damages arising from employer-employee relations. Citing
Article 217 of the Labor Code, the trial court ruled that it is the labor arbiter which had jurisdiction over petitioners complaint. In time, petitioner moved
for a reconsideration but its motion was denied by the trial court in its subsequent order of June 21, 2002.
Issue:
Whether or not the petitioners cause of action arises from employer-employee relations even if the claim therein is based on a provision in its
handbook.
Held:
No, the petitioners cause of action does not arises from employer-employee relations, because, petitioner does not ask for any relief under the Labor
Code of the Philippines. It seeks to recover damages agreed upon in the contract as redress for private respondents breach of his contractual
obligation to its damage and prejudice. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the
regular courts. More so when we consider that the stipulation refers to the post-employment relations of the parties.
While seemingly the cause of action arose from employer-employee relations, the employers claim for damages is grounded on wanton failure and
refusal without just cause to report to duty coupled with the averment that the employee maliciously and with bad faith violated the terms and conditions
of the contract to the damage of the employer. Such averments removed the controversy from the coverage of the Labor Code of the Philippines and
brought it within the purview of Civil Law.
Indeed, jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must have a
reasonable causal connection with any of the claims provided for in that article. Only if there is such a connection with the other claims can a claim for
damages be considered as arising from employer-employee relations.
Article 217, as amended by Section 9 of RA 6715, provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the Labor Arbiters shall
have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or
non-agricultural:
xxx
xxx
xxx
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;"
xxx
xxx
xxx
In San Miguel Corporation vs. National Labor Relations Commission, we had occasion to construe Article 217, as amended by B.P. Blg. 227. Article 217
then provided that the Labor Arbiter had jurisdiction over all money claims of workers, but the phrase arising from employer-employee relation was
deleted. We ruled thus:
While paragraph 3 above refers to all money claims of workers, it is not necessary to suppose that the entire universe of money claims that might be
asserted by workers against their employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. In the first place,
paragraph 3 should be read not in isolation from but rather within the context formed by paragraph 1 (relating to unfair labor practices), paragraph 2
(relating to claims concerning terms and conditions of employment), paragraph 4 (claims relating to household services, a particular species of
employer-employee relations), and paragraph 5 (relating to certain activities prohibited to employees or employers). It is evident that there is a unifying
element which runs through paragraph 1 to 5 and that is, that they all refer to cases or disputes arising out of or in connection with an employeremployee relationship. This is, in other words, a situation where the rule of noscitur a sociis may be usefully invoked in clarifying the scope of paragraph
3, and any other paragraph of Article 217 of the Labor Code, as amended. We reach the above conclusion from an examination of the terms
themselves of Article 217, as last amended by B.P. Blg 227, and even though earlier versions of Article 217 of the Labor Code expressly brought within
the jurisdiction of the Labor Arbiters and the NLRC cases arising from employer-employee relations, which clause was not expressly carried over, in
printers ink, in Article 217 as it exists today. For it cannot be presumed that money claims of workers which do not arise out of or in connection with
their employer-employee relationship, and which would therefore fall within the general jurisdiction of regular courts of justice, were intended by the

219

legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore,
believes and so holds that the money claims of workers referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in
connection with the employer-employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of
workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal
connection with the employer-employee relationship.
When, as here, the cause of action is based on a quasi-delict or tort, which has no reasonable causal connection with any of the claims provided for in
Article 217, jurisdiction over the action is with the regular courts.
It is basic that jurisdiction over the subject matter is determined upon the allegations made in the complaint, irrespective of whether or not the plaintiff is
entitled to recover upon the claim asserted therein, which is a matter resolved only after and as a result of a trial. Neither can jurisdiction of a court be
made to depend upon the defenses made by a defendant in his answer or motion to dismiss. If such were the rule, the question of jurisdiction would
depend almost entirely upon the defendant.
DUTY FREE PHILIPPINES VS. MOJICA;
G.R. No. 166365; September 30, 2005
Facts:
The Discipline Committee of Duty Free Philippines (DFP) on November 28, 2007 found Stock Clerk Rossano A. Mojica guilty of Neglect of Duty by
causing considerable damage to or loss of materials, assets and property of DFP. Thus, Mojica was considered forcibly resigned from the service with
forfeiture of all benefits except his salary and the monetary value of the accrued leave credits. He was formally informed of his forced resignation on
January 14, 1998. Thereupon, he filed a complaint for illegal dismissal with prayer for reinstatement, payment of full back wages, damages, and
attorneys fees, against DFP before the National Labor Relations Commission (NLRC).
The Labor Arbiter rendered a decision finding that Mojica was illegally dismissed. The NLRC later reversed the ruling of the arbiter. The CA sustained
the ruling of the arbiter.
Issue:
WON the Labor Arbiter and the NLRC had jurisdiction to decide the case
Held:
NO. Mojica is a civil service employee; therefore, jurisdiction is lodged not with the NLRC, but with the Civil Service Commission.
DFP was created under Executive Order (EO) No. 46 on September 4, 1986 primarily to augment the service facilities for tourists and to generate
foreign exchange and revenue for the government. In order for the government to exercise direct and effective control and regulation over the tax and
duty free shops, their establishment and operation was vested in the Ministry, now Department of Tourism (DOT), through its implementing arm, the
Philippine Tourism Authority (PTA). All the net profits from the merchandising operations of the shops accrued to the DOT.
As provided under Presidential Decree (PD) No. 564, PTA is a corporate body attached to the DOT. As an attached agency, the recruitment, transfer,
promotion and dismissal of all its personnel was governed by a merit system established in accordance with the civil service rules. In fact, all PTA
officials and employees are subject to the Civil Service rules and regulations.
Accordingly, since DFP is under the exclusive authority of the PTA, it follows that its officials and employees are likewise subject to the Civil Service
rules and regulations. Clearly then, Mojicas recourse to the Labor Arbiter was not proper. He should have followed the procedure laid down in DFPs
merit system and the Civil Service rules and regulations.
In sum, the labor arbiter and the NLRC erred in taking cognizance of the complaint as jurisdiction over the complaint for illegal dismissal is lodged with
the Civil Service Commission. The Court of Appeals likewise erred in sustaining the labor arbiter.
EASYCALL COMMUNICATION PHILS. VS. KING;
G.R. No. 145901; December 15, 2005
Facts:
Easycall Communications Phils., Inc. was a domestic corporation primarily engaged in the business of message handling. Petitioner, through its general
manager, Roberto B. Malonzo, hired the services of respondent as assistant to the general manager which became vice-president for nationwide
expansion.
Malonzo reviewed the sales performance of respondent. He also scrutinized the status of petitioners Nationwide Expansion Program (NEP) which was
under respondents responsibility. He found that respondents actual sales for the period October 1992March 1993 was 78% of his sales commitment
and 70% of his sales target.
Malonzo also checked the frequency and duration of the provincial sales development visits made by respondent for the same period to expansion
areas under his jurisdiction. He discovered that the latter spent around 40% of the total number of working days for that period in the field.

220

Rockwell Gohu, petitioners deputy general manager, talked to respondent to discuss his sales performance. In the course of the conversation, Gohu
informed respondent that Malonzo wanted his resignation. This prompted respondent to write a memorandum to Malonzo. In his memorandum, he
inquired whether Malonzo really wanted him to resign. He emphasized that his work performance had yet to be evaluated. He also stated that, based
on the approved budget for fiscal year ending in June 1993, he was within the budget and targets set forth by petitioner. He further declared that he had
no intention of resigning from his position.
Respondent received a notice of termination signed by Malonzo.
Issue:
Whether the termination was valid or not.
Held:
While loss of confidence is a valid ground for dismissing an employee, it should not be simulated. It must not be indiscriminately used as a shield by the
employer against a claim that the dismissal of an employee was arbitrary.
To be a valid ground for an employees dismissal, loss of trust and confidence must be based on a willful breach 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. Thus, a willful breach cannot be a breach resulting from mere carelessness.
In this case, the labor arbiters finding, affirmed by the NLRC, was that the sales record of respondent and the time he spent in the field were clear
indications of complainants inefficiency and/or negligence. Inefficiency implies negligence, incompetence, ignorance and carelessness. Negligence is
the want or lack of care required by the circumstances.
The grounds cited by petitioner, i.e., respondents alleged poor sales performance and the allegedly excessive time he spent in the field, were not
sufficient to support a claim of loss of confidence as a ground for dismissal.
Furthermore, the alleged loss of confidence was not founded on clearly established facts. First, petitioner included the sales performance of respondent
for the period covering October 1992 to December 1992 in arriving at the conclusion that his sales record was dismal. However, as the CA correctly
pointed out, petitioner previously recognized that respondents performance for that period was not merely satisfactory but more than extra-ordinary
that it merited his promotion not only to the position of assistant vice president, to which he was recommended by his supervisor, but to the even higher
position of vice president. This self-contradictory position of petitioner negates its claim of loss of confidence in repondent.
Moreover, the promotion of an employee negates the employers claim that it has lost its trust and confidence in the employee. Hence, petitioners claim
of loss of confidence crumbles in the light of respondents promotion not only to assistant vice-president but to the even higher position of vicepresident.
Second, the sales record of respondent for the period October 1992December 1992 was recognized as so exemplary that it merited his promotion.
Later, however, this very same record was suddenly deemed poor and dismal to justify loss of confidence. Thus, petitioner interpreted one and the
same sales record as proof of respondents simultaneous efficiency and inefficiency. This could only mean that there was no sufficient standard with
which to measure the performance of respondent, an indication of the arbitrariness of petitioner.
Finally, during the hearing of this case before the labor arbiter, Malonzo stated that the percentage of the time spent by respondent in his sales area
was actually not below par. This admission of petitioners general manager only proves all the more the lack of sufficient standard for determining
respondents performance.
The lack of just cause in respondents dismissal was aggravated by the absence of due process.
The twin requirements of notice and hearing constitute the essential elements of due process. The law requires the employer to furnish the employee
sought to be dismissed with two written notices before termination of employment can be legally effected: (1) a written notice apprising the employee of
the particular acts or omissions for which his dismissal is sought in order to afford him an opportunity to be heard and to defend himself with the
assistance of counsel, if he desires, and (2) a subsequent notice informing the employee of the employers decision to dismiss him. This procedure is
mandatory and its absence taints the dismissal with illegality.
In this case, respondent was served with one notice only the notice of his termination. The series of dialogues between petitioners management and
respondent was not enough as it failed to show that the latter was apprised of the cause of his dismissal. These dialogues or consultations could not
validly substitute for the actual observance of notice and hearing.
SAN MIGUEL FOODS INC. VS. SAN MIGUEL CORP EMPLOYEES UNION PTGWO;
G.R. No. 168569; October 5, 2007
Facts:
San Miguel Corporation Employees Union PTWGO (the Union), was the sole bargaining agent of all the monthly paid employees of petitioner San
Miguel Foods, Incorporated (SMFI). On November 9, 1992, some employees of SMFIs Finance Department, through the Union represented by Edgar
Moraleda, brought a grievance against Finance Manager Gideon Montesa (Montesa), for discrimination, favoritism, unfair labor practices, not flexible
[sic], harassment, promoting divisiveness and sectarianism, etc.,before SMFI Plant Operations Manager George Nava in accordance with Step 1 of
the grievance machinery adopted in the Collective Bargaining Agreement (CBA) forged by SMFI and the Union.

221

The Union sought the 1. review, evaluat[ion] & upgrad[ing of] all Finance staff and 2. promot[ion of] G.Q. Montesa to other SMC affiliate[s] &
subsidiaries.
At the grievance meeting held on January 14, 1993, SMFI informed the Union that it planned to address the grievance through a work management
review which would be completed by March 1993, hence, it asked the finance personnel to give it their attention and cooperation. The work
management review was not completed by March 1993, however, prompting the Union to, on March 26, 1993, elevate the grievance to Step 2
Almost nine months after the grievance meeting was held or on October 6, 1993, SMFI rendered a Decision on Step 1 Grievance stating that it was
still in the process of completing the work management review,[4] hence, the Unions requests could not be granted.
The Union thereupon filed a complaint on October 20, 1993 before the National Labor Relations Commission (NLRC), Arbitration Branch, against SMFI,
[5] its President Amadeo P. Veloso, and its Finance Manager Montesa for unfair labor practice, [and] unjust discrimination in matters of promotion . . .
It prayed that SMFI et al. be ordered to promote the therein named employees with the corresponding pay increases or adjustment including payment
of salary differentials plus attorneys fees[,] and to cease and desist from committing the same unjust discrimination in matters of promotion.
Instead of filing a position paper as required by the Labor Arbiter, SMFI et al. filed a motion to dismiss, contending that the Issue raised in the complaint
were grievance Issue and, therefore, should be resolved in the grievance machinery provided in [the] collective bargaining agreements [sic] of the
parties or in the mandated provision of voluntary arbitration which is also provided in the CBA.[9] The Union opposed the motion to dismiss.
In its Position Paper, the Union specified acts of ULP of SMFI et al. under Article 248, paragraphs (e) and (i) of the Labor Code[10] which Article reads:
Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair labor practices:
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage
membership in any labor organization. x x x
xxxx
(i) To violate a collective bargaining agreement.
xxxx
Held:
The jurisdiction of Labor Arbiters, enumerated in Article 217 of the Labor Code, includes complaints for ULP.
As stated above, the Union, in its Position Paper, mentioned the particular acts of ULP and the ultimate facts in support thereof.
1. large scale and wanton unjust discrimination in matters of promotion, particularly upon the following members of complainant: Ellen
Ventura, Julie Geronimo, Ronnie Cruz, Rita Calasin, Romy de Peralta, Malou Alano, And E. M. Moraleda, all assigned with the Finance
Department or respondent SMFI.
2. gross and blatant violations by respondent SMFI of Section 5, Article III (Job Security) and Section 4, Article VIII (Grievance Machinery)
of the current collective bargaining agreement (CBA) between complainant and respondent SMFI, which provisions of said CBA are
hereunder quoted for easy reference. (Emphasis and underscoring supplied)
On the questioned promotions, the Union did not allege that they were done to encourage or discourage membership in a labor organization. In fact,
those promoted were members of the complaining Union. The promotions do not thus amount to ULP under Article 248(e) of the Labor Code.
As for the alleged ULP committed under Article 248(i), for violation of a CBA, this Article is qualified by Article 261 of the Labor Code, the pertinent
portion of which latter Article reads:
x x x violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and
shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. (Emphasis and underscoring
supplied)
Silva v. NLRC instructs that for aULP case to be cognizable by the Labor Arbiter, and the NLRC to exercise its appellate jurisdiction, the allegations in
the complaint should show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; AND (2) the violation pertains to the
economic provisions of the CBA.[17] (Emphasis and underscoring supplied)
As reflected in the above-quoted allegations of the Union in its Position Paper, the Union charges SMFI to have violated the grievance machinery
provision in the CBA. The grievance machinery provision in the CBA is not an economic provision, however, hence, the second requirement for a Labor
Arbiter to exercise jurisdiction of a ULP is not present.
The Union likewise charges SMFI, however, to have violated the Job Security provision in the CBA, specifically the seniority rule, in that SMFI
appointed less senior employees to positions at its Finance Department, consequently intentionally by-passing more senior employees who are
deserving of said appointment.
Article 4 of the Labor Code provides that All doubts in the implementation and interpretation of the provisions of this Code, including implementing rules
and regulations, shall be resolved in favor of labor. Since the seniority rule in the promotion of employees has a bearing on salary and benefits, it may,
following a liberal construction of Article 261 of the Labor Code, be considered an economic provision of the CBA.

222

As above-stated, the Union charges SMFI to have promoted less senior employees, thus bypassing others who were more senior and equally or more
qualified. It may not be seriously disputed that this charge is a gross or flagrant violation of the seniority rule under the CBA, a ULP over which the
Labor Arbiter has jurisdiction.
SMFI, at all events, questions why the Court of Appeals came out with a finding that it (SMFI) disregarded the seniority rule under the CBA when its
petition before said court merely raised a question of jurisdiction. The Court of Appeals having affirmed the NLRC decision finding that the Labor Arbiter
has jurisdiction over the Unions complaint and thus remanding it to the Labor Arbiter for continuation of proceedings thereon, the appellate courts said
finding may be taken to have been made only for the purpose of determining jurisdiction.
LEYTE IV ELECTRIC COOPERATIVE, INC. VS. LEYECO IV EMPLOYEES UNION-ALU;
G.R. No. 157745; October 19, 2007
Facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU (respondent) entered into a CBAS covering
petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998.
On June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all
employees, as provided for in the CBA.
On June 20, 2000, petitioner, through its legal counsel, sent a letter-reply to Casilan, explaining that after perusing all available pay slips, it found that it
had paid all employees all the holiday pays enumerated in the CBA.
After exhausting the procedures of the grievance machinery, the parties agreed to submit the Issue of the interpretation and implementation of Section
2, Article VIII of the CBA on the payment of holiday pay, for arbitration of the National Conciliation and Mediation Board (NCMB), Regional Office No.
VIII in Tacloban City.[6] The parties were required to submit their respective position papers, after which the dispute was submitted for decision.
While admitting in its Position Paper[7] that the employees were paid all of the days of the month even if there was no work, respondent alleged that it is
not prevented from making separate demands for the payment of regular holidays concomitant with the provisions of the CBA, with its supporting
documents consisting of a letter demanding payment of holiday pay, petitioner's reply thereto and respondent's rejoinder, a computation in the amount
of P1,054,393.07 for the unpaid legal holidays, and several pay slips.
Petitioner, on the other hand, in its Position Paper,[8] insisted payment of the holiday pay in compliance with the CBA provisions, stating that payment
was presumed since the formula used in determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by 30 days or
Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the employees are already paid their regular and special days, the
days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a Decision[9] in favor of respondent, holding petitioner liable for payment of
unpaid holidays from 1998 to 2000 in the sum of P1,054,393.07. He reasoned that petitioner miserably failed to show that it complied with the CBA
mandate that holiday pay be reflected during any payroll period of occurrence since the payroll slips did not reflect any payment of the paid holidays.
He found unacceptable not only petitioner's presumption of payment of holiday pay based on a formula used in determining and computing the daily
rate of each covered employee, but also petitioner's further submission that the rate of its employees is not less than the statutory minimum wage
multiplied by 365 days and divided by twelve.
On April 11, 2001, petitioner filed a Motion for Reconsideration[10] but it was denied by the Voluntary Arbitrator in a Resolution dated June 17, 2002.
Petitioner received said Resolution on June 27, 2002.[12]
Thirty days later, or on July 27, 2002 petitioner filed a Petition for Certiorariin the CA, ascribing grave abuse of discretion amounting to lack of
jurisdiction to the Voluntary Arbitrator: (a) for ignoring that in said company the divisor for computing the applicable daily rate of rank-and-file employees
is 360 days which already includes payment of 13 un-worked regular holidays under Section 2, Article VIII of the CBA; and (b) for holding the
petitioner liable for the unpaid holidays just because the payroll slips submitted as evidence did not show any payment for the regular holidays. In a
Resolution dated September 4, 2002, the CA dismissed outright petitioner's Petition for Certiorari for adopting a wrong mode of appeal. It reasoned:
Considering that what is assailed in the present recourse is a Decision of a Voluntary Arbitrator, the proper remedy is a petition for review under Rule 43
of the 1997 Rules of Civil Procedure; hence, the present petition for certiorari under Rule 65 filed on August 15, 2002, should be rejected, as such a
petition cannot be a substitute for a lost appeal. And in this case, the period for appeal via a petition for review has already lapsed since the petitioner
received a copy of the Resolution denying its motion for reconsideration on June 27, 2002, so that its last day to appeal lapsed on July 12, 2002.
Held:
It has long been settled in the landmark case Luzon Development Bank that a voluntary arbitrator, whether acting solely or in a panel, enjoys in law the
status of a quasi-judicial agency; hence, his decisions and awards are appealable to the CA. This is so because the awards of voluntary arbitrators
become final and executory upon the lapse of the period to appeal;[27] and since their awards determine the rights of parties, their decisions have the
same effect as judgments of a court. Therefore, the proper remedy from an award of a voluntary arbitrator is a petition for review to the CA, following
Revised Administrative Circular No. 1-95, which provided for a uniform procedure for appellate review of all adjudications of quasi-judicial entities, which
is now embodied in Section 1, Rule 43 of the 1997 Rules of Civil Procedure, which reads:

223

SECTION 1. Scope. This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards,
judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among
these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of
the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and
Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission,
Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments,
Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law.[28] (Emphasis supplied)
Section 2, Rule 43 of the 1997 Rules of Civil Procedure which provides that:
SEC. 2. Cases not covered. - This Rule shall not apply to judgments or final orders issued under the Labor Code of the Philippines.
It did not alter the Court's ruling in Luzon Development Bank. Section 2, Rule 42 of the 1997 Rules of Civil Procedure, is nothing more than a reiteration
of the exception to the exclusive appellate jurisdiction of the CA,[29] as provided for in Section 9, Batas Pambansa Blg. 129,[30] as amended by
Republic Act No. 7902:[31]
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Employees Compensation Commission and the Civil
Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of
the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development Bank but, nevertheless, held that the decisions of voluntary arbitrators issued
pursuant to the Labor Code do not come within its ambit, thus:
x x x. The fact that [the voluntary arbitrators] functions and powers are provided for in the Labor Code does not place him within the
exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the Employees
Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is the forerunner of the present Revised
Administrative Circular No. 1-95, laid down the procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the
procedure outlined in Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute.
Nor will it run counter to the legislative intendment that decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the cases
within the adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter.[32]
This ruling has been repeatedly reiterated in subsequent cases[33] and continues to be the controlling doctrine. Thus, the general rule is that the
proper remedy from decisions of voluntary arbitrators is a petition for review under Rule 43 of the Rules of Court.
Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the tribunal, board
or officer exercising judicial or quasi-judicial functions acted in total disregard of evidence material to or decisive of the controversy.[34] As this Court
elucidated in Garcia v. National Labor Relations Commission[35] [I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings complained of are not supported by the evidence on
record. Earlier, in Gutib v. Court of Appeals, we emphasized thus:
[I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari proceedings. The cases in which certiorari will issue cannot
be defined, because to do so would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that authority is not
wanting to show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our superintending control over inferior
courts, we are to be guided by all the circumstances of each particular case as the ends of justice may require. So it is that the writ will be granted
where necessary to prevent a substantial wrong or to do substantial justice.
In addition, while the settled rule is that an independent action for certiorari may be availed of only when there is no appeal or any plain, speedy and
adequate remedy in the ordinary course of law[37] and certiorari is not a substitute for the lapsed remedy of appeal,[38] there are a few significant
exceptions when the extraordinary remedy of certiorari may be resorted to despite the availability of an appeal, namely: (a) when public welfare and the
advancement of public policy dictate; (b) when the broader interests of justice so require; (c) when the writs issued are null; and (d) when the
questioned order amounts to an oppressive exercise of judicial authority.
In this case, while the petition was filed on July 27, 2002,[40] 15 days after July 12, 2002, the expiration of the 15-day reglementary period for filing an
appeal under Rule 43, the broader interests of justice warrant relaxation of the rules on procedure. Besides, petitioner alleges that the Voluntary
Arbitrators conclusions have no basis in fact and in law; hence, the petition should not be dismissed on procedural grounds.

224

The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions that the holiday pay be reflected in
the payroll slips. Such literal interpretation ignores the admission of respondent in its Position Paper[41] that the employees were paid all the days of
the month even if not worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of employees salaries gains
significance.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum allowable divisor is 263, which is arrived at by
deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly
above the minimum, indubitably, petitioner's employees are being given their holiday pay.
Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting respondent's claim of non-payment of
holiday pay, a double burden was imposed upon petitioner because it was being made to pay twice for its employees' holiday pay when payment
thereof had already been included in the computation of their monthly salaries. Moreover, it is absurd to grant respondent's claim of non-payment when
they in fact admitted that they were being paid all of the days of the month even if not worked. By granting respondent's claim, the Voluntary Arbitrator
sanctioned unjust enrichment in favor of the respondent and caused unjust financial burden to the petitioner. Obviously, the Court cannot allow this.
ATTY. GARCIA VS. EASTERN TELECOMMUNICATIONS PHILS., ET AL.;
G.R. No. 173115 & 173163-64; April 16, 2009
Facts:
Atty. Virgilio R. Garcia was the Vice President and Head of Business Support Services and Human Resource Departments of the Eastern
Telecommunications Philippines, Inc. (ETPI). Atty. Garcia was placed under preventive suspension based on three complaints for sexual harassment
filed by Atty. Maria Larrie Alinsunurin, former manager of ETPIs Office of the Legal Counsel; Ms. Emma Valeros-Cruz, Assistant Vice President of ETPI
and former secretary of Atty. Garcia; and Dr. Mercedita M. Macalintal, medical retainer/company physician of ETPI. In response to the complaints, the
Human Resources Department constituted a Committee on Decorum to investigate the complaints. By reason of said complaints, Atty. Garcia was
placed in preventive suspension. The committee conducted an investigation where Atty. Garcia was given copies of affidavits of the witnesses against
him and a chance to defend himself and to submit affidavits of his witnesses. The Committee submitted a report which recommended his dismissal. In a
letter dated 14 April 2000, Atty. Hizon advised Atty. Garcia that his employment with ETPI was, per recommendation of the Committee, terminated
effective 16 April 2000.
The Labor Arbiter Reyes found the preventive suspension and subsequent dismissal of Atty. Garcia illegal. On 21 March 2003, the NLRC rendered its
decision in NLRC NCR CA Case No. 028901-01 reversing the decision of Labor Arbiter Reyes and dismissing the case for lack of jurisdiction. The
decretal portion of the decision reads: The Commission ruled that the dismissal of Atty. Garcia, being ETPIs Vice President, partook of the nature of an
intra-corporate dispute cognizable by Regional Trial Courts and not by Labor Arbiters. It added that ETPI and Atty. Hizon were not barred by estoppel
from challenging the jurisdiction of the Labor Arbiter over the instant case.
Atty. Garcia moved for the reconsideration of the decision, which ETPI and Atty. Hizon opposed.In a resolution dated 16 December 2003, the motion for
reconsideration was denied for lack of merit.On 3 April 2003, the NLRC made permanent the TRO it issued pursuant to its ruling in NLRC NCR CA
Case No. 028901-01, that since the Labor Arbiter had no jurisdiction over the case, the decision of the Labor Arbiter dated 30 September 2002 was
void.On 6 March 2004, the resolution dated 16 December 2003 became final and executory. Consequently, on 14 June 2004, an entry of judgment
was made recording said resolution in the Book of Entries of Judgments.
The CA ruled that Atty. Garcia, being the Vice President for Business Support Services and Human Resource Departments of ETPI, was a corporate
officer at the time he was removed. Being a corporate officer, his removal was a corporate act and/or an intra-corporate controversy, the jurisdiction of
which rested with the Securities and Exchange Commission (now with the Regional Trial Court), and not the Labor Arbiter and the NLRC. It added that
ETPI and Atty. Hizon were not estopped from questioning the jurisdiction of the Labor Arbiter before the NLRC on appeal, inasmuch as said issue was
seasonably raised by ETPI and Atty. Hizon in their reply memorandum before the Labor Arbiter. On 18 April 2006, Atty. Garcia filed his Motion for
Reconsideration. On 20 April 2006, ETPI and Atty. Hizon filed a Motion for Partial Reconsideration.The parties filed their respective comments thereon.
On 14 June 2006, the Court of Appeals denied the motions for reconsideration.
Atty. Garcia is now before us via a Petition for Review, which he filed on 3 August 2006.The petition was docketed as G.R. No. 173115. On 8 August
2006, he filed an Amended Petition for Review.He prays that the decision of the NLRC dated 21 March 2003 and its resolution dated 16 December
2003, and the decision of the Court of Appeals dated 24 March 2006 and its resolution dated 14 June 2006, be reconsidered and set aside and that the
decision of the Labor Arbiter dated 30 September 2002 be affirmed and reinstated.
Issue:
WHETHER THE QUESTION OF LEGALITY OR ILLEGALITY OF THE REMOVAL OR TERMINATION OF EMPLOYMENT OF AN OFFICER OF A
CORPORATION IS AN INTRA-CORPORATE CONTROVERSY THAT FALLS UNDER THE ORIGINAL EXCLUSIVE JURISDICTION OF THE
REGIONAL TRIAL COURTS?
Held:
The issue raised by Atty. Garcia whether the termination or removal of an officer of a corporation is an intra-corporate controversy that falls under the
original exclusive jurisdiction of the regional trial courts is not novel. The Supreme Court, in a long line of cases, has decreed that a corporate officers
dismissal or removal is always a corporate act and/or an intra-corporate controversy, over which the Securities and Exchange Commission [SEC] (now
the Regional Trial Court) has original and exclusive jurisdiction.

225

We have ruled that an intra-corporate controversy is one which pertains to any of the following relationships: (1) between the corporation, partnership or
association and the public; (2) between the corporation, partnership or association and the State insofar as the formers franchise, permit or license to
operate is concerned; (3) between the corporation, partnership or association and its stockholders, partners, members or officers; and (4) among the
stockholders, partners or associates themselves.In Lozon v. National Labor Relations Commission, we declared that Presidential Decree No. 902-A
confers on the SEC original and exclusive jurisdiction to hear and decide controversies and cases involving intra-corporate and partnership relations
between or among the corporation, officers and stockholders and partners, including their elections or appointments x x x. c
Before a dismissal or removal could properly fall within the jurisdiction of the SEC, it has to be first established that the person removed or dismissed
was a corporate officer. Corporate officers in the context of Presidential Decree No. 902-A are those officers of the corporation who are given that
character by the Corporation Code or by the corporations by-laws.There are three specific officers whom a corporation must have under Section 25 of
the Corporation Code.These are the president, secretary and the treasurer. The number of officers is not limited to these three. A corporation may have
such other officers as may be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of
corporate officers is thus limited by law and by the corporations by-laws.
In the case before us, the by-laws of ETPI provide:
ARTICLE V
Officers Section 1. Number. The officers of the Company shall be a Chairman of the Board, a President, one or more Vice-Presidents, a
Treasurer, a Secretary, an Assistant Secretary, and such other officers as may be from time to time be elected or appointed by the Board of
Directors. One person may hold any two compatible offices.
Atty. Garcia tries to deny he is an officer of ETPI. Not being a corporate officer, he argues that the Labor Arbiter has jurisdiction over the case. One of
the corporate officers provided for in the by-laws of ETPI is the Vice-President. It can be gathered from Atty. Garcias complaint-affidavit that he was Vice
President for Business Support Services and Human Resource Departments of ETPI when his employment was terminated effective 16 April 2000. It is
therefore clear from the by-laws and from Atty. Garcia himself that he is a corporate officer. One who is included in the by-laws of a corporation in its
roster of corporate officers is an officer of said corporation and not a mere employee.Being a corporate officer, his removal is deemed to be an intracorporate dispute cognizable by the SEC and not by the Labor Arbiter.
We agree with both the NLRC and the Court of Appeals that Atty. Garcias ouster as Vice-President, who is a corporate officer of ETPI, partakes of the
nature of an intra-corporate controversy, jurisdiction over which is vested in the SEC (now the RTC). The Labor Arbiter thus erred in assuming
jurisdiction over the case filed by Atty. Garcia, because he had no jurisdiction over the subject matter of the controversy.
Having ruled which body has jurisdiction over the instant case, we find it unnecessary, due to mootness, to further discuss and rule on the Issue raised
by ETPI and Atty. Hizon regarding the NLRC order dated 23 August 2004 granting Atty. Garcias Motion to Set Aside Finality of Judgment with
Opposition to Motion to Discharge Appeal Bond, and its resolution dated 10 January 2005 denying their motion for reconsideration thereon. The
decision of the Labor Arbiter, who had jurisdiction over the case, was properly dismissed by the NLRC. Consequently, Supersedeas Bond No. JCL (15)
00823 SICI Bond No. 75069 dated 18 November 2002, posted by ETPI as a requirement for the filing of an appeal before the NLRC, is ordered
discharged.
HALAGUENA ET AL., VS. PHIL AIRLINES;
G.R. No. 172013; October 2, 2009
Facts:
Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) on different dates prior to November 22, 1996. They are
members of the Flight Attendants and Stewards Association of the Philippines (FASAP), a labor organization certified as the sole and exclusive
bargaining representative of the flight attendants, flight stewards and pursers of respondent.
On July 11, 2001, respondent and FASAP entered into a Collective Bargaining Agreement[3] incorporating the terms and conditions of their agreement
for the years 2000 to 2005. Section 144, Part A of the PAL-FASAP CBA, provides that:
A. For the Cabin Attendants hired before 22 November 1996:
xxxx
3.
Compulsory Retirement
Subject to the grooming standards provisions of this Agreement, compulsory retirement shall be fifty-five (55) for females and sixty (60) for males. x x x.
Petitioners and several female cabin crews manifested that the aforementioned CBA provision on compulsory retirement is discriminatory, and
demanded for an equal treatment with their male counterparts. Hence, they filed a case with the RTC.
On August 9, 2004, the RTC issued an Orderupholding its jurisdiction over the present case. The RTC reasoned that:
In the instant case, the thrust of the Petition is Sec. 144 of the subject CBA which is allegedly discriminatory as it discriminates against
female flight attendants, in violation of the Constitution, the Labor Code, and the CEDAW. The allegations in the Petition do not make out a
labor dispute arising from employer-employee relationship as none is shown to exist. This case is not directed specifically against
respondent arising from any act of the latter, nor does it involve a claim against the respondent. Rather, this case seeks a declaration of the

226

nullity of the questioned provision of the CBA, which is within the Court's competence, with the allegations in the Petition constituting the
bases for such relief sought.
Upon appeal, The CA rendered a Decision, dated August 31, 2005, granting the respondent's petition, and ruled that the RTC is by us declared to have
NO JURISDICTION OVER THE CASE BELOW and, consequently, all the proceedings, orders and processes it has so far issued therein are
ANNULED and SET ASIDE.
Issue:
Whether the RTC has jurisdiction over the petitioners' action challenging the legality or constitutionality of the provisions on the compulsory retirement
age contained in the CBA between respondent PAL and FASAP.
Held:
The petition is meritorious. Jurisdiction of the court is determined on the basis of the material allegations of the complaint and the character of the relief
prayed for irrespective of whether plaintiff is entitled to such relief.
In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners' cause of action is the annulment of Section 144, Part
A of the PAL-FASAP CBA.
From the petitioners' allegations and relief prayed for in its petition, it is clear that the issue raised is whether Section 144, Part A of the PAL-FASAP
CBA is unlawful and unconstitutional. Here, the petitioners' primary relief in Civil Case No. 04-886 is the annulment of Section 144, Part A of the PALFASAP CBA, which allegedly discriminates against them for being female flight attendants. The subject of litigation is incapable of pecuniary
estimation, exclusively cognizable by the RTC, pursuant to Section 19 (1) of Batas Pambansa Blg. 129, as amended. Being an ordinary civil action, the
same is beyond the jurisdiction of labor tribunals.
The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of the Constitution, labor statutes, law on
contracts and the Convention on the Elimination of All Forms of Discrimination Against Women, and the power to apply and interpret the constitution
and CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction.
In Georg Grotjahn GMBH & Co. v. Isnani, this Court held that not every dispute between an employer and employee involves matters that only labor
arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under
Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the
Labor Code, other labor statutes, or their collective bargaining agreement.
In Eviota v. Court of Appeals, Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter. Actions between employees and employer where the employer-employee relationship is merely incidental and the cause
of action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court. Here, the employer-employee relationship
between the parties is merely incidental and the cause of action ultimately arose from different sources of obligation, i.e., the Constitution and CEDAW.
Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining
agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the labor arbiter and the
NLRC. In such situations, resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and
conditions of employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of competence or expertise
ordinarily ascribed to labor arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears.
If we divest the regular courts of jurisdiction over the case, then which tribunal or forum shall determine the constitutionality or legality of the assailed
CBA provision?
This Court holds that the grievance machinery and voluntary arbitrators do not have the power to determine and settle the Issue at hand. They have no
jurisdiction and competence to decide constitutional Issue relative to the questioned compulsory retirement age. Their exercise of jurisdiction is futile, as
it is like vesting power to someone who cannot wield it.
In Saura v. Saura, Jr., this Court emphasized the primacy of the regular court's judicial power enshrined in the Constitution that is true that the trend is
towards vesting administrative bodies like the SEC with the power to adjudicate matters coming under their particular specialization, to insure a more
knowledgeable solution of the problems submitted to them. This would also relieve the regular courts of a substantial number of cases that would
otherwise swell their already clogged dockets. But as expedient as this policy may be, it should not deprive the courts of justice of their power to decide
ordinary cases in accordance with the general laws that do not require any particular expertise or training to interpret and apply. Otherwise, the
creeping take-over by the administrative agencies of the judicial power vested in the courts would render the judiciary virtually impotent in the discharge
of the duties assigned to it by the Constitution.
To be sure, in Rivera v. Espiritu, after Philippine Airlines (PAL) and PAL Employees Association (PALEA) entered into an agreement, which includes the
provision to suspend the PAL-PALEA CBA for 10 years, several employees questioned its validity via a petition for certiorari directly to the Supreme
Court. They said that the suspension was unconstitutional and contrary to public policy. Petitioners submit that the suspension was inordinately long,
way beyond the maximum statutory life of 5 years for a CBA provided for in Article 253-A of the Labor Code. By agreeing to a 10-year suspension,
PALEA, in effect, abdicated the workers' constitutional right to bargain for another CBA at the mandated time. In that case, this Court denied the petition
for certiorari, ruling that there is available to petitioners a plain, speedy, and adequate remedy in the ordinary course of law. The Court said that while
the petition was denominated as one for certiorari and prohibition, its object was actually the nullification of the PAL-PALEA agreement. As such,

227

petitioners' proper remedy is an ordinary civil action for annulment of contract, an action which properly falls under the jurisdiction of the regional trial
courts.
The trial court in this case is not asked to interpret Section 144, Part A of the PAL-FASAP CBA. Interpretation, as defined in Black's Law Dictionary, is
the art of or process of discovering and ascertaining the meaning of a statute, will, contract, or other written document. The provision regarding the
compulsory retirement of flight attendants is not ambiguous and does not require interpretation. Neither is there any question regarding the
implementation of the subject CBA provision, because the manner of implementing the same is clear in itself. The only controversy lies in its intrinsic
validity.
The rule is settled that pure questions of fact may not be the proper subject of an appeal by certiorari under Rule 45 of the Revised Rules of Court. This
mode of appeal is generally limited only to questions of law which must be distinctly set forth in the petition. The Supreme Court is not a trier of facts.
The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory or not is a question of fact. A full-blown trial is necessary,
which jurisdiction to hear the same is properly lodged with the the RTC. Therefore, a remand of this case to the RTC for the proper determination of the
merits of the petition for declaratory relief is just and proper
OKOL VS. SLIMMERS WORLD INTERNATIONAL ET AL.;
G.R. No. 160146; December 11, 2009
Facts:
Slimmers World International employed Leslie Okol as a management trainee on 15 June 1992. She rose up the ranks to become Head Office
Manager and then Director and Vice President from 1996 until her dismissal on 22 September 1999. Prior to Okols dismissal, Slimmers World
preventively suspended Okol because the seizure by the Bureau of Customs of equipments belonging to or consigned to Slimmers World. The
shipment of the equipment was placed under the names of Okol for being undervalued. Okol filed her written explanation, however, Slimmers World
found it to be unsatisfactory. Through a letter dated 22 September 1999 signed by its president Ronald Joseph Moy, Slimmers World terminated Okols
employment.
Okol filed a complaint with the Arbitration branch of the NLRC against Slimmers World, Behavior Modifications, Inc. and Moy (collectively called
respondents) for illegal suspension, illegal dismissal, unpaid commissions, damages and attorneys fees, with prayer for reinstatement and payment of
backwages. Respondents asserted that the NLRC had no jurisdiction over the subject matter of the complaint.The labor arbiter granted the motion to
dismiss. The labor arbiter ruled that Okol was the vice-president of Slimmers World at the time of her dismissal. Since it involved a corporate officer,
the dispute was an intra-corporate controversy falling outside the jurisdiction of the Arbitration branch.
Okol filed an appeal with the NLRC, which reversed and set aside the labor arbiters order. Respondents contended that the relief prayed for was
confined only to the question of jurisdiction. The NLRC denied the motion for lack of merit. The appellate court set aside the NLRCs Resolution and
affirmed the labor arbiters Order. It ruled that the case, being an intra-corporate dispute, falls within the jurisdiction of the regular courts pursuant to
Republic Act No. 8799 and that the NLRC had acted without jurisdiction in giving due course to the complaint and deprived respondents of their right to
due process in deciding the case on the merits.
Issue:
Whether or not the NLRC has jurisdiction over the illegal dismissal case filed by petitioner (whether or not the petitioner was an employee or a
corporate officer of Slimmers World)
Held:
The petition lacks merit. Petitioner insists that the Court of Appeals erred in ruling that she was a corporate officer and that the case is an intracorporate dispute falling within the jurisdiction of the regular courts. Petitioner asserts that even as vice-president, the work that she performed
conforms to that of an employee rather than a corporate officer. Mere title or designation in a corporation will not, by itself, determine the existence of
an employer-employee relationship. It is the four-fold test, namely (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4)
the power to control, which must be applied.
Petitioner enumerated the instances that she was under the power and control of Moy, Slimmers Worlds president: (1) petitioner received salary
evidenced by pay slips, (2) Moy deducted Medicare and SSS benefits from petitioners salary, and (3) petitioner was dismissed from employment not
through a board resolution but by virtue of a letter from Moy. Thus, having shown that an employer-employee relationship exists, the jurisdiction to hear
and decide the case is vested with the labor arbiter and the NLRC.
Respondents maintain that petitioner was a corporate officer at the time of her dismissal from Slimmers World as supported by the General Information
Sheet and Directors Affidavit attesting that petitioner was an officer. Also, the factors cited by petitioner that she was a mere employee do not prove
that she was not an officer of Slimmers World. Even the alleged absence of any resolution of the Board of Directors approving petitioners termination
does not constitute proof that petitioner was not an officer. Respondents assert that petitioner was not only an officer but also a stockholder and
director; which facts provide further basis that petitioners separation from Slimmers World does not come under the NLRCs jurisdiction.
The issue is whether petitioner was an employee or a corporate officer of Slimmers World. Section 25 of the Corporation Code enumerates corporate
officers as the president, secretary, treasurer and such other officers as may be provided for in the by-laws. In Tabang v. NLRC, we held that an office
is created by the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an employee usually
occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also
determines the compensation to be paid to such employee.

228

The respondents, in their motion to dismiss filed before the labor arbiter, questioned the jurisdiction of the NLRC in taking cognizance of petitioners
complaint. In the motion, respondents attached the General Information Sheet (GIS), Minutes of the meeting of the Board of Directors and Secretarys
Certificate, and the Amended By-Lawsof Slimmers World as submitted to the SEC to show that petitioner was a corporate officer whose rights do not
fall within the NLRCs jurisdiction. The GIS and minutes of the meeting of the board of directors indicated that petitioner was a member of the board of
directors, holding one subscribed share of the capital stock, and an elected corporate officer.
Petitioner was a director and officer of Slimmers World. The charges of illegal suspension, illegal dismissal, unpaid commissions, reinstatement and
back wages imputed by petitioner against respondents fall squarely within the ambit of intra-corporate disputes. A corporate officers dismissal is
always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation. The question of remuneration
involving a stockholder and officer, not a mere employee, is not a simple labor problem but a matter that comes within the area of corporate affairs and
management and is a corporate controversy in contemplation of the Corporation Code.
Prior to its amendment, Section 5(c) PD 902-A provided that intra-corporate disputes fall within the jurisdiction of the Securities and Exchange
Commission (SEC). However, Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial
courts the SECs jurisdiction over all cases listed in Section 5 of PD 902-A:
5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to
the Courts of general jurisdiction or the appropriate Regional Trial Court. x x x
Jurisdiction over the subject matter is conferred by law. The determination of the rights of a director and corporate officer dismissed from his
employment as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts.
Thus, the appellate court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction over the present case.
HUGO ET AL. VS. LIGHT RAIL TRANSIT AUTHORITY;
G.R. No. 181866; March 18, 2010
Facts:
Respondent Light Rail Transit Authority (LRTA), a government-owned and controlled corporation, constructed a light rail transit system which traverses
from Baclaran in Paraaque City to Monumento in Kalookan City, Metro Manila pursuant to its mandate under its charter.
To effectively carry out its mandate, LRTA entered into a ten-year Agreement for the Management and Operation of the Metro Manila Light Rail Transit
System (the Agreement) from June 8, 1984 until June 8, 1994 with Metro Transit Organization, Inc. (METRO). One of the stipulations in the Agreement
was:
METRO shall be free to employ such employees and officers as it shall deem necessary in order to carry out the requirements of the Agreement. Such
employees and officers shall be the employees of METRO and not of LRTA. METRO shall prepare a compensation schedule for the salaries and fringe
benefits of its personnel
METRO thus hired its own employees including herein petitioners-members of the Pinag-isang Lakas ng Manggagawa sa METRO, Inc.-National
Federation of Labor, otherwise known as PIGLAS-METRO, INC.-NFL-KMU (the Union), the certified exclusive collective bargaining representative of
METROs rank-and-file employees.
LRTA later purchased the shares of stocks of METRO via Deed of Sale of June 9, 1989. The two entities, however, continued with their distinct and
separate juridical personalities such that when the ten-year Agreement expired on June 8, 1994, they renewed the same. On July 25, 2000, on
account of a deadlock in the negotiation for the forging of a new collective bargaining agreement between METRO and the Union, petitioners filed a
Notice of Strike before the National Conciliation and Mediation Board, National Capital Region (NCR). On even date, the Union went on strike,
completely paralyzing the operations of the light rail transit system.
Then Secretary of Labor Bienvenido E. Laguesma assumed jurisdiction over the conflict and directed the striking employees including herein petitioners
to immediately return to work and METRO to accept them back under the same terms and conditions of employment prevailing prior to the strike.
By LRTAs claim, the striking employees including petitioners defied the return-to-work order. Contradicting such claim, petitioners alleged that upon
learning of the order, they attempted to comply with it but the security guards of METRO barred them from entering their workplace for security reasons,
the latter being afraid that they (the striking employees) might sabotage the vital machineries and equipment of the light rail transit system.
When the Agreement expired on July 31, 2000, LRTA did not renew it. It instead took over the management and operations of the light rail transit
system, hiring new personnel for the purpose. METRO thus considered the employment of all its personnel terminated effective September 30, 2000.
Petitioners filed a complaint for illegal dismissal and unfair labor practice with prayer for reinstatement and damages against METRO and LRTA before
the NCR Arbitration Branch, National Labor Relations Commission (NLRC).
In impleading LRTA in their complaint, petitioners alleged that the "non-renewal of the [Agreement] is but an ingenious, albeit unlawful, scheme carried
out by the respondents to get rid of personnel they perceived as activists and troublemakers, thus, terminating the complainants without any just or
lawful cause."
LRTA filed a motion to dismiss the complaint on the ground that the Labor Arbiter and the NLRC have no jurisdiction over it, for, by petitioners own
admission, there was no employer-employee relationship between it and petitioners.
Issue:

229

Whether or not Labor Arbiter and the NLRC have jurisdiction over LRTA?
Held:
The Labor Arbiter and the NLRC do not have jurisdiction over LRTA. Petitioners themselves admitted in their complaint that LRTA "is a government
agency organized and existing pursuant to an original charter (Executive Order No. 603)," and that they are employees of METRO.
Light Rail Transit Authority v. Venus, Jr., which has a similar factual backdrop, holds that LRTA, being a government-owned or controlled corporation
created by an original charter, is beyond the reach of the Department of Labor and Employment which has jurisdiction over workers in the private
sector, viz:
. . . [E]mployees of petitioner METRO cannot be considered as employees of petitioner LRTA. The employees hired by METRO are covered by the
Labor Code and are under the jurisdiction of the Department of Labor and Employment, whereas the employees of petitioner LRTA, a governmentowned and controlled corporation with original charter, are covered by civil service rules. Herein private respondent workers cannot have the best of two
worlds, e.g., be considered government employees of petitioner LRTA, yet allowed to strike as private employees under our labor laws.
In sum, petitioner LRTA cannot be held liable to the employees of petitioner METRO.
MATLING INDUSTRIAL AND COMMERCIAL CORPORATION ET. AL. VS. COROS;
G.R. No. 157802; October 13, 2010
Facts:
After his dismissal by Matling as its Vice President for Finance and Administration, the respondent filed on August 10, 2000 a complaint for illegal
suspension and illegal dismissal against Matling and some of its corporate officers (petitioners) in the NLRC, Sub-Regional Arbitration Branch XII, Iligan
City.
The petitioners moved to dismiss the complaint, raising the ground, among others, that the complaint pertained to the jurisdiction of the Securities and
Exchange Commission (SEC) due to the controversy being intra-corporate inasmuch as the respondent was a member of Matlings Board of Directors
aside from being its Vice-President for Finance and Administration prior to his termination.
The petitioners contend that the position of Vice President for Finance and Administration was a corporate office, having been created by Matlings
President pursuant to By-Law No. V, as amended
In justification, they cite Tabang v. National Labor Relations Commission, which held that "other offices are sometimes created by the charter or by-laws
of a corporation, or the board of directors may be empowered under the by-laws of a corporation to create additional officers as may be necessary."
The respondent counters that Matlings By-Laws did not list his position as Vice President for Finance and Administration as one of the corporate
offices; that Matlings By-Law No. III listed only four corporate officers, namely: President, Executive Vice President, Secretary, and Treasurer; that the
corporate offices contemplated in the phrase "and such other officers as may be provided for in the by-laws" found in Section 25 of the Corporation
Code should be clearly and expressly stated in the By-Laws;
Issue:
Whether the respondent was a corporate officer of Matling or not. That whether the LA or the RTC had jurisdiction over his complaint for illegal
dismissal.
Held:
As a rule, the illegal dismissal of an officer or other employee of a private employer is properly cognizable by the LA. This is pursuant to Article 217 (a) 2
of the Labor Code, as amended, which provides as follows:
Article 217. Jurisdiction of the Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:
2. Termination disputes;
Where the complaint for illegal dismissal concerns a corporate officer, however, the controversy falls under the jurisdiction of the Securities and
Exchange Commission (SEC), because the controversy arises out of intra-corporate or partnership relations between and among stockholders,
members, or associates, or between any or all of them and the corporation, partnership, or association of which they are stockholders, members, or
associates, respectively; and between such corporation, partnership, or association and the State insofar as the controversy concerns their individual
franchise or right to exist as such entity; or because the controversy involves the election or appointment of a director, trustee, officer, or manager of
such corporation, partnership, or association.14 Such controversy, among others, is known as an intra-corporate dispute.
Effective on August 8, 2000, upon the passage of Republic Act No. 8799, 15 otherwise known as The Securities Regulation Code, the SECs jurisdiction
over all intra-corporate disputes was transferred to the RTC, pursuant to Section 5.2 of RA No. 8799.
Issue:
Whether or not the respondent is a corporate officer
Held:

230

We agree with respondent. Section 25 of the Corporation Code provides:

Section 25. Corporate officers, quorum.--Immediately after their election, the directors of a corporation must formally organize by the election of a
president, who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines, and
such other officers as may be provided for in the by-laws. Any two (2) or more positions may be held concurrently by the same person, except that no
one shall act as president and secretary or as president and treasurer at the same time.
Conformably with Section 25, a position must be expressly mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation
of an office pursuant to or under a By-Law enabling provision is not enough to make a position a corporate office. Guerrea v. Lezama, the first ruling on
the matter, held that the only officers of a corporation were those given that character either by the Corporation Code or by the By-Laws; the rest of the
corporate officers could be considered only as employees or subordinate officials.
Thus, it was held in Easycall Communications Phils., Inc. v. King:
An "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an employee
occupies no office and generally is employed not by the action of the directors or stockholders but by the managing officer of the corporation who also
determines the compensation to be paid to such employee.
In this case, respondent was appointed vice president for nationwide expansion by Malonzo, petitioner's general manager, not by the board of directors
of petitioner. It was also Malonzo who determined the compensation package of respondent. Thus, respondent was an employee, not a "corporate
officer." The CA was therefore correct in ruling that jurisdiction over the case was properly with the NLRC, not the SEC (now the RTC).
This interpretation is the correct application of Section 25 of the Corporation Code, which plainly states that the corporate officers are the President,
Secretary, Treasurer and such other officers as may be provided for in the By-Laws. Accordingly, the corporate officers in the context of PD No. 902-A
are exclusively those who are given that character either by the Corporation Code or by the corporations By-Laws.
Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate officers enumerated in the by-laws are the
exclusive Officers of the corporation and the Board has no power to create other Offices without amending first the corporate By-laws. However, the
Board may create appointive positions other than the positions of corporate Officers, but the persons occupying such positions are not
considered as corporate officers within the meaning of Section 25 of the Corporation Code and are not empowered to exercise the functions of
the corporate Officers, except those functions lawfully delegated to them. Their functions and duties are to be determined by the Board of
Directors/Trustees.
In Nacpil v. Intercontinental Broadcasting Corporation, which may be the more appropriate ruling, the position subject of the controversy was not
expressly mentioned in the By-Laws, but was created pursuant to a By-Law enabling provision authorizing the Board of Directors to create other offices
that the Board of Directors might see fit to create. The Court held there that the position was a corporate office, relying on the obiter dictum in Tabang.
MANILA ELECTRIC COMPANY ET. AL. VS. ROSARIO GOPEZ LIM;
G.R. No. 184769; October 5, 2010
Facts:
Rosario G. Lim (respondent), also known as Cherry Lim, is an administrative clerk at the Manila Electric Company (MERALCO). On June 4, 2008, an
anonymous letter was posted at the door of the Metering Office of the Administration building of MERALCO Plaridel, Bulacan Sector, at which
respondent is assigned, denouncing respondent
By Memorandum dated July 4, 2008, petitioner Alexander Deyto, Head of MERALCOs Human Resource Staffing, directed the transfer of respondent to
MERALCOs Alabang Sector in Muntinlupa as "A/F OTMS Clerk," effective July 18, 2008 in light of the receipt of " reports that there were accusations
and threats directed against [her] from unknown individuals and which could possibly compromise [her] safety and security."
Respondent addressed to petitioner Ruben A. Sapitula, Vice-President and Head of MERALCOs Human Resource Administration, appealed her
transfer and requested for a dialogue so she could voice her concerns and misgivings on the matter, claiming that the "punitive" nature of the transfer
amounted to a denial of due process. No response to her request having been received, respondent filed a petition for the issuance of a writ of habeas
data against petitioners before the Regional Trial Court (RTC) of Bulacan.
By respondents allegation, petitioners unlawful act and omission consisting of their continued failure and refusalto provide her with details or
information about the alleged report which MERALCO purportedly receivedconcerning threats to her safety and security amount to a violation of her
right to privacy in life, liberty and security, correctible by habeas data. Respondent thus prayed for the issuance of a writ commanding petitioners to file
a written return containing the following:
a) a full disclosure of the data or information about respondent in relation to the report purportedly received by petitioners on the alleged threat to her
safety and security; the nature of such data and the purpose for its collection;
b) the measures taken by petitioners to ensure the confidentiality of such data or information; and
c) the currency and accuracy of such data or information obtained.
Additionally, respondent prayed for the issuance of a Temporary Restraining Order (TRO) enjoining petitioners from effecting her transfer to the
MERALCO Alabang Sector.

231

Maintaining that the RTC has no jurisdiction over what they contend is clearly a labor dispute, petitioners argue that "although ingeniously crafted as a
petition for habeas data, respondent is essentially questioning the transfer of her place of work by her employer" and the terms and conditions of her
employment which arise from an employer-employee relationship over which the NLRC and the Labor Arbiters under Article 217 of the Labor Code
have jurisdiction.
Issue:
Whether or not RTC has jurisdiction
Held:
No. Section 1. Habeas Data. The writ of habeas data is a remedy available to any person whose right to privacy in life, liberty or security is violated or
threatened by an unlawful act or omission of a public official or employee or of a private individual or entity engaged in the gathering, collecting or
storing of data or information regarding the person, family, home and correspondence of the aggrieved party.
Castillo v. Cruz underscores the emphasis laid down in Tapuz v. del Rosario that the writs of amparo and habeas data will NOT issue to protect
purely property or commercial concerns nor when the grounds invoked in support of the petitions therefor are vague or doubtful. Employment
constitutes a property right under the context of the due process clause of the Constitution. It is evident that respondents reservations on the real
reasons for her transfer - a legitimate concern respecting the terms and conditions of ones employment - are what prompted her to adopt the
extraordinary remedy of habeas data. Jurisdiction over such concerns is inarguably lodged by law with the NLRC and the Labor Arbiters.
In another vein, there is no showing from the facts presented that petitioners committed any unjustifiable or unlawful violation of respondents right to
privacy vis-a-vis the right to life, liberty or security. To argue that petitioners refusal to disclose the contents of reports allegedly received on the threats
to respondents safety amounts to a violation of her right to privacy is at best speculative.
HONGKONG AND SHANGHAI BANKING CORP. VS. SPS. BROQUEZA;
G.R. No. 178610; November 17, 2010
Facts:
Sps. Broqueza are employees of Hongkong and Shanghai Banking Corporation (HSBC). They are also members of respondent Hongkong Shanghai
Banking Corporation, Ltd. Staff Retirement Plan (HSBCL-SRP, plaintiff below). The HSBCL-SRP is a retirement plan established by HSBC through its
Board of Trustees for the benefit of the employees.
Petitioner [Editha] Broqueza obtained a car loan in the amount of Php175,000.00. On December 12, 1991, she again applied and was granted an
appliance loan in the amount of Php24,000.00. On the other hand, petitioner Gerong applied and was granted an emergency loan in the amount of
Php35,780.00. These loans are paid through automatic salary deduction.
A labor dispute arose between HSBC and its employees. Majority of HSBCs employees were terminated, among whom are petitioners Editha
Broqueza and Fe Gerong. The employees then filed an illegal dismissal case before the National Labor Relations Commission (NLRC) against HSBC.
The legality or illegality of such termination is now pending before the supreme Court in CA G.R. CV No. 56797, entitled Hongkong Shanghai Banking
Corp. Employees Union, et al. vs. National Labor Relations Commission, et al.
Because of their dismissal, petitioners were not able to pay the monthly amortizations of their respective loans. Thus, respondent HSBCL-SRP
considered the accounts of petitioners delinquent. Demands to pay the respective obligations were made upon petitioners, but they failed to pay
HSBCL-SRP, acting through its Board of Trustees and represented by Alejandro L. Custodio, filed Civil Case No. 52400 against the spouses Broqueza
on 31 July 1996. On 19 September 1996, HSBCL-SRP filed Civil Case No. 52911 against Gerong. Both suits were civil actions for recovery and
collection of sums of money.
Held:
The RTC is correct in ruling that since the Promissory Notes do not contain a period, HSBCL-SRP has the right to demand immediate payment.
Article 1179 of the Civil Code applies. The spouses Broquezas obligation to pay HSBCL-SRP is a pure obligation. The fact that HSBCL-SRP was
content with the prior monthly check-off from Editha Broquezas salary is of no moment. Once Editha Broqueza defaulted in her monthly payment,
HSBCL-SRP made a demand to enforce a pure obligation.
In their Answer, the spouses Broqueza admitted that prior to Editha Broquezas dismissal from HSBC in December 1993, she "religiously paid the loan
amortizations, which HSBC collected through payroll check-off." 16 A definite amount is paid to HSBCL-SRP on a specific date. Editha Broqueza
authorized HSBCL-SRP to make deductions from her payroll until her loans are fully paid. Editha Broqueza, however, defaulted in her monthly loan
payment due to her dismissal. Despite the spouses Broquezas protestations, the payroll deduction is merely a convenient mode of payment and not
the sole source of payment for the loans. HSBCL-SRP never agreed that the loans will be paid only through salary deductions. Neither did HSBCL-SRP
agree that if Editha Broqueza ceases to be an employee of HSBC, her obligation to pay the loans will be suspended. HSBCL-SRP can immediately
demand payment of the loans at anytime because the obligation to pay has no period. Moreover, the spouses Broqueza have already incurred in
default in paying the monthly installments.
Finally, the enforcement of a loan agreement involves "debtor-creditor relations founded on contract and does not in any way concern employee
relations. As such it should be enforced through a separate civil action in the regular courts and not before the Labor Arbiter."
REAL VS. SANGU PHILS, INC. ET. AL;
G.R. No. 168757; January 19, 2011

232

Facts:
Petitioner Renato Real was the Manager of respondent corporation Sangu Philippines, Inc., a corporation engaged in the business of providing
manpower for general services, like janitors, janitresses and other maintenance personnel, to various clients. In 2001, petitioner, together with 29
others, filed their respective Complaints for illegal dismissal against the latter and respondent Kiichi Abe, the corporations Vice-President and General
Manager.
With regard to petitioner, he was removed from his position as Manager through Board Resolution 2001-03 adopted by respondent corporation Board of
Directors. Petitioner complained that he was neither notified of the Board Meeting during which said board resolution was passed nor formally charged
with any infraction. He just received from respondents a letter dated March 26, 2001 stating that he has been terminated from service effective March
25, 2001 for the following reasons: (1) continuous absences at his post at Ogino Philippines Inc. for several months which was detrimental to the
corporations operation; (2) loss of trust and confidence; and, (3) to cut down operational expenses to reduce further losses being experienced by
respondent corporation.
Respondents raised as one of the Issue the lack of jurisdiction of the Labor Arbiter over petitioners complaint. Respondents claimed that petitioner is
both a stockholder and a corporate officer of respondent corporation, hence, his action against respondents is an intra-corporate controversy over which
the Labor Arbiter has no jurisdiction.
Petitioner continues to insist that he is not a corporate officer. He argues that a corporate officer is one who holds an elective position as provided in the
Articles of Incorporation or one who is appointed to such other positions by the Board of Directors as specifically authorized by its By-Laws.
He believes that his action against the respondents does not arise from intra-corporate relations but rather from employer-employee relations. This,
according to him, was even impliedly recognized by respondents as shown by the earlier quoted portion of the termination letter they sent to him.
Issue:
Whether petitioners complaint for illegal dismissal constitutes an intra-corporate controversy and thus, beyond the jurisdiction of the Labor Arbiter.
Held:
Two-tier test in determining the existence of intra-corporate controversy
It is worthy to note, however, that before the promulgation of the Tabang case, the Court provided in Mainland Construction Co., Inc. v. Movilla a "better
policy" in determining which between the Securities and Exchange Commission (SEC) and the Labor Arbiter has jurisdiction over termination
disputes, or similarly, whether they are intra-corporate or not
The fact that the parties involved in the controversy are all stockholders or that the parties involved are the stockholders and the corporation does not
necessarily place the dispute within the ambit of the jurisdiction of the SEC (now the Regional Trial Court). The better policy to be followed in
determining jurisdiction over a case should be to consider concurrent factors such as the status or relationship of the parties or the nature of the
question that is subject of their controversy. In the absence of any one of these factors, the SEC will not have jurisdiction. Furthermore, it does not
necessarily follow that every conflict between the corporation and its stockholders would involve such corporate matters as only SEC (now the Regional
Trial Court) can resolve in the exercise of its adjudicatory or quasi-judicial powers
And, while Tabang was promulgated later than Mainland Construction Co., Inc., the "better policy" enunciated in the latter appears to have developed
into a standard approach in classifying what constitutes an intra-corporate controversy. This is explained lengthily in Reyes v. Regional Trial Court of
Makati,
Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in the Courts approach in classifying what constitutes an intra-corporate controversy. Initially,
the main consideration in determining whether a dispute constitutes an intra-corporate controversy was limited to a consideration of the intra-corporate
relationship existing between or among the parties. The types of relationships embraced under Section 5(b) x x x were as follows:
a) between the corporation, partnership or association and the public;
b) between the corporation, partnership or association and its stockholders, partners, members or officers;
c) between the corporation, partnership or association and the State as far as its franchise, permit or license to operate is concerned; and
d) among the stockholders, partners or associates themselves.
The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC (now the RTC), regardless of the subject
matter of the dispute. This came to be known as the relationship test.
However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc., the Court introduced the nature of the controversy test. We
declared in this case that it is not the mere existence of an intra-corporate relationship that gives rise to an intra-corporate controversy; to rely on the
relationship test alone will divest the regular courts of their jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers,
or stockholders. We saw that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the
dispute.
Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the
controversy itself is intra-corporate. The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain
to the enforcement of the parties correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of

233

the corporation. If the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not
exist, then no intra-corporate controversy exists.
The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the status or relationship of the
parties, but also the nature of the question under controversy. This two-tier test was adopted in the recent case of Speed Distribution Inc. v. Court of
Appeals:
To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of the RTC specifically
designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties, and (2) the nature of the
question that is the subject of their controversy.
The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the
corporation, partnership, or association of which they are not stockholders, members or associates, between any or all of them and the corporation,
partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership, or
association and the State insofar as it concerns the individual franchises. The second element requires that the dispute among the parties be
intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character,
necessarily, the case does not involve an intra-corporate controversy.
Guided by this recent jurisprudence, we thus find no merit in respondents contention that the fact alone that petitioner is a stockholder and director of
respondent corporation automatically classifies this case as an intra-corporate controversy. To reiterate, not all conflicts between the stockholders and
the corporation are classified as intra-corporate. There are other factors to consider in determining whether the dispute involves corporate matters as to
consider them as intra-corporate controversies.
Corporate officers in the context of Presidential Decree No. 902-A are those officers of the corporation who are given that character by the Corporation
Code or by the corporations by-laws. There are three specific officers whom a corporation must have under Section 25 of the Corporation Code. These
are the president, secretary and the treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may be
provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus
limited by law and by the corporations by-laws.
With the elements of intra-corporate controversy being absent in this case, we thus hold that petitioners complaint for illegal dismissal against
respondents is not intra-corporate. Rather, it is a termination dispute and, consequently, falls under the jurisdiction of the Labor Arbiter pursuant to
Section 2173 of the Labor Code.
PORTILLO VS. RUDOLF LIETZ, INC. ET AL.;
G.R. No. 196539; October 10, 2012
Facts:
Marietta Portillo was hired by Rudolf Lietz, Inc.. After ten years of service, she was promoted to Sales Representative. In this regard, Portillo signed a
letter agreement containing a "Goodwill Clause which provides that on the termination of his employment by act of either him or respondent, and for a
period of three (3) years thereafter, she shall not engage directly or indirectly as employee, manager, proprietor, or solicitor for himself or others in a
similar or competitive business or the same character of work which he was employed by Lietz, Inc. to do and perform. Should she breach such clause,
she shall pay as liquidated damages the amount of 100% of her gross compensation over the last 12 months, it being agreed that this sum is
reasonable and just.
Three years thereafter, Portillo resigned from Rudolf Lietz, Inc., and subsequently, they learned that Portillo had been hired by Ed Keller Philippines,
Limited to head its Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz, Inc.
Meanwhile, Portillo's demands from the respondents for the payment of her remaining salaries and commissions went unheeded. Respondents gave
Portillo the run around, on the pretext that her salaries and commissions were still being computed.
It was then that Portillo filed a complaint with NLRC for non-payment of 1 1/2 months' salary, two (2) months' commission, 13th month pay, plus moral,
exemplary and actual damages and attorney's fees.
Lietz, Inc. admitted liability for Portillo's money claims. However, Lietz, Inc. raised the defense of legal compensation that Portillo's money claims should
be offset against her liability to Lietz, Inc. for liquidated damages for Portillo's alleged breach of the "Goodwill Clause" in the employment contract when
she became employed with Ed Keller Philippines, Limited.
The Labor Arbiter Daniel J. Cajilig granted Portillo's complaint ordering respondents Rudolf Lietz, Inc. to pay complainant Marietta N. Portillo the amount
representing her salary and commissions, including 13th month pay.
On appeal by respondents, the NLRC, through its Second Division, affirmed the ruling of Labor Arbiter. On motion for reconsideration, the NLRC stood
pat on its ruling.
Expectedly, respondents filed a petition for certiorari before the Court of Appeals, alleging grave abuse of discretion in the labor tribunals' rulings. CA
denied the respondents petition but modified its previous decision on respondents motion for reconsideration allowing the legal compensation or set-off
invoked by the respondents.
Issue:

234

Whether or not, Portillo's money claims for unpaid salaries may be offset against respondents' claim for liquidated damages?
Held:
No. It cannot be offset.
Paragraph 4 of Article 217 of the Labor Code to wit:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this code, the Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following case involving all workers, whether agricultural or nonagricultural:
xxx xxx xxx
4.Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
The Court of Appeals was convinced that the claim for liquidated damages emanates from the "Goodwill Clause of the employment contract and,
therefore, is a claim for damages arising from the employer-employee relations.
But, as early as Singapore Airlines Limited v. Pao, it has already been established that not all disputes between an employer and his employee(s) fall
within the jurisdiction of the labor tribunals.
In the case at bar, there is no causal connection between the petitioner employees' claim for unpaid wages and the respondent employers' claim for
damages for the alleged "Goodwill Clause" violation. Portillo's claim for unpaid salaries did not have anything to do with her alleged violation of the
employment contract as, in fact, her separation from employment is not "rooted" in the alleged contractual violation. She resigned from her employment.
She was not dismissed. The alleged contractual violation did not arise during the existence of the employer-employee relationship. It was a postemployment matter, a post-employment violation.
The cause of action is based on a quasi-delict or tort, which has no reasonable causal connection with any of the claims provided for in Article 217,
jurisdiction over the action is with the regular courts. As it is, petitioner does not ask for any relief under the Labor Code, rather, merely seeks to recover
damages based on the parties' contract of employment as redress for respondent's breach thereof. Such cause of action is within the realm of Civil
Law, and jurisdiction over the controversy belongs to the regular courts. More so must this be in the present case, what with the reality that the
stipulation refers to the post-employment relations of the parties. Thus, the original decision of the appellate court, the right ruling, should not have been
reconsidered.
ACE NAVIGATION CO., INC. ET AL. VS. FERNANDEZ;
G.R. No. 197309; October 10, 2012
Facts:
Seaman Teodorico Fernandez, assisted by his wife, Glenita Fernandez, filed with the NLRC a complaint for disability benefits, with prayer for moral and
exemplary damages, plus attorney's fees, against Ace Navigation Co., Inc., Vela International Marine Ltd., and/or Rodolfo Pamintuan.
The petitioners moved to dismiss the complaint, contending that the labor arbiter had no jurisdiction over the dispute. They argued that exclusive
original jurisdiction is with the voluntary arbitrator or panel of voluntary arbitrators, pursuant to Section 29 of the POEA Standard Employment Contract
(POEA-SEC), since the parties are covered by the AMOSUP-TCC or AMOSUP-VELA collective bargaining agreement (CBA). Under Section 14 of the
CBA, a dispute between a seafarer and the company shall be settled through the grievance machinery and mandatory voluntary arbitration. Fernandez
opposed the motion. He argued that inasmuch as his complaint involves a money claim, original and exclusive jurisdiction over the case is vested with
the labor arbiter.
Issue:
Whether or not, the labor arbiter has the original and exclusive jurisdiction over Fernandez's disability claim under Section 10 of R.A. No. 8042?
Held:
No. It is not within the original and exclusive jurisdiction of the Labor Arbiter but rather with the voluntary arbitrators.
The POEA-SEC, which governs the employment of Filipino seafarers, provides that i n cases of claims and disputes arising from this employment,
the parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and exclusive jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators.
The voluntary arbitrator or panel of voluntary arbitrators has original and exclusive jurisdiction over Fernandez's disability claim. There is no dispute that
the claim arose out of Fernandez's employment with the petitioners and that their relationship is covered by a CBA the AMOSUP/TCC or the
AMOSUP-VELA CBA. The CBA provides for a grievance procedure for the resolution of grievances or disputes which occur during the employment
relationship and, like the grievance machinery created under Article 261 of the Labor Code, it is a two-tiered mechanism, with voluntary arbitration as
the last step.
What might have caused the CA to miss the clear intent of the parties in prescribing a grievance procedure in their CBA is, as the petitioners' have
intimated, the use of the auxiliary verb "may" in Article 14.7 (a) of the CBA which, to reiterate, provides that "[i]f by reason of the nature of the
Dispute, the parties are unable to amicably settle the dispute, either party may refer the case to a MANDATORY ARBITRATION COMMITTEE."

235

It is reasonable to conclude that it viewed as optional the referral of a dispute to the mandatory arbitration committee when the parties are unable to
amicably settle the dispute.
It bears stressing at this point that we are upholding the jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators over the present dispute,
not only because of the clear language of the parties' CBA on the matter; more importantly, we so uphold the voluntary arbitrator's jurisdiction, in
recognition of the State's express preference for voluntary modes of dispute settlement, such as conciliation and voluntary arbitration as expressed in
the Constitution, the law and the rules.
It is settled that when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration then that
procedure should be strictly observed.
COSARE VS. BROADCOM ASIA, INC.
GR No. 201298; February 5, 2014
Facts:
Cosare was employed as a salesman by Broadcom. Several years later, he was named as an incorporator of the said company having been assigned
100 shares of stocks. He was also promoted to the position of Assistant Vice President for Sales (AVP for Sales)
Cosare accused his immediate superior (Alex Abiog) for committing some irregularities in his office. Instead of acting the accusation thrown against
Abiog, it was Cosare who was asked by the employer to tender his resignation and offered him financial assistance. Cosare refused. He was charged of
serious misconduct and willful breach of trust, and according to the employer (Broadcom) it was him (Cosare) who committed some irregularities and
anomalies in his office. In line with that, Cosare was suspended and precluded from entering the work premises.
A complaint was filed for illegal dismissal was filed against Broadcom before the Labor Arbiter. The latter moved for the dismissal of the case on the
ground that Cosare was a corporate officer which means that the controversy is an intra-corporate dispute that falls within the jurisdiction of the RTC.
Issue:
Whether or not the controversy is an intra-corporate dispute which would be beyond the jurisdiction of the Labor Arbiter.
Held:
The LA had the original jurisdiction over the complaint for illegal dismissal because Cosare, although an officer of Broadcom for being its AVP for Sales,
was not a "corporate officer" as the term is defined by law. Corporate officers in the context of Presidential Decree No. 902-A are those officers of the
corporation who are given that character by the Corporation Code or by the corporations by-laws. There are three specific officers whom a corporation
must have under Section 25 of the Corporation Code. These are the president, secretary and the treasurer. The number of officers is not limited to
these three. A corporation may have such other officers as may be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor
or general manager. The number of corporate officers is thus limited by law and by the corporations by-laws."
It has been held that an "office" is created by the charter of the corporation and the officer is elected by the directors and stockholders. On the other
hand, an "employee" usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of
the corporation who also determines the compensation to be paid to such employee.
Nowhere in the Broadcoms by-laws that an AVP for Sales is a corporate officer neither is there any indication that Cosare was appointed by the Board
of Directors. Broadcom failed to sufficiently establish that the position of AVP for Sales was created by virtue of an act of Broadcoms board, and that
Cosare was specifically elected or appointed to such position by the directors.
Hence, in line with the above findings, the said controversy falls within the jurisdiction of the Labor Arbiter and not with the RTC.
MATLING INDUSTRIAL AND COMMERCIAL CORP ET AL., VS. COROS,
GR No. 157802
Facts:
Coros as Vice President for Finance and Administration filed a complaint against Matling Industrial for illegal dismissal before the Labor Arbiter.
Matling Industrial moved for dismissal of the complaint on the ground that the controversy is an intra-corporate dispute. Matling contended that aside of
being a VP for Finance and Administration, Coros is also a Board of Director and a stockholder of Matling Industry. The latter relied on a court ruling that
if the controversy pertains between the stockholder and the corporation such matter is considered as an intra-corporate dispute
Issues:
1.
2.

Whether or not Coros is a corporate officer

Whether or not Coros status as a stockholder converted the controversy into an intracorporate dispute

Held:
Section 25 of the Corporation Code plainly states that the corporate officers are the President, Secretary and Treasurer and such other officers as may
be provided for in the by-laws. The corporate officers in the context of PD # 902 are exclusively those who are given that character under the

236

Corporation Code or by the Corporations by-laws. Additionally, in order to create a corporate office, the appointment of which is exclusively vested in
the Board of Directors.
Coros position was not expressly provided in the Matlings Constitution and by-laws. In fact, it was the President of the corporation who designated him
as VP for Finance and Administration contrary to the above ruling that an officer to be considered as a corporate officer, he must be appointed and
elected by the Board of Directors.
The mere fact that Coros is a stockholder such controversy will not necessarily convert it into an intra-corporate dispute. Applying the controversy and
relationship test, in order to determine whether the conflict is intra-corporate or not two factors must concurrently determine, to wit: a.) the status and
the relationship of the parties; and b.) the nature of the question that is the subject of their controversy.
In this case, he was terminated by reason of his obligations as a VP for Finance and Administration and not as a stockholder. The said controversy is
not an intra-corporate dispute. It would be different if such termination was due to his being a stockholder.
Hence, jurisdiction lies within the Labor Arbiter.
Amecos vs Lopez
FACTS:
Petitioner Amecos Innovations, Inc. (Amecos) is a corporation duly incorporated under Philippine laws engaged in the business of selling assorted
products created by its President and herein co-petitioner, Antonio F. Mateo (Mateo). Social Security System (SSS) filed a complaint for alleged
delinquency in the remittance of SSS contributions and penalty liabilities in violation of Section 22 (a) and 22 (d) in relation to Section 28 (e) of the SSS
law, as amended. Amecos attributed the failure to remit to respondent Lopez. But Amecos settled its obligation with the SSS. Subsequently, Amecos
filed a demand against Lopez for her share in the SSS contributions and also claimed for actual, moral, and exemplary damages, attorneys fee, and
costs of the suit. Respondent claimed that she is a former employee of Amecos prior to her alleged illegal dismissal and she moved for dismissal
alleging that the regular courts do not have jurisdiction because the claim arose out of their employer-employee relationship.
The MeTC dismissed the petition for lack of jurisdiction. On appeal, the RTC affirmed MeTCs ruling. The Court of Appeals reaffirmed the rulings of the
lower courts. Thus this petition. The petitioner argue that their Complaint is one for recovery of a sum of money and damages based on Articles 19, 27
22, 28 and 2154 29 of the Civil Code; that their cause of action is based on solutio indebiti or unjust enrichment, which arose from respondent's
misrepresentation that there was no need to enroll her with the SSS as she was concurrently employed by another outfit, Triple A Glass and Aluminum
Company, and that she was self-employed as well. They argue that the employer-employee relationship between Amecos and respondent is merely
incidental, and does not necessarily place their dispute within the exclusive jurisdiction of the labor tribunals. Respondent, on the other hand, maintains
that jurisdiction over petitioners' case lies with the Labor Arbiter, as their cause of action remains necessarily connected to and arose from their
employer-employee relationship.
Issues:
(1) Whether the regular civil court and not the labor arbiter or . . . The national labor relations commission has jurisdiction over claim[s] for
reimbursement arising from employer-employee relations.
(2) Whether the regular civil court and not the labor arbiter or . . . The national labor relations commission has jurisdiction over claim[s] for damages for
misrepresentation arising from employer-employee relations.
RULING:
This Court holds that as between the parties, Article 217 (a) (4) of the Labor Code is applicable. Said provision bestows upon the Labor Arbiter original
and exclusive jurisdiction over claims for damages arising from employer-employee relations. The observation that the matter of SSS contributions
necessarily flowed from the employer-employee relationship between the parties shared by the lower courts and the CA is correct; thus,
petitioners' claims should have been referred to the labor tribunals. In this connection, it is noteworthy to state that "the Labor Arbiter has jurisdiction to
award not only the reliefs provided by labor laws, but also damages governed by the Civil Code."
XI.

2011 NLRC RULES OF PROCEDURE

MINDANAO TIMES CORP. VS. CONFESSOR;

G.R. No. 183417; February 5, 2012
Facts:
Mitchel Confesor (respondent) was employed by petitioner in 1998, publisher of a newspaper of general circulation in Mindanao and Davao City. He
became petitioners Associate Editor in six months.
Respondent resigned June 2003. On August 2003, he filed a verified complaint before the Labor Arbiter for payment of separation pay and pro-rated
13th month pay for 2003. He later amended his complaint from one of money claims to illegal dismissal, averring that petitioners President forced him
to resign after he published articles which appeared in petitioners newspaper accusing political figures of being involved in some anomalies; and that
he did resign as he was told that he would be entitled to separation pay and other benefits, but that the promised benefits were not forthcoming, hence,
his filing of the complaint.

237

The Labor Arbiter finds that respondent was constructively dismissed. Both parties appealed to the NLRC. Petitioner, on the other hand, questioned the
Labor Arbiters finding of constructive dismissal. In compliance with the appeal bond requirement, petitioner deposited the amount of P71,909.77 with
UCPB and surrendered to the NLRC the passbook covering the deposit, along with a Deed of Assignment.
The NLRC reversed the ruling of the Labor Arbiter and dismissed respondents complaint, holding that there was no constructive dismissal since
respondent effectively resigned from his employment. NLRC also held that the bank deposit complied with the appeal bond requirement and is a
substantial compliance with Sec. 6, Rule 6 of the NLRC Rules of Procedure.
The Court of Appeals, to which respondent assailed the NLRC resolution via petition for certiorari, dismissed said petition. On respondents Motion for
Reconsideration, CA set aside the NLRC Resolution and reinstated the Labor Arbiters Decision which it declared to have become final and executory.
It held that the bank deposit of petitioner failed to substantially comply with the appeal bond requirement, noting that its Deed of Assignment cannot be
a substitute for the cash or surety bond contemplated under the Rules for the perfection of appeal as the deed does not ensure payment of the
adjudged monetary award in case the appeal of fails.
Petitioner filed the present petition insisting that its bank deposit and Deed of Assignment which it transmitted to the NLRC, along with the passbook,
constituted substantial compliance with the rule on perfection of appeals.
Issue:
Whether or not bank deposit complied with the appeal bond requirement thus perfection of appeals.
Held:
The petition is bereft of merit. Article 223 of the Labor Code provides that an appeal by the employer to the NLRC from a judgment of a labor arbiter
which involves a monetary award may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the NLRC, in an amount equivalent to the monetary award in the judgment appealed from. Cash, means a sum of money; cash bail (the
sense in which the term cash bond is used) is a sum of money posted by a criminal defendant to ensure his presence in court, used in place of a
surety bond and real estate.
To comply with the appeal bond requirement, the company deposited the amount of P71,909.77 with UCPB and surrendered to the NLRC the passbook
covering the deposit, along with a Deed of Assignment it executed assigning the proceeds of the deposit in favor of the employee and authorizing the
NLRC to release the same in the event that the Labor Arbiters Decision becomes final and executory. Such Deed of Assignment, as well as the
passbook, is neither a cash bond nor a surety bond. The companys appeal to the NLRC was thus not duly perfected, thereby rendering the Labor
Arbiters Decision final and executory.
Bank deposit does not comply with the appeal bond requirement under Section 6, Rule 6, of the NLRC Rules of Procedure, viz.:
Section 6. Bond. In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer
may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either be in cash or surety in an amount equivalent
to the monetary award, exclusive of damages and attorneys fees.
The Supreme Court, giving no merit to petitioners contention, held that bank deposit is not sufficient compliance with the appeal bond requirement
under the aforementioned section.
Clearly, an appeal from a judgment as that involved in the present case is perfected only upon the posting of a cash or surety bond.
The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the LA. The intention of
the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly limned in the provision that an appeal
by the employer may be perfected only upon the posting of a cash or surety bond. The word only makes it perfectly plain that the lawmakers
intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employers appeal may be
perfected. The word may refers to the perfection of an appeal as optional on the part of the defeated party, but not to the compulsory posting of an
appeal bond, if he desires to appeal.
The filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the
NLRC. Non-compliance therewith renders the decision of the LA final and executory. This requirement is intended to assure the workers that if they
prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employers appeal. It is intended to discourage
employers from using an appeal to delay or evade their obligation to satisfy their employees just and lawful claims.
In the present case, the Deed of Assignment, as well as the passbook, which petitioner submitted to the NLRC is neither a cash nor a surety bond.
Petitioners appeal to the NLRC was thus not duly perfected, thereby rendering the Labor Arbiters Decision final and executory.
COLLEGE OF IMMACULATE CONCEPCION VS. NLRC;
G.R. No. 167563; March 22, 2012
Facts:
CIC appointed private respondent Atty. Carlos as Acting Dean of the Department of Business Administration and Accountancy. After a year, he was
appointed as Dean of the Department of Business, Economics and Accountancy effective June 1, 1996 until May 31, 2000. He served as Dean of said
department for the designated term. Upon the expiration of his term, Atty. Carlos became a full-time professor without the diminution of salary as former

238

Dean. However, he was charged with violation of CHED Memorandum No. 19, s.1998 for teaching part-time in another school and handling cases
without the prior approval or consent of CIC; and pursuant to the Memorandum, he was not assigned any teaching load for the succeeding semester.
Carlos protested the imposition of sanction against him arising from his part-time teaching of law in another university. He further claims that even
assuming that he violated Section 16.8, CHED Memorandum No. 19, series of 1998, he is only liable for mere censure or oral reprimand. On October
19, 2000, respondent filed a complaint against petitioner before Regional Arbitration Branch No. III of San Fernando, Pampanga, for unfair labor
practice, illegal dismissal, with payment of backwages and damages. Respondent argued that the non-renewal of his appointment as Dean and his
alleged demotion to a faculty member already constituted constructive dismissal and was but a prelude to his actual dismissal. Thereafter, his dismissal
materialized when he was deprived of his teaching load.
The Labor Arbiter rendered a decision which provided, among others, the reinstatement of Atty. Carlos as Dean. CIC appealed to the NLRC, but the
latter affirmed the decision of the LA with modification reinstating the respondent to his full-time teaching position. Petitioner filed a Motion for
Clarification and/or Partial Reconsideration, praying that since the respondent was not illegally dismissed, then he should be directed to refund the
petitioner all the amounts he received by way of payroll reinstatement. The NLRC denied petitioner's motion for lack of merit.
Issue:
Does the subsequent reversal of the LA's findings mean that respondent should reimburse petitioner all the salaries and benefits he received pursuant
to the immediate execution of the LA's erroneous decision ordering his reinstatement as Department Dean?
Held:
The SC cited the case of Air Philippines Corporation v. Zamora,15 citing Roquero v. Philippine Airlines, Inc., wherein it held that:
x x x Hence, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if
the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not
required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period.
It is not disputed at this point that the LA erred in ordering respondent's reinstatement as Dean. The NLRC ruled that respondent should have been
merely reinstated as a full-time law professor, because the term of his appointment as Dean had long expired. However, such mistake on the part of the
LA cannot, in any way, alter the fact that during the pendency of the appeal of his decision, his order for respondent's reinstatement as Dean was
immediately executory. Article 223 of the Labor Code explicitly provides that:
Art. 223. - Appeal. x x x
xxxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same
terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for reinstatement provided therein. (Emphasis supplied)
Therefore, petitioner could not validly insist that it is entitled to reimbursement for the payment of the salaries of respondent pursuant to the execution of
the LA's decision by simply arguing that the LA's order for reinstatement is incorrect. The pertinent law on the matter is not concerned with the wisdom
or propriety of the LA's order of reinstatement, for if it was, then it should have provided that the pendency of an appeal should stay its execution. After
all, a decision cannot be deemed irrefragable unless it attains finality.
The Court went on to discuss the illogical and unjust effects of the "refund doctrine" as it easily demonstrates how a favorable decision by the Labor
Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries
received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap
leading the employee to a risky cliff of insolvency. It also disregards the social justice principles behind the rule, but also institutes a scheme unduly
favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer. For
in the event of a reversal of the Labor Arbiters decision ordering reinstatement, the employer gets back the same amount without having to spend
ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the "posting of a bond [even a cash bond] by the
employer shall not stay the execution for reinstatement."
ORIENTAL SHIP MANAGEMENT CO. VS. BASTOL;
G.R. No. 186280; June 29, 2012
Facts:
OSCI hired Romy B. Bastol (Bastol) as bosun evidenced by a Contract of Employment and was deployed on board the vessel MV Felicita. While on
board the vessel, Bastol suffered chest pains and cold clammy perspiration. He was hospitalized in Algiers and found to be suffering from anterior
myocardial infarction. In short, he had a heart attack. He was subsequently repatriated due to his illness. The company referred Bastol for medical
treatment to the Metropolitan Hospital under the care of company-designated physician Dr. Robert D. Lim. Unsatisfied with the treatment by Dr. Lim and
seeking a second opinion, he went to Dr. Efren R. Vicaldo, a Cardiologist and Congenital Heart Disease Specialist of the Philippine Heart Center, who
diagnosed him to be suffering from "Coronary Artery Disease and Extensive Anteriorseptalmia" with the corresponding remarks: "For Disability,
Impediment Grade 1 (120%). Feeling abandoned and aggrieved, Bastol, through counsel, sent a letter on the President of OSCI, for a possible
settlement of his claim for disability benefits. He attached the Medical Certificate issued by Dr. Vicaldo. His letter did not merit a response from OSCI.

239

Bastol was compelled to file a Complaint before the Labor Arbiter but OSCI countered that Bastol is not entitled to his indemnity claims, among others,
for disability benefits on account of non-compliance with the requirements of the 1994 revised Standard Employment Contract (SEC) by failing to
properly submit himself for treatment and examination by the company-designated physician who is the only one authorized to set the degree of
disability.
Labor Arbiter Mayor, Jr. rendered a Decision based on the parties respective position papers and the documentary evidence presented in NLRC in
favor of Bastol. The Labor Arbiter saw no need to conduct formal hearings. He found that Bastol was healthy when deployed but subsequently
contracted or suffered heart ailment during his period of employment with OSCI. He also found that Bastol did not show any appreciable improvement
despite treatment by the company-designated physician, thus ruling that the fact that Dr. Lim had not issued a certification as to Bastols condition did
not negate his claim for disability indemnity, as the determination of the degree thereof by Dr. Vicaldo of the Philippine Heart Center sufficed. NLRC
ruled in favor of OSCI in that Bastol should have presented himself before the Labor Arbiter for the latter to properly assess his condition, and that Dr.
Lim and Dr. Vicaldo should be presented to determine with certainty the status of Bastols heart ailment. The CA ruled that the NLRC gravely erred in
construing the proviso that it is only the company-designated physician who could declare the fitness of the seafarer to work or establish the degree of
his disability for it does not prohibit a second medical opinion.
Issue:
Whether the Complaint filed before the Labor Arbiter ought to be dismissed for lack of certification against forum shopping as required by the Rules and
W/N seeking a second opinion and the certification of Dr. Vicaldo is sufficient.
Held:
Bastol should not be denied his claims.
For the expeditious and inexpensive filing of complaints by employees, the Regional Arbitration Branch (RAB) of the NLRC provides pro-forma
complaint forms. This is to facilitate the exercise and protection of employees rights by the convenient assertion of their claims against employers
untrammeled by procedural rules and complexities. To comply with the certification against forum shopping requirement, a simple question embodied in
the Complaint form answerable by "yes" or "no" suffices. Employee-complainants are not even required to have a counsel before they can file their
complaint. An officer of the RAB, duly authorized to administer oaths, is readily available to facilitate the execution of the required subscription or jurat of
the complaint. It is thus clear that the strict application of Sec. 4, Rule 7 of the Rules of Court does not apply to labor complaints filed before the NLRC
RAB. Labor arbiters given full discretion whether to conduct a hearing or not and to decide the case before him through position papers: The foregoing
provisos manifestly show the non-litigious and the summary nature of the proceedings before the Labor Arbiter, who is given full discretion whether to
conduct a hearing or not and to decide the case before him through position papers. A hearing cannot be demanded by either party as a matter of right.
The rationale behind this is to avoid delay and curtail the pernicious practice of withholding of evidence. The proceedings before the Labor Arbiter are
non-litigious in nature and the technicalities of law and procedure, and the rules obtaining in the courts of law are not applicable. Thus, the rules allow
the admission of affidavits by the Labor Arbiter as evidence despite the fact that the affiants were not presented for cross-examination by the counsel for
the adverse party. To require otherwise would be to negate the rationale and purpose of the summary nature of the administrative proceedings and to
make mandatory the application of the technical rules of evidence. The belated submission of additional documentary evidence by Bastol after the case
was already submitted for decision did not make the proceedings before the Labor Arbiter improper. The basic reason is that technical rules of
procedure are not binding in labor cases.
Bastol had been treated by these company-designated doctors for a period spanning around seven months and 20 days or for approximately 230 days.
Clearly then, the maximum period of 120 days stipulated in the SEC for medical treatment and the declaration or assessment by the companydesignated physician of either being fit to work or the degree of permanent disability had already lapsed. Thus, by law, if Bastols condition was with the
lapse of the 120 days of post-employment medical examination and treatment, without his being employed at his usual job, then it was certainly total
permanent disability.
It has been held that disability is intimately related to ones earning capacity. It should be understood less on its medical significance but more on the
loss of earning capacity. Total disability does not mean absolute helplessness. In disability compensation, it is not the injury which is compensated, but
rather the incapacity to work resulting in the impairment of ones earning capacity. Thus, permanent disability is the inability of a worker to perform
his job for more than 120 days, regardless of whether or not he loses the use of any part of his body.
We can say that Bastol had the right to seek medical treatment other than the company-designated physician after the lapse of the 120-day considering
that said physician, within the maximum 120-day period stipulated in the SEC neither declared him fit to work or gave the assessment of the degree of
his permanent disability which he is incumbent to do. Dr. Vicaldos diagnosis and assessment should be accorded greater weight considering that he is
a Cardiologist and Congenital Heart Disease Specialist of the Philippine Heart Center.

MILLENNIUM ERECTORS CORP. VS. MAGALLANES;

G.R. No. 184362; November 15, 2010
Facts:
Respondent Magallanes started working in 1988 as a utility man for Laurencito Tiu (Tiu), Chief Executive Officer of Millennium Erectors Corporation
(petitioner), Tius family, and Kenneth Construction Corporation. He was assigned to different construction projects undertaken by petitioner in Metro
Manila, the last of which was for a building in Libis, Quezon City. In July of 2004 he was told not to report for work anymore allegedly due to old age,
prompting him to file on August 6, 2004 an illegal dismissal complaint before the Labor Arbiter.

240

Petitioner claimed that respondent was a project employee, that respondents services were terminated as the project was nearing completion.
Petitioner likewise submitted a termination report to the DOLE dated August 17, 2004.
The Labor Arbiter ruled in favor of petitioner and dismissed the complaint, holding that respondent knew of the nature of his employment as a project
employee.
On appeal, the NLRC set aside the Labor Arbiters Decision holding that respondent was a regular, not a project employee, as the employment contract
he supposedly signed contained the date of commencement but not a specific date when it would end, contrary to the rule that the duration and scope
of similar contracts should be clearly set forth therein.
Petitioner moved for reconsideration of the NLRC decision, contending that respondents motion for reconsideration which it treated as an appeal was
not perfected, it having been belatedly filed; that there was no statement of the date of receipt of the appealed decision; and that it lacked verification
and copies thereof were not furnished the adverse parties. Petitioners motion was denied. The Court of Appeals, to which petitioner appealed, affirmed
the NLRCs ruling by Decision.
Issue:
WON the NLRC erred in treating the respondents motion for reconsideration as an appeal despite its technical flaws.

Held:
The NLRC did not err in treating respondents motion for reconsideration as an appeal, the presence of some procedural flaws including the lack of
verification and proof of service notwithstanding.
In labor cases, rules of procedure should not be applied in a very rigid and technical sense. They are merely tools designed to facilitate the attainment
of justice, and where their strict application would result in the frustration rather than promotion of substantial justice, technicalities must be avoided.
Technicalities should not be permitted to stand in the way of equitably and completely resolving the rights and obligations of the parties. Where the ends
of substantial justice shall be better served, the application of technical rules of procedure may be relaxed.
As to the defective verification in the appeal memorandum before the NLRC, the same liberality applies. After all, the requirement regarding verification
of a pleading is formal, not jurisdictional. Such requirement is simply a condition affecting the form of pleading, the non-compliance of which does not
necessarily render the pleading fatally defective. As for the requirement on proof of service, it may also be dispensed with since in appeals in labor
cases, non-service of copy of the appeal or appeal memorandum to the adverse party is not a jurisdictional defect which calls for the dismissal of the
appeal.
On the merits of the case, the Court finds that, indeed, respondent was a regular, not a project employee.
Assuming arguendo that petitioner hired respondent initially on a per project basis, his continued rehiring, as shown by the sample payrolls converted
his status to that of a regular employee.
ISLRIZ TRADING/LU VS. CAPADE;
G.R. No. 168501; January 31, 2011
Facts:
Respondents were employees of Islriz Trading, a gravel and sand business owned and operated by petitioner Victor Hugo Lu. Claiming that they were
illegally dismissed, respondents filed a Complaint for illegal dismissal and non-payment of overtime pay, holiday pay, rest day pay, allowances and
separation pay against petitioner. On his part, petitioner imputed abandonment of work against respondents.
The Labor Arbiter rendered judgment declaring Islriz Trading guilty of illegal dismissal and ordered the latter to reinstate the respondents and for
payment of backwages until actual reinstatement. Upon appeal, the NLRC set aside the Decision of Labor Arbiter. Finding that respondents failure to
continue working for petitioner was neither caused by termination nor abandonment of work, the NLRC ordered respondents reinstatement but without
backwages. However, pending appeal, respondents moved for the execution of the reinstatement aspect of the Labor Arbiters decision. However, until
the issuance of the NLRC Resolution overturning Labor Arbiter Gans decision, petitioner still failed to reinstate respondents or effect payroll
reinstatement. This prompted respondents to apply for a Writ of Execution to enforce the monetary award. A Writ of Execution was issued by Labor
Arbiter Castillon. The proceedings thereafter were likewise upheld by the CA.
Issue:
Whether respondents may collect their wages during the period between the Labor Arbiters order of reinstatement pending appeal and the NLRC
Resolution overturning that of the Labor Arbiter.
Held:
The petition is not meritorious.
Petitioner contends that the CAs act in upholding the issuance of the questioned Writ of Execution for the enforcement of respondents accrued
salaries, said Decision and Resolution, in effect, altered the NLRC Resolution which only decreed respondents reinstatement without backwages.
Paragraph 3 of Article 223 of the Labor Code reads:

241

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.
Thus in several cases, it has maintained that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of
the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required
to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. In other words, a
dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is
immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is
mandatory on the employer to comply therewith.
To come up with the answer to the present issue, we shall apply the two-fold test used in Garcia. Was there an actual delay or was the order of
reinstatement pending appeal executed prior to its reversal? As can be recalled, until the issuance of the September 5, 2002 NLRC Resolution
overturning Labor Arbiter Gans Decision, petitioner still failed to reinstate respondents or effect payroll reinstatement in accordance with Article 223 of
the Labor Code. This was what actually prompted respondents to move for the issuance of a computation of the award of backwages and Alias Writ of
Execution for its enforcement. It cannot therefore be denied that there was an actual delay in the execution of the reinstatement aspect of the Decision
of Labor Arbiter Gan prior to the issuance of the NLRC Resolution overturning the same.
Now, the next question is: Was the delay not due to the employers unjustified act or omission? Unlike in Garcia where PAL, as the employer, was then
under corporate rehabilitation, Islriz Trading here did not undergo rehabilitation or was under any analogous situation which would justify petitioners
non-exercise of the options provided under Article 223 of the Labor Code. Petitioner, without any satisfactory reason, failed to fulfill its obligation and
respondents remained to be not reinstated until the NLRC resolved petitioners appeal. Evidently, the delay in the execution of respondents
reinstatement was due to petitioners unjustified refusal to effect the same.
Hence, the conclusion is that respondents have the right to collect their accrued salaries during the period between the Labor Arbiters Decision
ordering their reinstatement pending appeal and the NLRC Resolution overturning the same because petitioners failure to reinstate them either actually
or through payroll was due to petitioners unjustified refusal to effect reinstatement. In order to enforce this, Labor Arbiter Castillon thus correctly issued
the Writ of Execution dated March 9, 2004 as well as the Order dated June 3, 2004 denying petitioners Motion to Quash Writ of Execution and granting
respondents Urgent Motion for Issuance of Break-Open Order. Consequently, we find no error on the part of the CA in upholding these issuances and
in dismissing the petition for certiorari before it.
To clarify, respondents are entitled to their accrued salaries only from the time petitioner received a copy of Labor Arbiter Gans Decision declaring
respondents termination illegal and ordering their reinstatement up to the date of the NLRC Resolution overturning that of the Labor Arbiter. This is
because it is only during said period that respondents are deemed to have been illegally dismissed and are entitled to reinstatement pursuant to Labor
Arbiter Gans Decision which was the one in effect at that time. Beyond that period, the NLRC Resolution declaring that there was no illegal dismissal is
already the one prevailing. From such point, respondents salaries did not accrue not only because there is no more illegal dismissal to speak of but
also because respondents have not yet been actually reinstated and have not rendered services to petitioner.
PANLILIO ET AL. VS. RTC BR. 51, CITY OF MANILA;
G.R. No. 173846; February 2, 2011
Facts:
On October 15, 2004, Jose Marcel Panlilio, Erlinda Panlilio, Nicole Morris and Marlo Cristobal (petitioners), as corporate officers of Silahis International
Hotel, Inc. (SIHI), filed with the Regional Trial Court (RTC) of Manila, Branch 24, a petition for Suspension of Payments and Rehabilitation[4] in SEC
Corp. Case No. 04-111180.
On October 18, 2004, the RTC of Manila, Branch 24, issued an Order staying all claims against SIHI upon finding the petition sufficient in form and
substance.
At the time, however, of the filing of the petition for rehabilitation, there were a number of criminal charges[7] pending against petitioners in Branch 51 of
the RTC of Manila. These criminal charges were initiated by respondent Social Security System (SSS) and involved charges of violations of Section 28
(h)[8] of Republic Act 8282, or the Social Security Act of 1997 (SSS law), in relation to Article 315 (1) (b)[9] of the Revised Penal Code, or Estafa.
Consequently, petitioners filed with the RTC of Manila, Branch 51, a Manifestation and Motion to Suspend Proceedings.[10] Petitioners argued that the
stay order issued by Branch 24 should also apply to the criminal charges pending in Branch 51. Petitioners, thus, prayed that Branch 51 suspend its
proceedings until the petition for rehabilitation was finally resolved.
Branch 51 issued an Order[11] denying petitioners motion to suspend the proceedings. It ruled that the stay order issued by Branch 24 did not cover
criminal proceedings, to wit:
Xxxx

242

The Court shares the view of the private complainants and the SSS that the said stay order does not include the prosecution of criminal offenses.
Precisely, the law criminalizes the non-remittance of SSS contributions by an employer to protect the employees from unscrupulous employers.
Clearly, in these cases, public interest requires that the said criminal acts be immediately investigated and prosecuted for the protection of society.
Issue:
Whether or not the stay order issued by branch 24, regional trial court of manila, in sec corp. Case no. 04-111180 covers also violation of sss law for
non-remittance of premiums and violation of [article] [3] 515 of the revised penal code.
Held:
Yes. Rosario is at fours with the case at bar. Petitioners are charged with violations of Section 28 (h) of the SSS law, in relation to Article 315 (1) (b) of
the Revised Penal Code, or Estafa. The SSS law clearly criminalizes the non-remittance of SSS contributions by an employer to protect the
employees from unscrupulous employers. Therefore, public interest requires that the said criminal acts be immediately investigated and prosecuted for
the protection of society.
The rehabilitation of SIHI and the settlement of claims against the corporation is not a legal ground for the extinction of petitioners criminal liabilities.
There is no reason why criminal proceedings should be suspended during corporate rehabilitation, more so, since the prime purpose of the criminal
action is to punish the offender in order to deter him and others from committing the same or similar offense, to isolate him from society, reform and
rehabilitate him or, in general, to maintain social order.[26] As correctly observed in Rosario,[27] it would be absurd for one who has engaged in criminal
conduct could escape punishment by the mere filing of a petition for rehabilitation by the corporation of which he is an officer.
The prosecution of the officers of the corporation has no bearing on the pending rehabilitation of the corporation, especially since they are charged in
their individual capacities. Such being the case, the purpose of the law for the issuance of the stay order is not compromised, since the appointed
rehabilitation receiver can still fully discharge his functions as mandated by law. It bears to stress that the rehabilitation receiver is not charged to defend
the officers of the corporation. If there is anything that the rehabilitation receiver might be remotely interested in is whether the court also rules that
petitioners are civilly liable. Such a scenario, however, is not a reason to suspend the criminal proceedings, because as aptly discussed in Rosario,
should the court prosecuting the officers of the corporation find that an award or indemnification is warranted, such award would fall under the category
of claims, the execution of which would be subject to the stay order issued by the rehabilitation court.[28] The penal sanctions as a consequence of
violation of the SSS law, in relation to the revised penal code can therefore be implemented if petitioners are found guilty after trial. However, any civil
indemnity awarded as a result of their conviction would be subject to the stay order issued by the rehabilitation court. Only to this extent can the order of
suspension be considered obligatory upon any court, tribunal, branch or body where there are pending actions for claims against the distressed
corporation.
ANDO VS. CAMPO;
G.R. No. 184007; February 16, 2011
Facts:
Petitioner was the president of Premier Allied and Contracting Services, Inc. (PACSI), an independent labor contractor. Respondents were hired by
PACSI as haulers tasked to manually carry bags of sugar from the warehouse of Victorias Milling Company and load them on trucks. The respondents
were dismissed from employment and thereafter, filed a case for illegal dismissal and some money claims with the NLRC. Labor Arbiter promulgated a
decision, ruling in respondents favor.
Petitioner and PACSI appealed to the NLRC and the NLRC ruled that petitioner failed to perfect his appeal because he did not pay the supersedeas
bond. It also affirmed the Labor Arbiters decision and upon finality of the decision, respondents moved for its execution.
To answer for the monetary award, NLRC Acting Sheriff Romeo Pasustento issued a Notice of Sale on Execution of Personal Property over the property
in the name of Paquito V. Ando x x x married to Erlinda S. Ando.
This prompted petitioner to file an action for prohibition and damages with prayer for the issuance of a TRO before RTC claiming that the property
belonged to him and his wife, not to the corporation, and, hence, could not be subject of the execution sale. But the RTC issued an order denying the
prayer for a TRO, holding that the trial court had no jurisdiction to try and decide the case. The RTC ruled that, pursuant to the NLRC Manual on the
Execution of Judgment, petitioners remedy was to file a third-party claim with the NLRC Sheriff.
Petitioner filed a petition for certiorari under Rule 65 before the CA contending that the RTC acted without or in excess of jurisdiction or with grave
abuse of discretion amounting to lack or excess of jurisdiction in issuing the Order. The CA, however, affirmed the RTC Order in so far as it dismissed
the complaint on the ground that it had no jurisdiction over the case, and nullified all other pronouncements in the same Order. Petitioner moved for
reconsideration, but the motion was denied.
Held:
Regular courts have no jurisdiction to hear and decide questions which arise from and are incidental to the enforcement of decisions, orders, or awards
rendered in labor cases by appropriate officers and tribunals of the Department of Labor and Employment. To hold otherwise is to sanction splitting of
jurisdiction which is obnoxious to the orderly administration of justice.
The NLRC Manual on the Execution of Judgment governs any question on the execution of a judgment of that body(NLRC). The Rules of Court apply
only by analogy or in a suppletory character.

243

NLRC Manual on the Execution of Judgment deals specifically with third-party claims in cases brought before that body. It defines a third-party claim as
one where a person, not a party to the case, asserts title to or right to the possession of the property levied upon. It also sets out the procedure for the
filing of a third-party claim, to wit:
SECTION 2. Proceedings. If property levied upon be claimed by any person other than the losing party or his agent, such person
shall make an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title and shall file the same
with the sheriff and copies thereof served upon the Labor Arbiter or proper officer issuing the writ and upon the prevailing party. Upon receipt
of the third party claim, all proceedings with respect to the execution of the property subject of the third party claim shall automatically be
suspended and the Labor Arbiter or proper officer issuing the writ shall conduct a hearing with due notice to all parties concerned and
resolve the validity of the claim within ten (10) working days from receipt thereof and his decision is appealable to the Commission within ten
(10) working days from notice, and the Commission shall resolve the appeal within same period.
There is no doubt in our mind that petitioners complaint is a third- party claim within the cognizance of the NLRC. Petitioner may indeed be considered
a third party in relation to the property subject of the execution vis--vis the Labor Arbiters decision. There is no question that the property belongs to
petitioner and his wife, and not to the corporation. It can be said that the property belongs to the conjugal partnership, not to petitioner alone. Thus, the
property belongs to a third party, i.e., the conjugal partnership. At the very least, the Court can consider that petitioners wife is a third party within
contemplation of the law.
There is no denying that the present controversy arose from the complaint for illegal dismissal. The subject matter of petitioners complaint is the
execution of the NLRC decision. Execution is an essential part of the proceedings before the NLRC. Jurisdiction, once acquired, continues until the
case is finally terminated, and there can be no end to the controversy without the full and proper implementation of the commissions directives.
Further underscoring the RTCs lack of jurisdiction over petitioners complaint is Article 254 of the Labor Code, to wit:
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.
Moreover, the power of the NLRC, or the courts, to execute its judgment extends only to properties unquestionably belonging to the judgment debtor
alone. A sheriff, therefore, has no authority to attach the property of any person except that of the judgment debtor. Likewise, there is no showing that
the sheriff ever tried to execute on the properties of the corporation.
The TCT of the property bears out that, indeed, it belongs to petitioner and his wife and the latter stands to lose the property subject of execution
without ever being a party to the case. This will be tantamount to deprivation of property without due process.
EXODUS INTERNATIONAL CONSTRUCTION CORP. VS. BISCOCHO;
G.R. No. 166109; February 23, 2011
Facts:
Petitioner Exodus International Construction Corporation (Exodus) is a duly licensed labor contractor for the painting of residential houses,
condominium units and commercial buildings. Petitioner Antonio P. Javalera is the President and General Manager of Exodus.
Exodus obtained from Dutch Boy Philippines, Inc. (Dutch Boy) a contract for the painting of the Imperial Sky Garden. Dutch Boy awarded another
contract to Exodus for the painting. In the furtherance of its business, Exodus hired respondents as painters on different dates.
Guillermo Biscocho (Guillermo) was assigned at the Imperial Sky Garden from February 8, 1999 to February 8, 2000. Fernando Pereda (Fernando)
worked in the same project from February 8, 1999 to June 17, 2000. Likewise, Ferdinand Mariano (Ferdinand) worked there from April 12, 1999 to
February 17, 2000. All of them were then transferred to Pacific Plaza Towers.
Gregorio S. Bellita (Gregorio) was assigned to work at the house of Mr. Teofilo Yap in Ayala Alabang, Muntinlupa City from May 20, 1999 to December
4, 1999. Afterwards he was transferred to Pacific Plaza Towers.
Miguel B. Bobillo (Miguel) was hired and assigned at Pacific Plaza Towers on March 10, 2000.
On November 27, 2000, Guillermo, Fernando, Ferdinand, and Miguel filed a complaint for illegal dismissal and non-payment of holiday pay, service
incentive leave pay, 13th month pay and night-shift differential pay.
On December 1, 2000, Gregorio also filed a complaint. He claimed that he was dismissed from the service on September 12, 2000 while Guillermo,
Fernando, Ferdinand, and Miguel were orally notified of their dismissal from the service on November 25, 2000.
Petitioners denied respondents allegations. As regards Gregorio, petitioners averred that on September 15, 2000, he absented himself from work and
applied as a painter with SAEI-EEI which is the general building contractor of Pacific Plaza Towers. Since then, he never reported back to work.
Guillermo absented himself from work without leave on November 27, 2000. When he reported for work the following day, he was reprimanded for
being Absent Without Official Leave (AWOL). Because of the reprimand, he worked only half-day and thereafter was unheard of until the filing of the
instant complaint.

244

On March 21, 2002, the Labor Arbiter rendered a Decision exonerating petitioners from the charge of illegal dismissal as respondents chose not to
report for work. The Labor Arbiter ruled that since there is neither illegal dismissal nor abandonment of job, respondents should be reinstated but
without any backwages. She disallowed the claims for premium pay for holidays and rest days and nightshift differential pay as respondents failed to
prove that actual service was rendered on such non-working days. However, she allowed the claims for holiday pay, service incentive leave pay and
13th month pay.
Petitioners sought recourse to the NLRC limiting their appeal to the award of service incentive leave pay, 13th month pay, holiday pay and 10%
attorneys fees in the sum of P70,183.23. NLRC dismissed the appeal. It ruled that petitioners, who have complete control over the records of the
company, could have easily rebutted the monetary claims against it. As to the award of attorneys fees, the NLRC found the same to be proper because
respondents were forced to litigate in order to validate their claim.
The CA also affirmed LA and NLRC decision, hence this petition.
Held:
No illegal dismissal.
The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to prove their allegation that respondents dismissed
them from their employment. It must be stressed that the evidence to prove this fact must be clear, positive and convincing. The rule that the employer
bears the burden of proof in illegal dismissal cases finds no application here because the respondents deny having dismissed the petitioners.
In this case, petitioners were able to show that they never dismissed respondents. As to the case of Fernando, Miguel and Ferdinand, it was shown
that on November 25, 2000, at around 7:30 a.m., the petitioners foreman, Wenifredo Lalap (Wenifredo) caught the three still eating when they were
supposed to be working already. Wenifredo reprimanded them and, apparently, they resented it so they no longer reported for work. In the case of
Gregorio, he absented himself from work on September 15, 2000 to apply as a painter with SAEI-EEI, the general contractor of Pacific Plaza Towers.
Since then he never reported back to work. Lastly, in the case of Guillermo, he absented himself without leave on November 27, 2000, and so he was
reprimanded when he reported for work the following day. Because of the reprimand, he did not report for work anymore.
Respondents must be reinstated and paid their holiday pay, service incentive leave pay, and 13th month pay.
However, petitioners are of the position that the reinstatement of respondents to their former positions, which were no longer existing, is impossible,
highly unfair and unjust. Having completed their tasks, their positions automatically ceased to exist. Consequently, there were no more positions where
they can be reinstated as painters.
Petitioners are misguided. They forgot that there are two types of employees in the construction industry. The first is referred to as project employees or
those employed in connection with a particular construction project or phase thereof and such employment is coterminous with each project or phase of
the project to which they are assigned. The second is known as non-project employees or those employed without reference to any particular
construction project or phase of a project.
The second category is where respondents are classified. As such they are regular employees of petitioners. It is clear from the records of the case
that when one project is completed, respondents were automatically transferred to the next project awarded to petitioners. There was no employment
agreement given to respondents which clearly spelled out the duration of their employment, the specific work to be performed and that such is made
clear to them at the time of hiring. It is now too late for petitioners to claim that respondents are project employees whose employment is coterminous
with each project or phase of the project to which they are assigned.
A project employee x x x may acquire the status of a regular employee when the following [factors] concur:
1. There is a continuous rehiring of project employees even after cessation of a project; and
2. The tasks performed by the alleged project employee are vital, necessary and indespensable to the usual business or trade of the employer.
In this case, the evidence on record shows that respondents were employed and assigned continuously to the various projects of petitioners. As
painters, they performed activities which were necessary and desirable in the usual business of petitioners, who are engaged in subcontracting jobs for
painting of residential units, condominium and commercial buildings. As regular employees, respondents are entitled to be reinstated without loss of
seniority rights.
Respondents are also entitled to the payment of attorneys fees.
Even though respondents were not represented by counsel in most of the stages of the proceedings of this case, the award of attorneys fees as ruled
by the Labor Arbiter, the NLRC and the CA to the respondents is still proper. In Rutaquio v. National Labor Relations Commission,[29] this Court held
that:
It is settled that in actions for recovery of wages or where an employee was forced to litigate and, thus, incur expenses to protect his rights and interest,
the award of attorneys fees is legally and morally justifiable.
In Producers Bank of the Philippines v. Court of Appeals[30] this Court ruled that:

245

Attorneys fees may be awarded when a party is compelled to litigate or to incur expenses to protect his interest by reason of an unjustified act of the
other party.
In this case, respondents filed a complaint for illegal dismissal with claim for payment of their holiday pay, service incentive leave pay, and 13th month
pay. The Labor Arbiter, the NLRC and the CA were one in ruling that petitioners did not pay the respondents their holiday pay, service incentive leave
pay, and 13th month pay as mandated by law. For sure, this unjustified act of petitioners had compelled the
respondents to institute an action primarily to protect their rights and interests.
As to Backwages
In cases where there is no evidence of dismissal, the remedy is reinstatement but without backwages. In this case, both the Labor Arbiter
and the NLRC made a finding that there was no dismissal much less an illegal one. It is settled that factual findings of quasi-judicial agencies are
generally accorded respect and finality so long as these are supported by substantial evidence. Thus, inasmuch as no finding of illegal dismissal had
been made, and considering that the absence of such finding is supported by the records of the case, this Court is bound by such conclusion and
cannot allow an award of the payment of backwages.
PFIZER, INC. VS. VELASCO;
G.R. No. 177467; March 9, 2011
Facts:
Private respondent Geraldine L. Velasco was employed with petitioner PFIZER, INC. as Professional Health Care Representative since 1 August 1992.
Sometime in April 2003, Velasco had a medical work up for her high-risk pregnancy and was subsequently advised bed rest which resulted in her
extending her leave of absence. Velasco filed her sick leave for the period from 26 March to 18 June 2003, her vacation leave from 19 June to 20 June
2003, and leave without pay from 23 June to 14 July 2003.
On 26 June 2003, while Velasco was still on leave, PFIZER through its Area Sales Manager, herein petitioner Ferdinand Cortez, personally served
Velasco a "Show-cause Notice" dated 25 June 2003. Aside from mentioning about an investigation on her possible violations of company work rules
regarding "unauthorized deals and/or discounts in money or samples and unauthorized withdrawal and/or pull-out of stocks" and instructing her to
submit her explanation on the matter within 48 hours from receipt of the same, the notice also advised her that she was being placed under "preventive
suspension" for 30 days .In response, Velasco sent a letter addressed to Cortez dated 28 June 2003 denying the charges.
On 12 July 2003, Velasco received a "Second Show-cause Notice" informing her of additional developments in their investigation. According to the
notice, a certain Carlito Jomen executed an affidavit pointing to Velasco as the one who transacted with a printing shop to print PFIZER discount
coupons. Velasco sent a letter to PFIZER via Aboitiz courier service asking for additional time to answer the second Show-cause Notice.
That same day, Velasco filed a complaint for illegal suspension with money claims before the Regional Arbitration Branch. The following day, 17 July
2003, PFIZER sent her a letter inviting her to a disciplinary hearing to be held on 22 July 2003. On 25 July 2003, Velasco received a "Third Show-cause
Notice," together with copies of the affidavits of two Branch Managers of Mercury Drug, asking her for her comment within 48 hours. Finally, on 29 July
2003, PFIZER informed Velasco of its "Management Decision" terminating her employment.
On 5 December 2003, the Labor Arbiter rendered its decision declaring the dismissal of Velasco illegal, ordering her reinstatement with backwages and
further awarding moral and exemplary damages with attorneys fees. On appeal, the NLRC affirmed the same but deleted the award of moral and
exemplary damages.
Undaunted, PFIZER filed with the Court of Appeals a special civil action for the issuance of a writ of certiorariunder Rule 65 of the Rules of Court to
annul and set aside the aforementioned NLRC issuances. In a Decision dated November 23, 2005, the Court of Appeals upheld the validity of
respondents dismissal from employment, the dispositive portion of which reads as follows:
IN VIEW WHEREOF, the dismissal of private respondent Geraldine Velasco is AFFIRMED, but petitioner PFIZER, INC. is hereby ordered to pay her the
wages to which she is entitled to from the time the reinstatement order was issued until November 23, 2005, the date of promulgation of Our Decision.
Issue:
Whether or not the Court of Appeals committed a serious but reversible error when it ordered Pfizer to pay Velasco wages from the date of the Labor
Arbiters decision ordering her reinstatement until November 23, 2005, when the Court of Appeals rendered its decision declaring Velascos dismissal
valid.13
Held:
The petition is without merit. At the outset, we note that PFIZERs previous payment to respondent of the amount of P1,963,855.00 (representing her
wages from December 5, 2003, or the date of the Labor Arbiter decision, until May 5, 2005) that was successfully garnished under the Labor Arbiters
Writ of Execution dated May 26, 2005 cannot be considered in its favor. Not only was this sum legally due to respondent under prevailing jurisprudence
but also this circumstance highlighted PFIZERs unreasonable delay in complying with the reinstatement order of the Labor Arbiter
As far back as 1997 in the seminal case of Pioneer Texturizing Corporation v. National Labor Relations Commission, the Court held that an award or
order of reinstatement is immediately self-executory without the need for the issuance of a writ of execution in accordance with the third paragraph of
Article 22322 of the Labor Code. In that case, we discussed in length the rationale for that doctrine, to wit:
The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory even pending appeal and the
posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of

246

reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the
execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere
continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of
Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement
order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed to
have ordained a valid and sensible law, one which operates no further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to
be construed in the light of the purpose to be achieved and the evil sought to be prevented. x x x In introducing a new rule on the reinstatement aspect
of a labor decision under Republic Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise. x x x23 (Italics in the
original; emphasis and underscoring supplied.)
In the case at bar, PFIZER did not immediately admit respondent back to work which, according to the law, should have been done as soon as an order
or award of reinstatement is handed down by the Labor Arbiter without need for the issuance of a writ of execution. Thus, respondent was entitled to the
wages paid to her under the aforementioned writ of execution. At most, PFIZERs payment of the same can only be deemed partial
compliance/execution of the Court of Appeals Resolution dated October 23, 2006 and would not bar respondent from being paid her wages from May 6,
2005 to November 23, 2005.
To reiterate, under Article 223 of the Labor Code, an employee entitled to reinstatement "shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll."
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is
not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period.
(Emphasis in the original; italics and underscoring supplied)
In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon
reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement and it is mandatory on the employer to comply therewith.
LUNA VS. ALLADO CONSTRUCTION CO., INC.;
G.R. No. 175251; May 30, 2011
Facts:
Petitioner Luna was the employee of the constructions company of the Respondent. He was assigned in Saranggani Province. As he was caught
pilfering the respondents property, he was dismissed from his employment, and thereby filed a case of illegal dismissal against the respondent.
The Labor Arbiter ruled that there was no illegal dismissal, but awarded financial assistance in favour of the petitioner. The respondent then appealed to
the NLRC questioning solely the LAs decision in awarding financial assistance. The NLRC reversed the LAs decision, finding out that there was illegal
dismissal and awarded the backwages to the petitioner.
Aggrieved by such an unfavourable decision, the respondent via Rule 65 posed in its appeal the validity of the NLRCs decision on the ground that it
has no jurisdiction to entertain questions not alleged in the appeal. The respondents ground was only questioning the propriety of the award of the
financial assistance, yet NLRC entertained issues other than that posed in the appeal. With the same adverse decision by the CA, the respondents
came before the SC via petition for certiorari still questioning the validity of the decision. Respondent argued that the NLRC does not have authority to
review issues not brought before it for appeal.
Issue:
WON the NLRC has jurisdiction to review issues not brought before it for appeal
Held:
NO.
Section 4(c), Rule VI of the 2002 Rules of Procedure of the NLRC, which was in effect at the time respondents appealed the Labor Arbiters decision,
expressly provided that, on appeal, the NLRC shall limit itself only to the specific issues that were elevated for review, to wit:
RULE
VI
Appeals
Section 4. Requisites for Perfection of Appeal. x x x.
xxxx
(c) Subject to the provisions of Article 218, once the appeal is perfected in accordance with these Rules, the Commission shall limit itself to
reviewing and deciding specific issues that were elevated on appeal.

247

As a testament to its effectivity and the NLRCs continued implementation of this procedural policy, the same provision was retained as Section 4(d),
Rule VI of the 2005 Revised Rules of Procedure of the NLRC.
In the case at bar, the NLRC evidently went against its own rules of procedure when it passed upon the issue of illegal dismissal although the question
raised by respondents in their appeal was concerned solely with the legality of the labor arbiters award of financial assistance despite the finding that
petitioner was lawfully terminated.
An appeal from a decision, award or order of the labor arbiter must be brought to the NLRC within ten (10) calendar days from receipt of such decision,
award or order, otherwise, the same becomes final and executory [Art. 223, Labor Code; Rule VIII, Sec. 1(a), Revised Rules of the NLRC]. Moreover,
the rules of the NLRC expressly provide that on appeal, the Commission shall limit itself only to the specific issues that were elevated for review, all
other matters being final and executory [Rule VIII, Sec. 5(c), Revised Rules of the NLRC, italics supplied].
In the present case, petitioner, aggrieved by the labor arbiters decision ordering the extension of financial assistance to Galagar despite the finding that
his termination was for just cause, specifically limited his appeal to a single legal question, i.e., the validity of the award of financial assistance to an
employee dismissed for pilfering company property. On the other hand, private respondent did not appeal.
When petitioner limited the issue on appeal, necessarily the NLRC may review only that issue raised. All other matters, including the issue of
the validity of private respondents dismissal, are final. If private respondent wanted to challenge the finding of a valid dismissal, he should
have appealed his case seasonably to the NLRC. By raising new issues in the reply to appeal, private respondent is in effect appealing his
case although he has, in fact, allowed his case to become final by not appealing within the reglementary period. A reply/opposition to appeal
cannot take the place of an appeal. Therefore, in this case, the dismissal of the complaint for illegal dismissal and the denial of the prayer for
reinstatement, having become final, can no longer be reviewed.
The Labor Code provision, read in its entirety, states that the NLRCs power to correct errors, whether substantial or formal, may be
exercised only in the determination of a question, matter or controversywithin its jurisdiction [Art. 218, Labor Code]. Therefore, by considering
the arguments and issues in the reply/opposition to appeal which were not properly raised by timely appeal nor comprehended within the scope of the
issue raised in petitioners appeal, public respondent committed grave abuse of discretion amounting to excess of jurisdiction.
The contention that the NLRC may nevertheless look into other issues although not raised on appeal since it is not bound by technical rules of
procedure, is likewise devoid of merit.
The law does not provide that the NLRC is totally free from "technical rules of procedure", but only that the rules of evidence prevailing in
courts of law or equity shall not be controlling in proceedings before the NLRC [Art. 221, Labor Code]. This is hardly license for the NLRC to
disregard and violate the implementing rules it has itself promulgated. Having done so, the NLRC committed grave abuse of discretion.
BANAHAW BROADCASTING CORP. VS. PACANA III;
G.R No. 171673; May 30, 2011
Facts:
On August 29, 1995, the DXWG personnel (Pacana III et al.) filed with the Labor Arbiter a complaint for illegal dismissal, unfair labor practice,
reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits, and attorneys fees against IBC and BBC.
On June 21, 1996, Labor Arbiter Abdullah L. Alug rendered his Decision awarding the DXWG personnel a total ofP12,002,157.28 as unpaid CBA
benefits consisting of unpaid wages and increases, 13th month pay, longevity pay, sick leave cash conversion, rice and sugar subsidy, retirement pay,
loyalty reward and separation pay. The Labor Arbiter denied the other claims of the DXWG personnel for Christmas bonus, educational assistance,
medical check-up and optical expenses. Both sets of parties appealed to the National Labor Relations Commission (NLRC).
The NLRC issued a resolution vacating the decision of the Labor Arbiter and remanded the case to arbitration branch of origin. On October 15, 1998,
Labor Arbiter Nicodemus G. Palangan rendered a Decision adjudging BBC to be liable for the same amount in the vacated Decision of Labor Arbiter
Alug.
Both BBC and respondents appealed to the NLRC anew. In their appeal, the DXWG personnel reasserted their claim for the remaining CBA benefits
not awarded to them, and alleged error in the reckoning date of the computation of the monetary award. BBC, in its own Memorandum of Appeal,
challenged the monetary award itself, claiming that such benefits were only due to IBC, not BBC, employees. In the same Memorandum of Appeal,
BBC incorporated a Motion for the Recomputation of the Monetary Award (of the Labor Arbiter), in order that the appeal bond may be reduced.
The NLRC issued an Order denying the Motion for the Recomputation of the Monetary Award. According to the NLRC, such recomputation would result
in the premature resolution of the issue raised on appeal. The NLRC ordered BBC to post the required bond within 10 days from receipt of said
Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection. Instead of complying with the Order to post
the required bond, BBC filed a Motion for Reconsideration, alleging this time that since it is wholly owned by the Republic of the Philippines, it need not
post an appeal bond.
Issue:
Whether or not Banahaw Broadcasting Corporation (BBC), a Government Owned and Controlled Corporation is exempt from posting an appeal bond
Held:

248

We can infer from the foregoing jurisprudential precedents that, as a general rule, the government and all the attached agencies with no legal
personality distinct from the former are exempt from posting appeal bonds, whereas government-owned and controlled corporations (GOCCs) are not
similarly exempted. This distinction is brought about by the very reason of the appeal bond itself: to protect the presumptive judgment creditor
against the insolvency of the presumptive judgment debtor. When the State litigates, it is not required to put up an appeal bond because it is
presumed to be always solvent. This exemption, however, does not, as a general rule, apply to GOCCs for the reason that the latter has a personality
distinct from its shareholders.
In the case at bar, BBC was organized as a private corporation, sequestered in the 1980s and the ownership of which was subsequently transferred
to the government in a compromise agreement. Further, it is stated in its Amended Articles of Incorporation that BBC has the following primary function:
To engage in commercial radio and television broadcasting, and for this purpose, to establish, operate and maintain such stations, both terrestrial and
satellite or interplanetary, as may be necessary for broadcasting on a network wide or international basis.
It is therefore crystal clear that BBCs function is purely commercial or proprietary and not governmental. As such, BBC cannot be deemed entitled to an
exemption from the posting of an appeal bond.
Consequently, the NLRC did not commit an error, and much less grave abuse of discretion, in dismissing the appeal of BBC on account of nonperfection of the same.
SOCIAL SECURITY COMMISSION VS. RIZAL POULTRY ET AL.;
G.R. No. 167050; June 1, 2011
Facts:
The instant case stemmed from a petition filed by Alberto Angeles (Angeles) before the Social Security Commission (SSC) to compel respondents Rizal
Poultry and Livestock Association, Inc. (Rizal Poultry) or BSD Agro Industrial Development Corporation (BSD Agro) to remit to the Social Security
System (SSS) all contributions due for and in his behalf.
Angeles had earlier filed a complaint for illegal dismissal against BSD Agro and/or its owner, Benjamin San Diego (San Diego). The Labor Arbiter initially
found that Angeles was an employee and that he was illegally dismissed. On appeal, however, the NLRC reversed the Labor Arbiters Decision and
held that no employer-employee relationship existed between Angeles and respondents. The ruling was anchored on the finding that the duties
performed by Angeles, such as carpentry, plumbing, painting and electrical works, were not independent and integral steps in the essential operations
of the company, which is engaged in the poultry business. Angeles elevated the case to the Court of Appeals via petition for certiorari. The appellate
court affirmed the NLRC ruling and upheld the absence of employer-employee relationship. Angeles moved for reconsideration but it was denied by the
Court of Appeals. No further appeal was undertaken, hence, an entry of judgment was made on 26 May 2001.
At any rate, the SSC did not take into consideration the decision of the NLRC. It denied respondents motion to dismiss in an Order dated 19 February
2002. The SSC ratiocinated, thus:
Decisions of the NLRC and other tribunals on the issue of existence of employer-employee relationship between parties are not binding on the
Commission. At most, such finding has only a persuasive effect and does not constitute res judicata as a ground for dismissal of an action pending
before Us. While it is true that the parties before the NLRC and in this case are the same, the issues and subject matter are entirely different. The labor
case is for illegal dismissal with demand for backwages and other monetary claims, while the present action is for remittance of unpaid SS[S]
contributions. In other words, although in both suits the respondents invoke lack of employer-employee relationship, the same does not proceed from
identical causes of action as one is for violation of the Labor Code while the instant case is for violation of the SS[S] Law.
Respondents sought recourse before the Court of Appeals by way of a petition for certiorari. The Court of Appeals reversed the rulings of the SSC and
held that there is a common issue between the cases before the SSC and in the NLRC; and it is whether there existed an employer-employee
relationship between Angeles and respondents. Thus, the case falls squarely under the principle of res judicata, particularly under the rule on
conclusiveness of judgment, as enunciated in Smith Bell and Co. v. Court of Appeals.
Issue:
WON the decision of the NLRC and the Court of Appeals, finding no employer-employee relationship, constitutes res judicata as a rule on
conclusiveness of judgment as to preclude the relitigation of the issue of employer-employee relationship in a subsequent case filed before the
petitioner.
Held:
The elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court
having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as
between the first and second action, identity of parties, subject matter, and causes of action. Should identity of parties, subject matter, and causes of
action be shown in the two cases, then res judicata in its aspect as a "bar by prior judgment" would apply. If as between the two cases, only identity of
parties can be shown, but not identical causes of action, then res judicata as "conclusiveness of judgment" applies.
Verily, the principle of res judicata in the mode of "conclusiveness of judgment" applies in this case. The first element is present in this case. The NLRC
ruling was affirmed by the Court of Appeals. It was a judicial affirmation through a decision duly promulgated and rendered final and executory when no
appeal was undertaken within the reglementary period. The jurisdiction of the NLRC, which is a quasi-judicial body, was undisputed. Neither can the
jurisdiction of the Court of Appeals over the NLRC decision be the subject of a dispute. The NLRC case was clearly decided on its merits; likewise on
the merits was the affirmance of the NLRC by the Court of Appeals.

249

With respect to the fourth element of identity of parties, we hold that there is substantial compliance.
The parties in SSC and NLRC cases are not strictly identical. Rizal Poultry was impleaded as additional respondent in the SSC case. Jurisprudence
however does not dictate absolute identity but only substantial identity. There is substantial identity of parties when there is a community of interest
between a party in the first case and a party in the second case, even if the latter was not impleaded in the first case.
A case in point is Smith Bell and Co. v. Court of Appeals25 which, contrary to SSC, is apt and proper reference. Smith Bell availed of the services of
private respondents to transport cargoes from the pier to the company's warehouse. Cases were filed against Smith Bell, one for illegal dismissal before
the NLRC and the other one with the SSC, to direct Smith Bell to report all private respondents to the SSS for coverage. While the SSC case was
pending before the Court of Appeals, Smith Bell presented the resolution of the Supreme Court in G.R. No. L-44620, which affirmed the NLRC,
Secretary of Labor, and Court of Appeals finding that no employer-employee relationship existed between the parties, to constitute as bar to the SSC
case. We granted the petition of Smith Bell and ordered the dismissal of the case. We held that the controversy is squarely covered by the principle of
res judicata, particularly under the rule on "conclusiveness of judgment." Therefore, the judgment in G.R. No. L-44620 bars the SSC case, as the relief
sought in the latter case is inextricably related to the ruling in G.R. No. L-44620 to the effect that private respondents are not employees of Smith Bell.
UNIVERSITY PLANS, INC. VS. SOLANO;
G.R. No. 170416; June 22, 2011
Facts:
Respondents filed before the Labor Arbiter complaints for illegal dismissal, illegal deductions, overriding commissions, unfair labor practice, moral and
exemplary damages, and actual damages against petitioner University Plans Incorporated.
The Labor Arbiter found petitioner guilty of illegal dismissal and ordered respondents' reinstatement as well as the payment of their full backwages,
proportionate 13th month pay, moral/exemplary damages, and attorney's fees.
Petitioner appealed the Decision of the LA to the NLRC and filed its Memorandum on Appeal as well as a Motion to Reduce Bond. Simultaneous with
the filing of said pleadings, it posted a cash bond in the amount of P30,000.00.
In its Motion to Reduce Bond, petitioner alleged that it was under receivership and that it cannot dispose of its assets at such a short notice. Because of
this, it could not post the required bond. Nevertheless, it has P30,000.00 available for immediate disposition and thus prayed that said amount be
deemed sufficient to satisfy the required bond for the perfection of its appeal. The NLRC denied petitioner's Motion to Reduce Bond and directed it to
post an additional appeal bond in the amount of P3,013,599.50 within an unextendible period of 10 days from notice, otherwise the appeal shall be
dismissed for non-perfection.
The NLRC denied petitioner's motion for reconsideration ratiocinating that while it has the discretion to reduce the appeal bond, it is nevertheless not
persuaded that petitioner was incapable of posting the required bond. It noted that petitioner failed to submit any financial statement or provide details
anent its alleged receivership or its sources of income.
Unsatisfied, petitioner went to the CA through a Petition for Certiorari. The CA upheld the NLRC Resolution.
Issue:
Whether or not the NLRC erred in not considering the merit or lack of merit of petitioners Motion to Reduce Bond.
Held:
There is merit in the petition.
The NLRC erred in not considering the merit or lack of merit of petitioner's Motion to Reduce Bond.
Petitioner attached to its Motion to Reduce Bond the SEC Orders dated August 23, 1999 and May 23, 2000. The Order of August 23, 1999 is a Cease
and Desist Order which, among others, prohibited the officers and agents of petitioner from withdrawing from its trust funds or from making any
disposition thereof and, ordered the freeze of all its assets and properties. On the other hand, the May 23, 2000 Order placed UPI, Inc. under the
management and control of a RECEIVER.
From the said SEC Orders, it is unmistakable that petitioner was under receivership. And from the tenor and contents of said Orders, it is possible that
petitioner has no liquid asset which it could use to post the required amount of bond. Also, it is quite understandable that because of petitioner's
financial state, it cannot raise the amount of more than P3 million within a period of 10 days from receipt of the Labor Arbiter's judgment.
However, the NLRC ignored petitioner's allegations and instead remained adamant that since the amount of bond is fixed by law, petitioner must post
an additional bond of more than P3 million. This, to us, is an utter disregard of the provision of the Labor Code and of the NLRC Revised Rules of
Procedure allowing the reduction of bond in meritorious cases. While the NLRC tried to correct this error in its March 21, 2003 Resolution by further
explaining that it was not persuaded by petitioner's alleged incapability of posting the required amount of bond for failure to submit financial statement,
list of sources of income and other details with respect to the alleged receivership, we still find the hasty denial of the motion to reduce bond not proper.
Notwithstanding petitioner's failure to submit its financial statement and list of sources of income and to give more details relative to its receivership, it
was nevertheless able to show through the abovementioned SEC Orders that it was indeed under a state of receivership. This should have been
sufficient reason for the NLRC to not outrightly deny petitioner's motion. As to the lacking documents and details on the receivership, it is true that they

250

are needed by the NLRC in determining petitioner's capacity to post the required amount of bond. However, their absence should not lead to the
outright denial of the motion since as earlier discussed, the NLRC is not precluded from conducting a preliminary determination on the merit or lack of
merit of a motion to reduce bond. Here, considering the clear showing of petitioner's state of receivership, the NLRC should have conducted such
preliminary determination and therein require the submission of said documents and other necessary evidence before proceeding to resolve the subject
motion. After all, the present case falls under those cases where the bond requirement on appeal may be relaxed considering that (1) there was
substantial compliance with the Rules; (2) the surrounding facts and circumstances constitute meritorious grounds to reduce the bond; and (3) the
petitioner, at the very least, exhibited its willingness and/or good faith by posting a partial bond during the reglementary period. Also, such a procedure
would be in keeping with the Labor Code's mandate to use every and all reasonable means to ascertain the facts in each case speedily and objectively,
without regard to technicalities of law or procedure, all in the interest of due process. We thus find error on the part of the NLRC when it denied
petitioner's Motion to Reduce Bond and likewise on the part of the CA when it affirmed said denial.
In view of the foregoing, a remand of this case to the NLRC for the conduct of preliminary determination of the merit or lack of merit of petitioner's
Motion to Reduce Bond is proper.
BPI EMPLOYEES UNION METRO MANILA VS. BANK OF THE PHIL. ISLANDS;
G.R No. 178699; September 21, 2011
Facts:
Petitioner Uy was a bank teller of the respondent BPI. She was separated from her job allegedly because of insubordination, disrespect and absence
without leave. She together with the Union, filed a case for illegal dismissal against respondent in the Voluntary Arbitrator. The VA ruled in favour of her,
ordering the respondent to reinstate her and award full backwages.
Both appealed to the CA which affirmed the VAs decision with modifications. Still unsatisfied, Uy and the Union went to SC and alleged that BPIs
remedy is not a certiorari petition under Rule 65 of the Rules of Court but an appeal from judgments, final orders and resolutions of voluntary arbitrators
under Rule 43 of the Rules of Court. They also contended that BPIs petition is wanting in substance.
Issue:
WON BPIs remedy of certiorari petition under Rule 65 is proper
Held:
YES.
Section 1, Rule 41 of the Rules of Court explicitly provides that no appeal may be taken from an order of execution, the remedy of an aggrieved party
being an appropriate special civil action under Rule 65 of the Rules of Court. Thus, BPI correctly availed of the remedy of certiorari under Rule 65 of the
Rules of Court when it assailed the December 6, 2005 order of execution of the Voluntary Arbitrator.
DUP SOUND PHILS. VS. CA;
G.R. No. 168317; November 21, 2011
Facts:
Private respondent, Pial is an employee of herein petitioner DUP Sound Phils. (DUP); petitioner Tan is the owner and manager of DUP. Pial was given
the job of "mastering tape"; his main function was to adjust the sound level and intensity of the music to be recorded as well as arrange the sequence of
the songs to be recorded in the cassette tapes. Pial got absent from work because he got sick. The following day when he was ready for work, he was
informed by the office secretary not to report for work until such time that they will advise him to do so. After three weeks without receiving any notice,
Pial again called up their office. This time the office secretary advised him to look for another job because, per instruction of Tan, he is no longer allowed
to work at DUP. Pial filed a complaint for illegal dismissal and prayed for the payment of his unpaid service incentive leave pay, full backwages,
separation pay, moral and exemplary damages as well as attorney's fees.
Petitioners DUP and Tan denied the material allegations of Pial; that the latter failed to report for work following an altercation with his supervisor the
previous day and that Pial called up their office and informed the office secretary that he will be going back to work on September 17, 2001. However,
he failed to report for work on the said date. Petitioners were subsequently surprised when they learned that Pial filed a complaint for illegal dismissal
against them; Pial was never dismissed, instead, it was his unilateral decision not to work at DUP anymore.
The Labor Arbiter rendered a decision declaring Pial to have been illegally dismissed and ordering DUP and Tan to reinstate him to his former position
and pay him backwages, cost of living allowance, service incentive leave pay and attorney's fees. On appeal, the NLRC modified the decision by
deleting the award of backwages and attorney's fees. The NLRC ruled that there was no illegal dismissal on the part of DUP and Tan, but neither was
there abandonment on the part of Pial. Pial then filed a special civil action for certiorari with the CA. The CA set aside the decision of the NLRC and
reinstated the decision of the LA.
Issue:
Whether or not Pial was illegally dismissed.
Held:
This Court cannot give credence to petitioners' claim that private respondent abandoned his job. Pial was illegally dismissed.

251

The settled rule in labor cases is that the employer has the burden of proving that the employee was not dismissed, or, if dismissed, that the dismissal
was not illegal, and failure to discharge the same would mean that the dismissal is not justified and, therefore, illegal. In the instant case, what betrays
petitioners' claim that private respondent was not dismissed from his employment but instead abandoned his job is their failure to prove that the latter
indeed stopped reporting for work without any justifiable cause or a valid leave of absence.
If private respondent indeed abandoned his job, petitioners should have afforded him due process by serving him written notices, as well as a chance to
explain his side, as required by law. It is settled that, procedurally, if the dismissal is based on a just cause under Article 282 of the Labor Code, the
employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought, a hearing or an opportunity to be heard and, after hearing or opportunity to
be heard, a notice of the decision to dismiss. Again, petitioners failed to do these. Thus, the foregoing bolsters private respondent's claim that he did not
abandon his work but was, in fact, dismissed.
Neither may private respondent's refusal to report for work subsequent to the LA's issuance of an order for his reinstatement be considered as another
abandonment of his job. It is a settled rule that failure to report for work after a notice to return to work has been served does not necessarily constitute
abandonment. As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just cause for termination of employment by the employer. For a valid finding of abandonment,
these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever
employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that
the employee has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and
unjustified. In the instant case, private respondent claimed that his subsequent refusal to report for work despite the Labor Arbiter's order for his
reinstatement is due to the fact that he was subsequently made to perform the job of a "bodegero" of which he is unfamiliar and which is totally different
from his previous task of "mastering tape." Moreover, he was assigned to a different workplace, which is a warehouse, where he was isolated from all
other employees. The Court notes that petitioners failed to refute the foregoing claims of private respondent
Under the existing law, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights. Article 279 of
the Labor Code clearly provides that an employee who is dismissed without just cause and without due process is entitled to backwages and
reinstatement or payment of separation pay in lieu thereof. Article 223 of the same Code also provides that an employee entitled to reinstatement shall
either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation, or, at the option of the employer,
merely reinstated in the payroll. It is established in jurisprudence that reinstatement means restoration to a state or condition from which one had been
removed or separated. The person reinstated assumes the position he had occupied prior to his dismissal. Reinstatement presupposes that the
previous position from which one had been removed still exists, or that there is an unfilled position which is substantially equivalent or of similar nature
as the one previously occupied by the employee.
This Court has ruled in many instances that reinstatement is no longer viable where, among others, the relations between the employer and the
employee have been so severely strained, that it is not in the best interest of the parties, nor is it advisable or practical to order reinstatement, or where
the employee decides not to be reinstated. In the instant case, the resulting circumstances show that reinstatement would be impractical and would
hardly promote the best interest of the parties. Resentment and enmity between petitioners and private respondent necessarily strained the relationship
between them or even provoked antipathy and antagonism as shown by the acts of the parties subsequent to the order of reinstatement. Besides,
private respondent expressly prayed for an award of separation pay in lieu of reinstatement from the very start of the proceedings before the Labor
Arbiter. By so doing, he forecloses reinstatement as a relief by implication.
Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as
an alternative. This has been the consistent ruling in the award of separation pay to illegally dismissed employees in lieu of reinstatement.
AUJERO VS. PHIL. COMMUNICATIONS SATELLITE CORP.;
G.R. No. 193484; January 18, 2012
Facts
Petitioner started working for Philcomsat in 1967 as an accountant. On August 15, 2001 or after 34 years of service, he applied for early retirement and
the same was approved on September 15, 2001. During that time, he was the Senior Vice-President. He executed a Deed of Release and Quitclaim in
Philcomsats favor on September 12, 2002 with a receipt from the latter of a check in the amount of P 9,439, 327.91.After almost 3 years, petitioner filed
a complaint for unpaid retirement benefits claiming that the actual amount of his retirement pay is P 14, 015, 055.00 and the P 9, 439, 327.91 that he
received as supposed settlement is unconscionable. Thus, his quitclaim must be declared as null and void. He said that he had no choice but to accept
said amount because he was in dire need thereof and he was ready to return to his hometown so he signed the quitclaim despite the deficiency as no
money would be released if he did not execute a release and waiver in Philcomsats favor. According to him, the letter of Philcomsats chairman and
president addressed to UCPB for the release of P 9,439,327.91 to him and P 4,575,727.09 to Philcomsat, which predated the execution of his quitclaim,
indicates the companys pre-conceived plans to deprive him of a portion of his retirement pay. The LA decided in favor of the petitioner and ordered
Philcomsat to pay him P 4,575,727.09and P 274,805.00 as balance of his retirement benefits and salary for the period from August 15 to September 15,
2001. Petitioners complaint for unpaid retirement benefits and salary was dismissed because he failed to prove that Philcomsat employed means to
vitiate his consent to the quitclaim. Philcomsats appeal to the NLRC from LAs decision was filed and its surety bond posted beyond the prescribed
period of 10 days but since it was only one day delayed, the NLRC disregard the procedural lapse & proceeded with the appeal. Petitioner later filed for
a petition for certiorari accusing NRLC with grave abuse of discretion for proceeding despite respondents belated appeal. He claimed that when
Philcomsat filed its appeal and posted its surety bond, LAs decision became final and executory and the failure of Philcomsats counsel to verify the
copy does not constitute excusable negligence. The CA however, found no merit in the claim of petitioner and ruled that the NLRC was correct in
upholding the validity of the quitclaim because the terms of the Deed of Release and Quitclaim were reasonable and there was no showing that
Philcomsat employed coercion, fraud or undue influence upon petitioner to compel him to sign the same.

252

Issues:
1. Whether or not the delay in the filing of Philcomsats appeal and posting of surety bond is inexcusable; and
2. Whether or not the quitclaim executed by the petitioner in Philcomsats favor is valid, thereby foreclosing his right to institute any claim against
Philcomsat
Held:
The Court rules in Philcomsats favor since procedural rules may be waived or dispensed with in absolutely meritorious cases. According to Philcomsat,
when petitioner made the execution of the quitclaim, it was voluntary. His educational attainment and the position he occupied also militate against his
claim that he was pressured or coerced into signing the quitclaim. Absent any evidence that any vices of consent is present and considering
the petitioners position and education, the quitclaim executed by the petitioner constitutes a valid and binding agreement.
Since petitioners claim of fraud and bad faith against Philcomsat is unsubstantiated, this Court
thus, finds the quitclaim to be legitimate waiver. The factual issues were determined by the NLRC and were affirmed by the CA. Petition is denied.
SARONA VS. NLRC;
G.R. No. 185280; January 18, 2012
Facts:
Petitioner, a security guard in Sceptre since April 1976, was asked by Sceptres operations manager on June 2003, to submit a resignation letter as a
requirement for an application in Royale and to fill up an employment application form for the said company. He was then assigned at Highlight Metal
Craft Inc. from July 29 to August 8, 2003 and was later transferred to Wide Wide World Express Inc. On September 2003, he was informed that his
assignment at WWWE Inc. was withdrawn because Royale has been allegedly replaced by another security agency which he later discovered to be
untrue. Nevertheless, he was once again assigned at Highlight Metal sometime in September 2003 and when he reported at Royales office on October
1, 2003, he was informed that he would no longer be given any assignment as instructed by Sceptres general manager. He thus filed a complaint for
illegal dismissal. The LA ruled in petitioners favor as he found him illegally dismissed and was not convinced by the respondents claim on petitioners
abandonment.
Respondents were ordered to pay backwages computed from the day he was dismissed up to the promulgation of his decision on May 11, 2005.The LA
also ordered for the payment of separation pay but refused to pierce Royales corporate veil.
Respondents appealed to the NLRC claiming that the LA acted with grave abuse of discretion upon ruling on the illegal dismissal of petitioner. NLRC
partially affirmed the LAs decision with regard to petitioners illegal dismissal and separation pay but modified the amount of backwages and limited it to
only 3 months of his last month salary reducing P95, 600 to P15, 600 since he worked for Royale for only 1 month and 3 days.
Petitioner did not appeal to LA but raised the validity of LAs findings on piercing Royales corporate personality and computation of his separation pay
and such petition was dismissed by the NLRC.
Petitioner elevated NLRCs decision to the CA on a petition for certiorari, and the CA disagreed with the NLRCs decision of not proceeding to review
the evidence for determining if Royale is Sceptres alter ego that would warrant the piercing of its corporate veil.
Issues:
1) Whether or not Royales corporate fiction should be pierced for the purpose of compelling it to recognize the petitioners length of service with
Sceptre and for holding it liable for the benefits that have accrued to him arising from his employment with Sceptre; and
2) Whether or not petitioners backwages should be limited to his salary for 3 months
Held:
The doctrine of piercing the corporate veil is applicable on alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business
conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality,
agency, conduit or adjunct of another corporation. The way on how petitioner was made to resign from Sceptre then later on made an employee of
Royale, reflects the use of the legal fiction of the separate corporate personality and is an implication of continued employment. Royale is a continuation
or successor or Sceptre since the employees of Sceptre and of Royale are the same and said companies have the same principal place of business.
Because petitioners rights were violated and his employer has not changed, he is entitled to separation pay which must be computed from the time he
was hired until the finality of this decision. Royale is also ordered to pay him backwages from his dismissal on October 1, 2003 until the finality of this
decision. However, the amount already received by petitioner from the respondents shall be deducted. He is also awarded moral and exemplary
damages amounting to P 25, 000.00 each for his dismissal which was tainted with bad faith and fraud. Petition is granted. CAs decision is reversed and
set aside.
SALENGA ET AL. VS. CA;
G.R. No. 174941; February 1, 2012
Facts:
President/Chief Executive Officer (CEO) Rufo Colayco issued an Order informing petitioner that, pursuant to the decision of the board of directors of
respondent CDC, the position of head executive assistant the position held by petitioner was declared redundant. Petitioner filed a Complaint for
illegal dismissal with a claim for reinstatement and payment of back wages, benefits, and moral and exemplary damages against respondent CDC and
Colayco. Respondents, represented by the Office of the Government Corporate Counsel (OGCC), alleged that the NLRC had no jurisdiction to entertain

253

the case on the ground that petitioner was a corporate officer and, thus, his dismissal was an intra-corporate matter falling properly within the
jurisdiction of the Securities and Exchange Commission (SEC). LA Darlucio rendered a Decision in favor of petitioner. From the decision, the OCGCC
filed an appeal with the National Labor Relations Commission (NLRC) via a Memorandum of Appeal verified and certified by Hilana Timbol-Roman, the
executive vice president of respondent CDC. The petitioner opposed the appeal on the ground that the Memorandum of Appeal and Joint Affidavit were
not accompanied by a board resolution from respondents board of directors authorizing either Timbol-Roman or Atty. Mallare, or both, to pursue the
case or to file the appeal on behalf of respondent.
Issue:
Whether or not the NLRC has jurisdiction to entertain the appeal.
Held:
NLRC has no jurisdiction to entertain the appeal. It is clear from the NLRC Rules of Procedure that appeals must be verified and certified against forumshopping by the parties-in-interest themselves. A corporation can only exercise its powers and transact its business through its board of directors and
through its officers and agents when authorized by a board resolution or its bylaws. Absent the requisite board resolution, neither Timbol-Roman nor
Atty. Mallari, who signed the Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent corporation, may be
considered as the appellant and employer referred to by Rule VI, Sections 4 to 6 of the NLRC Rules of Procedure. The court cannot agree with the
OGCCs attempt to downplay this procedural flaw by claiming that, as the statutorily assigned counsel for GOCCs, it does not need such authorization.
In Constantino-David v. Pangandaman-Gania, 456 Phil. 273, 294-298 (2003), the court exhaustively explained why it was necessary for government
agencies or instrumentalities to execute the verification and the certification against forum-shopping through their duly authorized representatives. The
purpose of verification is to secure an assurance that the allegations in the pleading are true and correct and have been filed in good faith. Unless
equitable circumstances which are manifest from the record of a case prevail, it therefore becomes necessary for the concerned government agency or
its authorized representatives to certify for non-forum shopping if only to be sure that no other similar case or incident is pending before any other court.
Anent the corporations liability, the decision of the LA still stands. In the case at bar, respondents failed to adduce any evidence showing that the
position of Head Executive Assistant is superfluous. There is no evidence on record to show that the position of Head Executive Assistant was
abolished by the Board of Directors in its meetings. Hence, the ground of redundancy is merely a device made by respondent Colayco in order to ease
out the complainant from the respondent corporation. Moreover, the complainant was not accorded his right to due process prior to his termination. He
was not given the opportunity to be heard and defend himself. However, the court notes that with regards to respondent Colaycos solidary liability with
the corporation, petitioner notably in the case at hand, did not question the ruling made by NLRC in finding that respondent Colayco may not be held
solidarily responsible to him. As a result, it dropped him as a respondent. Based on the foregoing, all other subsequent proceedings regarding the issue
of petitioners dismissal are null and void for having been conducted without jurisdiction.
LOCKHEED DETECTIVE & WATCHMAN AGENCY VS. UNIVERSITY OF THE PHILS.;
G.R No. 185918; April 18, 2012
Facts:
Petitioner entered into a contract for security services with respondent University of the Philippines and they were both sued by several security guards
in 1998 for payment of underpaid wages and other benefits. The labor arbiter found the claims meritorious and held both petitioner and respondent
solidarily liable as job contractor and principal. Upon appeal by both, the decision was only modified by dismissing some claims (premium pay and
service incentive leave pay) for lack of basis but they were still held solidarily liable. An MR on this was also denied by the NLRC. The NLRC decision
became final and executor on 2002 and a writ of execution was issued but later quashed by the LA on motion of UP due to the disputes regarding the
amount of the award. But, such order quashing the writ was reversed by the NLRC.
UP moved to reconsider the NLRC resolution but it was upheld with the modification that the satisfaction of the judgment award in favor of Lockheed
will be only against the funds of UP which are not identified as public funds. The order and resolution became final and an alias writ of execution was
issued.
Pursuant to such order, a notice of garnishment was issued to PNB for the satisfaction of the award. UP filed a motion to quash the writ of garnishment
and argued that the funds are public in nature and are earmarked for educational purposes. After 10 days from the receipt of the notice, PNB released
the garnished funds in favor of the NLRC.
UP filed a petition for certiorari before the CA on the garnishment order which was initially upheld by the CA but upon reconsideration, it reversed itself
and ruled in favor of UP after applying the principles in the NEA case. Thus, Lockheed filed the petition before the SC.
Issue:
WON the money claim against UP, being a Government instrumentality, should have been coursed to the COA first.
Held:
Yes.
This Court held that like in the NED case, UP is a juridical personality separate and distinct from the government and has the capacity to sue and be
sued and being such, it cannot evade execution, and its funds may be subject to garnishment or levy. However, before execution may be had, a claim
for payment of the judgment award must first be filed with the COA. Under Commonwealth Act No. 327 as amended by Section 26 of P.D. No. 1445, it
is the COA which has primary jurisdiction to examine, audit and settle "all debts and claims of any sort" due from or owing the Government or any of its
subdivisions, agencies and instrumentalities, including government-owned or controlled corporations and their subsidiaries. With respect to money
claims arising from the implementation of Republic Act No. 6758, their allowance or disallowance is for COA to decide, subject only to the remedy of
appeal by petition for certiorari to this Court.

254

As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be done since the funds of UP had already been
garnished, since the garnishment was erroneously carried out and did not go through the proper procedure (the filing of a claim with the COA), UP is
entitled to reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of judicial demand to be reckoned from
the time UP filed a petition for certiorari before the CA which occurred right after the withdrawal of the garnished funds from PNB.
Petitioner Lockheed Detective and Watchman Agency, Inc. was ordered to reimburse University of the Philippines the amount of P12,062,398.71 plus
interest of 6% per annum, to be computed from September 12, 2005 up to the finality of the decision, and 12% interest on the entire amount from date
of finality of the courts decision until fully paid.
3RD ALERT SECURITY AND DETECTIVE SERVICES, INC. VS. NAVIA;
G.R. No. 200653; June 13, 2012
Facts:
Romualdo Navia filed an illegal dismissal complaint against 3rd Alert and the labor arbiter issued a decision that Navia's dismissal was illegal. 3rd Alert
appealed to the NLRC which affirmed the ruling of the labor arbiter and later on, it issued an Entry of Judgment certifying that the NLRC resolution has
become final and executory. The labor arbiter issued a writ of execution to enforce the recomputed monetary awards upon Navias motion.
3rd Alert appealed the recomputed amount and alleged that the writ was issued with grave abuse of discretion since there was already a notice of
reinstatement sent to Navia. The NLRC dismissed the appeal, ruling that 3rd Alert is guilty of bad faith since there was no earnest effort to reinstate
Navia and that there was no notice or reinstatement sent to Navia's counsel. A motion for reconsideration was filed, but it was likewise denied.
3rd Alert filed a petition for certiorari with the CA which found the petition without merit because Navia had not been reinstated either physically or in the
payroll. The CA also denied the motion for reconsideration filed by 3rd Alert; hence, this petition.
Issue:
Whether or not, the CA erred in ruling that the NLRC did not commit any grave abuse of discretion?
Held:
No. CA did not erred in ruling that the NLRC did not commit any grave abuse of discretion
Article 223 of the Labor Code provides that in case there is an order of reinstatement, the employer must admit the dismissed employee under the
same terms and conditions, or merely reinstate the employee in the payroll. The order shall be immediately executory. Thus, 3rd Alert cannot escape
liability by simply invoking that Navia did not report for work. The law states that the e mployer must still reinstate the employee in the payroll. Where
reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service could be awarded as an
alternative.
In the case at bar, 3rd Alert resorted to legal tactics to frustrate the execution of the labor arbiter's order; for about four (4) years, it evaded the obligation
to reinstate Navia. By so doing, 3rd Alert has made a mockery of justice. We thus find it proper, under the circumstances, to impose treble costs against
3rd Alert for its utter disregard to comply with the writ of execution. To reiterate, no indication exists showing that 3rd Alert exerted any efforts to
reinstate Navia; worse, 3rd Alert's lame excuse of having sent a notice of reinstatement to a certain "Biznar" only compounded the intent to mislead the
courts. Failure to adduce additional evidence, it was held that indeed there was no earnest effort for 3 rd alert to reinstate Navia. Thus, CA was correct in
affirming the judgment of the NLRC in this regard.
RADIO PHILIPPINES NETWORK, INC. VS. YAP;
G.R No. 187713; August 1, 2012
Facts:
Petitioner RPN, represented by OGCC, is a government sequestered corporation, while petitioners Concio, Linao, Barrameda and Angeles were the
President, General Manager, Assistant General Manager for Finance, and Human Resources Manager, respectively, of RPN who were impleaded and
charged with indirect contempt, the subject matter of the present petition. Respondents Yap, San Miguel, Dayon, Lemina and Baptista were employees
of RPN and former members of RPNEU, the bargaining agent of the rank-and-file employees of the said company.
RPN and RPNEU entered into a CBA with a union security clause providing that a member who has been expelled from the union shall also be
terminated from the company.
A conflict arose between the respondents and other members of RPNEU and recommended to the union's board of directors the expulsion of the
respondents from the union. On January 24, 2006, the union wrote to RPN President Concio demanding the termination of the respondents'
employment from the company.
RPN notified the respondents that their employment would be terminated whereupon the respondents filed with the Labor Arbiter (LA) a complaint for
illegal dismissal and non-payment of benefits.
The LA rendered a decision ordering the reinstatement of the respondents with payment of backwages and full benefits and without loss of seniority
rights after finding that the petitioners failed to establish the legal basis of the termination of respondents' employment. The LA also directed the
company to pay the respondents certain aggregate monetary benefits.

255

The petitioner submitted a Manifestation and Compliance. Respondents alleging that there was no compliance yet and that no notice was received,
respondents filed with the LA a Manifestation and Urgent Motion to Cite for Contempt.
The petitioners denied any liability, insisting that the respondents had been duly informed through a letter of their payroll reinstatement. The petitioners
explained that because of the intra-union dispute between the respondents and the union leaders, they deemed it wise not to allow the respondents
inside the company premises to prevent any more untoward incidents, and to release their salaries only at the gate.This measure was for the protection
not only of respondents but also for the other employees of RPN as well.
Unswayed by these manifestations, the LA cited the petitioners for indirect contempt for committing disobedience to lawful order.
On appeal, the NLRC dismissed the same and it also denied the petitioners' motion for reconsideration.
The CA dismissed the petition for failure to attach copies of pertinent pleadings mentioned in the petition.
Issue:
WON petitioner has fully complied with the decision of the labor arbiter.
Held:
GRANTED
The manner of reinstating a dismissed employee in the payroll generally involves an exercise of management prerogative.
The general policy of labor law is to discourage interference with an employer's judgment in the conduct of his business. Even as the law is solicitous of
the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. As long as the
company's exercise of judgment is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees
under the laws or valid agreements, such exercise will be upheld. Neither does labor law authorize the substitution of judgment of the employer in the
conduct of his business, unless it is shown to be contrary to law, morals, or public policy. The only condition is that the exercise of management
prerogatives should not be done in bad faith or with abuse of discretion.
The circumstances of the present case have more than amply shown that the physical restoration of the respondents to their former positions would be
impractical and would hardly promote the best interest of both parties. Respondents have accused the petitioners of being directly complicit in the plot
to expel them from the union and to terminate their employment, while petitioners have charged the respondents with trying to sabotage the peace of
the workplace in "furthering their dispute with the union." The resentment and enmity between the parties have so strained their relationship and even
provoked antipathy and antagonism, as amply borne out by the physical clashes that had ensued every time the respondents attempted to enter the
RPN compound, that respondents' presence in the workplace will not only be distracting but even disruptive, to say the least.
Petitioners have substantially complied in good faith with the terms of payroll reinstatement.
The petitioners insist that the respondents were immediately reinstated, albeit in the payroll, in compliance with the order of the LA, and their salaries
have since been regularly paid without fail. And granting that there were occasional delays, the petitioners assert that the respondents in their
combative hostility toward the petitioners were partly to blame for their recalcitrant demands as to the place and schedule of payment, and their refusal
to cooperate in the opening of their ATM accounts.All these clearly show that the petitioners have substantially complied with the LA's Decision
Petitioners are not guilty of indirect contempt.
Indirect contempt refers to contumacious or stubbornly disobedient acts perpetrated outside of the court or tribunal, any abuse or any unlawful
interference with the process or proceedings of a court not constituting direct contempt; or any improper conduct tending directly or indirectly to impede,
obstruct or degrade the administration of justice. To be considered contemptuous, an act must be clearly contrary to or prohibited by the order of the
court or tribunal. A person cannot, for disobedience, be punished for contempt unless the act which is forbidden or required to be done is clearly and
exactly defined, so that there can be no reasonable doubt or uncertainty as to what specific act or thing is forbidden or required.
It is not denied that after the order of reinstatement of the respondents, RPN forthwith restored them in its payroll without diminution of their benefits and
privileges, or loss of seniority rights. They retained their entitlement to the benefits under the CBA and there was no sufficient basis for the charge of
indirect contempt against the petitioners, and that the same was made without due regard for their right to exercise their management prerogatives to
preserve the viability of the company and the harmony of the workplace.
GONZALES VS. SOLID CEMENT CORP.;
G.R. No. 198423; October 23, 2012
Facts:
The current petition arose from the execution of the final and executory judgment in the parties' illegal dismissal dispute. Since the LA found that an
illegal dismissal took place, the company reinstated petitioner Gonzales in the payroll.
In the meanwhile, the parties continued to pursue the original case on the merits. The case was appealed to the NLRC and from there to the CA. The
LA's ruling of illegal dismissal was largely left undisturbed in these subsequent recourses. The original case eventually came to this Court. We denied
the petition of respondent Solid Cement Corporation for lack of merit. Our ruling became final and entry of judgment took place on July 12, 2005.
Soon after its finality, the original case was remanded to the LA for execution. The LA decision declared the respondents guilty of illegal dismissal and
ordered the reinstatement of Gonzales to his former position "with full backwages and without loss of seniority rights and other benefits. Actual
reinstatement and return to work for Gonzales (who had been on payroll reinstatement since January 22, 2001) came on July 15, 2008.

256

When Gonzales moved for the issuance of an alias writ of execution on August 4, 2008, he included several items as components in computing the
amount of his backwages.
Acting on the motion, the LA added P57,900.00 as rice allowance and P14,675.00 as medical reimbursement (with the company's apparent conformity),
and excluded the rest of the items prayed for in the motion, either because these items have been paid or that, based on the records of the case,
Gonzales was not entitled thereto. Under the LA's execution Gonzales was entitled to a total of P965,014.15.
The NLRC, in its decision modified the LA's execution order by including the following amounts as part of the judgment award. This ruling increased
Gonzales' entitlement to P2,805,698.04.
The CA set aside the NLRC's decision and reinstated the LA's order, prompting Gonzales to come to the Court via a petition for review on certiorari.
From that point, only the implementation or execution of the final ruling remained to be done. EDI
Issue:
Whether the CA was legally correct in finding that the NLRC acted outside its jurisdiction when it modified the LA's execution order.
Held:
PARTIALLY GRANTED.
LA is DIRECTED to issue the appropriate writ of execution incorporating these additional awards.
Re-computation of awards during execution of an illegal dismissal decision
Gonzales was almost immediately reinstated pending appeal, although only by way of a payroll reinstatement as allowed by law. Upon the finality of the
decision on the appeal, Gonzales was actually reinstated.
Since Gonzales received his salary and benefit entitlements during his payroll reinstatement; the general concern in the present case is more on the
items that should be included in the award, part of which are the backwages.
The current petition only generally involves a determination of the scope of the awards that include the backwages.
The components of the backwages
a.Salary and 13th month differential due after dismissal
The Court ruled that in computing backwages, salary increases from the time of dismissal until actual reinstatement, and benefits not yet granted at the
time of dismissal are excluded. Hence, we cannot fault the CA for finding that the NLRC committed grave abuse of discretion in awarding the salary
differential amounting to P617,517.48 and the 13th month pay differentials amounting to P51,459.48 that accrued subsequent to Gonzales'
dismissal.
b.Legal interest of 12% on total judgment
Gonzales is entitled to 12% interest on the total unpaid judgment amount, from the time the Court's decision (on the merits in the original case)
became final. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest shall be 12% per annum
from such finality until its satisfaction.
c.Additional backwages and 13th month pay
Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the
plaintiff to prove non-payment.
Thus, even without proof of nonpayment, the NLRC was right in requiring the payment of the 13th month pay and the salaries due after the LA's
decision until the illegally dismissed petitioner was reinstated in the payroll, i.e., from December 13, 2000 to January 21, 2001. It follows that the CA
was wrong when it concluded that the NLRC acted outside its jurisdiction by including these monetary awards as items for execution.
These amounts are not excluded from the concept of backwages as the salaries fell due after Gonzales should have been reinstated, while the 13th
month pay fell due for the same period by legal mandate. These are entitlements that cannot now be glossed over if the final decision on the merits in
this case were to be respected.
MARTOS VS. NEW SAN JOSE BUILDERS;
G.R. No. 192650; October 24, 2012
Facts:
Petitioner New San Jose Builders, Inc. is a domestic corporation duly organized and existing under the laws of the Philippines and is engaged in the
construction of road, bridges, buildings, and low cost houses primarily for the government. One of the projects of petitioner is the San Jose Plains
Project. SJPP, calls for the construction of low cost housing, which are being turned over to the National Housing Authority to be awarded to deserving
poor families.
Private respondents alleged that, on various dates, petitioner hired them on different positions.
Sometime in 2000, petitioner was constrained to slow down and suspend most of the works on the SJPP project due to lack of funds of the National
Housing Authority. Thus, the workers were informed that many of them would be laid off and the rest would be reassigned to other projects.
Some who were retained and were issued new appointment papers to their respective assignments, indicating therein that they are project employees.
However, they refused to sign the appointment papers as project employees and subsequently refused to continue to work.

257

On different dates, three (3) Complaints for Illegal Dismissal and for money claims were filed before the NLRC against petitioner and Jose Acuzar, by
private respondents who claimed to be the former employees of petitioner.
Petitioner denies that private respondents were illegally dismissed, and alleged that they were project employees, whose employments were
automatically terminated upon completion of the project for which they were hired. On the other hand, private respondents claim that petitioner hired
them as regular employees, continuously and without interruption.
Ruling of the Labor Arbiter
As earlier stated, on May 23, 2003, the LA handed down a decision declaring, among others, that petitioner Felix Martos (Martos) was illegally
dismissed and entitled to separation pay, backwages and other monetary benefits; and dismissing, without prejudice, the complaints/claims of the other
complainants (petitioners).
Ruling of the NLRC
Both parties appealed the LA decision to the NLRC. Petitioners appealed that part which dismissed all the complaints, without prejudice, except that of
Martos. On the other hand, New San Jose Builders, Inc. (respondent) appealed that part which held that Martos was its regular employee and that he
was illegally dismissed. The NLRC resolved the appeal by dismissing the one filed by respondent and partially granting that of the other petitioners.
Ruling of the CA
The CA stated that the factual circumstances of Martos' employment and his dismissal from work could not equally apply to petitioners because they
were not similarly situated. The NLRC did not even bother to look at the evidence on record and inappropriately granted monetary awards to petitioners
who had either denied having filed a case or withdrawn the case against respondent. According to the CA, the position papers should have covered
only those claims and causes of action raised in the complaint excluding those that might have been amicably settled.
With respect to Martos, the CA ruled that he was a regular employee of respondent and his termination was illegal. It explained that Martos should have
been considered a regular employee because there was no indication that he was merely a project employee when he was hired.
Issue:
Whether or not Martos should be reinstated.
Held:
DENIED
The verification requirement is significant, as it is intended to secure an assurance that the allegations in the pleading are true and correct and not the
product of the imagination or a matter of speculation, and that the pleading is filed in good faith. Verification is deemed substantially complied with
when, as in this case, one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when
matters alleged in the petition have been made in good faith or are true and correct.
The absence of a proper verification is cause to treat the pleading as unsigned and dismissible.
The lone signature of Martos would have been sufficient if he was authorized by his co-petitioners to sign for them. Unfortunately, petitioners failed to
adduce proof that he was so authorized.
The Court agrees with the CA that the dismissal of the other complaints were brought about by the own negligence and passive attitude of the
complainants themselves.
As to Martos, the Court agrees that the reinstatement being sought by him was no longer practicable because of strained relation between the parties.
Indeed, he can no longer question this fact. This issue was never raised or taken up on appeal before the NLRC. It was only after he lost the appeal in
the CA that he raised it.
The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties.
Separation pay in lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated.
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is
no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.
LOON ET AL. VS. POWER MASTERS, INC.;
G.R. No. 189404; December 11, 2013
Facts:
Respondents Power Master, Inc. and Tri-C General Services employed and assigned the petitioners as janitors and leadsmen in various Philippine
Long Distance Telephone Company (PLDT) offices in Metro Manila area. Subsequently, the petitioners filed a complaint for money claims against
Power Master, Inc., Tri-C General Services and their officers, the spouses Homer and Carina Alumisin (collectively, the respondents). The petitioners
alleged in their complaint that they were not paid minimum wages, overtime, holiday, premium, service incentive leave, and thirteenth month pays. They
further averred that the respondents made them sign blank payroll sheets. On June 11, 2001, the petitioners amended their complaint and included
illegal dismissal as their cause of action. They claimed that the respondents relieved them from service in retaliation for the filing of their original
complaint. Notably, the respondents did not participate in the proceedings before the Labor Arbiter except on April 19, 2001 and May 21, 2001 when
Mr. Romulo Pacia, Jr. appeared on the respondents' behalf. The respondents' counsel also appeared in a preliminary mandatory conference

258

on July 5, 2001. However, the respondents neither filed any position paper nor proffered pieces of evidence in their defense despite their knowledge of
the pendency of the case.
In a decision dated March 15, 2002, Labor Arbiter (LA) Elias H. Salinas partially ruled in favor of the petitioners. The LA awarded the petitioners salary
differential, service incentive leave, and thirteenth month pays. In awarding these claims, the LA stated that the burden of proving the payment of
these money claims rests with the employer. The LA also awarded attorney's fees in favor of the petitioners, pursuant to Article 111 of the Labor Code.
However, the LA denied the petitioners' claims for backwages, overtime, holiday, and premium pays. The LA observed that the petitioners failed to
show that they rendered overtime work and worked on holidays and rest days without compensation. The LA further concluded that the petitioners
cannot be declared to have been dismissed from employment because they did not show any notice of termination of employment. They were also not
barred from entering the respondents' premises.
Both parties appealed the LA's ruling with the National Labor Relations Commission. The petitioners disputed the LA's denial of their claim for
backwages, overtime, holiday and premium pays. Meanwhile, the respondents questioned the LA's ruling on the ground that the LA did not acquire
jurisdiction over their persons.
The respondents insisted that they were not personally served with summons and other processes. They also claimed that they paid the petitioners
minimum wages, service incentive leave and thirteenth month pays. As proofs, they attached photocopied and computerized copies of payroll
sheets to their memorandum on appeal. They further maintained that the petitioners were validly dismissed. They argued that the petitioners'
repeated defiance to their transfer to different workplaces and their violations of the company rules and regulations constituted serious misconduct and
willful disobedience.
On January 3, 2003, the respondents filed an unverified supplemental appeal. They attached photocopied and computerized copies of list of
employees with automated teller machine (ATM) cards to the supplemental appeal. This list also showed the amounts allegedly deposited in the
employees' ATM cards. 11 They also attached documentary evidence showing that the petitioners were dismissed for cause and had been
accorded due process.
On January 22, 2003, the petitioners filed an Urgent Manifestation and Motion where they asked for the deletion of the supplemental appeal from the
records because it allegedly suffered from infirmities. First, the supplemental appeal was not verified. Second, it was belatedly filed six months from the
filing of the respondents' notice of appeal with memorandum on appeal. The petitioners pointed out that they only agreed to the respondents' filing of a
responsive pleading until December 18, 2002. Third, the attached documentary evidence on the supplemental appeal bore the petitioners' forged
signatures.
They reiterated these allegations in an Urgent Motion to Resolve Manifestation and Motion (To Expunge from the Records Respondents'
Supplemental Appeal, Reply and/or Rejoinder) dated January 31, 2003. Subsequently, the petitioners filed an Urgent Manifestation with
Reiterating Motion to Strike-Off the Record Supplemental Appeal/Reply, Quitclaims and Spurious Documents Attached to Respondents'
Appeal dated August 7, 2003. The petitioners argued in this last motion that the payrolls should not be given probative value because they were the
respondents' fabrications. They reiterated that the genuine payrolls bore their signatures, unlike the respondents' photocopies of the payrolls. They also
maintained that their signatures in the respondents' documents (which showed their receipt of thirteenth month pay) had been forged.
In a resolution dated November 27, 2003, the NLRC partially ruled in favor of the respondents. The NLRC affirmed the LA's awards of holiday pay and
attorney's fees. It also maintained that the LA acquired jurisdiction over the persons of the respondents through their voluntary appearance.
However, it allowed the respondents to submit pieces of evidence for the first time on appeal on the ground that they had been deprived of
due process. It found that the respondents did not actually receive the LA's processes. It also admitted the respondents' unverified supplemental
appeal on the ground that technicalities may be disregarded to serve the greater interest of substantial due process. Furthermore, the Rules of Court do
not require the verification of a supplemental pleading.
The NLRC also vacated the LA's awards of salary differential, thirteenth month and service incentive leave pays. In so ruling, it gave weight to the
pieces of evidence attached to the memorandum on appeal and the supplemental appeal. It maintained that the absence of the petitioners' signatures
in the payrolls was not an indispensable factor for their authenticity. It pointed out that the payment of money claims was further evidenced by the list of
employees with ATM cards. It also found that the petitioners' signatures were not forged. It took judicial notice that many people use at least two or
more different signatures. AHTICD
The NLRC further ruled that the petitioners were lawfully dismissed on grounds of serious misconduct and willful disobedience. It found that the
petitioners failed to comply with various memoranda directing them to transfer to other workplaces and to attend training seminars for the intended
reorganization and reshuffling.
The NLRC denied the petitioners' motion for reconsideration in a resolution dated April 28, 2006. 17 Aggrieved, the petitioners filed a petition for
certiorari under Rule 65 of the Rules of Court before the CA. 18 AEaSTC
The CA affirmed the NLRC's ruling. The CA held that the petitioners were afforded substantive and procedural due process. Accordingly, the petitioners
deliberately did not explain their side. Instead, they continuously resisted their transfer to other PLDT offices and violated company rules and
regulations. It also upheld the NLRC's findings on the petitioners' monetary claims.
The CA denied the petitioners' motion for reconsideration in a resolution dated August 28, 2009, prompting the petitioners to file the present petition. 19
Issue:
1.
2.
3.
4.
5.

Whether the CA erred when it did not find that the NLRC committed grave abuse of discretion in giving due course to the respondents'
appeal;
Whether the respondents perfected their appeal before the NLRC; and
Whether the NLRC properly allowed the respondents' supplemental appeal
Whether the respondents were estopped from submitting pieces of evidence for the first time on appeal;
Whether the petitioners were illegally dismissed and are thus entitled to backwages;

Held:
1. The respondents perfected theirappeal with the NLRC because therevocation of the bonding company'sauthority has a prospective
application

259

Paragraph 2, Article 223 of the Labor Code provides that "[i]n case of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from."
Contrary to the respondents' claim, the issue of the appeal bond's validity may be raised for the first time on appeal since its proper filing is a
jurisdictional requirement. The requirement that the appeal bond should be issued by an accredited bonding company is mandatory and
jurisdictional. The rationale of requiring an appeal bond is to discourage the employers from using an appeal to delay or evade the employees' just
and lawful claims. It is intended to assure the workers that they will receive the money judgment in their favor upon the dismissal of the employer's
appeal.
In the present case, the respondents filed a surety bond issued by Security Pacific Assurance Corporation (Security Pacific) on June 28, 2002.
At that time, Security Pacific was still an accredited bonding company. However, the NLRC revoked its accreditation on February 16, 2003.
Nonetheless, this subsequent revocation should not prejudice the respondents who relied on its then subsisting accreditation in good faith.
A bonding company's revocation of authority is prospective in application.
However, the respondents should post a new bond issued by an accredited bonding company in compliance with paragraph 4, Section 6, Rule 6
of the NLRC Rules of Procedure. This provision states that "[a] cash or surety bond shall be valid and effective from the date of deposit or posting, until
the case is finally decided, resolved or terminated or the award satisfied."
2. The CA correctly ruled that theNLRC properly gave due course tothe respondents' supplemental appeal
The CA also correctly ruled that the NLRC properly gave due course to the respondents' supplemental appeal. Neither the laws nor the rules require
the verification of the supplemental appeal. Furthermore, verification is a formal, not a jurisdictional, requirement. It is mainly intended for the
assurance that the matters alleged in the pleading are true and correct and not of mere speculation. 27 Also, a supplemental appeal is merely an
addendum to the verified memorandum on appeal that was earlier filed in the present case; hence, the requirement for verification has substantially
been complied with.
The respondents also timely filed their supplemental appeal on January 3, 2003. The records of the case show that the petitioners themselves agreed
that the pleading shall be filed until December 18, 2002. The NLRC further extended the filing of the supplemental pleading until January 3, 2003 upon
the respondents' motion for extension.
3. A party may only adduce evidence for the first time on appeal if he adequately explains his delay in the submission of evidence and
hesufficiently proves the allegationssought to be proven
In labor cases, strict adherence to the technical rules of procedure is not required. Time and again, we have allowed evidence to be submitted for
the first time on appeal with the NLRC in the interest of substantial justice . Thus, we have consistently supported the rule that labor officials
should use all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, in the
interest of due process.
However, this liberal policy should still be subject to rules of reason and fairplay.
The liberality of procedural rules is qualified by two requirements:
(1) a party should adequately explain any delay in the submission of evidence; and
(2) a party should sufficiently prove the allegations sought to be proven.
Guided by these principles, the CA grossly erred in ruling that the NLRC did not commit grave abuse of discretion in arbitrarily admitting and giving
weight to the respondents' pieces of evidence for the first time on appeal.
A.The respondents failed toadequately explain their delayin the submission of evidence
We cannot accept the respondents' cavalier attitude in blatantly disregarding the NLRC Rules of Procedure. The CA gravely erred when it overlooked
that the NLRC blindly admitted and arbitrarily gave probative value to the respondents' evidence despite their failure to adequately explain their delay in
the submission of evidence. Notably, the respondents' delay was anchored on their assertion that they were oblivious of the proceedings before the LA.
However, the respondents did not dispute the LA's finding that Mr. Romulo Pacia, Jr. appeared on their behalf on April 19, 2001 and May 21, 2001. The
respondents also failed to contest the petitioners' assertion that the respondents' counsel appeared in a preliminary mandatory conference on July 5,
2001.
Indeed, the NLRC capriciously and whimsically admitted and gave weight to the respondents' evidence despite its finding that they voluntarily appeared
in the compulsory arbitration proceedings. The NLRC blatantly disregarded the fact that the respondents voluntarily opted not to participate, to adduce
evidence in their defense and to file a position paper despite their knowledge of the pendency of the proceedings before the LA. The respondents were
also grossly negligent in not informing the LA of the specific building unit where the respondents were conducting their business and their counsel's
address despite their knowledge of their non-receipt of the processes.
B.The respondents failed tosufficiently prove theallegations sought to beproven
Furthermore, the respondents failed to sufficiently prove the allegations sought to be proven. Why the respondents' photocopied and computerized
copies of documentary evidence were not presented at the earliest opportunity is a serious question that lends credence to the petitioners' claim that
the respondents fabricated the evidence for purposes of appeal. While we generally admit in evidence and give probative value to photocopied
documents in administrative proceedings, allegations of forgery and fabrication should prompt the adverse party to present the original
documents for inspection. It was incumbent upon the respondents to present the originals, especially in this case where the petitioners had submitted
their specimen signatures. Instead, the respondents effectively deprived the petitioners of the opportunity to examine and controvert the alleged
spurious evidence by not adducing the originals. This Court is thus left with no option but to rule that the respondents' failure to present the
originals raises the presumption that evidence willfully suppressed would be adverse if produced.
It was also gross error for the CA to affirm the NLRC's proposition that "[i]t is of common knowledge that there are many people who use at least two or
more different signatures." 37 The NLRC cannot take judicial notice that many people use at least two signatures, especially in this case where the
petitioners themselves disown the signatures in the respondents' assailed documentary evidence. The NLRC's position is unwarranted and is patently
unsupported by the law and jurisprudence.
3. The petitioners are entitled tobackwages
In termination cases, the burden of proving just and valid cause for dismissing an employee from his employment rests upon the employer. The
employer's failure to discharge this burden results in the finding that the dismissal is unjustified. 40 This is exactly what happened in the present case.
4. The petitioners are entitled to salarydifferential, service incentive,holiday, and thirteenth month pays

260

As in illegal dismissal cases, the general rule is that the burden rests on the defendant to prove payment rather than on the plaintiff to prove nonpayment of these money claims. The rationale for this rule is that the pertinent personnel files, payrolls, records, remittances and other similar
documents which will show that differentials, service incentive leave and other claims of workers have been paid are not in the possession of the
worker but are in the custody and control of the employer. 42
5. The petitioners are not entitled toovertime and premium pays
The burden of proving entitlement to overtime pay and premium pay for holidays and rest days rests on the employee because these are not incurred
in the normal course of business. 43 In the present case, the petitioners failed to adduce any evidence that would show that they actually
rendered service in excess of the regular eight working hours a day, and that they in fact worked on holidays and rest days.
6. The petitioners are entitled toattorney's fees
The award of attorney's fees is also warranted under the circumstances of this case. An employee is entitled to an award of attorney's fees equivalent to
ten percent (10%) of the amount of the wages in actions for unlawful withholding of wages. 44
As a final note, we observe that Kodelito Ayala, Winelito Ojel, Renato Rodrego and Welito Loon are also named as petitioners in this case. However, we
deny their petition for the reason that they were not part of the proceedings before the CA. Their failure to timely seek redress before the CA precludes
this Court from awarding them monetary claims.
WHEREFORE, based on these premises, we REVERSE and SET ASIDE the decision dated June 5, 2009, and the resolution dated August 28, 2009 of
the Court of Appeals in CA-G.R. SP No. 95182. This case is REMANDED to the Labor Arbiter for the sole purpose of computing petitioners' full
backwages (computed from the date of their respective dismissals up to the finality of this decision) and their salary differential, service incentive leave,
holiday, thirteenth month pays, and attorney's fees equivalent to ten percent (10%) of the withheld wages.
LEPANTO CONSOLIDATED MINING CORP. VS. ICAO;
G.R. No. 196047; January 15, 2014
Facts:
The instant petition stemmed from a complaint for illegal dismissal and damages filed by private respondent Belio C. Icao [Icao] against petitioners
Lepanto Consolidated Mining Company (LCMC) and its Chief Executive Officer [CEO] Felipe U. Yap [Yap] before the Arbitration Branch of the NLRC.
Private respondent claimed that his dismissal from work was without just or authorized cause since petitioners failed to prove by ample and
sufficient evidence that he stole gold bearing highgrade ores from the company premises. If private respondent was really placing a wrapped
object inside his boots, he should have been sitting or bending down to insert the same, instead of just standing on a muckpile as alleged by
petitioners. Moreover, it is beyond imagination that a person, knowing fully well that he was being chased for allegedly placing wrapped ore inside
his boots, will transfer it to his skullguard. The tendency in such situation is to throw the object away. As such, private respondent prayed that
petitioners be held liable for illegal dismissal, to reinstate him to his former position without loss of seniority rights and benefits, and to pay his full
backwages, damages and attorney's fees.
For their defense, petitioners averred that SG Bulwayan saw private respondent standing on a muckpile and inserting a wrapped object inside his
right rubber boot. SG Bulwayan immediately ran towards private respondent, but the latter ran away to escape. He tried to chase private
respondent but failed to capture him. Thereafter, while SG Bulwayan was on his way to see his co-guard SG Papsa-ao, he saw private
respondent moving out of a stope. He then shouted at SG Papsa-ao to intercept him. When private respondent was apprehended, SG Bulwayan
ordered him to remove his skullguard for inspection and saw a wrapped object placed inside the helmet. SG Bulwayan grabbed it, but the
harness of the skullguard was also detached causing the object to fall on the ground. Immediately, SG Bulwayan recovered and inspected the
same which turned out to be pieces of stone ores. Private respondent and the stone ores were later turned over to the Mankayan Philippine
National Police where he was given a written notice of the charge against him. On January 9, 2008, a hearing was held where private
respondent, together with the officers of his union as well as the apprehending guards appeared. On February 4, 2008, private respondent
received a copy of the resolution of the company informing him of his dismissal from employment due to breach of trust and confidence and the
act of highgrading.
On 30 September 2008, the labor arbiter rendered a Decision holding petitioner and its CEO liable for illegal dismissal and ordering them to pay
respondent Icao P345,879.45, representing his full backwages and separation pay. 3 The alleged highgrading attributed by LCMC's security guards
was found to have been fabricated; consequently, there was no just cause for the dismissal of respondent. The labor arbiter concluded that the claim of
the security guards that Icao had inserted ores in his boots while in a standing position was not in accord with normal human physiological functioning.
The labor arbiter also noted that it was inconsistent with normal human behavior for a man, who knew that he was being chased for allegedly placing
wrapped ore inside his boots, to then transfer the ore to his skullguard, where it could be found once he was apprehended. To further support the
improbability of the allegation of highgrading, the labor arbiter noted that throughout the 21 years of service of Icao to LCMC, he had never been
accused of or penalized for highgrading or any other infraction involving moral turpitude until this alleged incident.
THE NLRC ORDER DISMISSING THE APPEALOF PETITIONER LCMC FOR FAILURE TO POST THE APPEAL BOND
On 8 December 2008, petitioner and its CEO filed an Appearance with Memorandum of Appeal 7 before the NLRC. Instead of posting the required
appeal bond in the form of a cash bond or a surety bond in an amount equivalent to the monetary award of P345,879.45 adjudged in favor of Icao, they
filed a Consolidated Motion for Release of Cash Bond and to Apply Bond Subject for Release As Payment for Appeal Bond (Consolidated Motion).
They requested therein that the NLRC release the cash bond of P401,610.84, which they had posted in the separate case Dangiw Siggaao v. LCMC,
and apply that same cash bond to their present appeal bond liability. They reasoned that since this Court had already decided Dangiw Siggaao in their
favor, and that the ruling therein had become final and executory, the cash bond posted therein could now be released. They also cited financial
difficulty as a reason for resorting to this course of action and prayed that, in the interest of justice, the motion be granted.
In its Order dated 27 February 2009, the NLRC First Division dismissed the appeal of petitioner and the latter's CEO for non-perfection. It found that
they had failed to post the required appeal bond equivalent to the monetary award of P345,879.45.
THE CA RULING AFFIRMING THE ORDER OF THE NLRC
On 27 September 2010, the CA issued its assailed Decision affirming the Order of the NLRC First Division, which had dismissed the appeal of petitioner
and the latter's CEO. According to the CA, they failed to comply with the requirements of law and consequently lost the right to appeal. 16

261

Issue:
whether or not petitioner complied with the appeal bond requirement under the Labor Code and the NLRC Rules by filing a Consolidated Motion to
release the cash bond it posted in another case, which had been decided with finality in its favor, with a view to applying the same cash bond to the
present case.
Held:
The Petition is meritorious. The Court finds that petitioner substantially complied with the appeal bond requirement.
Before discussing its ruling, however, the Court finds it necessary to emphasize the well-entrenched doctrine that an appeal is not a matter of right, but
is a mere statutory privilege. It may be availed of only in the manner provided by law and the rules. Thus, a party who seeks to exercise the right to
appeal must comply with the requirements of the rules; otherwise, the privilege is lost. 20
In appeals from any decision or order of the labor arbiter, the posting of an appeal bond is required under Article 223 of the Labor Code, which reads:
Article 223. APPEAL. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to
the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or
orders. Such appeal may be entertained only on any of the following grounds:
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission
in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis and underlining supplied)
The 2011 NLRC Rules of Procedure (NLRC Rules) incorporates this requirement in Rule VI, Section 6, which provides:
SECTION 6. Bond. In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which
shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive
of damages and attorney's fees. (Emphases and underlining supplied)
We now turn to the main question of whether petitioner's Consolidated Motion to release the cash bond it posted in a previous case, for application to
the present case, constitutes compliance with the appeal bond requirement. While it is true that the procedure undertaken by petitioner is not provided
under the Labor Code or in the NLRC Rules, we answer the question in the affirmative.
we rule that petitioner substantially complied with the mandatory requirement of posting an appeal bond for the reasons explained below.
First, there is no question that the appeal was filed within the 10-day reglementary period. Except for the alleged failure to post an appeal bond,
the appeal to the NLRC was therefore in order.
Second, it is also undisputed that petitioner has an unencumbered amount of money in the form of cash in the custody of the NLRC. To reiterate,
petitioner had posted a cash bond of P401,610.84 in the separate case Dangiw Siggaao, which was earlier decided in its favor.
Under the Rule VI, Section 6 of the 2005 NLRC Rules, "[a] cash or surety bond shall be valid and effective from the date of deposit or posting, until the
case is finally decided, resolved or terminated, or the award satisfied." Hence, it is clear that a bond is encumbered and bound to a case only for as long
as 1) the case has not been finally decided, resolved or terminated; or 2) the award has not been satisfied. Therefore, once the appeal is finally decided
and no award needs to be satisfied, the bond is automatically released. Since the money is now unencumbered, the employer who posted it
should now have unrestricted access to the cash which he may now use as he pleases as appeal bond in another case, for instance. This
is what petitioner simply did.
Third, the cash bond in the amount of P401,610.84 posted in Dangiw Siggaao is more than enough to cover the appeal bond in the amount of
P345,879.45 required in the present case.
Fourth, this ruling remains faithful to the spirit behind the appeal bond requirement which is to ensure that workers will receive the money awarded in
their favor when the employer's appeal eventually fails. There was no showing at all of any attempt on the part of petitioner to evade the posting of the
appeal bond. On the contrary, petitioner's move showed a willingness to comply with the requirement. Hence, the welfare of Icao is adequately
protected.
Having complied with the appeal bond requirement, petitioner's appeal before the NLRC must therefore be reinstated.
The Court will liberally apply the rules only in very highly exceptional cases such as this, in keeping with the dictates of justice, reason and equity.
BUILDING CARE CORP. VS. MACARAEG;
G.R. No. 198357; December 10, 2012
Facts:
Petitioners are in the business of providing security services to their clients. They hired respondent as a security guard beginning August 25, 1996,
assigning her at Genato Building in Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was re-assigned to Bayview
Park Hotel from March 9-13, 2008, but after said period, she was allegedly no longer given any assignment. Thus, on September 9, 2008, respondent
filed a complaint against petitioners for illegal dismissal, underpayment of salaries, non-payment of separation pay and refund of cash bond.
Conciliation and mediation proceedings failed, so the parties were ordered to submit their respective position papers.
Respondent claimed that petitioners failed to give her an assignment for more than nine months, amounting to constructive dismissal, and this
compelled her to file the complaint for illegal dismissal.
On the other hand, petitioners alleged in their position paper that respondent was relieved from her post as requested by the client because of her
habitual tardiness, persistent borrowing of money from employees and tenants of the client, and sleeping on the job. Petitioners allegedly directed
respondent to explain why she committed such infractions, but respondent failed to heed such order. Respondent was nevertheless temporarily
assigned to Bayview Park Hotel from March 9-13, 2008, but she also failed to meet said client's standards and her posting thereat was not extended.
Respondent then filed an administrative complaint for illegal dismissal with the PNP-Security Agencies and Guard Supervision Division on June 18,
2008, but she did not attend the conference hearings for said case. Petitioners brought to the conference hearings a new assignment order detailing

262

respondent at the Ateneo de Manila University but, due to her absence, petitioners failed to personally serve respondent said assignment order.
Petitioners then sent respondent a letter ordering her to report to headquarters for work assignment, but respondent did not comply with said order.
Instead, respondent filed a complaint for illegal dismissal with the Labor Arbiter.
LA dismissed for lack of merit. NLRC dismissed the appeal for having been filed out of time, thereby declaring that the Labor Arbiter's Decision had
become final and executor. CA the petition was granted.
Issue:
Whether the CA erred in liberally applying the rules of procedure and ruling that respondent's appeal should be allowed and resolved on the merits
despite having been filed out of time.
Held:
GRANTED
While procedural rules may be relaxed in the interest of justice, it is well-settled that these are tools designed to facilitate the adjudication of cases. The
relaxation of procedural rules in the interest of justice was never intended to be a license for erring litigants to violate the rules with impunity. Liberality in
the interpretation and application of the rules can be invoked only in proper cases and under justifiable causes and circumstances. While litigation is not
a game of technicalities, every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of
justice.
In this case, the justifications given by the CA for its liberality by choosing to overlook the belated filing of the appeal are, the importance of the issue
raised, i.e., whether respondent was illegally dismissed; and the belief that respondent should be "afforded the amplest opportunity for the proper and
just determination of his cause, free from the constraints of technicalities," considering that the belated filing of respondent's appeal before the NLRC
was the fault of respondent's former counsel. Note, however, that neither respondent nor her former counsel gave any explanation or reason citing
extraordinary circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted that she had not been remiss
in following up her case with said lawyer.
It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the client. A departure from this rule would bring about neverending suits, so long as lawyers could allege their own fault or negligence to support the client's case and obtain remedies and reliefs already lost by
the operation of law. 15 The only exception would be, where the lawyer's gross negligence would result in the grave injustice of depriving his client of
the due process of law. 16 In this case, there was no such deprivation of due process. Respondent was able to fully present and argue her case before
the Labor Arbiter. She was accorded the opportunity to be heard. Her failure to appeal the Labor Arbiter's Decision cannot, therefore, be deemed as a
deprivation of her right to due process.
CO SAY COCO PRODUCTS PHILS INC. vs BALTAZAR;
GR No. 188828, March 5, 2014
Facts:
Petitioner Co Say is a domestic corporation duly organized and existing under Philippine laws and is the owner of a private port located in Bigaa,
Legazpi City. Tanawan Port on the other hand, is a single proprietorship owned and managed by Salazar.
On 18 March 2002, Co Say, thru its President, Efren Co Say, entered into a Contract for Cargo Handling Services with petitioner Tanawan Port,
wherein the latter was given the authority to manage and operate the arrastre and stevedoring services of its port. CIAHaT
To jumpstart the operation of its cargo handling services, Tanawan Port employed respondents Benjamin Baltasar as Manager, Marvin Baltasar as
Computer Operator, Raymundo Botalon as Crane Operator, Nilo Bordeos, Jr. as Crane Helper, Cargo Botalon as Crane Operator and Geronimo Bas as
Fork Lift Operator.
Due to lack of clientele, the business venture of Tanawan Port failed to gain momentum causing serious alarm to the company. A couple of months after
respondents were hired, Tanawan Port decided to cease operation by sending letters to the City Treasurer of Legaspi City and the Revenue District
Officer of the Bureau of Internal Revenue informing them of its intention to close its business and to surrender its business registration due to serious
business losses. On 30 August 2002, the City Treasurer approved the retirement from business of Tanawan Port. On the same day, Salazar convened
respondents to formally inform them of her intention to close Tanawan Port's operation, but she was prevailed upon by the latter to hold it up while
Baltasar is looking for new clients that could help boost the company's revenue. Efforts to revive the business, however, proved to be futile constraining
the company to finally discontinue its operation and close its business. As a result, respondents were terminated from employment but were accordingly
given their corresponding separation pay and 13th month pay
Barely a month after they received their separation pay, respondents filed complaints for illegal dismissal and non-payment of labor standard benefits
against petitioners Tanawan Port, Salazar, Co Say and Efren Co Say before the Labor Arbiter. In their Position Papers, respondents alleged that
Tanawan Port was merely feigning losses in order to ease out employees, pointing out the absence of evidence to prove business reverses.
Respondents also punctuated Tanawan Port's failure to comply with the procedural requirement of sending notices to employees concerned and to the
Department of Labor and Employment (DOLE) one month before the intended date of closure as required by law.
Tanawan Port, for its part, asserted that respondents' severance from employment was brought about by closure or cessation of business operation
which is an authorized cause for termination of employment under the Labor Code. To dispute the allegation of respondents that the closure was done
in bad faith, Tanawan Port insisted that the lack of clientele caused serious financial drain to the company leaving the management with no other option
but to shutdown its operations.
On 7 August 2003, the Labor Arbiter rendered a Joint Decision in favor of respondents and held that petitioners are liable for illegal dismissal for failure
to comply with the procedural and substantive requirements of terminating employment due to closure of business operations. It was found that while
Tanawan Port claimed that it was suffering from serious business losses, it failed to adduce its financial statements to prove that its withdrawal from
operation was bona fide in character. A similar failure to comply with the notice requirement was likewise observed by the labor officer resulting in the

263

violation of respondents' right to due process of law. Finally, the Labor Arbiter declared that Tanawan Port is engaged in labor-only contracting and is
merely an extension of the business personality of Co Say, which is thus, solidarily liable with the former, the labor-only contractor, for the rightful claims
of the employees.
Contradicting the Labor Arbiter Decision, the NLRC in its Decision dated 31 May 2004, held that respondents' severance from employment was not
illegal, as the company where they were working closed due to business losses, and, the closure of business or establishment is one of the
authorized causes recognized by law in dismissing an employee. The NLRC further ruled that there was sufficient compliance with the substantive
requirement in terminating employment and held that proof of business losses is not necessary since cessation of business operation is a
management prerogative and should not be interfered with by courts or labor tribunals.
In a Decision 14 dated 20 April 2009, the Court of Appeals reversed the NLRC Decision due to failure of petitioners to perfect their appeal and
proceeded to affirm the Labor Arbiter's Decision. Contrary to the ruling of the NLRC, the appellate court ruled that the posting of the appeal bond after
the period to perfect the appeal had expired, resulted in the non-perfection of the appeal. Accordingly, the Court of Appeals ruled that the NLRC has no
authority to alter, modify or reverse the Labor Arbiter decision after the said decision became final and executory.
Issue:
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT RULED THAT THE
RESPONDENTS FAILED TO PERFECT THEIR APPEAL ON TIME;
Held:
The NLRC ruled that petitioners were able to post the surety bond and timely perfect their appeal before the expiration of the 10-day reglementary
period, while the Court of Appeals oppositely ruled although both findings are based on the same pieces of evidence available on record. According to
the appellate court, the First Certification issued by the RAB-NLRC on 2 October 2003 is telling of the petitioners' failure to perfect an appeal. It
appeared in the said certification that the appeal bond, which is a mandatory requirement for perfecting an appeal, has not been posted as of 2 October
2003
Three months after the said certification was issued, the RAB-NLRC issued a Second Certification on 19 January 2004, indicating that petitioners
posted a surety bond on 24 September 2003 although the said bond was received by the RAB-NLRC only on 28 October 2003.
It was on the basis of the Second Certification that the NLRC allowed the appeal. The divergence of the findings of the NLRC on the one hand, and the
Court of Appeals on the other, necessitates a review of the records of this case to ascertain which conclusion is supported by substantial evidence and,
enough to remove the conclusion away from the issue of grave abuse of discretion. Substantial evidence is such amount of relevant evidence which a
reasonable mind might accept as adequate to support a conclusion.
The crucial issue in the resolution of the instant petition concerns the timely posting of the appeal bond. The pertinent rule on the matter is Article 223 of
the Labor Code, as amended, which sets forth the rules on appeal from the Labor Arbiter's monetary award:
ART. 223.Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or
orders. . . . .
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in
the amount equivalent to the monetary award in the judgment appealed from. (Emphasis ours).
Implementing the aforestated provisions of the Labor Code are the provisions of Rule VI of the 2011 NLRC Rules of Procedure on perfection of appeals
which read: aHSAIT
SECTION 1.PERIODS OF APPEAL. Decisions, awards, or orders of the Labor Arbiter shall be final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt thereof; and in
case of decisions or resolutions of the Regional Director of the Department of Labor and Employment pursuant to
Article 129 of the Labor Code, within five (5) calendar days from receipt thereof. If the 10th or 5th day, as the case
may be, falls on a Saturday, Sunday or holiday, the last day to perfect the appeal shall be the first working day
following such Saturday, Sunday or holiday.
No motion or request for extension of the period within which to perfect an appeal shall be allowed.
SECTION 2.GROUNDS. The appeal may be entertained only on any of the following grounds:
a)If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter or Regional
Director;
b)If the decision, award or order was secured through fraud or coercion, including graft and
corruption;
c)If made purely on questions of law; and/or
d)If serious errors in the findings of facts are raised which, if not corrected, would cause grave or
irreparable damage or injury to the appellant.
SECTION 3.WHERE FILED. The appeal shall be filed with the Regional Arbitration Branch or Regional Office
where the case was heard and decided. cACTaI
SECTION 4.REQUISITES FOR PERFECTION OF APPEAL. a) The appeal shall be:
(1)filed within the reglementary period provided in Section 1 of this Rule;
(2)verified by the appellant himself/herself in accordance with Section 4, Rule 7 of the Rules of Court,
as amended;
(3)in the form of a memorandum of appeal which shall state the grounds relied upon and the
arguments in support thereof, the relief prayed for, and with a statement of the date
the appellant received the appealed decision, award or order;
(4)in three (3) legibly typewritten or printed copies; and
(5)accompanied by: aEcTDI

264

i)proof of payment of the required appeal fee and legal research

fee;
ii)posting of a cash or surety bond as provided in Section 6 of this
Rule; and
iii)proof of service upon the other parties.
b)A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of
the period for perfecting an appeal.
c)The appellee may file with the Regional Arbitration Branch or Regional Office where the appeal was filed,
his/her answer or reply to appellant's memorandum of appeal, not later than ten (10) calendar days from receipt
thereof. Failure on the part of the appellee who was properly furnished with a copy of the appeal to file his/her
answer or reply within the said period may be construed as a waiver on his/her part to file the same.
d)Subject to the provisions of Article 218 of the Labor Code, once the appeal is perfected in accordance with
these Rules, the Commission shall limit itself to reviewing and deciding only the specific issues that were
elevated on appeal.
SECTION 5.APPEAL FEE. The appellant shall pay the prevailing appeal fee and legal research fee to the
Regional Arbitration Branch or Regional Office of origin, and the official receipt of such payment shall form part of the
records of the case.
SECTION 6.BOND. In case the decision of the Labor Arbiter or the Regional Director involves a monetary award,
an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of
cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorney's fees.
In case of surety bond, the same shall be issued by a reputable bonding company duly accredited by the
Commission or the Supreme Court, and shall be accompanied by original or certified true copies of the following:
a)a joint declaration under oath by the employer, his/her counsel, and the bonding company, attesting
that the bond posted is genuine, and shall be in effect until final disposition of the
case.
b)an indemnity agreement between the employer-appellant and bonding company;
c)proof of security deposit or collateral securing the bond: provided, that a check shall not be
considered as an acceptable security;
d)a certificate of authority from the Insurance Commission;
e)certificate of registration from the Securities and Exchange Commission; THcaDA
f)certificate of accreditation and authority from the Supreme Court; and
g)notarized board resolution or secretary's certificate from the bonding company showing its
authorized signatories and their specimen signatures.
The Commission through the Chairman may on justifiable grounds blacklist a bonding company, notwithstanding its
accreditation by the Supreme Court.
A cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided,
resolved or terminated, or the award satisfied.
This condition shall be deemed incorporated in the terms and conditions of the surety bond, and shall be binding on
the appellants and the bonding company. cHESAD
The appellant shall furnish the appellee with a certified true copy of the said surety bond with all the abovementioned supporting documents. The appellee shall verify the regularity and genuineness thereof and immediately
report any irregularity to the Commission.
Upon verification by the Commission that the bond is irregular or not genuine, the Commission shall cause the
immediate dismissal of the appeal, and censure the responsible parties and their counsels, or subject them to
reasonable fine or penalty, and the bonding company may be blacklisted.
No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond
in a AAAAA in relation to the monetary award. DIESaC
The mere filing of a motion to reduce bond without complying with the requisites in the preceding paragraphs shall
not stop the running of the period to perfect an appeal.
These statutory and regulatory provisions explicitly provide that an appeal from the Labor Arbiter to the NLRC must be perfected within ten calendar
days from receipt of such decisions, awards or orders of the Labor Arbiter. In a judgment involving a monetary award, the appeal shall be
perfected only upon; (1) proof of payment of the required appeal fee; (2) posting of a cash or surety bond issued by a reputable bonding
company; and (3) filing of a memorandum of appeal. 23
No appeal was perfected by the petitioners within the 10-day period under Article 223 of the Labor Code.
The petitioners received the 7 August 2003 Decision of the Labor Arbiter on 15 September 2003, hence, they had until 25 September 2003 to perfect
their appeal. A perusal of the records reveals an apparent contrariety on the date of the posting of the appeal bond, a material fact decisive of the
instant controversy. While the First Certification indicated that no appeal bond has been posted as of 2 October 2003, the Second Certification and the
Transmittal Letter stated that a surety bond was posted on 24 September 2003.
The Second Certificate is not a document of timeliness of petitioners' appeal bond. It is even confirmatory of the fact of tardiness that the First
Certification stated doubtlessly.
That the posting of the surety bond requires as necessary addition the seven enumerated documents is underscored by the provision that the appellant
shall furnish the appellee with a certified true copy of the said surety bond with all the above-mentioned supporting documents. The appellee shall verify
the regularity and genuineness thereof and immediately report any irregularity to the Commission.
The rule gives the appellee the authority and opportunity, even the duty, to verify the regularity and genuineness not only of the surety bond but also of
the seven attachments. To reiterate, even if the issuance of the surety bond on 24 September 2003 is considered as the posting of the bond, the
certification cannot furthermore be considered as the posting of the other seven required documents.

265

Without a straight statement, the Second Certification seems to consider posting as mailing such that the date 24 September 2003 should be the
reckoning date that determines timeliness and not the date 28 October 2003 which was the date of receipt of the surety bond. Even such insinuation,
strained and all, is unacceptable considering the absence of proof of mailing, it being the fact that there was no mention at all in any of the pleadings
below that the surety bond was mailed.
The Court of Appeals therefore, correctly ruled that petitioners failed to perfect their appeal on time. In holding so, the appellate court only applied the
appeal bond requirement as already well explained in our previous pronouncements that there is legislative and administrative intent to strictly apply the
appeal bond requirement, and the Court should give utmost regard to this intention. 27 The clear intent of both statutory and procedural law is to require
the employer to post a cash or surety bond securing the full amount of the monetary award within the ten 10-day reglementary period. 28 Rules on
perfection of an appeal, particularly in labor cases, must be strictly construed because to extend the period of the appeal is to delay the case, a
circumstance which would give the employer a chance to wear out the efforts and meager resources of the worker to the point that the latter is
constrained to give up for less than what is due him. 29 This is to assure the workers that if they finally prevail in the case the monetary award will be
given to them both upon dismissal of the employer's appeal. It is further meant to discourage employers from using the appeal to delay or evade
payment of their obligations to the employees. 30 The appeal bond requirement precisely aims to prevent empty or inconsequential victories secured by
laborers in consonance with the protection of labor clause ensconced and zealously guarded by our Constitution.
It is entrenched in our jurisprudence that perfection of an appeal in a manner and within the period prescribed by law is not only mandatory but
jurisdictional, and failure to perfect an appeal has the effect of making judgment final and executory. 32 While dismissal of an appeal on technical
grounds is frowned upon, Article 223 of the Labor Code which prescribes the appeal bond requirement, however, is a rule of jurisdiction and not of
procedure. 33 Hence, there is a little leeway for condoning a liberal interpretation thereof, and certainly none premised on the ground that its
requirements are mere technicalities. 34 It is axiomatic that an appeal is only a statutory privilege and it may only be exercised in the manner provided
by law. 35 The timely perfection of an appeal is a mandatory requirement, which cannot be trifled with a "mere technicality" to suit the interest of party.
36 We cannot condone the practice of parties who, either by their own or their counsel's inadvertence, have allowed the judgment to become final and
executory and, after the same had reached finality, seeks the shield of substantial justice to assail it.
All considered then, the finding of the Labor Arbiter holding the petitioners liable for illegal dismissal is binding on them. Not having been timely
appealed, this issue is already beyond our jurisdiction to resolve, and the finding of the Labor Arbiter can no longer be disturbed without violating the
fundamental principle that final judgment is immutable and unalterable and may no longer be modified in any respect, even if the modification is meant
to correct erroneous conclusion of fact and law. 37
WHEREFORE, premises considered, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals, reversing the NLRC
Resolution and effectively reinstating the Labor Arbiter Decision, are hereby AFFIRMED.
OLORES VS MANILA DOCTORS COLLEGE;
GR NO. 201663, March 31, 2014
Facts:
Respondent is a private higher educational institution dedicated to providing academic degrees and certificate courses related to Allied Medical
Services and Liberal Arts and Sciences. [Petitioner] was hired as a part-time faculty of respondent on 07 November 2005. Thereafter, he signed fixed
term employment contracts as part-time instructor. From 03 November 2008, [petitioner] signed fixed term employment contracts, this time as a fulltime instructor.
[Petitioner] submitted the final grades of his students to Mr. Jacinto Bernardo, Jr. (Bernardo), the chair of the Humanities Area. On 13 April 2010,
Bernardo charged [petitioner] with gross misconduct and gross inefficiency in the performance of duty. [Petitioner] was accused of employing a
grading system not in accordance with the system because he: a) added 50 pts to the final examination raw scores; b) added 50 pts to students who
have not been attending classes; c) credited only 40% instead of 60% of the final examination; d) did not credit the essay questions; and e) added
further incentives (1-4 pts) aside from 50 pts. In so doing, [petitioner] gave grades not based solely on scholastic records.
On 14 April 2010, [petitioner] submitted his answer stating that he: a) did not add 50 pts to the raw scores as verified by the dean and academic
coordinator; b) made certain adjustments to help students pass; c) did not credit the essay questions because these have never been discussed in
the meetings with Bernardo; and d) did have the judgment to give an incentive for a task well done. Also on this date, [petitioner] wrote a letter to
respondent's Human Resources Manager asking that he should now be granted a permanent status.
Acting on the report of Bernardo, respondent created the Manila Doctors Tribunal (MDT) which was tasked to ascertain the truth. The MDT sent
notices of hearing to [petitioner]. During the administrative hearing, [petitioner] stood pat on his answer. He, however, elucidated on his points by
presenting slides.
On 31 May 2010, the MDT submitted its recommendation to the president of respondent. The culpability of [petitioner] was established, hence,
dismissal was recommended. On 07 June 2010, respondent terminated the services of [petitioner] for grave misconduct and gross inefficiency and
incompetence.
dated December 8, 2010, the Labor Arbiter found merit in petitioner's charge for illegal dismissal. However, it dismissed petitioner's claim for
regularization.
Respondent appealed from the aforesaid decision to the NLRC. However, the same was denied in a Resolution dated February 10, 2011. The NLRC
reasoned that respondent's appeal was not accompanied by neither a cash nor surety bond, thus, no appeal was perfected from the decision of the
Labor Arbiter.
September 30, 2011, the NLRC granted respondent's appeal and reversed its earlier resolution.
Resultantly, petitioner filed a certiorari petition with the CA. In a Resolution dated January 9, 2012, the CA held that since petitioner failed to file a
motion for reconsideration against the NLRC decision before seeking recourse to it via a certiorari petition, the CA dismissed petitioner's special civil
action for certiorari
Issue:
(1) whether respondent's appeal with the NLRC was perfected despite its failure to post a bond; and
(2) whether the CA erred in dismissing petitioner's Rule 65 petition.

266

Held:
There is merit in the petition.
At the outset, it must be emphasized that Article 223 of the Labor Code states that an appeal by the employer to the NLRC from a judgment of a Labor
Arbiter, which involves a monetary award, may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company
duly accredited by the NLRC, in an amount equivalent to the monetary award in the judgment appealed from.
Sections 4 (a) and 6 of Rule VI of the New Rules of Procedure of the NLRC, as amended, reaffirm the explicit jurisdictional principle in Article 223.
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. (a) The appeal shall be:
1) filed within the reglementary period provided in Section 1 of this Rule;
2) verified by the appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as amended;
3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof, the relief prayed
for, and with a statement of the date the appellant received the appealed decision, resolution or order;
4) in three (3) legibly type written or printed copies; and
5) accompanied by:
i) proof of payment of the required appeal fee;
ii) posting of a cash or surety bond as provided in Section 6 of this Rule;
iii) a certificate of non-forum shopping; and iv) proof of service upon the other parties.
SECTION 6. BOND. In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety bond equivalent in
the amount to the monetary award, exclusive of damages and attorney's fees. 15
The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decisions of the Labor Arbiter.
Moreover, the filing of the bond is not only mandatory, but a jurisdictional requirement as well, that must be complied with in order to confer jurisdiction
upon the NLRC. Non-compliance therewith renders the decision of the Labor Arbiter final and executory. This requirement is intended to assure the
workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer's appeal. It is intended to
discourage employers from using an appeal to delay or evade their obligation to satisfy their employees' just and lawful claims.
Here, it is undisputed that respondent's appeal was not accompanied by any appeal bond despite the clear monetary obligation to pay petitioner his
separation pay in the amount of P100,000.00. Since the posting of a bond for the perfection of an appeal is both mandatory and jurisdictional, the
decision of the Labor Arbiter sought to be appealed before the NLRC had already become final and executory. Therefore, the NLRC had no authority to
entertain the appeal, much less to reverse the decision of the Labor Arbiter.
Nevertheless, assuming that the NLRC has jurisdiction to take cognizance of the instant case, this Court would still be inclined to favor petitioner
because the instant case falls under one of the recognized exceptions to the rule that a motion for reconsideration is necessary prior to the filing of a
certiorari petition.
The general rule is that a motion for reconsideration is indispensable before resort to the special civil action for certiorari to afford the court
or tribunal the opportunity to correct its error, if any. The rule is well settled that the filing of a motion for reconsideration is an indispensable
condition to the filing of a special civil action for certiorari.
However, said rule is subject to several recognized exceptions:
(a) Where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) Where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the
same as those raised and passed upon in the lower court;
(c) Where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government
or of the petitioner or the subject matter of the action is perishable;
(d) Where, under the circumstances, a motion for reconsideration would be useless;
(e) Where petitioner was deprived of due process and there is extreme urgency for relief;
(f) Where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable;
(g) Where the proceedings in the lower court are a nullity for lack of due process;
(h) Where the proceeding was ex parte or in which the petitioner had no opportunity to object; and
(i) Where the issue raised is one purely of law or where public interest is involved. 19
In the instant case, the NLRC had all the opportunity to review its ruling and correct itself.
The NLRC issued a ruling on February 10, 2011 in favor of petitioner dismissing respondent's appeal on the ground that the latter failed to file an appeal
bond. However, upon a motion for reconsideration filed by respondent, the NLRC completely reversed itself and set aside its earlier resolution
dismissing the appeal. The NLRC had more than enough opportunity to pass upon the issues raised by both parties on appeal of the ruling of the Labor
Arbiter and the subsequent motion for reconsideration of its resolution disposing the appeal. Thus, another motion for reconsideration would have been
useless under the circumstances since the questions raised in the certiorari proceedings have already been duly raised and passed upon by the NLRC.
In a similar case, the Labor Arbiter rendered a decision dismissing petitioner's case for lack of merit. On appeal, the NLRC rendered a decision
reversing the decision of the Labor Arbiter and ordered the respondent therein to pay petitioner full backwages, separation pay, salary differentials, 13th
month pay and allowances. Not satisfied, respondent therein moved for reconsideration of the aforesaid NLRC resolution. The NLRC, thereafter,
granted respondent's motion and reversed its previous ruling. In a like manner, the petitioner therein filed a certiorari petition without first filing a motion
for reconsideration with the NLRC.
All told, the petition is meritorious. However, since this Court is not a trier of facts, we cannot rule on the substantive issue of the case, i.e., whether
petitioner has attained regular status, inasmuch as the CA has not yet passed upon the factual issues raised by the parties.
WHEREFORE, premises considered, the instant petition is hereby GRANTED and the Resolutions dated January 9, 2012 and April 27, 2012,
respectively, of the Court of Appeals in CA-G.R. SP No. 122596, are hereby REVERSED and SET ASIDE. The case is REMANDED to the Court of
Appeals for further proceedings.

267

BERGONIO VS SOUTH EAST ASIAN AIRLINES;

GR No. 195227,.April 21, 2014
Facts:
On April 30, 2004, the petitioners filed before the LA a complaint for illegal dismissal and illegal suspension with prayer for reinstatement against
respondents South East Asian Airlines (SEAIR) and Irene Dornier as SEAIR's President (collectively, the respondents).
In a decision dated May 31, 2005, the LA found the petitioners illegally dismissed and ordered the respondents, among others, to immediately reinstate
the petitioners with full backwages. The respondents received their copy of this decision on July 8, 2005. 6
On August 20, 2005, the petitioners filed before the LA a Motion for issuance of Writ of Execution for their immediate reinstatement.
During the scheduled pre-execution conference held on September 14, 2005, the respondents manifested their option to reinstate the petitioners in the
payroll. The payroll reinstatement, however, did not materialize. Thus, on September 22, 2005, the petitioners filed before the LA a manifestation for
their immediate reinstatement.
On October 3, 2005, the respondents filed an opposition to the petitioners' motion for execution. 7 They claimed that the relationship between them and
the petitioners had already been strained because of the petitioners' threatening text messages, thus precluding the latter's reinstatement. IAEcCT
On October 7, 2005, the LA granted the petitioners' motion and issued a writ of execution. 8
The respondents moved to quash the writ of execution with a prayer to hold in abeyance the implementation of the reinstatement order. 9 They
maintained that the relationship between them and the petitioners had been so strained that reinstatement was no longer possible.
The October 7, 2005 writ of execution was returned unsatisfied. In response, the petitioners filed a motion for re-computation of accrued wages, and, on
January 25, 2006, a motion for execution of the re-computed amount. On February 16, 2006, the LA granted this motion and issued an alias writ of
execution. 10
On February 21, 2006, the respondents issued a Memorandum 11 directing the petitioners to report for work on February 24, 2006. The petitioners
failed to report for work on the appointed date. On February 28, 2006, the respondents moved before the LA to suspend the order for the petitioners'
reinstatement. 12
Meanwhile, the respondents appealed with the NLRC the May 31, 2005 illegal dismissal ruling of the LA.
In an order dated August 15, 2006, 13 the NLRC dismissed the respondents' appeal for non-perfection. The NLRC likewise denied the respondents'
motion for reconsideration in its November 29, 2006 resolution, prompting the respondents to file before the CA a petition for certiorari.
The NLRC issued an Entry of Judgment on February 6, 2007 declaring its November 29, 2006 resolution final and executory. The petitioners forthwith
filed with the LA another motion for the issuance of a writ of execution, which the LA granted on April 24, 2007. The LA also issued another writ of
execution. 14 A Notice of Garnishment was thereafter issued to the respondents' depositary bank Metrobank-San Lorenzo Village Branch, Makati
City in the amount of P1,900,000.00 on June 6, 2007.
On December 18, 2007, the CA rendered its decision (on the illegal dismissal ruling of the LA) partly granting the respondents' petition. The CA
declared the petitioners' dismissal valid and awarded them P30,000.00 as nominal damages for the respondents' failure to observe due process.
The records show that the petitioners appealed the December 18, 2007 CA decision with this Court. In a resolution dated August 4, 2008, the Court
denied the petition. The Court likewise denied the petitioners' subsequent motion for reconsideration, and thereafter issued an Entry of Judgment
certifying that its August 4, 2008 resolution had become final and executory on March 9, 2009.
On January 31, 2008, the petitioners filed with the LA an Urgent Ex-Parte Motion for the Immediate Release of the Garnished Amount.
In its March 13, 2008 order, 15 the LA granted the petitioners' motion; it directed Metrobank-San Lorenzo to release the P1,900,000.00 garnished
amount. The LA found valid and meritorious the respondents' claim for accrued wages in view of the respondents' refusal to reinstate the petitioners
despite the final and executory nature of the reinstatement aspect of its (LA's) May 31, 2005 decision. The LA noted that as of the December 18, 2007
CA decision (that reversed the illegal dismissal findings of the LA), the petitioners' accrued wages amounted to P3,078,366.33.
In its July 16, 2008 resolution, 16 the NLRC affirmed in toto the LA's March 13, 2008 order. The NLRC afterwards denied the respondents' motion for
reconsideration for lack of merit. 17
The respondents assailed the July 16, 2008 decision and September 29, 2009 resolution of the NLRC via a petition for certiorari filed with the CA.
DIETcH
The CA's ruling
The CA granted the respondents' petition. 18 It reversed and set aside the July 16, 2008 decision and the September 29, 2009 resolution of the NLRC
and remanded the case to the Computation and Examination Unit of the NLRC for the proper computation of the petitioners' accrued wages, computed
up to February 24, 2006.
The CA agreed that the reinstatement aspect of the LA's decision is immediately executory even pending appeal, such that the employer is obliged to
reinstate and pay the wages of the dismissed employee during the period of appeal until the decision (finding the employee illegally dismissed including
the reinstatement order) is reversed by a higher court. Applying this principle, the CA noted that the petitioners' accrued wages could have been
properly computed until December 18, 2007, the date of the CA's decision finding the petitioners validly dismissed.
The CA, however, pointed out that when the LA's decision is "reversed by a higher tribunal, an employee may be barred from collecting the accrued
wages if shown that the delay in enforcing the reinstatement pending appeal was without fault" on the employer's part. In this case, the CA declared that
the delay in the execution of the reinstatement order was not due to the respondents' unjustified act or omission. Rather, the petitioners' refusal to
comply with the February 21, 2006 return-to-work Memorandum that the respondents issued and personally delivered to them (the petitioners)
prevented the enforcement of the reinstatement order.
Thus, the CA declared that, given this peculiar circumstance (of the petitioners' failure to report for work), the petitioners' accrued wages should only be
computed until February 24, 2006 when they were supposed to report for work per the return-to-work Memorandum. Accordingly, the CA reversed, for
grave abuse of discretion, the NLRC's July 16, 2008 decision that affirmed the LA's order to release the garnished amount.
Issues:

The petitioners argue that the CA gravely erred when it ruled, contrary to Article 223, paragraph 3 of the Labor Code, that the computation of
their accrued wages stopped when they failed to report for work on February 24, 2006.
Additionally, the petitioners direct the Court's attention to the several pleadings that the respondents filed to prevent the execution of the

268

reinstatement aspect of the LA's May 31, 2005 decision, i.e., the Opposition to the Issuance of the Writ of Execution, the Motion to Quash
the Writ of Execution and the Motion to Suspend the Order of Reinstatement. They also point out that in all these pleadings, the
respondents claimed that strained relationship barred their (the petitioners') reinstatement, evidently confirming the respondents' lack of
intention to reinstate them.
Finally, the petitioners point out that the February 21, 2006 Memorandum directed them to report for work at Clark Field, Angeles,
Pampanga instead of at the NAIA-Domestic Airport in Pasay City where they had been assigned. They argue that this directive to report for
work at Clark Field violates Article 223, paragraph 3 of the Labor Code that requires the employee's reinstatement to be under the same
terms and conditions prevailing prior to the dismissal.
Thus, the petitioners claim that the delay in their reinstatement was in fact due to the respondents' unjustified acts and that the respondents
never really complied with the LA's reinstatement order.

Held:
We GRANT the petition.
Preliminary considerations: jurisdictionallimitations of the Court's Rule 45 review ofthe CA's Rule 65 decision in labor cases
In a Rule 45 petition for review on certiorari, what we review are the legal errors that the CA may have committed in the assailed decision, in contrast
with the review for jurisdictional errors that we undertake in an original certiorari action. In reviewing the legal correctness of the CA decision in a labor
case taken under Rule 65 of the Rules of Court, we examine the CA decision in the context that it determined the presence or the absence of grave
abuse of discretion in the NLRC decision before it and not on the basis of whether the NLRC decision, on the merits of the case, was correct. Otherwise
stated, we proceed from the premise that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. Within
this narrow scope of our Rule 45 review, the question that we ask is: Did the CA correctly determine whether the NLRC committed grave abuse of
discretion in ruling on the case? 20
In addition, the Court's jurisdiction in a Rule 45 petition for review on certiorari is limited to resolving only questions of law.
The present petition essentially raises the question whether the petitioners may recover the accrued wages prior to the CA's reversal of the LA's May
31, 2005 decision. This is a question of law that falls well within the Court's power in a Rule 45 petition.
Resolution of this question of law, however, is inextricably linked with the largely factual issue of whether the accrued wages should be computed until
December 17, 2008 when the CA reversed the illegal dismissal findings of the LA or only until February 24, 2006 when the petitioners were supposed to
report for work per the February 21, 2006 Memorandum. In either case, the determination of this factual issue presupposes another factual issue, i.e.,
whether the delay in the execution of the reinstatement order was due to the respondents' fault. As questions of fact, they are proscribed by our Rule 45
jurisdiction; we generally cannot address these factual issues except to the extent necessary to determine whether the CA correctly found the NLRC in
grave abuse of discretion in affirming the release of the garnished amount despite the respondents' issuance of and the petitioners' failure to comply
with the February 21, 2006 return-to-work Memorandum.
The jurisdictional limitations of our Rule 45 review of the CA's Rule 65 decision in labor cases, notwithstanding, we resolve this petition's factual issues
for we find legal errors in the CA's decision. Our consideration of the facts taken within this narrow scope of our factual review power convinced us, as
our subsequent discussion will show, that no grave abuse of discretion attended the NLRC decision. DSHTaC
Nature of the reinstatement aspect of theLA's decision on a finding of illegaldismissal
Article 223 (now Article 229) 21 of the Labor Code governs appeals from, and the execution of, the LA's decision. Pertinently, paragraph 3, Article 223
of the Labor Code provides:
Article 223. APPEAL.
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, pending appeal . The employee shall either
be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein. [Emphasis and underscoring supplied]
Under paragraph 3, Article 223 of the Labor Code, the LA's order for the reinstatement of an employee found illegally dismissed is immediately
executory even during pendency of the employer's appeal from the decision. Under this provision, the employer must reinstate the employee either
by physically admitting him under the conditions prevailing prior to his dismissal, and paying his wages; or, at the employer's option, merely reinstating
the employee in the payroll until the decision is reversed by the higher court. 22 Failure of the employer to comply with the reinstatement order, by
exercising the options in the alternative, renders him liable to pay the employee's salaries. 23
Otherwise stated, a dismissed employee whose case was favorably decided by the LA is entitled to receive wages pending appeal upon
reinstatement, which reinstatement is immediately executory. 24 Unless the appellate tribunal issues a restraining order, the LA is duty bound to
implement the order of reinstatement and the employer has no option but to comply with it. 25
Moreover, and equally worth emphasizing, is that an order of reinstatement issued by the LA is self-executory, i.e., the dismissed employee need
not even apply for and the LA need not even issue a writ of execution to trigger the employer's duty to reinstate the dismissed employee. In Pioneer
Texturizing Corp. v. NLRC, et al., 26 decided in 1997, the Court clarified once and for all this self-executory nature of a reinstatement order. After tracing
back the various Court rulings interpreting the amendments introduced by Republic Act No. 6715 27 on the reinstatement aspect of a labor decision
under Article 223 of the Labor Code, the Court concluded that to otherwise "require the application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the
immediate execution of a reinstatement order." 28
In short, therefore, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its immediate
and automatic execution even pending appeal. 29 The employer is duty-bound to reinstate the employee, failing which, the employer is liable instead to
pay the dismissed employee's salary. The Court's consistent and prevailing treatment and interpretation of the reinstatement order as immediately
enforceable, in fact, merely underscores the right to security of tenure of employees that the Constitution 30 protects.
The employer is obliged to pay thedismissed employee's salary if herefuses to reinstate until actualreinstatement or reversal by a
highertribunal; circumstances that may bar anemployee from receiving the accrued wages

269

As we amply discussed above, an employer is obliged to immediately reinstate the employee upon the LA's finding of illegal dismissal; if the employer
fails, it is liable to pay the salary of the dismissed employee. Of course, it is not always the case that the LA's finding of illegal dismissal is, on appeal by
the employer, upheld by the appellate court. After the LA's decision is reversed by a higher tribunal, the employer's duty to reinstate the dismissed
employee is effectively terminated. This means that an employer is no longer obliged to keep the employee in the actual service or in the payroll. The
employee, in turn, is not required to return the wages that he had received prior to the reversal of the LA's decision. 31
The reversal by a higher tribunal of the LA's finding (of illegal dismissal), notwithstanding, an employer, who, despite the LA's order of reinstatement, did
not reinstate the employee during the pendency of the appeal up to the reversal by a higher tribunal may still be held liable for the accrued wages of the
employee, i.e., the unpaid salary accruing up to the time the higher tribunal reverses the decision. 32 The rule, therefore, is that an employee may still
recover the accrued wages up to and despite the reversal by the higher tribunal. This entitlement of the employee to the accrued wages proceeds from
the immediate and self-executory nature of the reinstatement aspect of the LA's decision. TEHIaA
By way of exception to the above rule, an employee may be barred from collecting the accrued wages if shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer. To determine whether an employee is thus barred, two tests must be
satisfied: (1) actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not
be due to the employer's unjustified act or omission. Note that under the second test, the delay must be without the employer's fault. If the delay is
due to the employer's unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the LA's decision.
33
Application of the two-fold test; thepetitioners are entitled to receive theiraccrued salaries until December 18, 2007
As we earlier pointed out, the core issue to be resolved is whether the petitioners may recover the accrued wages until the CA's reversal of the LA's
decision. An affirmative answer to this question will lead us to reverse the assailed CA decision for legal errors and reinstate the NLRC's decision
affirming the release of the garnished amount. Otherwise, we uphold the CA's decision to be legally correct. To resolve this question, we apply the twofold test.
First, the existence of delay whether there was actual delay or whether the order of reinstatement pending appeal was not executed prior to its
reversal? We answer this test in the affirmative.
To recall, on May 31, 2005, the LA rendered the decision finding the petitioners illegally dismissed and ordering their immediate reinstatement. Per the
records, the respondents received copy of this decision on July 8, 2005. On August 20, 2005, the petitioners filed before the LA a Motion for Issuance of
Writ of Execution for their immediate reinstatement. The LA issued the Writ of Execution on October 7, 2005. From the time the respondents received
copy of the LA's decision, and the issuance of the writ of execution, until the CA reversed this decision on December 17, 2008, the respondents had not
reinstated the petitioners, either by actual reinstatement or in the payroll. This continued non-execution of the reinstatement order in fact moved the LA
to issue an alias writ of execution on February 16, 2006 and another writ of execution on April 24, 2007.
From these facts and without doubt, there was actual delay in the execution of the reinstatement aspect of the LA's May 31, 2005 decision before it was
reversed in the CA's decision.
Second, the cause of the delay whether the delay was not due to the employer's unjustified act or omission . We answer this test in the negative;
we find that the delay in the execution of the reinstatement pending appeal was due to the respondents' unjustified acts.
In reversing, for grave abuse of discretion, the NLRC's order affirming the release of the garnished amount, the CA relied on the fact of the issuance of
the February 21, 2006 Memorandum and of the petitioners' failure to comply with its return-to-work directive. In other words, with the issuance of this
Memorandum, the CA considered the respondents as having sufficiently complied with their obligation to reinstate the petitioners. And, the subsequent
delay in or the non-execution of the reinstatement order was no longer the respondents' fault, but rather of the petitioners who refused to report back to
work despite the directive.
Our careful consideration of the facts and the circumstances that surrounded the case convinced us that the delay in the reinstatement pending appeal
was due to the respondents' fault. For one, the respondents filed several pleadings to suspend the execution of the LA's reinstatement order, i.e., the
opposition to the petitioners' motion for execution filed on October 3, 2005; the motion to quash the October 7, 2005 writ of execution with prayer to hold
in abeyance the implementation of the reinstatement order; and the motion to suspend the order for the petitioners' reinstatement filed on February 28,
2006 after the LA issued the February 16, 2006 alias writ of execution. These pleadings, to our mind, show a determined effort on the respondents' part
to prevent or suspend the execution of the reinstatement pending appeal. EaCSTc
Another reason is that the respondents, contrary to the CA's conclusion, did not sufficiently notify the petitioners of their intent to actually reinstate them;
neither did the respondents give them ample opportunity to comply with the return-to-work directive. We note that the respondents delivered the
February 21, 2006 Memorandum (requiring the petitioners to report for work on February 24, 2006) only in the afternoon of February 23, 2006. Worse,
the respondents handed the notice to only one of the petitioners Pelaez who did not act in representation of the others. Evidently, the petitioners
could not reasonably be expected to comply with a directive that they had no or insufficient notice of.
Lastly, the petitioners continuously and actively pursued the execution of the reinstatement aspect of the LA's decision, i.e., by filing several motions for
execution of the reinstatement order, and motion to cite the respondents in contempt and re-computation of the accrued wages for the respondents'
continued failure to reinstate them.
These facts altogether show that the respondents were not at all sincere in reinstating the petitioners. These facts when taken together with the fact
of delay reveal the respondents' obstinate resolve and willful disregard of the immediate and self-executory nature of the reinstatement aspect of the
LA's decision.
A further and final point that we considered in concluding that the delay was due to the respondents' fault is the fact that per the 2005 Revised Rules of
Procedure of the NLRC (2005 NLRC Rules), 34 employers are required to submit a report of compliance within ten (10) calendar days from receipt of
the LA's decision, noncompliance with which signifies a clear refusal to reinstate. Arguably, the 2005 NLRC Rules took effect only on January 7, 2006;
hence, the respondents could not have been reasonably expected to comply with this duty that was not yet in effect when the LA rendered its decision
(finding illegal dismissal) and issued the writ of execution in 2005. Nevertheless, when the LA issued the February 16, 2006 alias writ of execution and
the April 24, 2007 writ of execution, the 2005 NLRC Rules was already in place such that the respondents had become duty-bound to submit the
required compliance report; their noncompliance with this rule all the more showed a clear and determined refusal to reinstate.
All told, under the facts and the surrounding circumstances, the delay was due to the acts of the respondents that we find were unjustified. We reiterate
and emphasize, Article 223, paragraph 3, of the Labor Code mandates the employer to immediately reinstate the dismissed employee, either by
actually reinstating him/her under the conditions prevailing prior to the dismissal or, at the option of the employer, in the payroll. The respondents' failure
in this case to exercise either option rendered them liable for the petitioners' accrued salary until the LA decision was reversed by the CA on December

270

17, 2008. We, therefore, find that the NLRC, in affirming the release of the garnished amount, merely implemented the mandate of Article 223; it simply
recognized as immediate and self-executory the reinstatement aspect of the LA's decision.
Accordingly, we reverse for legal errors the CA decision. We find no grave abuse of discretion attended the NLRC's July 16, 2008 resolution that
affirmed the March 13, 2008 decision of the LA granting the release of the garnished amount.
ARABIT VS JARDINE PACIFIC FINANCE INC.;
GR NO. 181719, April 21, 2014
Facts:
Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc. (formerly MB Finance) (Jardine). The petitioners were also
officers and members of MB Finance Employees Association-FFW Chapter (the Union), a legitimate labor union and the sole exclusive bargaining
agent of the employees of Jardine. On the claim of financial losses, Jardine decided to reorganize and implement a redundancy program among its
employees. The petitioners were among those affected by the redundancy program. Jardine thereafter hired contractual employees to undertake the
functions these employees used to perform.
The Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB), questioning the termination of employment of the
petitioners who were also union officers. The Union alleged unfair labor practice on the part of Jardine, as well as discrimination in the dismissal of its
officers and members.
They reached a settlement but In the settlement, the petitioners accepted their redundancy pay without prejudice to their right to question the legality of
their dismissal with the NLRC. Jardine paid the petitioners a separation package composed of their severance pay, plus their grossed up transportation
allowance.
Issue:
WON the petitioners was illegally dismissed because of the implementation of the redundancy program
Held:
Yes, We cannot accept Jardines shallow understanding of the concepts of redundancy and retrenchment in determining the validity of the severance of
an employer-employee relationship. These rulings appropriately clarify that redundancy does not need to be always triggered by a decline in the
business. Primarily, employers resort to redundancy when the functions of an employee have already become superfluous or in excess of what the
business requires. Thus, even if a business is doing well, an employer can still validly dismiss an employee from the service due to redundancy if that
employees position has already become in excess of what the employers enterprise requires.
From this perspective, it is illogical for Jardine to terminate the petitioners employment and replace them with contractual employees. The replacement
effectively belies Jardines claim that the petitioners positions were abolished due to superfluity. Redundancy could have been justified if the functions
of the petitioners were transferred to other existing employees of the company. To dismiss the petitioners and hire new contractual employees as
replacements necessarily give rise to the sound conclusion that the petitioners services have not really become in excess of what Jardines business
requires.
Guidelines in implementing redundancy
this Court laid down the principle that the employer must use fair and reasonable criteria in the selection of employees who will be dismissed from
employment due to redundancy. Such fair and reasonable criteria may include the following, but are not limited to: (a) less preferred status (e.g.
temporary employee); (b) efficiency; and (c) seniority. The presence of these criteria used by the employer shows good faith on its part and is
evidence that the implementation of redundancy was painstakingly done by the employer in order to properly justify the termination from the service of
its employees (Golden Thread Knitting Industries vs NLRC). For the implementation of a redundancy program to be valid, the employer must comply
with the following requisites: (1) written notice served on both the employees and the Department of Labor and Employment at least one month
prior to the intended date of retrenchment; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for
every year of service, whichever is higher; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and accordingly abolished (Asian Alcohol vs NLRC).
The first level, based on Asian Alcohol, is broader as the case recognized distinctions on a per position basis. At this level, Jardine failed to explain why
among all of the existing positions in its organization, Jardine chose the petitioners posts as the ones which have already become redundant and
terminable.1wphi1
The second level, derived from Golden Thread, is more specific. Here the distinction narrows down to the particular employees occupying the same
positions which were already declared to be redundant. At this level, Jardines lapse is shown by its failure to explain why among all of its employees
whose positions were determined to be redundant, the petitioners were the ones selected to be dismissed from the service.
MIRANT VS CARO;
GR NO. 181490, April 23, 2014
Facts:
Respondent was hired by Mirant Pagbilao on January 3, 1994 as its Logistics Officer. In 2002, when Southern Company was sold to Mirant, respondent
was already a Supervisor of the Logistics and Purchasing Department of petitioner. At the time of the severance of his employment, respondent was the
Procurement Supervisor of Mirant Pagbilao assigned at petitioner corporations corporate office. As Procurement Supervisor, his main task was to serve
as the link between the Materials Management Department of petitioner corporation and its staff, and the suppliers and service contractors in order to
ensure that procurement is carried out in conformity with set policies, procedures and practices. In addition, respondent was put incharge of ensuring
the timely, economical, safe and expeditious delivery of materials at the right quality and quantity to petitioner corporations plant. Respondent was also
responsible for guiding and overseeing the welfare and training needs of the staff of the Materials Management Department. Due to the nature of
respondents functions, petitioner corporation considers his position as confidential. On November 3, 2004, petitioner corporation conducted a random

271

drug test where respondent was randomly chosen among its employees who would be tested for illegal drug use. Through an Intracompany
Correspondence,12 these employees were informed that they were selected for random drug testing to be conducted on the same day that they
received the correspondence. Respondent was duly notified that he was scheduled to be tested after lunch on that day. His receipt of the notice was
evidenced by his signature on the correspondence.
There was phone call from his wife. She said there was a bombing incident near her workplace in Tel Aviv. So he acted on and told the secretary of his
department that respondent that he will give preferential attention to the emergency phone call that he just received. He also told Torres that he would
be back at the office as soon as he has resolved his predicament.
On that same day, at around 6:15 p.m., respondent returned to petitioner corporations office. When he was finally able to charge his cellphone at the
office, he received a text message from Tina Cecilia (Cecilia), a member of the Drug Watch Committee that conducted the drug test, informing him to
participate in the said drug test. He immediately called up Cecilia to explain the reasons for his failure to submit himself to the random drug test that
day. He also proposed that he would submit to a drug test the following day at his own expense. Respondent never heard from Cecilia again.
On November 8, 2004, respondent received a Show Cause Notice 15 from petitioner corporation through Jaime Dulot (Dulot), his immediate supervisor,
requiring him to explain in writing why he should not be charged with "unjustified refusal to submit to random drug testing." Respondent submitted his
written explanation16 on November 11, 2004. Petitioner corporation further required respondent on December 14, 2004 to submit additional pieces of
supporting documents.
He was found guilty by the petitioners corporation Investigating panel of unjustified refusal of to submit random drug testing. and recommended a
penalty of four working weeks suspension without pay, instead of termination, due to the presence of mitigating circumstances. petitioner corporations
Asst. Vice President for Material Management Department, George K. Lamela, Jr. (Lamela), recommended 19 that respondent be terminated from
employment instead of merely being suspended.
Issue:
WON respondent was validly terminated for his failure to take the mandatory drug test
Held:
No, We agree with the disposition of the appellate court that there was illegal dismissal in the case at bar. While the adoption and enforcement by
petitioner corporation of its Anti-Drugs Policy is recognized as a valid exercise of its management prerogative as an employer, such exercise is not
absolute and unbridled. Managerial prerogatives are subject to limitations provided by law, collective bargaining agreements, and the general principles
of fair play and justice.
Petitioner corporations subject Anti-Drugs Policy fell short of being fair and reasonable:
First. The policy was not clear on what constitutes "unjustified refusal" when the subject drug policy prescribed that an employees "unjustified refusal"
to submit to a random drug test shall be punishable by the penalty of termination for the first offense. To be sure, the term "unjustified refusal" could not
possibly cover all forms of "refusal" as the employees resistance. The fact that petitioner corporations own personnel had to dissect the intended
meaning of "unjustified refusal" is further proof that it is not clear on what context the term "unjustified refusal" applies to.
Second. The penalty of termination imposed by petitioner corporation upon respondent fell short of being reasonable. Company policies and regulations
are generally valid and binding between the employer and the employee unless shown to be grossly oppressive or contrary to law 50 as in the case at
bar. Recognizing the ambiguity in the subject policy, the CA was more inclined to adopt the recommendation of petitioner corporations own
Investigating Panel over that of Sliman and the NLRC. Thus, We find that the recommended four (4) working weeks suspension without pay as the
reasonable penalty to be imposed on [respondent] for his disobedience but not the illegal termination of work.
McBurnie vs. Ganzon et al.,
GR Nol. 178034 & 178117 & 186984-85, Oct. 17, 2013,
Facts
McBurnie , an Australian national, signed a five-year employment agreement5 with the company EGI as an Executive Vice-President who shall oversee
the management of the companys hotels and resorts within the Philippines. He met an accident in the Philippines, so he left for Australia for a medical
treatment. At that time when he left for Australia, he had not yet obtained a work permit. He sued EGI company for illegal dismissal. Respondents
opposed the complaint, contending that their agreement with McBurnie was to jointly invest in and establish a company for the management of hotels.
They did not intend to create an employer-employee relationship, and the execution of the employment contract that was being invoked by McBurnie
was solely for the purpose of allowing McBurnie to obtain an alien work permit in the Philippines.
The Labor Arbiter declared him to be illegally dismissed.and thus entitled to receive salary and bene benefits for the unexpired term of their employment
contract, moral and exemplary damages, and (c) attorneys fees.
Feeling aggrieved, the respondents appealed the LAs Decision to the NLRC.However, it was denied. It was only granted in CA that the bond would be
reduced to P10,000.
ISSUES:
1.
2.

WON the appeal to reduce bond is proper.

WON EGI is responsible to McBurnie for illegal dismissal.

HELD:
1.The bond requirement in appeals involving monetary awards has been and may be relaxed in meritorious cases, including instances in which (1)
there was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a
liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the
appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period

272

2. In finding merit in the respondents motion for reconsideration, we also take into account the unwarranted results that will arise from an
implementation of the Courts Decision dated September 18, 2009. We emphasize, moreover, that although a remand and an order upon the NLRC to
give due course to the appeal would have been the usual course after a finding that the conditions for the reduction of an appeal bond were duly
satisfied by the respondents, given such results, the Court finds it necessary to modify the CAs order of remand, and instead rule on the dismissal of
the complaint against the respondents.
Without the reversal of the Courts Decision and the dismissal of the complaint against the respondents, McBurnie would be allowed to claim benefits
under our labor laws despite his failure to comply with a settled requirement for foreign nationals.
Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under our labor laws, it was necessary for him to establish, first
and foremost, that he was qualified and duly authorized to obtain employment within our jurisdiction. A requirement for foreigners who intend to work
within the country is an employment permit, as provided under Article 40, Title II of the Labor Code which reads:
Art. 40. Employment permit for non-resident aliens. Any alien seeking admission to the Philippines for employment purposes and any
domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the
Department of Labor.
In this case, the Supreme Court admitted that it made a very big mistake in deciding on an illegal dismissal case. It completely reversed its own
decision which became final in 2009, or more than 4 years ago, and spared a Filipino businessman from paying P60 million worth of backwages and
damages to an Australian who worked for him for only 45days
Absent an employment permit, any employment relationship that McBurnie contemplated with the respondents was void for being contrary to law. A void
or inexistent contract, in turn, has no force and effect from the beginning as if it had never been entered into. Thus, without an Alien Employment Permit,
the "Employment Agreement" is void and could not be the source of a right or obligation.
CRISANTO F. CASTRO, JR. vs. ATENEO DE NAGA UNIVERSITY
G.R. No. 175293
Petitioner is a regular and full time faculty member of Ateneo de naga university. He received from respondent, the University President, informing him
that
his
would
no
longer
be
renewed.
Thus,
petitioner
filed
a
complaint
for
illegal
dismissal.
The University denied the allegation of illegal dismissal, and maintained that the petitioner was a participant and regular contributor to the Ateneo de
Naga Employees Retirement Plan (Plan); that upon reaching the age of 60 years on June 26, 1999, he was deemed automatically retired under the
Plan;
and
that
he
had
been
allowed
to
teach
after
his
retirement
only
on
contractual
basis.
The Labor Arbiter ruled in favor of petitioner and ordered respondent to reinstate the petitioner and pay him back wages.
Respondents appealed to the NLRC. Simultaneously, they submitted a manifestation stating that neither actual nor payroll reinstatement of the
petitioner could be effected because he had meanwhile been employed as a Presidential Assistant for Southern Luzon Affairs with the position of
Undersecretary; and that his reinstatement would result in dual employment and double compensation which were prohibited by existing civil service
rules and regulations. Petitioner filed a motion to order the respondents to pay his salaries and benefits.
The LA explained that Article 223 of the Labor Code granted to the employer the option to implement either a physical or a payroll reinstatement, and
that, therefore, the respondents must first exercise the option regardless of the petitioner's employment with the Government, denied the petitioner's
motion, but ordered the respondents to exercise the option of either actual or payroll reinstatement of the petitioner. NLRC reversed the decision of the
LA.
Held:
Claim for accrued benefits should be sustained despite dismissal of the petitioner's complaint. The employer is obliged to reinstate and to pay the
wages of the dismissed employee during the period of appeal until its reversal by the higher Court; and that because he was not reinstated either
actually or by payroll, he should be held entitled to the accrued salaries. Article 279 of the Labor Code, as amended, entitles an illegally dismissed
employee to reinstatement. Article 223 of the Labor Code requires the reinstatement to be immediately executory even pending appeal. The unjustified
refusal of the employer to reinstate the dismissed employee would entitle the latter to the payment of his salaries effective from the time when the
employer failed to reinstate him; thus, it becomes the ministerial duty of the LA to implement the order of reinstatement. An order or award for
reinstatement does not require a writ of execution it is already selfexecutory. For as long as the employer continuously fails to actually implement the
reinstatement aspect of the decision of the LA, the employer's obligation to the employee for his accrued backwages and other benefits continues to
accumulate.
Phil. Touristers Inc et al., vs. Mas Transit Workers Union-ANGLO-KMU
GR No. 201237, Sept. 3, 2014
Fact:
A union files case of Unfair labor practice, illegal lockouts and illegal dismissal againts its employer. MTI sold its buses and its franchise to
PTI, thus leads to closure of its business. The union argued that the sale is a scheme to terminate their employment, for they join a union which the
company vehemently oppose. Thus, union files a case of Unfair labor practice, illegal lockouts and illegal dismissal againts its employer (MTI) and the
buyer (PTI). The Labor arbiter granted the petition and direct MTI and PTI solidarily liable for the employee backwages, separation pay, and attorneys
fees.

273

Dissatisfied, petitioners appealed before the NLRC by filing their Notice of Appeal31 and Appeal Memorandum,32 accompanied by a
Manifestation with Motion for Reduction of Bond,33 praying that the required bond covering the monetary judgment of ?12,833,210.00 (full judgment
award) be reduced in view of PTIs liquidity problems. Simultaneously, petitioners posted South Sea Surety and Insurance Company, Inc. (SSSICI)
Surety Bond No. G(21) 00271834 in the amount of ?5,000,000.00 (partial bond), seeking that the same be considered as substantial compliance for
purposes of perfecting their appeal.
However, the union vehemently opposed petitioners motion to reduce bond and moved for the dismissal of their appeal for failure to perfect
the same as the bond posted was not in an amount equivalent to the full judgment award as mandated by law.
Issue:
WON PTI substantially comply with the requirements to perfect an appeal despite its failure to post bond equivalent to the full judgment
award as mandated by law?
Ruling:
YES, PTI substantially comply with the requirements of posting a bond to perfect an appeal.
or an appeal from the LAs ruling to the NLRC to be perfected, Article 223 (now Article 229)61 of the Labor Code requires the posting of a cash or surety
bond in an amount equivalent to the monetary award in the judgment appealed from, viz.:
ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds:
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued
by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.
No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the
monetary award.
The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not stop the running of the period to
perfect an appeal.
Here, it is not disputed that petitioners filed an appeal memorandum and complied with the other requirements for perfecting an appeal, save for the
posting of the full amount equivalent to the monetary award of P12,833,210.00. Instead, petitioners filed a motion to reduce bond claiming that they
were suffering from liquidity problems and, in support of their claim, submitted PTIs AFS which showed a deficit in income.
The absence of grave abuse of discretion in this case is bolstered by the fact that petitioners motion to reduce bond was accompanied by a
P5,000,000.00 surety bond which was seasonably posted within the reglementary period to appeal. In McBurnie v. Ganzon,70 the Court ruled that, [f]or
purposes of compliance with [the bond requirement under the 2011 NLRC Rules of Procedure], a motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to ten percent (10%) of the monetary award subject of the appeal, exclusive of damages, and attorneys
fees. Seeing no cogent reason to deviate from the same, the Court deems that the posting of the aforesaid partial bond, being evidently more than ten
percent (10%) of the full judgment award of P12,833,000.00, already constituted substantial compliance with the governing rules at the onset.
In this relation, it must be clarified that while the partial bond was initially tainted with defects, i.e., that it was initially issued in favor of MTI and not PTI,
and that the bonding company, SSSICI, had no authority to transact business in all courts of the Philippines at that time, these defects had already been
cured by the petitioners posting of Supersedeas Bond No. SS-B-10150, in the full amount of P12,833,000.00, issued on November 8, 2004 by the Far
Eastern Surety & Insurance Company, Inc.,71 in timely compliance with the NLRCs September 30, 2004 Order.

274