JAKA FOOD PROCESSING CORPORATION vs PACOT Case Digest

[G.R. No. 151378. March 28, 2005]

JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN PACOT, ROBERT PAROHINOG, DAVID
BISNAR, MARLON DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB, respondents.

FACTS: Private respondents were hired by JAKA but their services were eventually terminated on August
29, 1997 due to “dire financial straits”. It is not disputed by the parties that the termination was effected
without compliance of Article 283 of the LC because no written notice was served on the employees and
the DOLE at least one month before the respondents’ termination.

Respondents filed a complaint for illegal dismissal against JAKA. JAKA was defeated on appeal in the
lower court hence this petition.

ISSUE: The issues boil down to one question: What are the implications where an employee is dismissed
for cause BUT without compliance of the notice requirement under the LC?

HELD: It is clear that an employer is liable for nominal damages even if the termination were upheld due
to just causes. However, it is also important to note the different implications between a dismissal for
just cause under Article 282 and one for authorized causes under Article 283.

SC ruled that the termination was based on authorized cause (retrenchment), but since JAKA did not
comply with the notice requirement they have to pay 50k as nominal damages for non-compliance with
statutory due process. JAKA, however should not pay separation pay because where it is true that the
rule is to grant separation pay to employees terminated due to authorized causes, the EXCEPTION is
where the closure of business or cessation of operations is due to serious business losses or financial
reverses, duly proved, as in this case.

CASE #2[G.R. No. 158693 November 17, 2004]VIRGILIO AGABON, et al. v. NLRC

FACTS: Virgilio and Jenny Agabon worked for respondent Riviera Home Improvements, Inc. as gypsum
and cornice installers from January 1992 until Feb 1999. Their employment was terminated when they
were dismissed for allegedly abandoning their work. Petitioners Agabon then filed a case of illegal
dismissal. The LA ruled in favor of the spouses and ordered Riviera to pay them their money claims. The
NLRC reversed the LA, finding that the Agabons were indeed guilty of abandonment. The CA modified
the LA by ruling that there was abandonment but ordering Riviera to pay the Agabons’ money claims.
The arguments of both parties are as follows: The Agabons claim, among others that Riviera violated the
requirements of notice and hearing when the latter did not send written letters of termination to their
addresses.

Riviera admitted to not sending the Agabons letters of termination to their last known addresses
because the same would be futile, as the Agabons do not reside there anymore. However, it also claims
that the Agabons abandoned their work. More than once, they subcontracted installation works for
other companies. They already were warned of termination if the same act was repeated, still, they
disregarded the warning.

ISSUES

1. Whether the Agabons were illegally dismissed

2. Whether Riviera violated the requirements of notice and hearing
3. Is the violation of the procedural requirements of notice and hearing for termination of employees
a violation of the Constitutional due process?
4. What are the consequences of violating the procedural requirements of termination?

RULING: Valid dismissal but violation of statutory due process = payment of nominal damages (P30,000)
& balance of 13th month pay, etc.

1. No. There was just cause for their dismissal, i.e., abandonment. Art. 282specifies the grounds for
just dismissal, to wit:
a. Serious misconduct or willful disobedience of the lawful orders of the employer or his duly
authorized representative in connection with the employee’s work
b. Gross and habitual neglect of the by the employee of his duties(includes abandonment)
c. Fraud or willful breach of the trust reposed by the employer or his duly authorized representative
to the employed.

Commission of a crime or offense by the employee against the person of the employer or any member
of his immediate family or his duly authorized representative. Any other causes analogous to the
foregoing.To establish abandonment, two elements must be present:

a. The unjustified failure of the employee to report for work

b. A clear intention to sever e-e relationship, manifested by overt acts Here, the Agabons were
frequently absent from work for having performed installation work for another company,
despite prior warning given by Riviera. This clearly establishes an intention to sever the e-e
relationship between them, and which constitutes abandonment.
2. Yes. While the employer has the right to expect good performance, diligence, good conduct and
loyalty from its employees, it also has the duty to provide just compensation to his employees and
to observe the procedural requirements of notice and hearing in the termination of his employees.
Procedure of termination (Omnibus Rules Implementing the Labor Code):
a. A written notice to the employee specifying the grounds for termination and giving the
employee reasonable opportunity to be heard
b. A hearing where the employee is given the opportunity to respond to the charges against him
and present evidence or rebut the evidence presented against him (if he so requests)
c. A written notice of termination indicating that grounds have been established to justify his
termination upon due consideration of all circumstances In this case, Riviera failed to notify the
Agabons of their termination to their last known addresses. Hence, they violated the procedural
requirement laid down by the law in the termination of employees.
3. No. Constitutional due process is that provided under the Constitution, which involves the
protection of the individual against governmental oppression and the assurance of his rights In civil,
criminal and administrative proceedings; statutory due process is that found in the Labor Code and
its Implementing Rules and protects the individual from being unjustly terminated without just or
authorized cause after notice and hearing. The two are similar in that they both have two aspects:
substantive due process and procedural due process. However, they differ in that under the Labor
Code, the first one refers to the valid and authorized causes of employment termination, while the
second one refers to the manner of dismissal. A denial of statutory due process is not the same as a
denial of Constitutional due process for reasons enunciated in Serrano v. NLRC.
4. The dismissal is valid, but Riviera should pay nominal damages to the Agabons in vindication of the
latter for violating their right to notice and hearing. The penalty is in the nature of a penalty or
indemnification, the amount dependent on the facts of each case, including the nature of gravity of
offense of the employer. In this case, the Serrano doctrine was re-examined. First, in the Serrano
case, the dismissal was upheld, but it was held to be ineffectual (without legal effect). Hence,
Serrano was still entitled to the payment of his backwages from the time of dismissal until the
promulgation of the court of the existence of an authorized cause. Further, he was entitled to his
separation pay as mandated under Art.283. The ruling is unfair to employers and has the danger of
the following consequences:
a. The encouragement of filing frivolous suits even by notorious employees who were justly
dismissed but were deprived of statutory due process; they are rewarded by invoking due
process
b. It would create absurd situations where there is just or authorized cause but a procedural
infirmity invalidates the termination, ie an employee who became a criminal and threatened his
co-workers’ lives, who fled and could not be found.
c. It could discourage investments that would generate employment in the economy. Second, the
payment of backwages is unjustified as only illegal termination gives the employee the right to
be paid full backwages. When the dismissal is valid or upheld, the employee has no right to
backwages.

ADDITIONAL NOTES:

1. Dismissals based on just causes: acts or omissions attributable to the employee; no right to
claim backwages or to pay separation pay (separation pay is subject to exception, ie if
termination is not based on serious misconduct or a conduct reflecting the moral depravity of a
person, separation pay may be granted by reason of social justice)

Dismissals based on authorized causes: involve grounds provided under the Labor Code; employee (and
DOLE) is entitled the payment of separation pay (redundancy and installation of labor-saving devices: 1
month pay or 1 month/yr of service, whichever is higher; retrenchment and closure or cessation of
business: 1month pay or ½ month per year of service, whichever is higher)

Illegal termination: employee is entitled to the payment of full backwages as well as reinstatement
without loss of seniority rights and other privileges, inclusive of allowances and other monetary claims
from the time compensation was withheld until reinstatement; if reinstatement is not possible,
separation pay shall be given.

IMMACULATE CONCEPCION ACADEMY/DR. JOSE PAULO E. CAMPOS vs. EVELYN E. CAMILON, G.R. No.
188035, July 2, 2014, J. Villarama, Jr.

SEPARATION PAY

Pursuant to the aforementioned rulings, Camilon is clearly not entitled to separation pay. Camilon was
holding a position which involves a high degree of responsibility requiring trust and confidence as it
involves financial interests of the school. She was guilty of gross and habitual negligence in failing to
regularly pre-audit the report of the school cashier, check the entries therein and keep custody of the
petty cash fund. Had she been assiduously doing her job, the unaccounted school funds would have
been discovered right away. Hence, she should not be granted separation pay. To rule otherwise would
be to reward Camilon for her negligent acts instead of punishing her for her offense. This is in line with
the Court’s ruling in Reno Foods, Inc. vs. Nagkakaisang Lakas ng Manggagawa-Katipunan that 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.

Goodyear Phils., Inc. v. Angus

PETITIONERS:

Goodyear Philippines, Inc.; Remegio M. Ramos

RESPONDENT:

Marina L. Angus

SUMMARY: When Goodyear experienced economic reversals, it resorted to the retrenchment of certain
employees in order to continue its operations. One such employee is Marina, and she was granted an
early retirement benefit, as per company practice. However, she claimed entitled to separation pay in
addition to the retirement benefits already received.

DOCTRINE: Retirement benefits and separation pay are not mutually exclusive. Retirement benefits are
a form of reward for an employee’s loyalty and service to an employer, whereas separation pay is that
amount which an employee receives at the time of his severance from employment, designed to provide
the employee with the wherewithal during the period that he is looking for another employment

FACTS:

1. 19 November 1966: Marina was employed by Goodyear on November 19, 1966 as the secretary
to the Manager of Quality and Technology.
 2. Goodyear experienced economic reversals. To continue its operations, it resorted to
retrenchment.
3. 18 September 2001: Marina received a letter from Remegio Ramos, HR Director, stating that
management considered her position redundant and no longer necessary and is to be abolished
on the same day, with her services to be terminated after a month. Per company practice, the
company only granted her an early retirement benefit.
4. Marina claims that she is entitled to separation pay in addition to retirement benefits.
5. Goodyear points to a provision in their CBA stating that the availment of retirement benefits
therein shall exclude entitlement to any separation pay, termination pay, redundancy pay,
retrenchment pay, or any other severance pay.
6. The parties finally agreed that an employee shall be entitled to the higher of either benefit.
However, Marina later contested this.

ISSUE: WON Marina is entitled to both retirement benefits and separation pay.

RATIO: Labor Law; Retirement Benefits; Separation Pay; Retirement benefits and separation pay are not
mutually exclusive.

—It is worthy to mention at this point that retirement benefits and separation pay are not mutually
exclusive. Retirement benefits are a form of reward for an employee’s loyalty and service to an
employer and are earned under existing laws, CBAs, employment contracts and company policies. On
the other hand, separation pay is that amount which an employee receives at the time of his severance
from employment, designed to provide the employee with the wherewithal during the period that he is
looking for another employment and is recoverable only in instances enumerated under Articles 283 and
284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible. In the case at bar,
Article 283 clearly entitles Angus to separation pay apart from the retirement benefits she received from
petitioners.

“In the absence of an express or implied prohibition against it, collection of both retirement benefits and
separation pay upon severance from employment is allowed. This is grounded on the social justice
policy that doubts should always be resolved in favor of labor rights.”

G.R. No. 185449, 12 November 2014

Complainant Marina L. Angus filed a labor complaint against her previous employer Defendants
Goodyear Philippines, Inc. and its Human Resource Director Remigio M. Ramos. “In order to maintain
the viability of its operations in the midst of economic reversals, Goodyear implemented cost-saving
measures which included the streamlining of its workforce.” Complainant received from Defendant
Ramos a letter stating that her position as Secretary to the Manager of Quality and Technology “is
already redundant or is no longer necessary for its effective operation and is to be abolished effective
today.” After 30 days, complainant would be terminated.

The letter further stated: “As Company practice, termination due to redundancy or retrenchment is paid
at 45 days’ pay per year of service. Considering, that you have rendered 34.92 years of service to the
Company as of October 18, 2001, and have reached the required minimum age of 55 to qualify for early
retirement, Management has decided to grant you early retirement benefit at 47 days’ per year of
service.”

On the day she received the letter, Complainant replied thereto accepting the management’s decision
but protesting on the terms. She wrote: “… I accept Management decision to avail early retirement
benefit. However, I do not agree on the terms stated therein. I suggest I be given a premium of
additional 3 days for every year of service which is only 6.3% or a total of 50 days. I gathered it is
Philippine industry’s practice to give premium to encourage employees to avail of the early retirement
benefit… Acceptance of this proposal will make my separation from Goodyear pleasant.”

Meanwhile, Defendant Goodyear submitted an Establishment Termination Report with DOLE in

connection with complainant’s termination.

Subsequently, complainant accepted the checks which covered payment of her retirement benefits
computed at 47 days’ pay per year of service and other company benefits. However, she made an
annotation in the acknowledgment receipt: “Received under protest – amount is not acceptable.
Acceptance is on condition that I will be given a premium of 3 days for every year of service.” This time
she also asked for separatin pay. “Since my service was terminated due to redundancy, I now claim my
separation pay as mandated by law. This is a separate claim from my early retirement benefit.”

It is claimed that the check were taken back due to the annotation and complainant’s refusal to sign a
Release and Quitclaim. Through another letter, Defendant Ramos explained that “the company has
already offered her the most favorable separation benefits due to redundancy, that is, 47 days’ pay per
year of service instead of the applicable rate of 45 days’ pay per year of service. And based on the
Retirement Plan under the Collective Bargaining Agreement (CBA) and the parties’ Employment
Contract, Angus is entitled to only one of the following kinds of separation pay: (1) normal retirement
which is payable at 47 days’ pay per year of service; (2) early retirement at a maximum of 47 days’ pay
per year of service; (3) retrenchment, redundancy, closure of establishment at 45 days’ pay per year of
service; (4) medical disability at 45 days’ pay per year of service; or (5) resignation at 20 days’ pay per
year of service. Because of these, [defendant] Ramos informed [complainant] that the company cannot
anymore entertain any of her additional claims.”

Complainant replied to the last letter reiterating her claims adding the following demands: that she be
furnished a copies of the Notice of Redundancy filed with DOLE, specific provisions in the Retirement
Plan, CBA and Employment Contract “which could justify the prohibition against the grant of both to a
separated employee as asserted by [defendants].” However, her last letter was merely brushed aside
and instead she was simply reminded to claim her checks.

As a result, complainant finally accepted a check in the amount of P1,958,927.89 which supposedly
includes all termination benefits computed at 47 days’ pay per year of service. Then, she executed a
Release and Quitclaim in favor of defendant Goodyear.
Notwithstanding, complainant initiated a labor complaint for illegal dismissal with claims for separation
pay, damages and attorney’s fees, against defendants.

The Labor Arbiter upheld the validity of complainant’s termination. However, her claim for both
separation pay and retirement benefit were denied holding that such was not allowed under the
Retirement Plan/CBA. On appeal, NLRC affirmed the Labor Arbiter. On Petition for Certiorari, the Court
of Appeals partially granted complainant’s claims. While the appellate court upheld the dismissal, it
ruled that she was entitled to both separation pay and retirement benefits “in view of the absence of
any provision in the CBA prohibiting the payment of both.” Further, it was observed that complainant
did not voluntarily sign the Release and Quitclaim as that would result in her receiving less than what
she was legally entitled to receive. She was granted moral damages and attorney’s fees. On motion for
reconsideration by respondents/defendants, the appellate court denied the same.

HELD: Defendants were made liable. Complainant is entitled to both separation pay and early
retirement benefit as there is no express and specific provision in the CBA that prohibits recovering for
both. Citing earlier jurisprudence, “an employee is entitled to recover both separation pay and
retirement benefits in the absence of a specific prohibition in the Retirement Plan or CBA.
Concomitantly, the Court ruled that an employee’s right to receive separation pay in addition to
retirement benefits depends upon the provisions of the company’s Retirement Plan and/or CBA.”

Retirement benefits and separation pay are not mutually exclusive. “Retirement benefits are a form of
reward for an employee’s loyalty and service to an employer and are earned under existing laws, CBAs,
employment contracts and company policies. On the other hand, separation pay is that amount which
an employee receives at the time of his severance from employment, designed to provide the employee
with the wherewithal during the period that he is looking for another employment and is recoverable
only in instances enumerated under Articles 283 and 284 of the Labor Code or in illegal dismissal cases
when reinstatement is not feasible. In the case at bar, Article 283 clearly entitles [complainant] to
separation pay apart from the retirement benefits she received from petitioners.”

The release and quitclaim is invalid. The Supreme Court concurred with the appellate court that “the
terms of the quitclaim authorizes Angus to receive less than what she is legally entitled to.” This is
contrary to prevailing jurisprudence holding that “a quitclaim cannot bar an employee from demanding
benefits to which he is legally entitled.” Such quitclaim was held to be “ineffective in barring claims for
the full measure of the worker’s rights and the acceptance of benefits therefrom does not amount to
estoppel”. Further, “release and quitclaims are often looked upon with disfavor when the waiver was
not done voluntarily by employees who were pressured into signing them by unscrupulous employers
seeking to evade their obligations.”

Complainant was entitled to moral damages and attorney’s fees. “Moral damages is awarded when
fraud and bad faith have been established, as in this case. [Defendants’] false contention over what has
been paid to Angus suggests an attempt to feign compliance with their legal obligation to grant their
employee all the benefits provided for by agreement and law. Their bad faith is evident in the intent to
circumvent this legal mandate. And as [complainant] was then forced to litigate her just claims when
[defendants] refused to heed her demands for the payment of separation pay, the award of attorney’s
fees equivalent to 10% of the amount of separation pay is also in order.”

GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR. JAMES TAN, Petitioner, v. FILIPINAS
A. LAVANDERA, Respondent.

G.R. No. 177845 August 20, 2014

PONENTE: Perlas-Bernabe

TOPIC: Retirement pay benefits

FACTS:

Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher
since June1977, with a monthly salary of 18,662.00 as of May 31, 2001.

On August 30, 2001, Filipinas filed a complaint for illegal (constructive) dismissal, non-payment
of service incentive leave (SIL) pay, separation pay, service allowance, damages, and attorney’s fees
against GCHS and/or its principal, Dr. James Tan. She alleged that on May 11, 2001, she was informed
that her services were to be terminated effective May 31, 2001, pursuant to GCHS’ retirement plan
which gives the school the option to retire a teacher who has rendered at least 20 years of service,
regardless of age, with a retirement pay of one-half (½) month for every year of service. At that time,
Filipinas was only 58 years old and still physically fit to work. She pleaded with GCHS to allow her to
continue teaching but her services were terminated, contrary to the provisions of Republic Act No. (RA)
7641, otherwise known as the “Retirement Pay Law.”

LA dismissed the illegal dismissal case but found the retirement benefits payable under GCHS
plan to be deficient. NLRC reversed LA’s award and held that retirement pay should be computed based
on her monthly salary at the time of her retirement. CA modified NLRC’s decision and ruled that the
computation of “one-half month salary” by equating it to”22.5 days”.

ISSUE:

Whether or not the multiplier “22.5 days” is to be used in computing the retirement pay
differentials of Filipinas.

HELD:

YES. RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor
Code, providing for the rules on retirement pay to qualified private sector employees in the absence of
any retirement plan in the establishment. The said law states that “an employee’s retirement benefits
under any collective bargaining agreement (CBA)]and other agreements shall not be less than those
provided” under the same – that is, 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 – and that “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 13th month pay and the cash equivalent of not more than five (5) days of
service incentive leaves.”

Applicability of the 1/2 month salary provision

There is no CBA or other applicable agreement providing for retirement benefits to employees, or

There is a CBA or other applicable agreement providing for retirement benefits but it is below the
requirement set by law.

Verily, the determining factor in choosing which retirement scheme to apply is still superiority
in terms of benefits provided.

In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which
gives it the option to retire a teacher who has rendered at least 20 years of service, regardless of age,
with a retirement pay of one-half (1/2) month for every year of service. Considering, however, that
GCHS computed Filipinas’ retirement pay without including one-twelfth (1/12) of her 13th month pay
and the cash equivalent of her five (5) days SIL, both the NLRC and the CA correctly ruled that Filipinas’
retirement benefits should be computed in accordance with Article 287 of the Labor Code, as amended
by RA 7641, being the more beneficent retirement scheme. They differ, however, in the resulting benefit
differentials due to divergent interpretations of the term “one-half (1/2) month salary” as used under
the law.

Elegir v. Philippine Airlines, Inc.: “one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days
representing one-twelfth (1/12) of the 13th month pay and the remaining 5 days for SIL.”

The Court sees no reason to depart from this interpretation. GCHS’ argument therefore that
the 5 days SIL should be likewise pro-rated to their 1/12 equivalent must fail.

Moreover, the Court held that the award of legal interest at the rate of 6% per annum on the
amount of P68,150.00 representing the retirement pay differentials due Filipinas should be reckoned
from the rendition of the LA’s Decision on March 26, 2002 and not from the filing of the illegal dismissal
complaint.

ARIEL L. DAVID vs. JOHN G. MACASIO

G.R. No. 195466 JULY 2, 2014

For: overtime pay, holiday pay, 13th month pay and payment for service incentive leave.

Facts: In January 2009, Macasio filed before the LA a complaint against petitioner Ariel L. David, doing
business under the name and style “Yiels Hog Dealer,” for non-payment of overtime pay, holiday pay
and 13th month pay. He also claimed payment for moral and exemplary damages and attorney’s fees.
Macasio also claimed payment for service incentive leave (SIL) David claimed that he started his hog
dealer business in 2005 and that he only has ten employees. The LA concluded that as Macasio was
engaged on “pakyaw” or task basis, he is not entitled to overtime, holiday, SIL and 13th month pay. The
NLRC affirmed the LA decision, thus this case reach the CA which says that Macasio is entitled to his
monetary claims following the doctrine laid down in Serrano v. Severino Santos Transit.The CA explained
that as a task basis employee, Macasio is excluded from the coverage of holiday, SIL and 13th month pay
only if he is likewise a “field personnel.”Thus this case reached the SC.

Issue: Whether or not Macasio is entitled of overtime pay, holiday pay, 13th month pay and payment for
service incentive leave.

Ruling: Yes, in so far as the Holiday and SIL pay is concern. To determine whether workers engaged on
“pakyaw” ortask basis” is entitled to holiday and SIL pay, the presence (or absence) of employer
supervision as regards the worker’s time and performance is the key: if the worker is simply engaged on
pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless
exempted from the exceptions specifically provided under Article 94 (holiday pay) and Article 95 (SIL
pay) of the Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the
meaning of “field personnel” under the law, then he is not entitled to these monetary benefits. CA that
Macasio does not fall under the definition of “field personnel.” The CA’s finding in this regard is
supported by the established facts of this case: first, Macasio regularly performed his duties at David’s
principal place of business; second, his actual hours of work could be determined with reasonable
certainty; and, third, David supervised his time and performance of duties. Since Macasio cannot be
considered a “field personnel,” then he is not exempted from the grant of holiday, SIL pay even as he
was engaged on “pakyaw” or task basis.

However, the governing law on 13th month pay is PD No. 851. As with holiday and SIL pay, 13th month
pay benefits generally cover all employees; an employee must be one of those expressly enumerated to
be exempted. Section 3 of the Rules and Regulations Implementing P.D. No. 851 enumerates the
exemptions from the coverage of 13th month pay benefits. Under Section 3(e), “employers of those
who are paid on task basis, and those who are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof are exempted. Note that unlike the IRR of
the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations Implementing PD No.
851exempts employees "paid on task basis" without any reference to "field personnel." This could only
mean that insofar as payment of the 13th month pay is concerned, the law did not intend to qualify the
exemption from its coverage with the requirement that the task worker be a "field personnel" at the
same time. Thus Macasio is not entitled to 13th month pay.

Wherefore, the petition was partially granted the petition insofar as the payment of 13th month pay to
respondent is concerned. But all other aspect of the CA’s decision was affirmed.
PROBATIONARY EMPLOYEES – those who are hired generally for regular positions but are placed on a
probationary status for a period of 6 months (as a general rule). May become regular once he has
qualified as such in accordance with reasonable standards made known to him at the time of hiring.
They are considered regular if they are allowed to work beyond the probationary period.

2014-2015 CASES ON PROBATIONARY EMPLOYEES:

Universidad de Sta. Isabel vs. Sambajon, G.R. Nos. 196280 & 196286, 02 April 2014 . – 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.

G.R. No. 196280 & 196286 : April 2, 2014

UNIVERSIDAD DE STA. ISABEL, Petitioner, v. MARVIN-JULIAN L. SAMBAJON, JR., Respondent.

VILLARAMA, JR., J.:

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, as evidenced by an Appointment Contract4
dated November 1, 2002, 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 (June
2004 to March 31, 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 masters degree, to the Human
Resources Department of petitioner for the purpose of salary adjustment/increase. Subsequently,
respondents 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 dated October 15, 2004
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 thru Sr. Purita Gatongay, D.C., replied by explaining its
policy on re-ranking of faculty members, viz: 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 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. This provision is found also in the 2000-2001 Operations Manual.
Your personnel file shows that you were hired as a probationary teacher in the second semester of
school year 2002-2003. By October 2004, you will be completing four (4) semesters (two school years) of
service. Even permanent teachers are re-ranked only every two years, and you are not even a
permanent teacher. I am informed that you have been told several times and made to read the
Provision in the Faculty Manual by the personnel office that you cannot be re-ranked because you are
still a probationary teacher.

Respondent insisted on his demand for retroactive pay. Petitioner reiterated the school policy on re-
ranking of teachers.

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 masters 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. A dialogue between the parties ensued but led to conflict.

On February 26, 2005, respondent received his letter of termination. On April 14, 2005, respondent filed
a complaint for illegal dismissal against the petitioner.

Labor Arbiter Jesus Orlando M. Quinones ruled that there was no just or authorized cause in the
termination of respondents probationary employment. 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. On motion by respondent, the two cases were
consolidated (CA-G.R. SP Nos. 108103 and 108168).

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.

ISSUES:

(1) Whether the NLRC correctly resolved an issue not raised in petitioners appeal memorandum; and

(2) whether respondents probationary employment was validly terminated by petitioner.

HELD: The petition is partly meritorious.

LABOR LAW: NLRC revised rules of procedure

Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC, which was in force at the time
petitioner 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:

Section 4. Requisites for perfection of appeal.

(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.

We have clarified that the clear import of the aforementioned procedural rule is that the NLRC shall, in
cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. As a
consequence thereof, any other issues which were not included in the appeal shall become final and
executory.

In this case, petitioner sets forth the following issues in its appeal memorandum: WHETHER THE
MARVIN JULIAN L. SAMBAJON, JR. WAS ILLEGALLY DISMISSED FROM THE UNIVERSIDAD DE STA. ISABEL.
WHETHER THE UNIVERSIDAD DE STA. ISABEL SHORTENED THE PROBATIONARYPERIOD OF SAMBAJON.
WHETHER RESPONDENTS-APPELLANTS ARE ENTITLED TO DAMAGES.

In reviewing the Labor Arbiters finding of illegal dismissal, the NLRC concluded that respondent had
already attained regular status after the expiration of his first appointment contract as probationary
employee. Such conclusion was but a logical result of the NLRCs own interpretation of the law. Since
petitioner elevated the questions of the validity of respondents dismissal and the applicable
probationary period under the aforesaid regulations, the NLRC did not gravely abuse its discretion in
fully resolving the said issues.

There is no merit to this contention. The records show that the petitioners elevated the issues regarding
the correctness of the award of damages, reinstatement with backpay, retirement benefits and the cost-
saving bonus to the respondent Commission in their appeal. This opened the said issues for review and
any action taken thereon by the Commission was well within the parameters of its jurisdiction.

LABOR LAW: probationary employment period

A probationary employee is one who is on trial by the employer during which the employer determines
whether or not said employee is qualified for permanent employment. A probationary appointment is
made to afford the employer an opportunity to observe the fitness of a probationary employee while at
work, and to ascertain whether he will become a proper and efficient employee. The word probationary
as used to describe the period of employment implies the purpose of the term or period, but not its
length. It is well settled that the employer has the right or is at liberty to choose who will be hired and
who will be denied employment. In that sense, it is within the exercise of the right to select his
employees that the employer may set or fix a probationary period within which the latter may test and
observe the conduct of the former before hiring him permanently. The law, however, regulates the
exercise of this prerogative to fix the period of probationary employment. While there is no statutory
cap on the minimum term of probation, the law sets a maximum trial period during which the employer
may test the fitness and efficiency of the employee.

Article 281 of the Labor Code provides:

ART. 281. Probationary Employment Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement stipulating a
longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.

LABOR LAW: manual of regulations for private schools

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.

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 9326 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.

Respondent nonetheless claims that subsequently, the probationary period of three years under the
regulations was shortened by petitioner as relayed to him by Sr. Evidente herself. However, the latter,
together with Sr. Real, categorically denied having informed respondent that his probationary period
was abbreviated, allegedly the reason his salary adjustment was not made retroactive. Apart from his
bare assertion, respondent has not adduced proof of any decision of the school administration to
shorten his probationary period.

In Rev. Fr. Labajo v. Alejandro, we held that:

The three (3)-year period of service mentioned in paragraph 75 of the Manual of Regulations for Private
Schools is of course the maximum period or upper limit, so to speak, of probationary employment
allowed in the case of private school teachers. This necessarily implies that a regular or permanent
employment status may, under certain conditions, be attained in less than three (3) years. By and large,
however, whether or not one has indeed attained permanent status in ones employment, before the
passage of three (3) years, is a matter of proof.

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 three-year period ends. Conversely, if the purpose sought by the employer is neither attained
nor attainable within the said period, the law does not preclude the employer from terminating the
probationary employment on justifiable ground; or, a shorter probationary period may be incorporated
in a collective bargaining agreement. But absent any circumstances which unmistakably show that an
abbreviated probationary period has been agreed upon, the three-year probationary term governs.

As to the Certificate of Employment issued by Sr. Real on January 31, 2005, it simply stated that
respondent was a full time faculty member in the Religious Education Department of this same
institution and that he holds the rank of Associate Professor. There was no description or qualification of
respondents employment as regular or permanent. Neither did the similar Certification also issued by Sr.
Real on March 18, 2005 prove respondents status as a permanent faculty member of petitioner. It bears
stressing that full-time teaching primarily refers to the extent of services rendered by the teacher to the
employer school and not to the nature of his appointment. Its significance lies in the rule that only full-
time teaching personnel can acquire regular or permanent status.

The circumstance that respondents services were hired on semester basis did not negate the applicable
probationary period, which is three school years or six consecutive semesters. In Magis Young Achievers
Learning Center the Court explained the three years probationary period rule in this wise:

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. It is when the yearly
contract is renewed for the third time that Section 93 of the Manual becomes operative, and the
teacher then is entitled to regular or permanent employment status.

LABOR LAW: probationary status and fixed-term employment

The existence of the term-to-term contracts covering the petitioners employment is not disputed, nor is
it disputed that they were on probationary status not permanent or regular status from the time they
were employed on May 25, 1998 and until the expiration of their Teaching Contracts on September 7,
2000. As the CA correctly found, their teaching stints only covered a period of at least seven (7)
consecutive trimesters or two (2) years and three (3) months of service. This case, however, brings to
the fore the essential question of which, between the two factors affecting employment, should prevail
given AMACCs position that the teachers contracts expired and it had the right not to renew them. In
other words, should the teachers probationary status be disregarded simply because the contracts were
fixed-term?

The provision on employment on probationary status under the Labor Code is a primary example of the
fine balancing of interests between labor and management that the Code has institutionalized pursuant
to the underlying intent of the Constitution.

On the one hand, employment on probationary status affords management the chance to fully
scrutinize the true worth of hired personnel before the full force of the security of tenure guarantee of
the Constitution comes into play. Based on the standards set at the start of the probationary period,
management is given the widest opportunity during the probationary period to reject hirees who fail to
meet its own adopted but reasonable standards. These standards, together with the just and authorized
causes for termination of employment the Labor Code expressly provides, are the grounds available to
terminate the employment of a teacher on probationary status. For example, the school may impose
reasonably stricter attendance or report compliance records on teachers on probation, and reject a
probationary teacher for failing in this regard, although the same attendance or compliance record may
not be required for a teacher already on permanent status. At the same time, the same just and
authorized causes for dismissal under the Labor Code apply to probationary teachers, so that they may
be the first to be laid-off if the school does not have enough students for a given semester or trimester.
Termination of employment on this basis is an authorized cause under the Labor Code.

Labor, for its part, is given the protection during the probationary period of knowing the company
standards the new hires have to meet during the probationary period, and to be judged on the basis of
these standards, aside from the usual standards applicable to employees after they achieve permanent
status. Under the terms of the Labor Code, these standards should be made known to the teachers on
probationary status at the start of their probationary period, or at the very least under the
circumstances of the present case, at the start of the semester or the trimester during which the
probationary standards are to be applied. Of critical importance in invoking a failure to meet the
probationary standards, is that the school should show as a matter of due process how these standards
have been applied. This is effectively the second notice in a dismissal situation that the law requires as a
due process guarantee supporting the security of tenure provision, and is in furtherance, too, of the
basic rule in employee dismissal that the employer carries the burden of justifying a dismissal. These
rules ensure compliance with the limited security of tenure guarantee the law extends to probationary
employees.
To be sure, nothing is illegitimate in defining the school-teacher relationship in this manner. The school,
however, cannot forget that its system of fixed-term contract is a system that operates during the
probationary period and for this reason is subject to the terms of Article 281 of the Labor Code. Unless
this reconciliation is made, the requirements of this Article on probationary status would be fully
negated as the school may freely choose not to renew contracts simply because their terms have
expired. The inevitable effect of course is to wreck the scheme that the Constitution and the Labor Code
established to balance relationships between labor and management.

Given the clear constitutional and statutory intents, we cannot but conclude 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.
This conclusion is immeasurably strengthened by the petitioners and the AMACCs hardly concealed
expectation that the employment on probation could lead to permanent status, and that the contracts
are renewable unless the petitioners fail to pass the schools standards.

LABOR LAW: 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 had as yet accrued in favor of respondent since
he had not completed the prerequisite three-year period (six consecutive semesters) necessary for the
acquisition of permanent status as required by the Manual of Regulations for Private Schools --which
has the force of law --he enjoys a limited tenure.

During the said probationary period, he cannot be terminated except for just or authorized causes, or 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,
respondents 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 petitioners
officials and students. He had also been promoted to the rank of Associate Professor after finishing his
masters degree course on his third semester of teaching. Clearly, respondents termination after five
semesters of satisfactory service was illegal.

Respondent therefore is entitled to continue his three-year probationary period, such that from March
31, 2005, his probationary employment is deemed renewed for the following semester (1st semester of
SY 2005-2006). However, given the discordant relations that had arisen from the parties dispute, it can
be inferred with certainty that petitioner had opted not to retain respondent in its employ beyond the
three-year period.

WHEREFORE, the petition for review on certiorari is PARTLY GRANTED.

Hacienda Leddy, Gamboa Jr vs Paquito Villegas Sept 22, 2014, Peralta

Facts

Petition on Certiorari under Rule 45 to reverse CA decision ruling in favor of RESP Villegas.

Villegas was an employee of hacienda Leddy (previously known as Hacienda Teresa) from 1960 as a
sugar farmer for 8 hrs/day 6days/week and P45 a day and also in the owner’s Coconut lumber business
for 34 for 8 hours work. The hacienda was previously owned by Ricardo Gambao Sr. then Ricardo
Gamboa Jr (PET). Said PET suddenly went to RESP house on June 9 1993 and told RESP that his services
were no longer required. Prompting the Initial case of illegal dismissal.

Such dismissal was denied by PET who confirmed that RESP had worked in their farm before, doing
casual and odd jobs and was even given a plot of land to erect a house. His argument was that said
employee ceased work in 1992. Such statements were later retracted and relying on the hacienda’s
documentation they argued that RESP only worked for the farm in 1993, on Feb 9 and 11 respectively
and only to help cut lumber for the hosues of their laborers. He argues that the reason for the initial
complaint was to gain leverage over them for trying to evict them from the mentioned plot of land.

LA: found for RESP, there was illegal dismissal

NLRC: set aside the decision

CA: granted petition by certiorari under Rule 65 and annulled NLRC ruling, reinstating the LA ruling

The PET now raises the issue to the supreme court questioning classification of RESP as regular worker
stating he was paid on a piece-rate basis and that his work was not necessary or desirable for their usual
business. Finally that said RESP was the one who chose to stop work.

Issues

WoN RESP is a regular worker? YES

Ruling
 Essentially the case is a factual matter relating to existence of an employer-employee relationship
which the court does not usually review but is reviewing now as a function of its equity jurisdiction.

The fact that RESP was employed remains undisputed, even admitted earlier by PET. His refutation of
him doing odd jobs does not categorically deny that RESP was indeed employed in the hacienda.

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 tonshow 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.

In the instant case, if we are to follow the length of time that Villegas had worked with the Gamboas,
it should be more than 20 years of service. Even Gamboa admitted that by act of generosity and
compassion, Villegas was given a privilege of erecting his house inside the hacienda during his
employment.16 While it may indeed be an act of good will on the part of the Gamboas, still, such act is
usually done by the employer either out of gratitude for the employee’s service or for the employer’s
convenience as the nature of the work calls for it. Indeed, petitioner’s length of service is an indication
of the regularity of his employment.

Even if he was doing odd jobs, such long period of doing said odd jobs is indicative that the same was
either necessary or desirable to petitioner’s trade or business. Owing to the length of service alone, he
became a regular employee, by operation of law, one year after he was employed.

Article 280 of the Labor Code, describes a regular employee as one who is either:

o(1) engaged to perform activities which are necessary or desirable in the usual business or trade of the
employer;

o(2) those casual employees who have rendered at least one year of service, whether continuous or
broken, with respect to the activity in which he is employed.

Test to determine whether employment is regular or not (Integrated Contractor and Plumbing Works,
Inc. v. National Labor Relations)

o is the reasonable connection between the particular activity performed by the employee in relation to
the usual business or trade of the employer.
oIf 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.

Clearly, with more than 20 years of service, Villegas, without doubt, passed this test to attain
employment regularity.

While length of time may not be the controlling test to determine if Villegas is indeed a regular
employee, it is vital in establishing if he was hired to perform tasks which are necessary and
indispensable to the usual business or trade of the employer.
If it was true that Villegas worked in the hacienda only in the year 1993, specifically February 9, 1993
and February 11, 1993, why would then he be given the benefit to construct his house in the hacienda?
More significantly, petitioner admitted that Villegas had worked in the hacienda until his father’s
demise.

Clearly, even assuming that Villegas’ employment was only for a specific duration, the fact that he was
repeatedly rehired over a long period of time shows that his job is necessary and indispensable to the
usual business or trade of the employer.

Payment by piece-rate does not negate regularity:

o“The term ‘wage’ is broadly defined in Article 97 of the Labor Code as remuneration or earnings,
capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or
commission basis. Payment by the piece is just a method of compensation and does not define the
essence of the relations.”

To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified
refusal on the part of an employee to resume his employment. The burden of proof is on the employer
to show an unequivocal intent on the part of the employee to discontinue employment. Mere absence is
not sufficient. It must be accompanied by manifest acts unerringly pointing to the fact that the
employee simply does not want to work anymore.

Petitioner failed to discharge this burden

oHe did not adduce proof of any overt acts to abandon work except self-serving declarations.

Also that it was filed after a year of the dismissal is a non issue as the RESP had 3 years to bring suit.
This may also stem from the fact that RESP is without educational attainment and may not have known
that he had rights which had been violated
 The Labor Code draws a fine line between regular and casual employees to protect the interests of
labor. We ruled in Baguio Country Club Corporation v. NLRC that “ 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, notwithstanding any agreements to the contrary, what determines whether a certain
employment is regular or casual is not the will and word of the employer, to which the desperate worker
often accedes, much less the procedure of hiring the employee or the manner of paying his salary. It is
the nature of the activities performed in relation to the particular business or trades considering all
circumstances, and in some cases the length of time of its performance and its continued existence

Thus RESP is entitled to security of tenure as a regular worker under ART 279 thus is protected by the
process in 277b requiring due notice be given him of his termination and reasons therefore. Such being
absent, the employee was illegally terminated.

FALLO:

Petition denied, original decision reinstated, remanded to LA for determination of separation pay and
backwages