S 2000-2001 L C Ateneo Central Bar Operations 2001 Aris and Camille 2000 CASES

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SURVEY OF 2000-2001 LABOR CASES

ATENEO CENTRAL BAR OPERATIONS 2001
Aris and Camille
2000 CASES
Q: X had been working for a year as a security guard with company A., a sister company of
company B. He was hired on January 1, 1988 as he was among those absorbed by company B
when it took over the security contracts of its sister company A. He was forced by company B
to sign a new probationary contract for 6 mos; and on August 1, 1988, his employment was
terminated for allegedly sleeping on post and quarreling with a co-worker. Was B a regular
employee and thereby illegally dismissed?
A: Yes. B’s employment with company B was just a continuation of his employment with
company A. The Court cannot sanction the practice of companies that effects the transfer of its
employees to another entity whose owners are the same, in order to deprive subject employees
of the benefits he is entitled to under the law. Nevertheless, B attained the status of a regular
employee with company B upon completion of his six-month period of probation. He started
working on January 30, 1988; and the end of the period of probation was on July 27, 1988.
When he was dismissed on August 1, he was already a regular employee with a security of
tenure. Private respondent’s alleged violations were first infractions and do not amount to valid
grounds for terminating employment. (A Prime Security Services, Inc. v. NLRC, G.R. 107320,
January 19, 2000)
Q: KMDD-CFW is a union whose CBA with the company A expired. During renegotiations, the
management panel arrived late causing the union panel to walk out. The management
addressed a letter of apology to the union and requested for negotiations to resume. The union
panel did not show up despite letters from management advising the former of the CBA
meetings. Consequently, the union struck. A complaint was filed by Golden Donuts to declare
the strike illegal. Counsel for the union strikers pleaded for a compromise whereupon a 257 out
of 262 members agreed to a compromise settlement whereby they shall be paid separation pay
in exchange for the dismissal of the criminal and unfair labor practice cases filed by petitioners
against them. Could the union compromise or waive the rights to security of tenure and money
claims of its minority members, without the latter’s consent?
A: No. Absent a showing of the union’s special authority to compromise the individual claims of
private respondents for reinstatement and backwages, there is no valid waiver of the aforesaid
rights. The judgment of the Labor Arbiter upholding the dismissal of private respondents based
on the compromise agreement does not have the effect of res judicata those who did not agree
thereto since the requirement of identity of parties is not satisfied. A judgment upon a
compromise agreement is conclusive only upon parties thereto and their privies. Private
respondents have not waived their right to security of tenure nor can they be barred from
entitlement of their individual claims. Since there was no evidence that private respondents
committed any illegal act, petitioner’s failure to reinstate them after the settlement of the strike
amounts to illegal dismissal. (Golden Donuts, Inc. v. NLRC, G.R. Nos. 113666-68, January
19, 2000)
Q: Union A, of which X was a part, filed with the DOLE a notice of strike raising charges of ULP
and illegal dismissal against Company A. The Labor Arbiter ordered Company A to pay X
separation pay of ½ month pay for every year of service. X filed a motion for execution of the
decision of the Labor Arbiter. The Rehabilitation Receiver of Company A submitted a
Manifestation with Motion, alleging that petitioner was not yet in a position to comply with the
directive of the Labor Arbiter as it was still under Rehabilitation Receivership by virtue of the
order of the SEC. However, the Labor Arbiter still granted the motion for execution. Company A
contends that the NLRC should have denied the order of the LA for the immediate payment of
separation pay because of the order of the SEC suspending all claims against petitioner
pending before any court, tribunal or body. Can the order of the SEC stay the execution of
judgment against petitioner?
A: No. Although a stay of execution may be warranted by the fact that a petitioner corporation
has been placed under rehabilitation receivership, the SEC already issued an order approving
the rehabilitation plan of petitioner and placing it under liquidation pursuant to PD 902-A. Since
receivership proceedings have ceased and petitioner’s rehabilitation receiver and liquidator has
been given the imprimatur to proceed with corporate liquidation, the cited order of the SEC has
been rendered functus oficio. Petitioner’s monetary obligation to private respondent is long
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overdue and thus cannot delay the satisfaction of private respondent’s claim. However, due to
events subsequent to the filing of this petition, private respondent must present its claim with the
rehabilitation receiver and liquidator in the SEC, subject to the rules on preference of credits.
(Alemar’s Sibal & Sons, Inc. v. NLRC, G.R. No. 114761, January 19, 2000)
Q: X was employed as a quality control inspector with the duty of inspecting LPB cylinders for
any possible defects. He was dismissed when he was allegedly caught by petitioner’s company
President for sleeping on the job, thereby violating Company Rule 15-b. He was asked to
explain why no disciplinary action should be taken against him, to which he promptly replied.
Notwithstanding his reply, he was terminated. Was X illegally dismissed?
A: Yes. Petitioner’s claim that private respondent slept on the job was not substantiated by any
evidence. In other cases, sleeping on the job was found as a valid ground for dismissal
because such cases involved security guards whose duty necessitates that they be awake and
watchful at all times, such is not the degree of discipline required of a quality control inspector.
While an employer is allowed a wide discretion in the promulgation of company policies, such
should always be fair and reasonable. In this case, the dismissal meted out on private
respondent for sleeping on the job appears to be too harsh a penalty. (VH Manufacturing, Inc.
v. NLRC, G.R. No. 130957, January 19, 2000)
Q: Company Y is engaged in road construction projects of the government. It engaged the

services of certain workers to work on various projects on different dates. Several of its
workers joined Union A as members. Union A filed a motion for certification election with the
regional office. Company Y opposed stating that the workers were project employees and not
qualified to form part of the rank and file collective bargaining unit. Later, Company Y
terminated the employment of the workers due to the completion of its projects or the expiration
of worker’s contracts. The affected workers claimed they were dismissed because of their
union activities; and thus staged a strike. The strike was declared illegal and the workers were
deemed to have lost their employment status. Were the workers validly dismissed?
A: Yes. The contracts of employment of petitioners attest to the fact that they were hired for
specific projects and their employment was coterminous with the completion of the
project for which they had been hired. Also, they were informed in advance that said
project or undertaking for which they were hired would end on a stated or determinable
date. Since the workers were project employees, their employment legally ended upon
completion of their respective projects. (Association of Trade Unions v. Abella, G.R.
No. 100518, January 24, 2000.
Q: Company K allowed the temporary transfer holding of office at Kalibo, Aklan. Nevertheless,
majority of the employees continued to work at its office in Lezo Aklan and were paid their
respective salaries. From June 1992 to March 1993, X and Y reported to work at the Lezo office
and were not paid their salaries. From March up to the present, they were again allowed to
draw their salaries. It is the assertion of Company K that X and Y voluntarily abandoned their
work assignments and that they defied the lawful orders by the General manager and thus the
Board of Directors passed a resolution resisting and denying X and Y’s claims under the
principle of “no work, no pay.” X and Y interpose that the transfer to Kalibo was illegal. Are X
and Y entitled to claim their unpaid wages from June 1992 to March 1993?
A: No. Petitioner was able to show that private respondents did not render services during the
stated period. X and Y even admitted that they did not report at the Kalibo office, as Lezo
remained to be their office where they continuously reported. It was not for X and Y to declare
the management’s act of transferring the office to Kalibo as an illegal act as there was no
allegation of proof that such was made in bad faith or with malice. Private respondents were
dismissed by petitioner effective January 1992 and were accepted back, subject to the condition
of “no work, no pay” effective March 1993 which is why they were allowed to draw their salaries
again. (Aklan Electric Cooperative Incorporated v. NLRC, G.R. 121439, January 25, 2000)
Q: A was hired by Isetann Department Store as a security checker to apprehend shoplifters. As

a cost-cutting measure, private respondent decided to phase out its security section and engage
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the services of an independent security agency. A was then terminated prompting him to file a
complaint for illegal dismissal. NLRC ordered petitioner to be given separation pay holding that
the phase-out of the security section was a legitimate business decision. However, A was
denied the right to be given written notice before termination of his employment. What is the
effect of violation of the notice requirement when termination is based on an authorized cause?
A: The dismissal is ineffectual. In termination of employment under Art. 283, the violation of
notice requirement is not a denial of due process as the purpose is not to afford the employee
an opportunity to be heard on any charge against him, for there is none. The purpose is to give
him time to prepare for the eventual loss of his job and the DOLE to determine whether
economic causes do exist justifying the termination of his employment. With respect to Art. 283,
the employer’s failure to comply with the notice requirement does not constitute a denial of due
process but a mere failure to observe a procedure for the termination of employment which
makes the termination of employment merely ineffectual.
If the employee’s separation is without cause, instead of being given separation pay, he should
be reinstated. In either case, whether he is reinstated or given separation pay, he should be
paid full backwages if he has been laid off without written notice at least 30 days in advance.
With respect to dismissals under 282, if he was dismissed for any of the just causes in 282, he
should not be reinstated. However, he must be paid backwages from the time his employment
was terminated until it is determined that the termination is for a just cause because the failure
to hear him renders the termination of his employment without legal effect. (Serrano v. NLRC,
G.R. No. 117040, January 27, 2000)
Q: A was employed as “housekeeper” with Company B. He also owned a car-for-hire which he

rented to B who operated the car as a taxi. One day, B approached the front desk clerk at
petitioner’s hotel requesting a collectible of P2000 be added to a certain Korean guests, Mr.
Hu’s bill. Mr. Hu later complained that he was overbilled. A explained his side being the front
desk supervisor and owner of the car. Eventually, Company B’s staff confirmed the error and
refunded the amount to the Korean. Company B terminated the services of A on the ground of
loss of confidence for the latter’s malicious intent to defraud a guest of the hotel. Was A illegally
dismissed?
A: Yes. Company B failed to prove by ample evidence that A intended to defraud Mr. Hu. The
front desk clerk admitted being the one responsible for entering the P2000 in Mr. Hu’s statement
of account. Also, B admitted approaching the front desk clerk to demand payment of the
transportation fee as he was hired by Mr. Hu’s group for two days believing in good faith that Mr.
Hu owed him P2000. As there is no valid and just cause, he is entitled to reinstatement without
loss of seniority rights plus full backwages and other benefits withheld from him up to the time of
his actual reinstatement. (Condo Suite Club Travel, Inc. v. NLRC, G.R. No. 125671, January
28, 2000)
Q: Union A and Company B were faced with a bargaining deadlock. The union then filed a
notice of strike with the NCMB. Later, the union conducted a strike vote among its members
and the results were submitted to the Alliance of Nationalist and Genuine labor Organization for
submission to the NCMB, but which was not made. The union went on strike without the report
of the strike vote submitted to the NCMB. Company B filed a petition to declare the strike illegal
alleging that the union barricaded gates of Company B and committed acts of violence, threats
and coercion. Trial on the merits was conducted wherein Company B presented witnesses and
evidence, Union A did not present any witness but instead relied on their Memorandum
contending that respondent’s evidence are inadmissible. Was the strike illegal?
A: Yes. Failure to submit the strike vote to the NCMB immediately makes the strikek illegal. The
illegality of the strike is further affirmed by the acts of violence, threats and coercion committed
during the strike. The requirements of procedural due process were complied with as both
parties were allowed to present their witnesses and evidence, although petitioner opted instead
to file a memorandum. (Samahan ng Manggagawa sa Moldex Products, Inc. v. NLRC, G.R.
No. 119467, February 1, 2000)
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Q: V was hired by RFC as sales representative. He avers that he was transferred by RFC to
PMCI, an agency which provides RFC with additional contractual workers. In PMCI, he was
reassigned to RFC as sales representative and then later informed by the personnel manager of
RFC that his services were terminated. RFC maintains that no employer-employee relationship
existed between V and itself. V filed complaint for illegal dismissal. RFC alleges that PMCI is
an independent contractor as the latter is a highly capitalized venture. Was V a regular
employee of RFC, thereby illegally dismissed?
A: Yes. PMCI was a labor-only contractor. Although the Neri doctrine stated that it was enough
that a contractor had substantial capital to show it was an independent contractor, the case of
Fuji Xerox clarified the doctrine stating that an independent business must undertake the
performance of the contract according to its own manner and method free from the control of
the principal. In this case, PMCI did not even have substantial capitalization as only a small
amount of its authorized capital stock was actually paid-in. Furthermore, PMCI did not carry on
an independent business or undertake the performance of its contract according to its own
manner and method nor was it engaged to perform a specific and special job or service. In
labor-only contracting, the employees supplied by the contractor perform activities, which are
directly related to the main business of its principal. It is clear that in this case, the work of
petitioner as sales representative was directly related to the business of RFC. Due to V’s length
of service, he had attained the status of regular employee and thus cannot be terminated
without just or valid cause. RFC failed to prove that his dismissal was for cause and that he
was afforded procedural due process. V is thus entitled to reinstatement plus full backwages
from his dismissal up to actual reinstatement. (Vinoya v. NLRC, G.R. No. 126596, February 2,
2000)
Q: B is a lady Security Guard of Company O. She was last assigned at Vicente Madrigal
Condominium II located in Ayala Avenue, Makati. In a memorandum, the Building Administrator
of VM Condomunium II complained of the laxity of the guards in enforcing security measures
and requested to reorganize the men and women assigned to the building to induce more
discipline and proper decorum. B was then transferred another building in Taytay, Rizal. B filed
a complaint alleging that her transfer amounted to an unjust dismissal. Was the transfer of B
illegal?
A: No. Service-oriented enterprises adhere to the business adage that, “the customer is always
right.” In the employment of personnel, the employer has management prerogatives subject
only to limitations imposed by law. The transfer of an employee would only amount to
constructive dismissal when such is unreasonable, inconvenient, or prejudicial to the employee,
and when it involves a demotion in rank or diminution of salaries, benefits and other privileges.
In this case, the transfer was done in good faith and in the best interest of the business
enterprise. Evidence does not show that Company O discriminated against B in effecting her
transfer as such was done to comply with a reasonable request. The mere inconvenience of a
new job assignment does not by itself make the transfer illegal. (OSS Security and Allied
Services, Inc. v. NLRC, G.R. No. 112752, February 9, 2000)
Q: Company W is conducts a printing business in Sta. Cruz Makati. The Company informed its
workers that it was going to transfer its site in Makati to Batangas. It gave its employees time to
inform the management of their willingness to go with petitioner, otherwise, they would find
replacements. The Union advised the company that its members were not willing to transfer to
the new site. Are the employees entitled to separation pay by virtue of their refusal to transfer to
the business in Batangas.
A: Yes. Although there is no complete dissolution of petitioner’s undertaking, but a mere

relocation; the phrase, “closure or cessation of operation of an establishment not due to serious
business losses or reverses,” under Article 283 of the Labor Code includes the cessation of only
part of a company’s business. Company W had alegitimate reason to relocate its plant due to
the expiration of the lease contract in Makati; however, it is still required to pay its workers
separation pay. Cessation of operation not due to serious business losses is an authorized
cause for termination; and the Labor Code provides that such terminated employees are entitled
to separation pay of 1 month pay or at least ½ month for every year of service, whichever is
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higher. (Cheniver Deco Print Technics Corporation v. NLRC, G.R. No. 122876, February
17, 2000)
Q: Meralco and its union MEWA renegotiated its 1992-1997 CBA insofar as the last two-year
period was concerned. The Secretary of Labor assumed jurisdiction and granted the arbitral
awards. There was no question that these arbitral awards were to be given retroactive effect.
However, the parties dispute the reckoning period when retroaction shall commence. Meralco
claims that the award should retroact only from such time that the Secretary of Labor rendered
the award. The union argues that the awards should retroact to such time granted by the
Secretary who has plenary and discretionary power to determine the effectivity of the arbitral
award. The union cited the case of St. Luke’s and Mindanao Terminal where the Secretary
ordered the retroaction of the CBA to the date of expiration of the previous CBA. When should
the arbitral award retroact?
A: Labor laws are silent as to when an arbitral award in a labor dispute where the Secretary has
assumed jurisdiction by virtue of Art. 263 (g) shall retroact. Despite the silence of the law, the
Court ruled that the CBA arbitral awards granted after six months from the expiration of the last
CBA shall retroact to such time agreed upon by both the employer and the employees or their
union. Absent such agreement as to retroactivity, the award shall retroact to the first day after
the six-month period following the expiration of the last day of the CBA should there be one. In
the absence of a CBA, the Secretary’s determination of the date of effectivity as part of his
discretionary powers over arbitral awards shall control. (Manila Electric Company v. Secretary
of Labor, G.R. No. 127598, February 22, 2000)
Q: A, B and C were drivers of Company Q driving the latter’s taxicabs every other day on a 24
hour work schedule under the boundary system where petitioners earn an average of P400
daily and private respondent regularly deducts an amount for the washing of the taxi units. A, B
and C decided to form a labor union. Later, Company Q refused to let petitioners drive their
taxicabs. A, B and C filed with the labor arbiter a complaint for ULP, illegal dismissal, and illegal
deductions. The NLRC found for A, B and C stating that dismissal must be for just cause and
after due process. Company Q's first motion for reconsideration was denied. It filed another
MR, which was then granted. Should the NLRC have granted the second MR?
A: No. Company Q exhausted administrative remedies available to it by seeking an MR. The

rationale for allowing only one MR from the same party is to assist the parties in obtaining an
expeditious and inexpensive settlement of labor cases. The NLRC should have recognized that
the relationship between jeepney-owners and jeepney drivers under the boundary system is that
of ee-er and not that of lessor-lessee. The fact that the drivers do not receive fixed wages is not
sufficient to withdraw the relationship f3om that of er and ee. Therefore the termination of A, B
and C’s employment should have be effectuated in accordance with law. With regard to the
amount deducted for washing, such was not illegal as such is indeed a practice in the taxi
industry and is dictated by fair play. (Jardin v. NLRC, G.R. No. 119268, February 23, 2000)
Q: Union M is an affiliate of Federation U. A bitter disagreement ensued between the

Federation U and the Union M culminating in the latter’s declaration of general autonomy from
the former. The federation asked the company to stop the remittance of Union M’s share in the
education funds. The federation called a meeting placing Union M under trusteeship and
appointing an administrator. Officers of Union M received letters from the administrator
requiring them to explain why they should not be removed from their office and expelled from
union membership. The officers were expelled from the federation. The federation then
advised the company of the expulsion of the 30 union officers and demanded their separation
pursuant to the Union Security Clause in the CBA. The Federation filed a notice of strike with
the NCMB to compel the company to effect the immediate termination of the expelled union
officers. Under the pressure of a strike, the company terminated the 30 union officers from
employment. Union M filed a notice of strike on the grounds of discrimination; interference;
mass dismissal of union officers and shop stewards; threats, coercion and intimidation; and
union busting. Members of Union M prayed for the suspension of the effects of their termination.
Secretary Drilon dismissed the petition stating it was a intra-uion matter. Later, 78 union shop
stewards were placed under preventive suspension. The union members staged a walk-out and
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officially declared a strike that afternoon. The strike was attended by violence. Was the
dismissal of the union officers illegal?
A: Yes. The charges against respondent company proceeded mainly from the termination of
the union officers upon the demand of the federation pursuant to the union security clause.
Although the union security clause may be validly enforced, such must comply with due
process. In this case, the union officers were expelled for allegedly committing acts of disloyalty
to the federation. The company did not inquire into the cause of the expulsion and merely relied
upon the federation’s allegations. The issue is not a purely intra-union matter as it was later on
converted into a termination dispute when the company dismissed the petitioners from work
without the benefit of a separate notice and hearing. As to the act of disaffiliation by the local
union; it is settled that a local union has the right to disaffiliate from its mother union in the
absence of specific provisions in the federation’s constitution prohibiting such. There was no
such provision in federation ULGWP’s constitution.
Q: In the above case, was the strike illegal?
A: No. As to the legality of the strike; it was based on the termination dispute and petitioners
believed in good faith that in dismissing them, the company was guilty of ULP. The no-strike, no
lockout provision in the CBA can only be invoked when the strike is economic. As to the
violence, both parties agreed that the violence was not attributed to the striking employees
alone as the company itself hired men to pacify the strikers. Such violence cannot be a ground
for declaring the strike illegal. (Malayang Samahan ng mga Manggagawa sa M. Greenfield
(MSMG0UWP) v. Ramos, G.R. No. 113907, February 28, 2000)
Q: The LA ordered petitioner to pay respondents the sum of P655, 866.41. Petitioner appealed
to the NLRC with a motion for the reduction of the supersedeas to P100,000 and thereafter
posted a cash bond of P100,000. The NLRC dismissed the appeal for insufficiency of the bond.
Petitioner said the Star Angel doctrine should apply where the appeal may be perfected after
that period upon posting of a cash or surety bond. However, the NLRC disagreed stating that in
this case, the petitioner did not file a motion for reduction of bond within the period but instead
posted a bond in an amount not equivalent to the monetary award. Was the motion for the
reduction of the bond filed in time?
A: Yes. That petitioner did file a motion within the period is supported by the following:
1. The motion for reduction was stamped with the “received” rubber stamp marker of the NLRC
and indicated the date of filing as 6.7.96.
2. Both the motion and the appeal memorandum were sent to respondents in one envelope
and sent by registered mail under Reg. Receipt 3576.
3. The same person notarized both the motion and the appeal on the same date.
4. On the last page of their comments, respondents stated that “the motion for reduction
should be founded on meritorious grounds.” This was found by the SC to be an implied
admittance of the receipt of the motion. Besides, respondents could just as well have stated
in their comments that no motion was filed. (Coral Point Development Corporation v.
NLRC, G.R. No.129761, February 28, 2000)
Q: A was a jeepney driver of X on the boundary system. Due to a change in schedule, they did
not report for work as protest. They were then replaced. A filed a complaint for illegal dismissal
asking for separation pay and other benefits. On November 26, 1991, the labor arbiter rendered
judgment in favor of A. X was served a copy of the decision on April 3, 1992. X filed a
memorandum on appeal on April 13, 1992; however the appeal bond was only filed on April 30,
1992. Also, such bond was found to be spurious. It was only on July 20, 1993 that a substitute
bond was issued by another company. Did the NLRC have jurisdiction to hear the appeal?
A: No. The perfection of an appeal within the reglementary period and in the manner prescribed
by law is jurisdictional, and noncompliance with such legal requirement is fatal and has the
effect of rendering the judgment final and executory. Perfection of an appeal includes the filing,
within the prescribed period of the memorandum of appeal and posting of the appeal bond. In
cases where the judgment involves a monetary award, as in this case, the appeal may be
perfected only upon posting of a cash or surety bond to the NLRC. Since the X received the
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LA’s decision on April 3, they had only until April 13 to file their appeal. The bond was posted
only on April 30; beyond the reglementary period. The requirement of posting the bond has only
been relaxed on grounds of substantial justice and special circumstances which are not
attendant in this case. Furthermore, the bond posted was not genuine. The decision can no
longer be amended nor altered by the labor tribunal. (Navarro v. NLRC, G.R. No. 116464,
March 1, 2000)
Q: A, is a member of the NFL, employed by X in the Patalon Coconut Estate in Zamboanga

City. Pursuant to RA 6657, the Comprehensive Agrarian Reform Law, the Patalon Cocount
Estate was warded to the Patalon Estate Reform Association, of which A is a member and co-
owner. As a result of this acquisition, the Patalon Estate shut down operations and the
employment of A was severed. A did not receive separation pay. A became co-owner of the
land and subsequently filed a complaint for illegal dismissal. Should X, who had been
compelled to cease operations because of compulsory acquisition by the government of his land
for purposes of agrarian reform, be made liable to pay separation pay to A?
A: No. The peculiar circumstance in the case at bar involves neither the closure of an
establishment nor a reduction in personnel as contemplated in Article 283. The closure
contemplated in 283 is a voluntary act on the part of the employer. The Labor Code
does not contemplate a situation where the closure is forced upon the employer. As
such, petitioners are not entitled to separation pay as private respondents did not
voluntary shut down operations as they even sought to be exempted from the coverage
of RA 6657. (National Federation of Labor v. NLRC, G.R. No. 127718, March 2, 2000)
Q: A and B were employed by Company E. A applied for a leave of absence and informed the
Operations Manager of his intention to avail of the optional retirement plan under the
Consecutive Enlistment Incentive Plan (CEIP). Such was denied. B also applied for a leave of
absence and informed the Operations Manger of his intention to avail of the optional early
retirement plan in view of his 20 years of service which was likewise denied. A and B both
requested for extension of their leaves of absence. Later, they discovered that they had been
dropped from the roster of crew members. Company E asserts that A and B are contractual
employees whose employment are terminated every time their contracts expire. Were A and B
validly dismissed?
A: No. The primary standard to determine a regular employment is the reasonable connection
between the activity performed by the employee in relation to the usual business or trade of the
employer. In this case it is undisputed that petitioners were regular employees of private
respondents. Also, as they had been in the employ of private respondents for 20 years as they
were repeatedly re-hired after the expiration of their respective contracts, it is clear that their
service was necessary and indispensable to private respondent’s business. Therefore, they
could only be dismissed for just and valid cause. There is no showing that they abandoned their
job as there was no showing of their unjustified refusal to resume employment. (Millares v.
NLRC, G.R. No. 110524, March 14, 2000)
Q: X is a members of Union S. The Executive Board of Union S decided to retain the services
of their counsel in connection with negotiations for a new CBA. A general membership meeting
was called where majority of union members approved a resolution confirming the decision to
engage the services of the union’s counsel, Atty. Lacsina. The resolution provided that 10% of
the total economic benefits that may be secured be given to the counsel at attorney’s fees. Also
it contained an authorization for Solidbank Corporation to check-off said attorney’s fees from the
first lump sum of payment of benefits under the new CBA. X issued a complaint for illegal
deduction. May the union validly deduct attorney’s fees from X’s salary?
A: No. Article 241 has 3 requisites for the validity of the special assessment for union’s
incidental expenses, attorney’s fees and representation expenses. They are:
1. authorization by a written resolution of majority of all the members at the general
membership meeting called for the purpose
2. secretary’s record of the minutes of the meeting
3. individual written authorization for check-off duly signed by the employees concerned.
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Such requirements were not complied with, as there were no individual written check off
authorizations; thus, the employer cannot legally deduct thus the assessment. The
union should be made to shoulder the expenses incurred for the services of a lawyer
and accordingly, reimbursement should be charged to the union’s general fund or
account. No deduction can be made from the salaries of the concerned employees
other than those mandated by law. (Gabriel, et al v. Secretary of Labor, G.R. No.
115949, March 16, 2000)
Q: A and B were employed by PAL as load controller and check-in clerk, respectively. On
January 19, 1993, a passenger by the name of Cominero checked in for the flight. It appears
that B reflected a lighter weight of baggage on Cominero’s ticket to make it appear that the
same was within the allowable level. When the anomaly was later discovered, B went to the
cashier to pay the excess baggage fee. Cominero further paid the sum representing the excess
baggage fee. B implicated A in the anomaly. A and B were charged with “fraud against the
company” and were found guilty and meted with the penalty of dismissal. The NLRC found that
the alleged defrauding of PAL’s excess baggage revenue was not the handiwork of A and that
PAL failed to show it suffered loss in revenues as a consequence of private respondent’s
questioned act. Was A validly dismissed?
A: Yes. The core of PAL’s evidence against A included the report of B. It was erroneous for the
NLRC to have discredited B’s testimony because he appeared guilty as well. There is
substantial evidence showing that private respondent had direct involvement in the illegal
pooling of baggage. A’s act is inexcusable as it constitutes a serious offense under petitioner’s
Code of Discipline. The fact that PAL failed to show it suffered losses in revenue is immaterial
as private respondent’s mere attempt to deprive petitioner of its lawful remedy is already
tantamount to fraud. Therefore, A was validly dismissed and as such was for a just cause, he is
not entitled to backwages nor separation pay. (PAL v. NLRC, G.R. No. 126805, March 16,
2000)
Q: The NFL was the sole and exclusive bargaining representative for the rank and file
employees of Company X. NFL started to negotiate for better terms and conditions of
employment; which were met with resistance by Company X. The NFL filed a complaint for
ULP on the ground of refusal to bargain collectively. LA issued an order declaring the company
guilty of ULP and ordering the CBA proposals submitted by the NFL as the CBA between the
parties. Later, Y claimed that he was wrongfully excluded from the benefits under the CBA filed
a petition for relief. Company X asserts that Y is not entitled to the benefits under the CBA
because he was hired after the term of a CBA and therefore, is not a party to the agreement and
may not claim benefits thereunder. As for the CBA, Company X maintains that the force and
effect of the CBA’s terms are limited to only three years and cannot extend to terms and
conditions which ceased to have force and effect. Are the assertions of Company X correct?
A: No. As to its first assertion, Y should be able to claim benefits under the CBA. The benefits
under the CBA should be extended to those who only became such after it expired, to exclude
them would constitute undue discrimination. In fact, when a CBA is entered into by the union
representing the employees and the employer, even the non-union members are entitled to the
benefits of the contract. As to its assertion that the CBA’s terms are limited to only three years,
it is clear from Art. 253 that until a new CBA has been executed by and between the parties,
they are duty bound to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement. In the case at bar, no new agreement was entered
between the parties pending appeal of the decision in the NLRC. Consequently, the employees
would be deprived of a substantial amount of monetary benefits if the terms and conditions of
the CBA were not to remain in force and effect which runs counter to the intent of the Labor
Code to curb labor unrest and promote industrial peace. (New Pacific Timber Supply Co. v.
NLRC, G.R. No. 124224, March 17, 2000)
Q: A was employed as a data encoder by private respondent. From 1988 until 1991, she
entered into 13 employment contracts with private respondent, each contract for a period of 3
months. In September 1991, A and 12 other employees allegedly agreed to the filing of a PCE
of the rank and file employees of private respondent. Subsequently, A received a termination
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letter due to “low volume of work.” A filed a complaint for illegal dismissal. Was A a regular
employee entitled to tenurial security?
A: Yes. Even though petitioner is a project employee, as in the case of Maraguinot, Jr. v.
NLRC, the court held that a project employee or member of a work pool may acquire the status
of a regular employee when the following concur:
1. there is continuous rehiring of project employees even after the cessation of a project
2. the tasks performed by the alleged “project employee” are vital, necessary and
indispensable to the usual business and trade of the employer.
A was employed as a data encoder performing duties, which are usually necessary or desirable
in the usual business or trade of the employer, continuously for a period of more than 3 years.
Being a regular employee, A is entitled to security of tenure and could only be dismissed for a
just and authorized cause; low volume of work is not a valid cause for dismissal under Arts. 282
or 283. Having worked for more than 3 years, A is also entitled to service incentive leave
benefits from 1989 until her actual reinstatement since such is demandable after one year of
service, whether continuous or broken. (Imbuido v. NLRC, G.R. No. 114734, March 31, 2000)
Q: A was employed as a security guard by Company X. During a routinary meeting of the

security guards, A stood up and shouted at the presiding officer. She was then suspended for
15 days. Later, she received a letter that she was reassigned and required to report to
respondent’s Manila office. Her services were terminated for abandonment when she failed to
report for work in her new assignment. The Labor Arbiter found for petitioner. Private
respondent appealed to the NLRC, which denied the appeal. The decision having become final,
the LA issued a writ of execution on the reinstatement aspect, but it was not implemented as the
monetary aspect remained to be determined. Later, NLRC sheriff issued a notice of
Garnishment served on private respondent’s deposit account with the PNB. The LA directed the
PNB to release the amount. Meanwhile, Company X filed with the LA a motion to quash the writ
of execution on the ground that there has been a change in the situation of the parties which
would make the execution inequitable. It contended that A accepted employment from another
security agency without previously resigning from respondent’s agency. Should the Labor
Arbiter still order the release of the judgment award?
A: Yes. Execution is the final stage of litigation, the end of the suit. It cannot be frustrated
except for serious reasons demanded by justice and equity. It is the ministerial duty of the court
to issue a writ of execution to enforce the judgment. Company X’s contention that there has
been a change in the situation of the parties is without merit. It has been held that back wages
awarded to an illegally dismissed employee shall not be diminished or reduced by the earnings
by him elsewhere during the period of his illegal dismissal. The decision is final and the total
amount representing the salary differentials and back wages awarded to the petitioner has been
garnished from the account of respondent agency with no opposition or resistance. Therefore, it
is the ministerial duty of the LA to release the money to A. (Torres v. NLRC, G.R. No. 107014,
April 12, 2000)
Q: On December 1986, De La Salle University and De La Salle University Employee’s

Association, which is composed of regular non-academic rank and file employees entered into a
CBA. During the freedom period of such CBA, the Union initiated negotiations, which turned out
to be unsuccessful. After several conciliation meetings, 5 out of 11 issues were resolved by the
parties. A partial CBA was executed. The parties then entered into a Submission Agreement
identifying the remaining issues for arbitration. In resolving the issues, the VA included the
computer operators from the scope of the CBA and excluded the employees of the College of
St. Benilde. Did the VA act properly in ruling as such?
A: Yes. Computer operators were presently doing clerical and routinary work and had nothing
to do with the setting of management policies for the university. The access they have to
information to the University’s operations are not necessarily confidential. The express
exclusion of the computer operators in the past does not pose a bar to re-negotiation for future
inclusion of the said employees in the bargaining unit. Also, as to the employees of the CSB,
they were properly excluded at the two education institutions have their own separate juridical
personality. (De la Salle University v. De La Salle University Employees Association, G.R. No.
109002, April 12, 2000)
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Q: A received a letter calling to his attention his conduct during a Sales and Marketing
Christmas gathering where she allegedly made utterances of obscene, insulting and offensive
words towards the SPC’s Management Committee. A was given two days to explain why no
disciplinary action should be taken against him and he was thereafter placed on preventive
suspension. A replied stating that such utterances were only made in reference to a decision
taken by the management committee on the Cua Lim Case and not to any specific person. A
was thereafter informed in a letter that his employment was terminated. Was A validly
dismissed?
A: No. A’s dismissal was brought about by utterances made during an informal Christmas
gathering. For misconduct to warrant dismissal, it must be in connection with the employee’s
work. In this case, the alleged misconduct was neither in connection with employee’s work, as
A’s utterances are not unusual in informal gatherings, neither was it of such serious and grave
character. Furthermore, A’s outburst was in reaction to the decision of the management in a
certain case and was not intended to malign on the person of the respondent company’s
president and general manager. The company itself did not seem to consider the offense
serious to warrant an immediate investigation. It is also provided in the company’s rules and
regulations that for conduct such as that of A, a first offense would only warrant a “verbal
reminder” and not dismissal. (Samson v. NLRC, G.R. No.121035, April 12, 2000).
Q: X was employed by Company C as assistant mechanic. X drove Company C’s truck to

install a panel sign and accidentally sideswiped a ten year old girl whose injuries incurred
hospitalization expenses of up to P19,534.45. Such amount was not reimbursed by insurance
as X had no driver’s license at the time of the accident; therefore Company C shouldered the
expenses. Company C conducted an investigation where X was given the opportunity to defend
himself. X was then dismissed for violating the company rules and regulation for blatant
disregard of established control procedures resulting in company damages. Was X validly
dismissed?
A: Yes. Although X contends that he was investigated simply for the offense of driving without a
valid driver’s license, it was clear that he was fully aware that he was being investigated for his
involvement in the vehicular accident. It was also known to him that the accident caused the
victim to suffer serious injuries leading to expenses which the insurance refused to cover. Due
process does not necessarily require a hearing, as long as one is given reasonable opportunity
to be heard. X’s actions clearly constituted willful disobedience. Although generally, an
employee who is dismissed for just cause is not entitled to any financial assistance, due to
equity considerations as this was X’s first offense in 18 years of service, he is to be granted
separation pay by way of financial assistance of ½ month’s pay for every year of service.
(Aparente, Sr. v. NLRC, G.R. No. 117652, April 27, 2000)
Q: Y was a company nurse for the Company Z. A memorandum was issued by the personnel
manager of Company Z to Y asking her to explain why no action should be taken against her for
(1) throwing a stapler at plant manager William Chua; (2) for losing the amount of P1,488
entrusted to her, (3) for asking a co-employee to punch in her time card one morning when she
was not there. She was then placed on preventive suspension. Another memorandum was
sent to her asking her to explain why she failed to process the ATM applications of her co-
employees. She submitted a written explanation as to the loss of the P1,488 and the punching
in of her time card. A third memorandum was sent to her informing her of her termination from
service for gross and habitual neglect of duties, serious misconduct, and fraud or willful breach
of trust. Y claims that her throwing of the stapler at plant manager William Chua was because
the latter had been making sexual advances on her since her first year of employment and that
when she would not accede to his requests, he threatened that he would cause her termination
from service. As to the other charges, she claimed that they were not done with malice or bad
faith. Was Y illegally dismissed, and if so, is she entitled to recover damages?
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A: Yes. The grounds by which an employer may validly terminate the services of an employee
must be strictly construed. To constitute serious misconduct to justify dismissal, the acts
must be done in relation to the performance of her duties as would show her to be unfit
to continue working for her employer. The acts complained of did not pertain to her
duties as a nurse neither did they constitute serious misconduct. On the question of
damages, although Y allowed four years to pass before coming out with her employer’s
sexual impositions; the time to do so admittedly varies depending upon the needs,
circumstances and emotional threshold of each person. It is clear that Y has suffered
anxiety, sleepless nights, besmirched reputation and social humiliation by reason of the
act complained of. Thus, she should be entitled to moral and exemplary damages for
the oppressive manner with which petitioner’s effected her dismissal and to serve as a
warning to officers who take advantage of their ascendancy over their employees.
(Philippine Aeolus Automotive United Corporatoin v. NLRC, G.R. No. 124617, April
28, 2000)
Q: Isetann Dept Store dismissed B due to retrenchment. However instead of giving the required
30 day notice, the company gave 30 days pay arguing that this is effective notice. They made B
sign quitclaims so that there would be no more claims from them. The Labor Arbiter ruled that
the B was illegally dismissed because they were not afforded due process because they failed
to prove retrenchment due to losses. The NLRC reversed the ruling saying that the dismissal
was justified because it was due to redundancy and not retrenchment. The NLRC however did
not rule on whether the 30 day pay was a sufficient substitute for the 30 day notice. The
petitioner argues further that they should be given the chance to present his side. Was the 30
days pay sufficient replacement for 30 day notice?
A: No. The Court ruled that since the dismissal is due to an authorized cause only notice is
required and that the employee has no right to present his side. The 30 day notice is needed in
order to afford the employee enough time to look for work and to give the DOLE time to look into
the validity of the authorized cause. 30 days pay is not enough to replace the notice
requirement because it would not serve the purpose of the notice. Additionally, backwages are
not a severe punishment because it is a consequence of the employer’s failure to give notice
and due process and the employee is therefore not deemed terminated so he should be
compensated for that period. (Serrano vs NLRC, GR No 117040, May 4, 2000)
Q: A and B filed a petition for certification election. Their petition was granted but they lost in
the election as majority of the employees voted for “no union”. The next day, they failed to
report for work. They claim that they were barred from entering the premises. They filed a suit
for illegal dismissal and backwages. The company denied these allegations and alleged that A
and B refused to return to work despite their attention being called. Were A and B legally
dismissed?
A: No. The Court ruled that an immediate filing of a complaint for illegal dismissal is
incompatible with abandonment. Abandonment is a matter of intention. There must be proof of
deliberate and unjustified intent to sever the employer-employee relationship. This burden rests
on the employer. In this case, the employer failed to do so. Since they were illegally dismissed,
the employees are entitled to reinstatement with full backwages, undiminished by their earnings
elsewhere. (Villar v. NLRC, GR No 130935, May 11, 2000)
Q: A school employs both local-hire and foreign-hire teachers. The foreign-hire teachers were
given an added 25% in their salary and some benefits like transportation and housing, shipping
costs etc. These were given based on two things: dislocation and limited tenure. The added
compensation was the school’s way of remaining competitive on an international level in terms
of attracting competent teachers. The local-hire teachers, part of the union contested the
difference, a deadlock resulted so the teachers went on strike. Is there discrimination in terms
of wages?
A: Yes, there is discrimination. The principle “equal pay for equal work” should apply in this
case. Persons who work with substantially equal qualifications, skill, effort and responsibility,
under similar conditions, should be paid similar salaries. If an employee is paid less it is upon
the employer to explain why the employee is treated differently. Dislocation and limited tenure
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cannot serve as adequate or valid bases for the difference in the salary rates. The other
benefits are enough to make up for these two factors. There is no reasonable distinction
between the work of a local-hire and a foreign-hire that will justify the difference. (International
School Alliance of Educators v. Quisumbing, GR No 128845, June 1, 2000)
Q: A company was found to have underpaid their employees and did not pay the 13 th month pay
on a routine inspection conducted by DOLE. The regional director ordered the company to pay
the deficiency. Subsequently, the NLRC affirmed the order. A waiver was signed by 108 of the
workers where they reduced by half the amount that was due. DOLE approved the waiver
saying that it was not contrary to law, good customs and public policy. Later, petitioner filed a
motion for reconsideration alleging undue influence, coercion, intimidation, and no assistance of
counsel. The motion was denied. Eduardo Nietes, claiming that he represented the workers,
filed a position paper with the same argument. The NLRC dismissed the case for failure to
acquire jurisdiction. He again filed an appeal but the appeal was denied for being filed out of
time. The appeal was filed 9 days late along with the appeal fee and research fee. Was the
appeal was filed out of time?
A: Yes, the appeal was filed out of time. The perfection of an appeal within the reglamentary
period and in the manner prescribed by law is mandatory and jurisdictional. Non-compliance
renders the judgement appealed final and executory. An appeal is perfected when there is
proof of payment of the appeal fee and in cases of the employer appealing and there is a
monetary award, payment of the appeal bond. A mere notice of appeal without complying with
the other requisites shall not stop the running of the period for perfecting an appeal. Sometimes
though, in the interest of justice, late appeals have been allowed. An instance is a class suit. In
this case there is no evidence that there is a class suit. There is no evidence that the workers
chose Nietes to represent them. There is no showing that the workers are joined by a common
interest. As there is no basis to invalidate the waiver the workers signed, the waiver is valid.
(Workers of Antique Electric Cooperative v. NLRC, GR No 120062, June 8, 2000)
Q: X was a radio operator on board a ship where he had a contract for 12 months. He was
required to submit himself to a medical examination. Prior to this, he had a pacemaker inserted
to help his cardiovascular functioning but he was still declared fit to work. On board the vessel,
he had bouts of coughing and he needed open heart surgery. He filed for sickness and
disability benefits with the POEA and these were awarded to him. Is the sickness
compensable?
A: Yes, it is compensable. Compensability of the illness or death of seamen need not depend on
whether the illness was work connected or not. It is sufficient that the illness occurred during the
term of the employment contract. It will also be recalled that petitioners admitted that private
respondent's work as a radio officer exposed him to different climates and unpredictable
weather, which could trigger a heart attack or heart failure. Even assuming that the ailment of
the worker was contracted prior to his employment, this still would not deprive him of
compensation benefits. For what matters is that his work had contributed, even in a small
degree, to the development of the disease and in bringing about his eventual death. Neither is it
necessary, in order to recover compensation, that the employee must have been in perfect
health at the time he contracted the disease. (Seagull ShipManagement and Transport Inc. v.
NLRC, GR No 123619, June 8, 2000)
Q: X is a merchandiser of respondent company. He withdraws stocks from the warehouse,

fixes the prices, price-tagging, displaying the products and inventory. He was paid by the
company through an agent. He asked for regularization of his status. The company denied any
employer-employee relationship. They claim that they used an agent or independent
contractors to sell the merchandise. Was there labor-only contracting?
A: No. The agent is a legitimate independent contractor. Labor-only contractor occurs only
when the contractor merely recruits, supplies or places workers to perform a job for a principal.
The labor-only contractor does not have substantial capital or investment and the workers
recruited perform activities directly related to the principal business of the employer. There is
permissible contracting only when the contractor carries an independent business and
undertakes the contract in his own manner and method, free from the control of the principal
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and the contractor has substantial capital or investment. The agent, and not the company, also
exercises control over the petitioners. No documents were submitted to prove that the company
exercised control over them. The agent hired the petitioners. The agent also pays the
petitioners, no evidence was submitted showing that it was the company paying them and not
the agent. It was also the agent who terminated their services. By petitioning for regularization,
the petitioners concede that they are not regular employees. (Escario v. NLRC, GR No
124055, June 8, 2000)
Q: X was originally employed by R Corporation as a muffler specialist, and was subsequently

appointed supervisor . He was instructed to report at private respondent’s main office where he
was informed by the company’s personnel manager that he would be transferred to its Sucat
plant due to his failure to meet his sales quota, and for that reason, his supervisor’s allowance
would be withdrawn. For a short time, X reported for work at the Sucat plant; however, he
protested his transfer, subsequently filing a complaint for illegal termination. X decries his
transfer as being violative of his security of tenure, the clear implication being that he was
constructively dismissed. Was X constructively dismissed?
A: No. We have held that an employer acts well within its rights in transferring an employee as it
sees fit provided that there is no demotion in rank or diminution in pay. The two circumstances
are deemed badges of bad faith, and thus constitutive of constructive dismissal. In this regard,
constructive dismissal is defined as “an involuntary resignation resorted to when continued
employment becomes impossible, unreasonable, or unlikely; 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.” It should be borne in mind, however, that the right to
demote an employee also falls within the category of management prerogatives. An employer
is entitled to impose productivity standards for its workers, and in fact, non-compliance may be
visited with a penalty even more severe than demotion. Failure to observe prescribed standards
of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause
for dismissal. (Leonardo v. NLRC, G.R. No. 125303, June 16, 2000)
Q: Y was employed as a mechanic. He was dismissed after the company found out that he was
doing sideline work. It would appear that late in the evening of the day in question, the driver of
a red Corolla arrived at the shop looking for Y. The driver said that, as prearranged, he was to
pick up Y who would perform a private service on the vehicle. When reports of the "sideline"
work reached management, it confronted Y and asked for an explanation. According to private
respondent, Y gave contradictory excuses, eventually claiming that the unauthorized service
was for an aunt. When pressed to present his aunt, it was then that Y stopped reporting for
work, filing his complaint for illegal dismissal some ten months after his alleged termination. Y
was even employed by another company thereafter. Was there abandonment of work?
A: Yes. Y, after being pressed by the respondent company to present the customer regarding
his unauthorized solicitation of sideline work from the latter and whom he claims to be his aunt,
he never reported back to work anymore. It must be stressed that while Y alleges that he was
illegally dismissed from his employment by the respondents, surprisingly, he never stated any
reason why the respondents would want to ease him out from his job. Moreover, why did it take
him ten (10) long months to file his case if indeed he was aggrieved by respondents. All the
above facts clearly point that the filing of his case is a mere afterthought on the part of Y.
(Leonardo v. NLRC, G.R. No. 125303, June 16, 2000)
Q: X is an officer and member of the PGA Brotherhood Association, a duly registered labor
organization, and is a security guard employed by PSVSIA. He was informed that his services
were being terminated. He contended that prior to such dismissal, they were harassed by
PSVSIA officers to withdraw their membership from the PGA Brotherhood Association.
Although PSVSIA denied the charge of illegal dismissal, the Labor Arbiter declared PSVSIA and
its responsible officers guilty of ULP and declared that petitioners were constructively dismissed,
thereby ordering respondent to reinstate X to his former position with backwages up to the time
of actual reinstatement. However, X was paid monetary award for backwages pursuant to an
earlier decision of the NLRC limiting it to three years where he assented to the computation
made by the NLRC reducing the backwages to three years. No M.R. was filed. In fact, X even
filed a motion to release the remaining balance to satisfy the judgment awards. X filed a motion
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for clarification of the resolution reiterating their prayer for the inclusion of their backwages from
time they were terminated up to the present (until actual or payroll reinstatement). How should
the backwages be computed?
A: The NLRC decision has become final and executory. Neither a motion for reconsideration
nor appeal was ever taken by petitioners on this point. This procedural lapse is fatal. Equally
significant is the fact that petitioners actively participated in the enforcement of the execution by
garnishing the supersedeas bond and the bank deposits of PSVSIA. The NLRC prepared a
computation showing the back wages due petitioners for three (3) years. X not only assented to
the computation made when they did not object thereto but even filed a motion to release the
remaining balance amounting to P398,600.00 still in the hands of the NLRC to fully satisfy the
judgment awards. X cannot now claim that they have remained unpaid, especially considering
that they have already received the judgment award. (PGA Brotherhood Association, et al., v.
NLRC, G.R. No. 131084, June 19, 2000).
Q: X was working as driver of passenger jeepneys. He lost his driver’s license and asked for
permission to go on vacation leave to secure a new one. X only returned after three months
when he was able to obtained his license. He was however informed that another driver had
already taken his place. The company argues that the prolonged absence of X constituted
abandonment. X filed a case for illegal dismissal. Did X’s absence constitute abandonment?
A: No. 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 intention to sever the employer-
employee relationship. Such is disputed by the fact that private respondent immediately
reported back for work and lost no time in filing a case for illegal dismissal against petitioners.
(Icawat v. NLRC, GR 133572, June 20, 2000)
Q: X was employed as manager by a company for its Healthcare Division. In April 1996,
fictitious invoices were sent to clients made to inflate the gross revenues of the Healthcare
Division; and Nokom was placed on preventive suspension as initial findings showed her to be
involved in such anomaly. X admitted the irregularities and made no explanation. She also
failed to appear during the hearing. After the investigation, X’s employment was terminated. X
was found to have been dismissed for “fraud or willful breach” of the trust reposed on her by her
employer or duly authorized representative. Was X legally dismissed?
A: Yes. In the case at bar, petitioner’s position demanded a high degree of responsibility,
including the unearthing of fraudulent and irregular activities. Petitioner failed to do such and
her bare denials did not disprove her guilt. The ordinary rule is that one who has knowledge
peculiarly within his control, and refuses to divulge it, cannot complain if the court puts the most
unfavorable construction upon his silence, and infers that a disclosure would have shown the
fact to be as claimed by the opposing party. Loss of confidence is one of the just causes for a
valid dismissal; and it is enough that there be “some basis” for such loss of confidence. The
guidelines for the application of the doctrine of loss of confidence as enunciated in Midas Touch
Food Corporation, are:
a.....loss of confidence should not be simulated;
b.....it should not be used as a subterfuge for causes which are improper, illegal or
unjustified;
c.....it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and
d.....it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
An employer enjoys a wide latitude in the promulgation of company rules; and in this case, the
policies of respondent were fair and reasonable. (Nokom v. NLRC, G.R. No.140043, July 18,
2000)
Q: X, President of the exclusive bargaining agent initiated renegotiations of its CBA with the
company for the last two years of the CBA’s 5 year lifetime from 1989-1994. On the same year,
the union elected a new set of officers with Z as the newly elected President. Z wanted to
continue renegotiation, but the company claimed that the CBA was already prepared for signing.
The CBA was submitted to a referendum which was rejected by the union members. Later, the
union notified the NCMB of its intention to strike due to the company’s refusal to bargain.
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Thereafter, the parties agreed to disregard the unsigned CBA and to start negotiation on a new
five-year CBA. The union submitted its proposals to petitioner, which notified the union that the
same was submitted to its Board of Trustees. Meanwhile, Z’s work schedule was changed,
which she protested and requested to be submitted to a grievance machinery under the old
CBA. Due to the company’s inaction, the union filed a notice of strike. Later, Z was dismissed
for alleged insubordination. Both parties again discussed the ground rules for the CBA
renegotiations; however the company stopped negotiations after allegedly receiving information
that a new group of employees had filed a Petition for Certification Elections. The union held a
stike and the Secretary assumed jurisdiction ordering all striking workers to return to work. All
were readmitted except Z.
1. Is the company guilty of unfair labor practice by refusing to bargain with the union when it
unilaterally suspended the ongoing negotiations for a new CBA upon mere information that a
petition for certification has been filed by another legitimate labor organization?
2. Does the termination of the union president amount to an interference of the employees’ right
to self-organization?
A:
1. No. The duty to bargain collectively includes the mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement.
Petitioner failed to make a timely reply to the union’s proposals, thereby violating the proper
procedure in collective bargaining as provided in Article 250. In order to allow the employer
to validly suspend the bargaining process, there must be a valid PCE raising a legitimate
representation issue. In this case, the petition was filed outside the 60-day freedom period;
therefore there was no legitimate representation issue and the filing of the PCE did not
constitute a bar to the ongoing negotiation.
2. Yes. The dismissal was in violation of the employee’s right to self-organization. The
dismissal must be made pursuant to the tenets of equity and fair play; wherein the
employer’s right to terminate the services of an employee must be exercised in good faith;
furthermore, it must not amount to interfering with, restraining or coercing employees in their
right to self-organization. The factual backdrop of the Ambas’ termination reveals that such
was done in order to strip the union of a leader. Admittedly, management has the
prerogative to discipline its employees for insubordination. But when the exercise of such
management right tends to interfere with the employees’ right to self-organization, it
amounts to union-busting and is therefore a prohibited act. (Colegio de San Juan de
Letran v. Association of Employees and Faculty of Letran, G.R. 141471, September 18,
2000)
Q: X was employed as sewer by a corporation engaged in the business of sewing costumes,

gowns and casual and formal dresses. Eventually, she started to feel chest pains. She then filed
a leave of absence from work as the chest pains became unbearable. After subjecting herself to
medical examination, she was found to be suffering from Atherosclerotic heart disease, Atrial
Fibrillation, Cardiac Arrhythmia. Upon recommendation of her doctor, she resigned from her
work hoping that with a much-needed complete rest, she will be cured. She later filed a
disability claim with the SSS from the Employees’ Compensation Fund, under Presidential
Decree No. 626, as amended. Was the sickness compensable?
A: Yes, the illness is compensable. Under the Labor Code, as amended, the law applicable to
the case at bar, in order for the employee to be entitled to sickness or death benefits, the
sickness or death resulting therefrom must be or must have resulted from either (a) any illness
definitely accepted as an occupational disease listed by the Commission, or (b) any illness
caused by employment, subject to proof that the risk of contracting the same is increased by
working conditions.” In other words, “for a sickness and the resulting disability or death to be
compensable, the said sickness must be an occupational disease listed under Annex “A” the
Amended Rules on Employees’ Compensation; otherwise, the claimant or employee concerned
must prove that the risk of contracting the disease is increased by the working condition.”
Indisputably, cardiovascular diseases, which, as herein above-stated include atherosclerotic
heart disease, atrial fibrillation, cardiac arrhythmia, are listed as compensable occupational
diseases in the Rules of the Employees’ Compensation Commission, hence, no further proof of
casual relation between the disease and claimant’s work is necessary. (Salmone v.
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Employees’ Compensation Commission and Social Security System, G.R. No. 142392,
September 26, 2000)
1999 CASES
Q. A flight surgeon at PAL, was on duty from 4 pm until 12 midnight. At around 7 pm, he left the
clinic to have his dinner at his residence, a 5-minute drive away. While he was away, the clinic
received an emergency call for a PAL employee suffered from a heart attack. The nurse on duty
phoned the doctor at home to inform him of the emergency, then rushed the patient to the
hospital at 7:50 pm. The doctor arrived at 7:51 pm. The patient died the following day. After
investigation, the doctor was charged with abandonment of post while on duty, and was later
suspended for 3 months. Was this suspension legal?
A. The suspension was illegal. Article 83 of the Labor Code (Normal hours of Work) provides
that Health personnel . . . shall hold regular office hours for eight (8) hours a day, for five (5)
days a week, exclusive of time for meals, … (See Art. 85 - Meal Periods; Sec. 7, Rule I, Book
III of the Omnibus Rules (Meals and Rest periods) Thus, the 8-hour work period does not
include the meal break. Nowhere in the law may it be inferred that employees must take their
meals within the company premises, as long as they return to their posts on time. Private
respondent’s act of going home to take his dinner does not constitute abandonment.
(Philippine Airlines, Inc. v. NLRC, 302 SCRA 582 (1999))
Q. A jet printer operator employed at Selecta was dismissed from employment for dishonesty
and theft of company property. Considering that the employee merely took 15 hamburger
patties, a pair of boots and an aluminum container, was dismissal the appropriate remedy?
A. No. While the SC agrees that the employer should not be required to continuously employ
someone who has betrayed its trust and confidence, dismissal would not be proportionate to the
gravity of the offense. Further, he is a non-confidential employee. Dismissal as a measure to
protect the interests of Respondent Company is unwarranted under the facts of this case.
Suspension would have sufficed. (Associated Labor Unions-TUCP v. NLRC, 302 SCRA 708
(1999))
Q. A deliveryman of Petitioner Company filed a complaint for illegal dismissal and non-payment
of basic wages and certain monetary benefits. He was suspected of selling fruits of his employer
at a higher price, and pocketing the difference. The LA found in favor of the employee and
ordered petitioner Company to reinstate him with back wages, salary differentials, 13th month
pay and service incentive pay. The NLRC reversed the decision and ruled that private
respondent was not entitled to reinstatement with back wages except for the award of salary
differentials due to underpayment.
A. The SC agrees with the LA and held that private respondent was indeed illegally dismissed. It
was only upon his complaint regarding his low salary that he was no longer allowed to report for
work. This amounted to dismissal without cause and without the requisite written notice. Such
circumstances make it difficult to sustain any allegation of abandonment. Abandonment, as a
just and valid cause for termination, requires a deliberate and unjustified refusal of an employee
to resume his work, coupled with a clear absence of any intention of returning to his or her work.
With regard to the salary differentials granted, petitioners claim exemption under RA 6727
(Wage Rationalization Act) and the Rules Implementing Wage Order Nos. NCR-01 and
NCR-01-A, as well as Wage Order Nos. NCR-02 and NCR-02-A. However, regardless of
the factual circumstances in this case, the SC was not convinced as the petitioners could
not even show any approved application for exemption, as required by the applicable
guidelines issued by the Commission. (C. Planas Commercial v. NLRC, 303 SCRA 49
(1999))
Q. Is due process served even when the decision of the Labor arbiter is based solely on position
papers?
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A. Petitioner likewise contends that it was not granted its right to due process, as the decision of
the LA was based purely on position papers. The standard of due process that must be met in
administrative tribunals allows a certain degree of latitude as long as fairness is not ignored.
[Adamson & Adamson, Inc. v. Amores, 152 SCRA 237, 250 (1987)] Hence it is not legally
objectionable, for being violative of due process, for the LA to resolve a case based solely on
position papers, affidavits or documentary evidence submitted by the parties. (CMP Federal
Security Agency, Inc. v. NLRC, 303 SCRA 99 (1999))
Q. While petitioner was assigned to sort out rejects in a private respondent’s bakery, he went to
the comfort room to answer the call of nature, with the permission of his checker. However,
when the owner saw that petitioner was not at his station, he demanded from him a written
explanation for abandoning his work. Having verbally explained that he had to answer the call of
nature, petitioner no longer submitted a written explanation, believing that his verbal denial
would suffice. However, he was suspended for 15 days. On another occasion, petitioner had to
answer the call of nature. This time, he requested his fellow worker to replace him while he was
away. The owner, however, once again noticed that he was gone and demanded a written
explanation for his absence. Knowing better, petitioner complied with the demand. Finding
petitioner’s explanation unsatisfactory, the Company served petitioner a notice of termination.
A. Petitioner’s act of relieving himself can hardly be characterized as abandonment, much less a
willful or intentional disobedience of company rules since bowel movements are hardly
controllable. Aside from the discomfort it causes, restraining one’s bowel movements adversely
affects the efficiency and health of the worker. Neither could it have disrupted the operations of
the company as to cause it irreparable damage. As such, answering the call of nature is a valid
reason to leave the work area. (Dimabayao v. NLRC, 303 SCRA 655 (1999))
Q. A room attendant of the Sheraton, operated by petitioner, was dismissed for having been
caught by a hotel guest with his left hand inside the guest’s suitcase. After being charged and
terminated based on the company rules regarding qualified theft, he filed a complaint for illegal
dismissal. He reasons that he was merely placing the belongings of the hotel guest into the
latter’s suitcase, as they were scattered on the floor. Was the dismissal illegal?
A. Yes. Petitioner reasons that the employee was caught in flagrante delicto, and is therefore a
cause for dismissal. However, absent any evidence that would substantiate such imputation
against the employee, suspicions and baseless conclusions by employers are not legal
justification for dismissing employees. The burden of proof to show the validity of the dismissal
lies on the employer. Notably, it was shown that the hotel guest lost nothing. (Maranaw Hotels
and Resort Corporation v. NLRC, 303 SCRA 541 (1999))
Q. Petitioner was a checker in the warehouse of respondent Company who met an accident
while in the course of performing his job. His hand was pinned down by a crane which resulted
in its deformity and total disability of his middle finger. He was given a month of sick leave
which he extended for another month. Later, he discovered that the Company had terminated
his services. He then filed a complaint for illegal dismissal. The LA found that there was an
illegal dismissal. In its appeal to the NLRC, the Company alleged that the real reason why
petitioner was dismissed was due to several gambling incidents in the work area. This
explanation was accepted by the NRLC, which omitted reinstatement and backwages from the
award of the LA. Petitioner points out that the issue of gambling was raised only by the
respondents upon appeal. Not having been alleged in the Position Papers of the respondents
at the earliest instance, should the NLRC have considered the Company’s gambling
allegations?
A. The Company was allowed to submit “Annex 2” which contained the gambling allegations
with the LA, there was no showing whether the NLRC gave the petitioner a clear chance to
rebut the contention. Considering the lateness of its submission, and the critical fact it alleged,
this was the least that should have been done by the NLRC. Therefore, petition granted. NLRC
committed grave abuse of discretion. LA’s decision reinstated. (Villa v. NLRC, 303 SCRA 481
(1999))
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Q. Supervisory employees of SMC were retired prior to reaching the compulsory age of 60
pursuant to a CBA reducing optional retirement to fifteen years. They claim that their signatures
in conformity with their retirement from the service were secured through threats, and that the
employees had no choice but no accept the benefits. Were the employees validly retired? Did
their acceptance of benefits amount to estoppel?
A. No the employees were not validly retired. The mere absence of actual physical force to
compel them to ink their application for retirement did not make it voluntary. They were
confronted with the danger of being jobless. Their acceptance of benefits did not likewise
amount to estoppel. If the intention to retire is not clearly established or if the retirement is
involuntary, such is to be treated as a discharge. In any case, the CBA is not applicable to them
as it expressly excluded supervisory positions which petitioners occupy. (San Miguel
Corporation v. NLRC; July 23, 1999)
Q. San Miguel Corporation shut down some of its plants and declared 55 positions as
redundant, in order to streamline operations due to financial losses. Consequently, the union
filed several grievance cases for the said retrenched employees, and sought the redeployment
of said employees to other divisions of the company. Grievance proceedings were conducted
pursuant to the parties' Collective Bargaining Agreement. The procedure outlined in the CBA
required the settlement of grievances on 3 levels - department manager, plant manager, and a
conciliation board. During the proceedings, many employees were redeployed, some accepted
early retirement. San Miguel informed the union that the remaining employees would be
terminated, if they could not be redeployed. Subsequently, the union filed a notice of strike with
the NCMB of the DOLE due to a bargaining deadlock and gross violation of the CBA such as
non-compliance with the grievance procedure. On the other hand, San Miguel filed a complaint
with the NLRC to dismiss the notice of strike. Can the union hold a strike on the grounds relied
upon?
A. The grounds relied upon by the union are non-strikeable. A strike or lockout may only be
declared in cases of bargaining deadlocks and ULP. Violations of the CBA, except
flagrant/malicious refusal to comply with economic provisions shall not be strikeable. (Sec. 1,
Rule XXII, LC IRR) A collective bargaining deadlock is the situation between the labor and
management of the company where there is failure in the collective bargaining negotiations
resulting in a stalemate. This situation is nonexistent in the present case since there is a
conciliation board assigned in Step 3 of the grievance machinery to resole the conflicting views
of the parties. For failing to exhaust all the steps in the grievance machinery and arbitration
proceedings provided in the CBA, the notice of strike should have been dismissed by the NLRC
and the union ordered to proceed with the grievance and arbitration proceedings. Moreover, in
abandoning the grievance proceedings and refusing to avail of the remedies under the CBA, the
union violated the mandatory provisions of the CBA. Parenthetically, it is worthy to note that
abolition of departments or positions in the company is one of the recognized management
prerogatives. (San Miguel Corporation v. NLRC, 304 SCRA 1 (2 March 1999))
Q. Due to alleged ULP, several employees walked out from their jobs. The company purportedly
sent them notices urging them to return to work, otherwise their services would be terminated.
The employees denied having received these notices, and claimed that they were merely
informed of their dismissal and prevented from returning to work (removal of their machines by
the company). Was there a valid case of abandonment, as a ground for dismissal?
A. Abandonment, as a just and valid ground for dismissal, means the deliberate and unjustified
refusal 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. Two
elements must be proved: the intention of an employee to abandon and an overt act from which
it may be inferred that the employee has no more intent to resume his work. It is unlikely that the
employees abandoned their jobs, considering the length of their service (10-17 years). In fact,
no overt act was proven by the company from which the intention of the employees to desist
from employment may be shown. Moreover, the abandonment of work does not per se sever
the employer-employee relationship. IT is merely a form of neglect of duty, which is in turn a just
cause for termination of employment. The operative act that will ultimately put an end to the
relationship is the dismissal of the employee, after complying with the procedure prescribed by
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law. If the employer does not follow the procedure, there is illegal dismissal. (De Paul/King
Philip Customs Tailor v. NLRC, 304 SCRA 448, 10 March 1999)
Q: S was employed under an employment contract that will be effective for a period of 1 year,
unless sooner terminated. The first period was for six months terminable at the option of the
employer. The second period was also for six months but probationary in character. After
working for six months, S was made to sign a 3-month probationary employment and later
extended by another 3-month period. After a total employment of one year, S was dismissed on
grounds of termination of contract employment. S filed a complaint for illegal dismissal. Was S
validly dismissed?
A: Yes. In both periods, the company did not specify the criteria for the termination or retention
of the services of S. If the contract was really for a fixed term, the employer should not have
been given the discretion to dismiss S during the one year period of employment for reasons
other than the just and authorized causes under the Labor Code. In effect, the employer
theorized that the one-year period of employment was probationary. It was not brought to light
that S was informed at the start of his employment of the reasonable standards under which he
would qualify as a regular employee. In the case of Brent, the Court upheld the principle that
when the period was imposed to preclude the acquisition of tenurial security, they should be
disregarded for being contrary to public opinion. It was clear that S was hired as a regular
employee and his work was necessary and directly related to the business of the company. S is
considered as a regular employee of the company. At any rate, even assuming that the original
employment was probationary, the fact that he was allowed to work beyond the six-month
probationary period converts him to a regular employee under Article 281 of the Labor Code. S
was reinstated with backwages from the time of dismissal to payroll reinstatement. (Servidad v.
National Labor Relations Commission, 305 SCRA 49, 18 March 1999)
Q: D learned from B that the latter needed factory workers in Taiwan, but B told D that as a part
of his job application, he should give a certain amount. D gave B the money but was unable to
go to Taiwan. Several other persons paid B the required placement fee but were also unable to
work abroad. The victims filed cases of illegal recruitment in large scale (3 or more persons) and
estafa. Was B guilty of illegal recruitment and estafa?
A: Yes. Illegal recruitment is committed when the (1) offender has no valid license or authority;
and (2) he undertakes any activity within the meaning of “recruitment and placement” under the
Labor Code. It is the lack of necessary license or authority that renders the recruitment activity
unlawful or criminal. There is illegal recruitment when one purports to have the ability to send a
worker abroad through without license and authority to do so. (People v. Borromeo, 305 SCRA
180, 25 March 1999)
Q: At the time AIUP filed a petition for certification election, there was an existing CBA between
the company and CCEA, the incumbent bargaining agent for all the rank and file employees.
This petition was opposed by CCEA on the ground of the contract bar rule. AIUP filed a notice
of strike citing union busting and unfair labor practice as grounds. The union proceeded to stage
a strike, in the course of which, illegal acts were perpetrated. When AIUP ignored the TRO
enjoining the union members to refrain from blocking the road, the company dismissed several
employees on the ground of illegal strike and illegal acts perpetrated in connection with the
strike. AIUP is questioning the legality of the dismissal of several AIUP member employees.
Was the strike illegal? Was the dismissal of the AIUP member employees valid?
A: The Court was not persuaded by the allegation of union busting. The strike staged by AIUP
was a union-recognition-strike. The petition for certification election (PCE) should not have been
entertained because of the contract bar rule. A PCE may only be entertained 60 days before the
expiration of a CBA (freedom period).
The strike staged by AIUP was illegal as they formed human barricades to block roads
and prevented co-workers from entering company premises. Even if the strike is valid because
its object or purpose is lawful, the strike may still be declared as invalid where the means
employed are illegal. Union officers who knowingly participate in the commission of illegal acts
in a strike may be declared to have lost his employment status but an ordinary striking
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employee cannot be terminated for mere participation in an illegal strike. However, there must
be proof that he committed illegal acts during the strike. For the severest penalty to dismissal to
attach, the erring strikers must be duly identified. Simply referring to them as “strikers” is not
enough to justify their dismissal. The petitioning members of AIUP are ordered reinstated with
full backwages. (Association of Independent Unions in the Philippines v. NLRC, 305 SCRA
219, 25 March 1999)
Q: The original owners of AAC were driven by mounting financial loses to sell the majority rights
of the company to PH. To thwart further losses, PH implemented a re-organizational plan.
Workers occupying redundant positions that were abolished were terminated. PH duly paid their
separation pay and other benefits. Six of the union members who were terminated filed a case
for illegal termination alleging that the retrenchment program was a subterfuge for union
busting. They claimed that they were singled out for their active participation in union activities.
They also asserted that AAC was not bankrupt, as it has engaged in an aggressive scheme of
contractual hiring. Were the union members validly dismissed?
A: Yes. The condition of business losses is normally shown by audited financial documents. It
is the Court’s ruling that financial statements must be prepared and signed by independent
auditors. In the instant case, the employees never contested the veracity of the audited financial
documents presented by AAC to the Labor Arbiter, neither did they object to the documents’
admissibility. It is only necessary that the employees show that its losses increased through a
period of time and that the condition of the company is not likely to improve in the near future.
The allegation of union busting is also bereft of proof. The records show that the position on 51
other non-union members were abolished due to business loses.
The Court generally holds quitclaims to be contrary to public policy. Yet as in the instant
case, as there is no showing that the quitclaims were executed in duress, they are binding on
the parties. (Asian Alcohol Corporation v. NLRC, 305 SCRA 416, 25 March 1999)
Q: PICOP grants certain allowances to its employees depending on the circumstances and
need for such. The allowances in question pertains to the following:
1. Staff/Manager’s Allowance: Free housing facilities to supervisory and managerial
employees assigned in Bislig. Due to shortage of housing facilities, the company was
constrained to grant allowances to those who live or rent houses near the vicinity of
the mill site.
2. Transportation Allowance: granted to Managers assigned to the mill site who use
their own vehicles in the performance of their duties.
3. Bislig Allowance: given in consideration of being assigned to the hostile environment
then prevailing in Bislig.
The Executive Labor Arbiter opined that the subject allowances formed part of the
employees’ wages. Citing jurisprudence, he concluded that the allowances should be included
in the computation of the employees’ base pay in determining the separation pay. The NLRC
did not share the view of the Labor Arbiter. It found that the allowances were contingency-based
and thus not included I their salaries. Did the subject allowances form part of the petitioners’
wage?
A: No. “Wage”, as defined by the Labor Code, may include any determination by the Secretary
of Labor in appropriate instances the “fair and reasonable value of board, lodging and other
facilities customarily furnished by an employer to his employees.” The Court agrees with the
OSG that the subject allowances were temporary and not regularly received by the petitioners.
The allowance given to the employees in the instant case do not represent such fair and
reasonable value because the allowance were given by the company in lieu of actual housing
and transportation needs whereas the Bislig allowance was given in consideration of being
assigned to the hostile environment then prevailing in Bislig; petitioners’ continuous enjoyment
of the disputed allowances was based on contingencies the occurrence of which terminated
such enjoyment. (Millares v. National Labor Relations Commission, 305 SCRA 500, 29
March 1999)
Q: A was employed by IBM for 16 years as an Engineer. He was informed, through a letter, that
his employment with the company was to be terminated on the grounds of habitual tardiness
and absenteeism. Alleging that his dismissal was without just cause and due process, he filed a
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compliant with the DOLE. He also claimed that he was not given the opportunity to be heard
and hat he was summarily dismissed from employment based on charges which has not been
duly proven. IBM denied A’s claims. It was alleged that A was told of his poor attendance record
and inefficiency through the company’s internal electronic mail system. Attached to IBM’s
position paper were copies of printouts of alleged computer entries/messages sent by the
company to A through the internal email system. Was A validly dismissed?
A: No. It appears, however, that A’s Daily Time Record (DTR) and pay slips showed that he did
not incur any unexcused absences, he was not late on any day and, that no deduction was
made from his salary on account of tardiness or absences. The computer print outs, which
constitutes the only evidence of IBM, afford no assurance of their authenticity because they are
unsigned It is true that administrative agencies are not bound by the technical rules of
procedure and evidence in the adjudication of cases. However, the liberality of procedure is
subject to limitations imposed by basic requirements of due process. The evidence presented
before the NLRC must at least have a modicum of admissibility for it to be given some probative
value. The print outs likewise failed to show that A was allowed due process before his
dismissal. The law requires an employer to furnish the employee two written notices before
termination of his employment may be ordered. These requirements were not observed in this
case. (IBM Philippines v. National Labor Relations Commission, 305 SCRA 592, 13 April
1999)
Q: RP filed with the SEC a petition for the suspension of payments and a rehabilitation plan. A
management committee was created to oversee the rehabilitation plan. Consequently, the SEC
issued an order suspending all actions and claims against RP. Employees of RP filed their
respective complaints for illegal dismissal, unfair labor practice, and payment of separation pay.
The Labor Arbiter held that the order of the SEC suspending all action for claims against
RP does not cover the claims of private respondents in the labor cases because said claims and
the liability of RP as the employer still has to be determined, thus carrying no dissipation of the
assets of petitioners. Are labor claims included in the suspension order of the SEC?
A: Yes. The law is clear: all claims for actions shall be suspended accordingly. No exception in
favor of labor claims is mentioned in the law. Allowing labor cases to proceed clearly defeats the
purpose of the automatic stay and severely encumbers the management committee’s time and
resources.
The preferential right of workers and employees under Article 110 of the Labor Code
may be invoked only upon the institution of insolvency or judicial liquidation proceedings. The
purpose of rehabilitation proceedings is precisely to enable the company to gain a new lease on
life and thereby allow creditors to be paid their claims from its earnings. In insolvency
proceedings, the company stops operations and the claims of creditors are satisfied from the
assets of the insolvent company. The present case involves rehabilitation, not the liquidation, of
RP Corporation. Hence the preference of credit granted to workers is not applicable. The labor
claims filed by the employees will temporarily be suspended during the period of the
rehabilitation plan. (Rubberworld Philippines v. National Labor Relations Commission, 305
SCRA 721, 14 April 1999)
Q: S was employed by JVAC Corporation in 1969. He retired on 1992 when he was 62 years
old. Subsequently, S brought a complaint for retirement benefits and service incentive leave pay
before the NLRC against the corporation. The Labor Arbiter granted retirement pay to S under
RA 7641. The corporation challenged this decision asserting that S retired almost a year prior to
the effectivity of the said law (7 January 1993), and thus the retirement benefits under RA 7641
should not be applied retroactively. Was S entitled to the retirement benefits under RA 7641?
A: No. The Court held in a previous case that RA 7641 granting retirement benefits is
undoubtedly a social legislation. There should be little doubt about the fact that the law can
apply to labor contracts still existing at the time the statute has taken effect, and that its benefits
can be reckoned not only from the date of the law’s enactment but retroactively to the time said
employment contract have started. The aforecited doctrine was elaborated upon by
enumerating the circumstances which must concur before the law could be given retroactive
effect: (1) the claimant must still be an employee of the employer at the time the statute took
effect; and (2) the claimant has complied with the requirements for eligibility under the statute. In
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the case under scrutiny, S retired and ceased to be an employee of JVAC Corporation eleven
months before the effectivity of RA 7641. It is thus decisively clear that the provisions of RA
7641 could not be given retroactive effect in his favor. (J.V. Angeles Construction
Corporation v. NLRC, 305 SCRA 734, 14 April 1999)
Q: The corporation and ALU inked a CBA effective until 1995. 14 days before the expiration of
the said CBA, NAFLU filed a petition for certification election, which was granted by the Med-
Arbiter. ALU interposed a Motion to Dismiss for failure of NAFLU to acquire for and in behalf of
its local charter affiliates (COPPER), a legal personality as a legitimate labor organization. ALU
and NAFLU signed an agreement to hold a certification election and NAFLU promised to furnish
ALU a copy of its Certificate of Registration and other pertinent documents. On the same day
COPPER was issued by the DOLE a Certificate of Registration. Was the PCE duly filed?
A: Yes. In a previous case, the Court held that a party is estopped to challenge the personality
of a corporation after having acknowledged the same by entering into a contract with it. In the
present case, ALU acknowledged the legal existence of NAFLU’s affiliate by entering into an
agreement with NAFLU. ALU aver that their agreement with NAFLU on the holding of a
certification election with a suspensive condition was not complied with. Considering, however,
that NAFLU was able to submit the documents required by the agreement, such compliance
retroacted to the date the agreement was signed.
The order of the Med-Arbiter granting the petition for the certification election has
become final in view of ALU’s failure to appeal there from. Under the Labor Code, a party has
the right to appeal an order allowing or granting a petition for certification election. But the right
of appeal may only be exercised within 10 calendar days from the receipt of the order.
(Associated Labor Unions v. Quisumbing, 305 SCRA 762, 14 April 1999)
Q: A was a police officer assigned to PNP Vigan. While he was driving his tricycle and ferrying
passengers, he was confronted by another police officer about his tour of duty. A verbal tussle
then ensued between the two, which led to the fatal shooting A. On account of A’s death, his
wife filed a claim for death benefits with the GSIS. In its decision, GSIS denied the claim on the
ground that at the time of his death, A was performing a personal activity that was not work-
connected. Subsequent appeal to the Employees Compensation Commission (ECC) proved to
be futile as it merely affirmed the decision of GSIS. The Court of Appeals, however, ruled
otherwise. It decided that “as applied to a peace officer, A’s work place is not confined to the
police precinct or any station, but to any place where his services, as a lawman, to maintain
peace and security, are required. At the time of his death, A was driving his tricycle at the town
complex where the police assistance center is located. There can be no dispute therefore that
he met his death literally in his place of work. Policemen, by the nature of their functions, are
deemed to be on a round-the-clock duty.” Must the activity being performed at the time of death
be work-connected for it to be compenesable?
A: Yes. While it agrees that policemen are at the beck and call of public duty as peace officers
and technically on duty round-the-clock, the same does not justify the grant of compensation
benefits for the death of A. Obviously, the matter A was attending at the time of his death, that
of ferrying passenger for a fee, was intrinsically private and unofficial in nature proceeding as it
did from no particular directive or permission of his superiors officers. The 24-hour duty doctrine,
as applied to policemen and soldiers, serves more as an after-the-fact validation of their acts to
place them within the scope of the guidelines rather than a blanket license to benefit them in all
situations that may give rise to their deaths. In other words, the 24-hour doctrine should not be
sweepingly applied to all acts and circumstances causing the death of a police officer but only
tot hose which, although not on official line of duty, are nonetheless basically police service in
character. Therefore, death benefits under the ECC should not be granted. (Government
Service Insurance System v. Court of Appeals, 306 SCRA 41, 20 April 1999)
Q: LG, JB and PB were accused of illegal recruitment by a syndicate in large scale. It was
alleged that the above named accused, without license or authority, recruited several people for
job placement abroad, receiving a placement fee from the recruits in exchange. The recruits
flew to the supposed country of employment yet had to return to the Philippines as the promised
job did not exist. The victims confronted the accused, and the accused promised to refund their
money. Were the accused guilty of illegal recruitment in a syndicate?
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A: Yes. The Court held that the appeal lacks merit. Recruitment for overseas employment is not
in itself necessarily immoral or unlawful. It is the lack of the necessary license or permit, or the
engagement of prohibited activities enumerated in the Labor Code that renders such
recruitment activities unlawful or criminal. The accused asserted that the offense should not
have been qualified into illegal recruitment by a syndicate since there was no proof that they
acted in conspiracy with one another. However, the acts of the accused showed unity in
purpose. One would visit the house of the recruits several times, convincing them to work
abroad. Another would accompany the recruit to the house of the person collecting the
processing fee. All these acts established a common criminal design mutually deliberated upon
and accomplished through coordinated acts. Against the evidence of the prosecution, the
accused merely posited the defense of denial. Denials, if unsubstantiated by clear and
convincing evidence, are deemed negative and self-serving evidence unworthy of credence.
(People v. Guevarra, 306 SCRA 111, 21 April 1999)
Q: Philippine Rabbit Inc. (PRI) employed PE as a bus conductor. On 1975, petitioner terminated
the services of PE, prompting him to sue PRI for illegal dismissal. The Labor Arbiter declared
the dismissal to be illegal and ordered reinstatement with full backwages. PRI appealed to the
NLRC but the appeal was dismissed, as the same was not filed within the reglementary period.
PRI appealed to the Office of the President, which directed PRI to reinstate PE but only pay
backwages for six months. PE was paid the backwages but he was not reinstated. Thus, he
moved for a second writ of execution on 1985 and the payment of backwages from 1979 (the
date he presented himself for reinstatement) until he could actually be reinstated. The NLRC
granted the Writ of Execution. Did the NLRC committed a grave abuse of discretion in modifying
the amending the final and executory order of the Office of the President, and in enforcing by
mere motion the final judgment of the Office of the President despite the lapse of seven years?
A: No. PRI cannot legally invoke in this case the strict application of the rule limiting execution of
judgment by mere motion within a period of 5 years only. There have been cases where the
Court allowed execution by mere motion even after the lapse of 5 years. Their common
denominator in those instances was the delay caused or occasion by the actions of the
judgment debtor and/or those incurred for his benefit. In the instant case, PRI unduly delayed
the full implementation of the final decision of the Office of the President by fling numerous
dilatory appeals and persistently refusing to reinstate private respondent PE. Technicalities
have no room in labor cases where the Rules of Court are applied only in a suppletory manner
and only to effectuate the objectives of the Labor Code, and not to defeat them.
PRI can no longer assail the propriety of the final decision of the Office of the President
issued way back in May 1978. The finality of a decision is a jurisdictional event that cannot be
made to depend on the convenience of a party. Once a decision attains finality, it becomes the
law of the case whether or not the decision is erroneous. (Philippine Rabbit Bus Lines, Inc. v.
NLRC and Evangelista, 306 SCRA 151, 21 April 1999)
Q: According to the prosecution, the accused, RC, invited and convinced several people to work
with her as a factory worker abroad. RC promised to process the necessary papers for a
placement fee of P8, 000.00. When the agreed date of departure came, RC failed to show up.
The recruits went to the POEA who issued a certification that RC had no license to recruit
overseas workers. The recruits then went to the police and filed a compliant for illegal
recruitment in large-scale. RC vehemently denied recruiting the complainants and declared that
she merely tried to help them work abroad at the insistence of the complainants. Is RC guilty of
illegal recruitment?
A: Yes. Large-scale illegal recruitment has the following elements: (1) The accused undertook
recruitment activities or any prohibited practice under the Labor Code. (2) He did not have the
license or authority to lawfully engage in the recruitment and placement of workers. (3) He
committed the same to two or more persons. The prosecution evidence proved beyond
reasonable doubt that the foregoing elements were present in this case. There is no question
that RC did not have a license to engage in he recruitment of workers, as she herself admitted,
and that the crime was committed against more than three persons. The evidence on record
belies her argument that she did not engage in the recruitment and placement of workers. The
testimonies of the recruits unequivocally prove that RC promised the three jobs abroad provided
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they would pay the placement fee. The fact that each of them paid the down payment is
evidence by the receipts issued and signed by RC. (People of the Philippines v. Castillon,
306 SCRA 271, 21 April 1999)
Q: AA is the owner of a farm who employed the petitioners C and I. Petitioners contended that
they were verbally told by AA to stop working and terminated their employment without
informing them of the reason for their intended dismissal. Hence, they charged AA for illegal
dismissal with money claims. AA asserts that C and I were dismissed for valid causes, as they
were guilty of insubordination, both disobeying the prescribed manner and procedure of doing
their job. The Labor Arbiter ruled that there was no just cause for termination. On appeal, the
NLRC reversed the decision of the Labor Arbiter for gross insufficiency of evidence to sustain
the decision, remanding the case to the Labor Arbiter for the reception of further evidence. Was
the remand of the case to the Labor Arbiter proper?
A: No. The remand of the case to the Labor Arbiter for the reception of evidence has no legal or
actual basis. Subject to the requirements of due process, proceedings before the Labor Arbiter
are generally non-litigious, because technical rules and procedures of ordinary courts of law do
not strictly apply. Thus, a formal or trial-type hearing is not always essential. In the absence of
any palpable error, arbitrariness or partiality, the method adopted by the Labor Arbiter to decide
a case must be respected by the NLRC.
AA was not deprived of due process of law, the essence of which is simply the
opportunity to be heard. It must be stressed that all the parties to the case were given equal
opportunities to air their respective positions before the Labor Arbiter. That AA failed to fully air
his position by his own inaction or negligence does not constitute deprivation of due process.
(Cañete and Isabida v. National Labor Relations Commission, 306 SCRA 324, 21 April
1999)
Q: AL was a seaman on board the vessel M/V Cast Muskoz. His lifeless body was found
hanging by the neck from the ceiling of an old abandoned warehouse in Quebec, Canada.
According to the coroner, the probable cause of death was asphyxiation by hanging. When AL’s
body was flown to Manila, his father noted that the body bore several bruises. They submitted
the cadaver to the NBI for an autopsy. Considering that the findings of the NBI were all
inconsistent with suicide, the father filed a claim with the POEA. The POEA dismissed the
compliant of the father based on the solid evidence of the employer-shipping company. On
appeal, the NLRC affirmed the ruling of the POEA. Apparently, both labor bodies anchored their
conclusion on the fact that had there been foul play involved in AL’s death, the $2, 000.00 in his
pocket would have been taken. Was the father of AL entitled to his son’s death benefits?
A: Yes. The employer failed to ascertain the circumstances surrounding AL’s death, which was
its duty to undertake as AL’s employer. Such willful neglect cannot but indicate that a through
investigation would have yielded a result adverse to the employer. The records are bereft of any
substantial evidence showing that respondent employer successfully discharged its burden of
proving that AL committed suicide, so as to evade its liability for death benefits under POEA’s
Standard Employment Contract for Filipino Seaman. The records of this case are remanded to
the POEA for the computation of the death benefits to be awarded to the father of AL. (Lapid v.
National Labor Relations Commission, 306 SCRA 349, 29 April 1999)
Q: R was employed by the hotel as a doorman. Professional shoppers hired by the hotel
evaluating hotel employees recommended the transfer of Rodriguez to a non-customer-contact
position because of the negative feedback on his manner of providing services to the hotel
guests. A memorandum was later issued transferring him to the linen room as an attendant. He
resisted the transfer and did not assume his new post at the linen room. The hotel terminated
his employment on the ground of insubordination. The Labor Arbiter declared the dismissal to
be legal. On appeal, the NLRC reversed the decision of the Labor Arbiter declaring that the
intended transfer was in the nature of a disciplinary action. The hotel management contends
that the employee’s continuous refusal to report to his new work assignment constituted gross
insubordination. Was the transfer of the employee a valid exercise of its management
prerogative?
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A: Yes. Disobedience to be a just cause for dismissal envisages the concurrence of at least two
requisites – (a) the employee’s wrongful conduct must have been willful or intentional; (b) the
order violated must have been reasonable, lawful, made known to the employee and must
pertain to the duties which he has been engaged to discharge. It is the employer’s prerogative,
based on its assessment and perception of the employee’s qualification, aptitude and
competence, to move him around in the various areas of its business operations in order to
ascertain where the employee will function with utmost efficiency and maximum productivity or
benefit to the company.
Deliberate disregard of company rules or defiance of management prerogative cannot
be countenanced. Until and unless the rules or orders are declared to be illegal or improper by
competent authority, the employees ignore or disobey them at their peril. In the case at bat, the
employee was repeatedly reminded not only by management but also by his union to report to
work station but to no avail. (Westin Philippine Plaza Hotel v. National Labor Relations
Commission, 306 SCRA 631, 3 May 1999)
Q: Accused Enriquez promised employment in Taiwan to at least 42 people. They were each
asked to pay processing fees ranging from P3, 370 to P5, 000 for which no receipts were issued
and to submit documents to facilitate their travel and subsequent deployment abroad. The
POEA issued a certification showing the Enriquez is not licensed to engage in the recruitment of
workers for overseas employment. In her defense, Enriquez claimed that it was her common-
law husband who was engaged in the “business” and she only acted as his secretary when she
dealt with the complainants. She allowed him to establish his recruitment office at her residence.
Enriquez claimed that she only helped her husband in the office for three months while he was
looking for a secretary. Part of her duties then was to collect the documents submitted by the
applicants and receive the money they paid as placement fees. Is she guilty of illegal
recruitment in large-scale?
A: Yes. The essential elements of the crime of illegal recruitment in large-scale can be
summarized as follows: (1) the accused engages in acts of recruitment and placement of
workers as defined in the Labor Code; (2) the accused does not have a license or authority from
the Secretary of Labor to recruit and deploy workers; and (3) the accused commits the same
unlawful acts against three or more persons, individually or as a group.
The theory of the defense unduly strains the credulity of the Court. The complainants
positively identified Enriquez as the one who dealt directly with them from the time they inquired
about the job prospects abroad until they complied with the requirements and followed up their
applications. Worth reiterating is the rule that illegal recruitment in large-scale is malum
prohibitum, not malum in se, and that the fact alone that a person violated the law warrants her
conviction. Any claim of lack of criminal intent is unavailing. (People of the Philippines v.
Enriquez, 306 SCRA 739, 5 May 1999)
Q: Coca Cola entered into a contract of janitorial services with BJS. Coca Cola then hired X first,
as a casual employee; after the casual employment was terminated, Coca Cola again hired X
as a painter in contractual projects. He was also hired by BJS, which assigned him to the Coca
Cola considering his familiarity with its premises. Goaded by information that Coca Cola
employed previous BJS employees who filed a complaint against the company for regularization
pursuant to a compromise agreement, X submitted a similar complaint against Coca Cola to the
Labor Arbiter; he included BJS therein as a co-respondent. He no longer reported to work and
when offered by BJS to work in other firms, he refused. He amended the complaint to illegal
dismissal and underpayment of wages. Is there an employee-employer relationship in this
case?
A: No. The Court takes judicial notice of the practice adopted in several government and private
institutions and industries of hiring janitorial services on an “independent contractor basis”.
Although janitorial services may be considered directly related to the principal business of an
employer, the Court deemed them unnecessary in the conduct of the principal business. This
judicial notice rests on the assumption that the independent contractor is a legitimate job
contractor so that there can be no doubt as to the existence of an employer-employee
relationship between the contractor and the worker. It is also clear that BJS exercises control
over the work of X as most of his assigned task dealt with the maintenance and sanitation of the
company premises pursuant to BJS’s contract with the company.
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The Court ruled that no employer-employee relation exists between X and Coca Cola yet
the latter shall be jointly and severally liable with BJS for the wage differentials and 13th Month
pay of X. (Coca Cola Bottlers Philippines v. NLRC, 307 SCRA 131, 17 May 1999)
Q: Admiral Hotel hired Balani as a Cost Controller. She received a memo from the Managing
Director calling her attention to several violation of hotel rules she had violated such as using
the phone for personal calls and entertaining visitors during office hours, to the detriment of her
regular work. The employee denied the charges leveled against her and she submitted a letter
of resignation. Consequently, she received all salaries, benefits and separation pay, and
executed a quitclaim in favor of the hotel. Did the employee voluntarily resign?
A: Yes, this is a case if voluntary resignation. The employee claims that she was constructively
dismissed from her office as its location was transferred from under the steps of the stairs to the
kitchen. Such transfer caused her mental torture, which forced her to resign. However, it was
not shown that her transfer was prompted by ill will of management. Indeed, the resident
manager of the hotel swore that the transfer affected not only the Cost Control office but also
the other offices. The transfer only involved a change in location of the office. It does not involve
a change in the employee’s position. Even a transfer in position is valid when based on sound
judgment, unattended by demotion in rank or diminution of pay or bad faith. (Admiral Realty
Company (Admiral Hotel) v. NLRC, 307 SCRA 162, 18 May 1999)
Q: While the oiler was anchored on port, seaman H was directed to open and clean the main
engine. To accomplish this, he had to enter a manhole in a crouching position. After working for
4 consecutive days, he experienced back pains and foot swelling. However, he was instructed
to continue with his work until he was finally repatriated to the Philippines where medical
examinations confirmed that he suffered from a slipped disc, which required surgery. Upon
hearing that the surgery would cost more than P 40,000, the company disregarded the
recommendation for surgery and instead proposed a less costly treatment. But this did not
improve the condition of H. After seven months, H filed a complaint with the POEA against the
maritime agencies for disability and medical benefits. The employers allege that H signed a
Receipt and Release in favor of the maritime agencies while the case was pending in POEA,
that affirmed the findings of the POEA that his illness was work-connected. H supposedly
acknowledged receipt of a certain amount in complete and final settlement of all his wages,
benefits and claims. The maritime agencies assert that the signed Receipt is a quitclaim that
releases them from any liability whatsoever. Is the agreement valid?
A: No, the law does not consider as valid any agreement to receive less compensation than
what a worker is entitled to recover nor prevent him from demanding benefits to which he is
entitled. It is appalling that H would settle for a measly consideration of P15, 000 which is
grossly inadequate, that is could not have given rise to a valid waiver on the part of the
disadvantaged employee.
In order that a quitclaim may be valid, the requisites are: (1) there was no fraud or deceit
on the part of any party; (2) the consideration of the quitclaim is credible and reasonable; and
(3) that the contract is not contrary to law, public order, public policy, morals or good custom.
But even assuming that the ailment of H was contracted prior to his employment with the
maritime agency, this fact would not exculpate petitioners from liability. Compensability of an
ailment does not depend on whether the injury or disease was pre-existing at the time of the
employment but rather if the disease or injury is work-related or aggravated his condition. It is
safe to presume, at the very least, the arduous nature of H’s employment had contributed to the
aggravation of his injury, if indeed it was pre-existing at the time of his employment. Therefore, it
is but just that he be duly compensated for it. (More Maritime Agencies and Alpha Insurance
v. NLRC, 307 SCRA 189, 18 May 1999)
Q: The General Manger of the Toll way received reports that certain security personnel are
involved in mulcting activities. Acting on the complaint, the manager along with police officers
staged an entrapment. Angeles, security guard on duty in one of the exits was caught in
flagrante delicto receiving bribe money from an undercover passenger pretending to illegally
transport dogs. A notice of dismissal on the ground of serious misconduct was issued. After
formal investigations, dismissal was advised and Angeles was informed of his dismissal.
Angeles claimed that the entrapment was masterminded by the manager as a retaliation for his
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being critical of the manager’s administration. He now claims separation pay. Is he entitled to
separation pay?
A: An employee who is dismissed for just cause is generally not entitled to separation pay. In
some cases, the Court awards separation pay to a legally dismissed employee on the grounds
of equity and social justice. This is not allowed, though, when the employee has been dismissed
for serious misconduct or other causes reflecting on his moral character. The act of accepting
bribe money constituted serious misconduct that warrants the dismissal from the service.
(Philippine National Construction Corporation v. NLRC, 307 SCRA 218, 18 May 1999)
Q: C, a managerial employee, was accused of sexually harassing a subordinate, S. After

hearing and investigation, the Management Evaluation Committee concluded that the charges
against C constituted a violation of the Plant’s rules and regulations. It stated that, “touching a
female subordinate’s hand and shoulder, caressing her nape and telling other people that S was
the one who hugged and kissed or that she responded to the sexual advances are unauthorized
acts that damaged her honor.” It referred to the manual of the Philippine Daily Inquirer in
defining sexual harassment, which defined sexual harassment as “unwelcome or uninvited
sexual advances, requests for sexual favors and other verbal or physical conduct of sexual
nature with any of the following elements...(including) such conduct as unreasonably interferes
with the individual’s performance at work, or creates an intimidating, hostile or offensive working
environment.” C was charged with 30 days suspension without pay. C filed a complaint for
illegal suspension. The Labor Arbiter dismissed the petition which ruling was affirmed by the
NLRC. The C assailed the failure to apply RA 7877 in determining whether or not he actually
committed sexual harassment. Was C correctly charged with sexual harassment justifying his
suspension?
A: Yes. RA 7877 was not yet in effect at the time of the occurrence of the act complained of. IT
was still being deliberated upon in Congress. As a rule, laws shall have no retroactive effect
unless otherwise provided. Hence, the Labor Arbiter had to rely on the MEC report and the
common connotation of sexual harassment as it is generally understood by the public. Also, as
a managerial employee, is bound by more exacting work ethics. When such moral perversity is
perpetrated against a subordinate, there is a justifiable ground for dismissal based on loss of
trust and confidence. (Libres v. NLRC, 307 SCRA 674, May 28, 1999)
Q: In an intra-union dispute involving the examination of union accounts of a Local Chapter, the
parties submitted the matter to the Office of the Regional Director, who sustained the order for
an audit to be conducted. The ILM union officers appealed the order to the DOLE Secretary,
who endorsed it to the Bureau of Labor Relations. The BLR subsequently dismissed the
appeal. Is the DOLE Secretary correct in endorsing the case?
A: Yes. Examinations of union accounts are expressly classified by the Rules of Procedure on
Med-Arbitration, and a different process is provided for the resolution of the same. According to
Art. 226 of the Labor Code, the BLR has appellate jurisdiction over the matter, so the DOLE
Secretary was correct in its endorsement of the case. (Barles v. Bitonio, 308 SCRA 288, June
1999)
Q: Q and L were supervisors whose jobs involved the overseeing of the withdrawal and sorting
of sacks of sugar. In one transaction involving 50,000 Class C sacks, large numbers of sacks
were misplaced, and sacks of other classes were mixed in with the lot. As they were
supervising other operations at the time, Q and L were lax with their duties to see that the sacks
were properly segregated and delivered. As a result, a large number of sacks was stolen from
the company. Q and L were subsequently fired for gross negligence. Are they validly
dismissed?
A: NO. While Quimba and Lagrana were partially responsible for the unfortunate incident, their
negligence is not gross or habitual, and as such does not merit outright dismissal. Thus, they
would be entitled to reinstatement, but the employees have accepted the NLRC’s judgement for
separation pay instead due to the animosity between the parties. (National Sugar Refineries
Corp. v. NLRC, 308 SCRA 599, June 1999)
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Q: R worked as the driver of T, the owner of Ultra Villa Food Haus. During the May 1992
elections, he acted as a poll watcher for Lakas-NUCD and did not report for work for two days.
For the past years, the T gave R 13th mo. Pay. He alleged that he was an employee of Ultra
Villa Food Haus, and as such, he was entitled to the benefits accorded to employees under the
Labor Code. What is R entitled to?
A: Geniston is a personal driver of Tio, and as such, the company is not obliged to grant
overtime pay, holiday pay, premium pay and service incentive leave, including 13th mo. pay.
However, since T admitted that she has given R 13th mo. pay every December, it is but just to
award R such benefit. (Ultra Villa Food Haus v. Geniston, 309 SCRA 17, June 1999).
Q, a former employee of SURNECO, sent letters to the company management requesting

separation benefits for her 9 years of faithful service to the company. Nearly four months later,
E, then Personnel Officer of SURNECO, followed up and made a review of Q’s case.
Subsequently, Q filed a complaint for illegal dismissal, based largely on the report of E acting in
favor of Q. The complaint was barred by prescription, but because of what had happened, E
was terminated for having provided Q with the “weapons and ammunition” to wage a war
against the cooperative. Furthermore, the Board of SURNECO concluded that advancing the
interest of Q instead of the company, especially since she divulged the contents of her internal
memorandum to Q, were inimical to the company and merited dismissal. Was E illegally
dismissed?
A: YES. E was a Personnel Officer, holding a managerial position that is considered vested
with a certain amount of discretion and independent judgement. She was simply doing her job
when she reviewed Quinto’s case, and she is not proscribed from taking the side of labor when
she makes recommendations as to what must be done in each situation. Also, there is no
evidence that Quinto got the copy of the internal memorandum directly from Esculano – she
could have acquired it from other sources. As such, E’s actions do not qualify as breach of
confidence or serious misconduct. (Surigao Del Norte Electric Cooperative v. NLRC, 309
SCRA 233, June 1999).
Q: RA 6715 was passed creating a new classification of employee, the supervisory employee,
as not being a member of the rank and file but also not considered a managerial employee. At
around this time, the supervisory employees of Semirara Coal decided to form their own union
and intervene in the certification elections. However, the company filed a motion to disqualify
the supervisory employees from participating in the certification elections, as their functions
were managerial in nature. Should they be allowed to participate in the certification elections?
A: Yes, they should be allowed. The said employees fall under the category of supervisory
employees. Nothing in the company policies alters the nature and duty of these supervisory
employees to managerial. There is no showing that the power to discipline erring employees is
vested in their immediate supervisors. As such, they fall outside of the restriction on managerial
employees from joining unions and participating in certification elections. (Semirara Coal
Corporation v. Secretary of Labor, 309 SCRA 292, June 1999)
Q: Complainants are deaf-mutes hired by Company F as money sorters and counters through
an agreement called, ‘Employment Contract for Handicapped Worker.’ The Labor Arbiter and
NLRC ruled that Article 280 was not controlling as complainants were hired as an
accommodation to the recommendation of civic oriented personalities whose employments were
covered by Employment Contracts with special provisions on duration of contract as specified
under Art. 80. Hence, the terms of the contract was be the law between the parties.
Complainants allege that the contracts served to preclude the application of Article 280 and to
bar them from becoming regular employees. Company F submits that complainants were hired
as special workers under Art. 80 of the Labor Code and they never solicited the services of
petitioners. Were complainants regular employees?
A: Yes. The enactment of RA 7277, the Magna Carta for Disabled Persons, justify the
application of Art. 280 of the Labor Code. Such law mandates that a qualified disabled
employee should be given the same terms and conditions of employment as a qualified able
bodies person. The fact that complainants were qualified disabled persons removes the
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employment contracts from the ambit of Art. 280, since the Magna Carta accords them the
rights of qualified able-bodied persons. The task of complainants was necessary and desirable
in the usual trade of the employer and therefore they should be deemed regular employees.
(Bernardo v. NLRC, 310 SCRA 186, July 12, 1999)
Q: A labor dispute arose between Company Y and Union A, which caused the union to file a
notice of stricke with the NCMB charging the company with ULP for union-busting and violations
of the CBA. This was followed by picketing and the holding of assemblies by the union outside
the gate of Company P’s plant. The Secretary of Labor assumed jurisdiction over the labor
dispute and certified it for compulsory arbitration. During the pendency of the labor dispute,
Company Y agreed to sell it’s plant and equipment to Company Z. The union was informed of
the purchase of the plant. Company Z asked the union to desist from picketing outside its plant.
The Union refused petitioner’s request, and Company Z filed a compalint for injunction. The
Union moved to dismiss the complaint alleging lack of jurisdiction on the part of the trial court
and that Company Z was an alter ego of Company Y and not merely an “innocent by-stander.”
A: An “innocent by-stander,” who seeks to enjoin a labor strike, must satisfy the court that its
interests are totally foreign to the context of the labor dispute. It must appear that the inevitable
result of its exercise is to create an impression that a labor dispute with which they have no
connection or interest exists between them and the picketing union or constitutes an invasion of
their rights. In this case, Company Z clearly has a connection with the labor dispute as the sale
between Company Y and Company Z reveals a legal relation between them that cannot be
ignored. (MSF Tire and Rubber, Inc. v. CA, 311 SCRA 784, August 5, 1999)
Q: M was employed by petitioner as a truck driver. One day, he was accused of tampering with
the “vale” sheet and he was subsequently barred from entering company premises. M filed a
complaint of illegal dismissal against private respondent before the NLRC. A copy of the
summons was sent to petitioners by registered mail and was duly received and signed. The
petitioner was also notified of the hearing date by registered mail but no one appeared for the
petitioner. The Labor Arbiter deemed petitioners’ non-appearance as a failure to controvert the
facts as claimed by M and decided the case ex-parte. The petitioners allege that they never
received copies of summons or notices and that the Labor Arbiter never acquired jurisdiction
over them, as there was no valid service of summons. Were the petitioners denied due
process?
A: No. The bare assertion of petitioner that the persons who signed the summons which were
sent by registered mail were “impostors or persons unknown to them” requires substantiation by
competent evidence. In quasi-judicial proceedings of the NLRC, procedural rules governing
service of summons are not strictly construed and substantial compliance is therefore sufficient.
Further, official duty is presumed to have been performed regularly unless the contrary is
proven. In administrative proceedings, due process simple means the opportunity to explain
one’s side or seek a reconsideration of the action complained of. Petitioners were able to file an
appeal before the NLRC of the Labor Arbiter’s decision and a party who has availed of the
opportunity to present his position cannot claim to have been denied due process.
The Court also ruled that M was constructively dismissed when he was accused of
tampering with the vale sheet and prevented from going to work. The assertion of petitioner that
M abandoned his work is also without merit as it is highly illogical for an employee to abandon
his employment and thereafter file a complaint for illegal dismissal. Even assuming that there
was abandonment, there was non-compliance with the statutory requirement of notice; therefore
M is entitled to separation pay and backwages. (Masagana Concrete Products v. NLRC, 313
SCRA 576, 3 September 1999)
Q: L was employed by NAPCO-Luzmart, which was managed by petitioner Garcia. A mauling

incident occurred in the company premise involving L and another employee. The following day
after the incident, L submitted his written explanation of the event. 3 days later, L attempted to
report for work but the company refused to admit him. L immediately filed a complaint for illegal
dismissal with the NLRC. After the company knew of the illegal dismissal charge against it, a
memorandum was issued ordering the suspension of L. The company asserted that L remains
an employee and was merely suspended for a month. Proof of this, the company presented the
payrolls where the name of L continued to be listed as a regular employee during the period
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after the alleged illegal dismissal. The company claimed that L abandoned his work when he
failed to report for work after notice of return. Was L illegally dismissed?
A: The Court ruled that the payroll is of doubtful probative value, as it does not contain the
signature of employees as proof that they received their salaries for the said period. For a valid
finding of abandonment, two factors must be present: (1) failure to report for work without any
valid or justifiable reason; and (2) a clear intention to sever the employer-employee relationship
manifested by some overt acts. It was the company who refused him entry into the work place
and made it impossible for him to return to work. Moreover, the filing of the complaint for illegal
dismissal 7 days after the alleged dismissal negates said charge.
Although fighting within company premises may be considered as a serious misconduct
under Article 282 of the Labor Code, not all fights within company premises would warrant
dismissal. This is especially true if the employee did not instigate the fight and it appears from
the facts of the case that L was just defending himself from the assault of a co-employee.
The company was ordered to reinstate L and pay backwages computed from the date of
illegal dismissal. (Garcia v. National Labor Relations Commission, 313 SCRA 597, 3
September 1999)
Q: In a case of illegal dismissal against the petitioner, the Labor Arbiter ruled that the dismissal
of P was illegal and awarded damages, separation pay and backwages. The company filed a
Motion for Appeal and a Motion to Reduce Appeal Bond before the NLRC reiterating that P
voluntarily resigned and was not illegally dismissed. Petitioners argued that considering the
authorized capital stock of the corporation was only P2, 000,000.00, an award of P1,
870,000.00 as backwages alone was excessive and initially posted only a P50,000.00 cash
bond. The NLRC denied the Motion to Reduce the Appeal Bond. The NLRC gave the company
three extensions (totaling 30 days) for them to comply with the appeal bond requirement. A
certain R, wife of the company’s chairman, posted the required bond. Yet when R learned that
she was not under any obligation to post the bond on behalf of her husband, she withdrew the
bond. Should petitioners still be made to post another bond?
A: Yes. Since effectively, no appeal bond was posted by petitioners, no appeal was perfected
from the decision of the Labor Arbiter, for which reason the decision sought to be appealed to
the NLRC became final and executory and immutable. The requirement of cash or surety bond
to perfect an appeal from the Labor Arbiter’s monetary award is jurisdictional; non-compliance is
fatal and renders the award final and executory. It is not an excuse that the bond of P2 million is
too much for a small business enterprise. The law does not require outright payment but only
the posting of a bond to ensure that the award will eventually be paid should the appeal fail.
(Biogenerics Marketing and Research Corporation v. NLRC, 313 SCRA 748, 8 September
1999)
Q: X was employed by petitioner Restaurante Las Conchas while the latter was involved in a
legal battle with company Y over the land being allegedly occupied by the petitioner. Company
Y was able to obtain a favorable judgment which eventually caused petitioner to vacate the
premises. As no other suitable location was found for petitioner to move, the restaurant was
forced to close down, thereby resulting in the termination of employment of X. No separation
pay was given to X based on the argument of petitioner that only closure of business not due to
business losses mandates payment of separation pay to dismissed employees. Should
separation be given and should the manager of the Restaurante Las Conchas be held liable as
a corporate officer?
A: The Court rules that the burden of proof that business losses actually occurred rests on the
employers. Since no statements of assets and liabilities certified by a CPA or accounting firm
was offered, nor the corporation’s Income Tax Return certified by the BIR was shown, such
business losses were not proven. As regards the liability of the manager, generally, the officers
and members of a corporation are not personally liable for the acts done in the performance of
their duties. An exception is when the employer corporation is no longer existing and is unable
to satisfy the judgment in favor of the employees. In such a case, the officers should be held
liable for acting on behalf of the corporation. (Restaurante Las Conchas and/or David
Gonzales vs. Llego, 314 SCRA 24, Sept. 9, 1999)
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Q: X was hired by Respondent under a 2 year contract in Kuwait. Only after 1 year, however, X
was terminated from employment and was sent back to the Philippines. X then filed a complaint
for illegal dismissal with the Labor Arbiter. Respondents were given by the Labor Arbiter 10
days to answer the charges against. Respondents submitted a bill of particulars instead alleging
that X was lacking in the required narration of facts constituting the causes of action. X, on the
other hand, moved to declare respondents in default for failing to submit their position papers.
Both parties agreed that the Labor Arbiter should decide on the motion on the Bill of Particulars.
The Labor Arbiter, however, declared the respondents in default for failure to submit their
position papers within the period given. Were the respondents denied due process?
A: Yes. The court rules that there was denial of due process since no notice or order requiring
respondents to file their position paper, nor an order informing the parties that the case was
already submitted for decision. There was an utter absence of opportunity to be heard at the
arbitration level. What the Labor Arbiter should have done was to rule on the pending motions,
or at least notify private respondents that he would no longer resolve their motions, and to direct
them forthwith to submit within a reasonable time their position paper as well as all the
evidence. (Habana vs. NLRC, 314 SCRA 187, September 1999)
Q: Petitioner X was an Italian citizen who was the Exec. Vice President and Gen. Manager of
Company Y when he was terminated by the latter. X then filed a complaint for illegal dismissal.
Company Y based the dismissal of X on the ground that X failed to secure his employment
permit. X, on the other hand, argued that it was the duty of the company to secure his work
permit during the term of his office. The Labor Arbiter rendered a decision in favor of X.
Company Y however appealed such decision to the NLRC. X now questions the jurisdiction of
NLRC as he is a corporate officer, it is the SEC who should have jurisdiction. Did the NLRC
have jurisdiction over the case?
A: No. According to Sec 5(c) of P.D. No. 902-A, the SEC exercises exclusive jurisdiction over
controversies over regarding the election and/or designation of directors, trustees, officers, or
managers of a corporation, partnership or association. Jurisdiction therefore is not which the
Labor Arbiter nor the NLRC. (De Rossi vs. NLRC, 314 SCRA 245, September 1999)
Q: Respondent X was hired by the Blue Dairy to work as a food technologist in the latter’s
laboratory. One day however, while attending to a client outside company premises as
accompanied by the company driver, the vehicle was hit by a post, as there was a typhoon.
Afterwards, X was then transferred from the laboratory to the vegetable processing section; she
was then barred from the laboratory. X claims that she was constructively dismissed as she was
evidently demoted. Was X constructively dismissed from work?
A: Yes. The Court rules that although the employer has managerial prerogative to transfer
personnel, such must be exercised without grave abuse of discretion. The employer has the
burden of proof to show that such transfer was 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 company in this case, alleges that the reason for the transfer was loss
of trust and confidence. X however, was never given the chance to refute such reason, nor was
she notified in advance of the transfer. (Blue Dairy Corporation vs. NLRC, 314 SCRA 401,
September 1999)
Q. A check was mis-posted, resulting in an overstatement of a client’s outstanding daily

balance. The President of the bank sent a letter to petitioner to explain the mis-posting.
Internal auditors, after investigation, reported that petitioner was liable, and the bank notified her
that 20% of the amount would be deducted from her salary. Upon petitioner’s demand for a full-
dress investigation, she was informed of her preventive suspension until the end of the
investigation. Petitioner then filed a complaint for illegal dismissal and damages. Was she
illegally dismissed? Did filing of damages amount to abandonment of work?
A. Yes, her preventive suspension was without valid cause since she was suspended outright.
Preventive suspension beyond the maximum period amounts to constructive dismissal.
Likewise, her claim for damages did not amount to abandonment of work. To constitute
abandonment, these should concur: 1. Failure to report for work or absence without valid or
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justifiable cause; and 2. A clear intention to sever the employee-employer relationship (more
determinative factor manifested by over acts). She merely took steps to protest her indefinite
suspension. Her failure to report for work was even due to her indefinite suspension.
(Premiere Dev’t Bank v. NLRC)
1998 CASES
Q. In an illegal dismissal case, the Labor Arbiter ruled in favor of the worker. The total
monetary award was more than ONE MILLION Pesos. The employer appealed and posted a
bond in the amount of P700,000.00 only. In computing the monetary amount for the purpose of
posting an appeal bond, the employer excluded the award for damages, litigation expenses and
attorney’s fees. Is the employer’s computation correct?
A. Yes, the computation of the monetary award is correct. Under the NLRC New Rules of
Procedure, an appeal is deemed perfected upon the posting of the bond equivalent to the
monetary award “exclusive of moral and exemplary damages as well as attorney’s fees.” The
said implementing rule is a contemporaneous construction of Article 223 of the Labor Code by
the NLRC pursuant to the mandate. The exclusion of moral and exemplary damages and
attorney’s fees from the computation of the monetary award has been recognized by the
Supreme Court in a number of cases. (Fernandez v. NLRC, 285 SCRA 149, January 28,
1998)
Q. Reynaldo worked as a bus driver for Nelbusco, Inc.. On February 28, 1993, the
airconditioning unit of the bus which Reynaldo was driving suffered a mechanical breakdown.
The company told Reynaldo to wait until the airconditioning unit was repaired. No other bus
was assigned to Reynaldo to keep him gainfully employed. Reynaldo continued reporting to his
employer’s office for work, only to find out that the airconditioning unit had not been repaired.
More than six months elapsed but Reynaldo was not given work. He filed a complaint for illegal
dismissal. The NLRC ruled that there was no illegal dismissal. Is the ruling correct?
A. No, the ruling is erroneous. Under Article 286 of the labor Code, the bona fide suspension of
the operation of a business or undertaking for a period not exceeding six months shall not
terminate employment. Consequently, when the suspension exceeds six months, the
employment of the employee shall be deemed terminated. By the same token and applying
said rule by analogy, if the employee was forced to remain without work or assignment for a
period exceeding six months, then he is in effect constructively dismissed. The so-called
“floating status” of an employee should last only for a legaly prescribed period of time. When
that “floating status” lasts for more than six months, he may be considered to have been illegally
dismissed from the service. (Valdez v. NLRC, 286 SCRA 87, February 9, 1998)
Q. An employer appealed a Writ of Execution issued by the Labor Arbiter claiming that it had
varied the tenor of the judgment. The NLRC dismissed the appeal stating that it had lost
jurisdiction over the case. The NLRC stated that an order of execution is not merely
interlocutory but final in character and that after a decision has become final, the prevailing party
becomes entitled as a matter of right to its execution. Is the dismissal of the appeal correct?
A. No, the dismissal of the appeal is erroneous. The NLRC’s ruling is based on the general
rule that after a decision has become final, the prevailing party becomes entitled as a matter of
right to its execution, that it becomes merely the ministerial duty of the court to issue the
execution. This general rule cannot be applied, however, whhere the writ of execution is
assailed as having varied the decision. In this case, the employer alleged that the writ of
execution materially altered the decision. If this allegation is correct, the appellant is entitled to
the remedy of appeal. The NLRC is vested with authority to look into the correctness of the
execution of the decision and to consider supervening events that may affect such execution.
(SGS Far East Ltd. V. NLRC, 286 SCRA 335, February 12, 1998)
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Q. Federico was a regular work pool employee of PNCC. He was employed in 1971 and
worked in various construction projects of PNCC. IN 1979, he worked for a project of PNCC in
the Middle East with a salary of $2.20 per hour. After the completion of the project in 1984,
Federico returned to the Philippines. PNCC then failed to give him work in its local projects.
Consequently, Federico filed a complaint for illegal dismissal and obtained a ruling in his favor.
When the backwages were computed, the NLRC used Federico’s salary rate in the Middle East.
PNCC questions the correctness of the computation and claimed that the computation should
be based on Federico’s local wage rate at the time of his transfer to the overseas project.
Decide.
A. The NLRC’s computation is erroneous. Federico was not illegally dismissed while working in
the Middle East project. He was dismissed from the work pool after the completion of the
Middle East project. If Federico were given local assignments after his stint abroad, he would
have received the local wage. This is the “loss” which backwages aim to restore. The
computation should be based on the local rate. (PNCC v. NLRC, 286 SCRA 329, February 12,
1998)
Q. Alleging serious business losses, Edge Apparel implemented a retrenchment program by

phasing out its sewing line for simple garments. The workers assigned to this particular sewing
line were terminated. The other lines were maintained. In the illegal dismissal case filed by the
dismissed workers, the NLRC upheld the legality of the dismissal but treated such dismissal as
due to redundancy. Was the dismissal due to redundancy?
A. No, the dismissal was due to a retrenchment program. In exercising its right to retrench
employees, the firm may choose to close all, or a part of, its business to avoid further losses or
mitigate expenses. The fact that only the dismissed employees’ sewing line was phased out
does not make their termination a case of redundancy. Redundancy exists where the services
of an employee are in excess of what would reasonably be demanded by the actual
requirements of the enterprise. A position is redundant when it is superfluous. Retrenchment,
in contrast to redundancy, is an economic ground to reduce the number of employees. In order
to be justified, it must be due to business losses which are serious, actual and real. In this
case, the phasing out of the line for simple garments and, consequently, the termination of
employees assigned to such line, was due to serious business losses. Hence, it constitutes
retrenchment. (Edge Apparel, Inc. v. NLRC, 286 SCRA 303, February 12, 1998)
Q. Simultaneous with the filing of the appeal, the appellant-employer filed a motion to reduce
the amount of the bond. The motion was partially granted. In the order partially granting the
motion to reduce the amount of the bond, the NLRC directed the appellant to post the bond
within ten (10) days from receipt of the order. Instead of filing the bond, the appellant employer
filed a motion for reconsideration of the NLRC’s order reducing the amount of the bond.
Because of the appellant employer’s failure to post the bond, the NLRC dismissed the appeal.
Is the NLRC’s ruling correct?
A. Yes, the ruling is correct. To have the bond reduced is not a matter of right on the part of the
appellant but lies within the sound discretion of the NLRC upon showing of meritorious grounds.
After the NLRC had exercised its discretion in fixing the bond, the appellant should have
complied with it. To file a subsequent motion seeking another reconsideration of the already
reduced amount of the bond is to request for an extension of time to perfect an appeal which is
prohibited. (MERS Shoes Manufacturing, Inc. v. NLRC, 286 SCRA 647, February 27, 1998)
Q. Juana is a worker in Del Monte Phil., Inc.. The company rules provide for an Absence
Without Permission (AWOP) Policy. If the worker intends to be absent from work, he should
first file an application for leave and wait for its approval before going on leave. The first
offense is punishable by oral reprimand; 2nd offense – written reprimand; 3rd offense – 1-7 days
suspension; 4th offense – 8-15 days suspension; 5th offense – 16-30 days suspension; and 6th
offense – dismissal. From 1992-1994, Juana incurred 57 AWOP. Without initially penalizing
Juana for her past AWOP, the company dismissed her from service in 1994.
(a) Is the dismissal valid?
(b) Can Juana be considered to have abandoned her job due to her intermittent absences
without permission?
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A. (a) No, the dismissal is not valid. The rule is that an employer’s power to discipline its
workers may not be exercised in an arbitrary manner as to erode the constitutional guarantee of
security of tenure. In this case, the company rules provide for a graduation of penalties for
violation of the AWOP policy. Even granting that Juana incurred previous AWOPs as far back
as 1992, the company should have initially penallized her with reprimand or suspension for her
previous AWOPs instead of dismissing her outright from service.
(b) No, Juana did not abandon her job. Abandonment, as a just and valid ground for
termination, means the deliberate, unjustified refusal of an employee to resume his
employment. The burden of proof is on the employer to show a clear and deliberate intent on
the part of the employee to discontinue employment. The intent cannot be lightly inferred from
certain equivocal acts. For abandonment to be a valid ground for dismissal, two elements must
be proved: the intention of an employee to abandon, coupled with an overt act from which it
may be inferred that the employee has no more intent to resume his/her work. In this case,
these elements are not present. (Del Monte Philippines, Inc. v. NLRC, 287 SCRA 71, March
5, 1998)
Q. Ernesto was employed by Baliwag Transit as a bus driver. On May 20, 1983, the bus
driven by Ernesto was heavily damaged in an accident with two other vehicles. Ernesto was
“grounded” and was advised by Baliwag Transit to wait for the result of the police investigation
and the actions that may be taken by the owners of the other vehicles. Ernesto paitiently
waited. Realizing that he has waited too long, Ernesto on December 11, 1986 requested
Baliwag Transit to reinstate him. Baliwag Transit formally informed him to look for another job
because the management has terminated his services on account of the vehicular accident.
On November 15, 1990, Ernesto filed a complaint for illegal dismissal. The labor arbiter
dismissed the complaint on the ground that Ernesto’s action is barred by prescription since it
was filed more than four years from the accrual of the cause of action on May 20, 1983. Is
Ernesto’s action barred by prescription?
A. No, the action is not barred. The four year period should not be reckoned from the time of
the accident on May 20, 1983 because Ernesto was not yet considered terminated at that time.
He was merely “grounded” and advised to wait. Ernesto’s cause of action accrued only in
December 1986 when baliwag Transit formally dismissed him from the service. Hence, the
action filed on November 1990 had not yet prescribed. (Mendoza v. NLRC, 287 SCRA 51,
March 5, 1998)
Q. Jose, a married man, was employed as a teacher by Hagonoy Institute. Likewise working
as a teacher for Hagonoy Institute was Arlene, also married. In the course of their employment,
Jose and Arlene fell in love and had a relationship. After complying with the procedural
requirements, Hagonoy terminated the services of the couple. Is the dismissal valid?
A. Yes, the dismissal is valid. The illicit relationship between Jose and Arlene can be
considered immoral as to constitute just cause to terminate the couple. To constitute
immorality, the circumstances of each particular case must be considered and evaluated in light
of the prevailing norms of conduct and applicable laws. In the present case, the gravity of the
charges against the couple stem from their being married and at the same time teachers.
Teachers must adhere to the exacting standards of morality and decency. A teacher, both in
his/her official and personal conduct, must display exemplary behavior. He/she must freely
and willingly accept restrictions on his/her conduct that might be viewed irksome by ordinary
citizens. Teachers must abide by a standard of personal conduct which not only proscribes the
commission of immoral acts, but also prohibits behavior creating a suspicion of immorality
because of the harmful impression it might have on students. (Santos v. NLRC, 287 SCRA
117, March 6, 1998)
Q. Philippine Airlines terminated the services of two flight stewards for their alleged involvement
in currency smuggling in Hong Kong. Instead of filing an illegal dismissal case with the Labor
Arbiter, the workers filed with the NLRC (Commission) a petition for injunction. The NLRC
issued a temporary mandatory injunction enjoining PAL to cease an desist from enforcing its
memorandum of dismissal. The NLRC further ruled that the filing of an illegal dismissal case
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with the Labor Arbiter was not an adequate remedy for the workers. Is the NLRC’s ruling
correct?
A. No, the NLRC’s ruling is erroneous. The power of the NLRC to issue an injunctive writ
originates from “any labor dispute”, i.e. a case between the contending parties before the labor
arbiter. In the present case, there is no labor dispute yet between the workers and PAL since
there has yet been no illegal dismissal complaint filed with the labor arbiter. The petition for
injunction directly filed before the NLRC is in reality an action for illegal dismissal. The petition
should have been filed with the labor arbiter who has the original and exclusive jurisdiction over
termination disputes. The Labor Code does not provide blanket authority to the NLRC or any of
its divisions to issue writs of injunction, considering that the New Rules of Procedure of the
NLRC makes injunction only an ancillary remedy in ordinary labor disputes. (PAL v. NLRC,
287 SCRA672, March 20, 1998)
Q. The factory workers of Sime Darby used to work from 7:45 a.m. to 3:45 p.m. with a 30-
minute paid “on call” lunch break. In 1992, Sime Darby issued a memorandum to all factory
workers advising them of a change in work schedule. The new work schedule eliminated the
30-minute paid “on call” lunch break and gave the workers a one-hour unpaid lunch break.
Under the new schedule, the workers will still work for eight hours per day. The workers filed a
complaint for unfair labor practice. Did the company commit any unfair labor practice when it
revised the work schedule?
A. No, the company did not commit any unfair labor practice. The right to fix the work
schedules of the employees rests principally on their employer. Under the old schedule, the
workers could be called upon to do jobs during their 30-minute paid lunch break. Under the
new schedule, the workers were given a one-hour lunch break without any interruption from
their employer. Thus, there is no need to compensate the workers for this period. Since the
new schedule applies to all employees in the factory whether union members or not, it is not
discriminatory. It cannot be said that this new scheme prejudices the workers’ right to self-
organization. Hence, there is no unfair labor practice in this case.
Q. Should the appeal bond be posted within the ten (10) day reglementary period for filing an
appeal from the Labor Arbiter’s decision?
A. As a general rule, yes. When the judgment involves a monetary award, an appeal by the
employer may be perfected only upon posting of a cash or surety bond in an amount equivalent
to the monetary award in the judgment appealed from. Compliance with the requirement of
posting a bond is both mandatory and imperative as the perfection of an appeal within the
reglementary period is jurisdictional. In a growing number of cases, however, the Supreme
Court has relaxed the stringent application of the rule concerning the posting of the appeal bond
within the ten (10) day reglementary period as a requirement for the perfection of an appeal.
The Supreme Court has allowed the filing of a motion for reduction of bond in lieu of the appeal
bond within the reglementary period for filing an appeal. In such case, the appeal bond may be
filed after the lapse of the reglementary period and after the resolution of the motion to reduce
the amount of the bond . (Alcosero v. NLRC, 288 SCRA 129, March 26, 1998)
Q. Roberto was a driver of Philtranco who was assigned to the Legaspi City-Pasay City route.
He was dismissed from the service. He filed a complaint for illegal dismissal before the NLRC’s
National Capital region Arbitration Branch in Manila. Philtranco filed a Motion to Dismiss
stating that the complaint should have been lodged with the NLRC’s Regional Arbitration Branch
in Legaspi City not only because Roberto was a resident thereof but also because the latter was
hired, assigned, and based in Legaspi City. Decide.
A. The Motion to Dismiss must be denied. The question of venue pertains to the trial and
relates more to the convenience of the parties rather than upon the substance and merits of the
case. Provisions on venue are intended to assure convenience for the plaintiff and his
witnesses and to promote the ends of justice. The New Rules of Procedure of the NLRC cited
by Philtranco speaks of the complainant’s workplace, evidently showing that the rule is intended
for the exclusive benefit of the worker. This being the case, the worker may waive said benefit.
Moreover, since Roberto was assigned to Legaspi City-Pasay City route, the filing of the
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complaint with the National Capital Region Arbitration Branch was proper, Manila being
considered as part of Roberto’s workplace. (Philtranco Service Enterprises, Inc. v. NLRC,
288 SCRA 585, April 1, 1998)
Q. Mario was hired to work on board the passenger cruise vessel Odyssey for 12 months as
utility man. When he boarded the vessel, he was unaware that there was an existing animosity
between the Filipino crew and the Greek crew. One day, a heated argument occurred between
Mario and a Greek deck steward, Zakkas, which resulted in a scuffle between the two. Zakkas
pushed Mario who fell hitting his head against the steel molding of the door. Mario suffered a
cut in the head. Prior to this incident, Zakkas and the other Greek workers continuously
ridiculed Mario. The night before the incident, Zakkas threatened to pour hot coffee on Mario’s
head. Mario reported the abuses to the ship captain but the latter just blamed Mario for joining
the ship. Because of his fear that further trouble may erupt between him and the Greek crew,
Mario left the ship. When he was repatriated to the Philippines, he filed a complaint for illegal
dismissal. The labor arbiter dismissed the complaint on the ground that Mario voluntarily
signed off from the vessel. Is the ruling correct?
A. No, the ruling is erroneous. Constructive dismissal exists when there is a quitting because
continued employment is rendered impossible, unreasonable or unlikely. In this case, Mario
quit because he feared for his life and his fear was well founded. His decision to leave the ship
was not voluntary but was impelled by a legitimate desire for self-preservation. The ship
captain, as the general agent of the ship owner, could be held responsible for failing to make the
workplace safe for Mario. This is a clear case of constructive dismissal. (Singa Ship
Managament Phils., Inc. v. NLRC, 288 SCRA 692, April 14, 1998)
Q. PISI is a duly licensed security agency. It hired Escobin and several other security guards to
work as guards in the premises of Basilan Plantations, Inc. in Basilan, Mindanao. Escobin and
his companions were residents of Basilan and heads of families. After working for five years as
guards in the plantation, Escobin and his group were placed under reserved or floating status.
This was due to the reduction of the security force ordered by Basilan Plantations, Inc.. Later,
the guards placed on reserved or floating status were instructed by registered letter to report to
PISI Head Office in Metro Manila for posting to PISI clients within Metro Manila. The guards
did not reply. A second letter was sent but the guards likewise failed to reply. PISI sent
individual letters to the guards ordering them to explain why no disciplinary action should be
taken against them for failing to comply with PISI’s order. The guards did not send their
answers to PISI. PISI dismissed the guards on the ground of insubordination or willful
disobedience to lawful orders of their employer. During the proceedings before the Labor
Arbiter, the guards justified their inability to comply with PISI’s order to report to the head office
in Metro Manila, saying: they were residents of Basilan, have families of their own in Basilan,
have never traveled beyond Visayas and Mindanao, not provided by PISI with fare money as
they cannot, on their own, finance their travel from Basilan to Manila. Assuming the allegations
of the guards were true, was the dismissal valid?
A. No, the dismissal was not valid. Disobedience, to be a just cause for termination, must be
willful and perverse mental attitude rendering the employee’s act inconsistent with proper
subordination. A willful or intentional disobedience justifies dismissal only when the rule, order
or instruction is (1) reasonable and lawful, (2) sufficiently known to the employee, and (3)
connected with the duties which the employee has been engaged to discharge. The
reasonableness and lawfulness of a rule depend on the circumstances of each case.
Reasonableness pertains to the kind or character of directives and commands and to the
manner in which they are ade. In this case, the order to report to the Manila office fails to meet
this standard. It was grossly inconvenient for the guards who were residents and heads of
families in Basilan. The guards were not provided with funds to defray their transportation and
living expenses. The dismissal in this case was too harsh a penalty for the insubordination
which was neither willful nor intentional. The guards’ failure to answer PISI’s show-cause
letters does not negate this conclusion as PISI granted other guards a second chance to
explain, an opportunity it denied Escobin and his group. (Escobin v. NLRC, 289 SCRA 48,
April 15, 1998)
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Q. Drivers/salesmen and truck helpers of a softdrinks merchandiser filed a case for illegal
dismissal, underpayment of wages, and other claims. The Labor Arbiter decided, among
others, that the employer had not complied with the minimum wage requirements. In arriving at
this conclusion, the Labor Arbiter refused to include the commissions paid to the workers in
determining compliance with the minimum wage requirement. As part of their compensation,
the workers received commissions per case of softdrinks sold. Is the Labor Arbiter’s ruling
correct?
A. No, the ruling is erroneous. The definition of the term “wage” in the Labor Code explicitly
includes commissions. While commissions are incentives or forms of encouragement to inspire
workers to put a little more industry on their jobs, still these commissions are direct
remunerations for services rendered. There is no law mandating that commissions be paid
only after the minimum wage has been paid to the worker. The establishment of a minimum
wage only sets a floor below which an employee’s remuneration cannot fall, not that
commissions are excluded from wages in determining compliance with the minimum wage law.
(Iran v. NLRC, 289 SCRA 433, April 22, 1998)
Q. In a complaint for illegal dismissal and unfair labor practices, judgment was rendered in favor
of Buda Labor Union. The Labor Arbiter ordered the company, Buda Enterprises to reinstate
the individual complainants and to pay them full backwages. The decision became final and
executory and a writ of execution was issued. Parcels of land allegedly belonging to Buda
Enterprises, but later found to be registered under the names of Co Tuan, S. Ang, J. Lim, and E
Gotamco, were levied upon. Upon learning of such levy, Co Tuan and his three other relatives
filed an Urgent Motion to Quash the Writ of Execution claiming that they hold valid and lawful
title to the said properties by virtue of the “Extra-judicial Settlement and Sale of the Estate of the
Deceased Edilberto Soriano” executed by the heirs. None of the heirs, except Lourdes
Soriano, the proprietress and manager of Buda Enterprises, were parties in the labor case.
The motion was granted. The workers appealed and asked the Commission to order the Labor
Arbiter to implead the movants, praying that the sale between the movants and Buda
Enterprises be declared void. Is the NLRC competent to determine the legality of the sale?
A. No. The power of the NLRC to execute its judgment extends only to properties
unquestionably belonging to the judgment debtor. If the property under levy does not belong
to the judgment debtor in the NLRC case, it could not be levied upon by the sheriff for the
satisfaction of the judgment therein. Even upon a mere prima facie showing of ownership by
the third-party claimant, if the third party claim does not involve nor grows out of a labor dispute,
a separate action for injunctive relief against such levy may be maintained in court. If there is
suspicion that the sale of properties was not in good faith, i.e. was made in fraud of creditors,
the NLRC is incompetent to make a determination . The task is judicial and the proceedings
must be adversary. (Co Tuan v. NLRC, 289 SCRA 415, April 22, 1998)
Q. The Regional Wage Board for Region X issued Wage Order No. RX-01. Three corporations
filed applications for exemption as “distressed establishments” under Guidelines No. 3 issued by
the Regional Wage Board. Under the Regional Wage Board’s guideline, a corporation is a
“distressed establishment” if it is engaged in an industry that is “distressed due to conditions
beyond its control.” This criterion is different from the criterion laid down in the guidelines
promulgated by the National Wages and Productivity Commission. Should the applications be
granted pursuant to the Regional Wage Board’s guidelines?
A. No, the applications should be denied. The law grants the NWPC, not the Regional Wage
Board, the power to “prescribe the rules and guidelines” for the determination of minimum wage
and productivity measures. While the Regional Wage Board has the power to issue wage
orders, such wage orders are subject to the guidelines prescribed by the NWPC. Since the
Regional Wage Board’s Guideline No. 3 was not approved by the NWPC and is contrary to
NWPC’s guidelines, the said guideline issued by the Regional Wage Board is inoperative and
cannot be used by the latter in deciding on the applications for exemption. (Nasipit Lumber
Company, Inc. v. NWPC, 289 SCRA 667, April 27, 1998)
Q. Virginia was an employee of Judy Philippines, Inc.. Because of her erroneous assortment
and packaging of 2,680 dozens of infant wear, the company dismissed her from employment on
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the ground of gross negligence. Virginia committed the infraction for the first time. Is the
dismissal valid?
A. No, the dismissal is invalid. Gross negligence implies a 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. Article 282 (b) of the
Labor Code requires that such neglect must not only be gross, it should be “gross and habitual
neglect”. The penalty of dismissal is quite severe here since the worker committed the
infraction for the first time. (Judy Philippines, Inc. v. NLRC, 289 SCRA 755, April 29, 1998)
Q. In an illegal dismissal case filed by security guards of Scout Security Agency, the labor
arbiter held Rosewood, Inc., the principal, jointly and severally liable with the security agency for
wage differential, backwages, and separation pay. The labor arbiter stated that Rosewood was
liable as the guards’ indirect employer under Arts. 106, 107, and 109 of the Labor Code.
Rosewood appealed claiming that it had no participation in the illegal dismissal of the guards.
Assuming Rosewood’s claim is true, should the labor arbiter’s ruling be reversed?
A. Yes, the labor arbiter’s ruling should be reversed. Under the Labor Code, an employer is
solidarily liable for legal wages due security guards for the period of time they were assigned
to it by its contracted security agency. However, in the absence of proof that the employer
itself committed the acts constitutive of illegal dismissal or conspired with the security agency in
the performance of such acts, the employer shall not be liable for backwages and/or
separation pay arising as a consequence of such unlawful termination. (Rosewood
Processing, Inc. v. NLRC, 290 SCRA 408, May 21, 1998)
Q. In an illegal dismissal case, the Labor Arbiter upheld the validity of a retrenchment program
implemented by a mining company. As basis for the ruling, the Labor Arbiter took “judicial
notice” of the economic difficulties suffered by the mining sector. Is the ruling correct?
A. No, the ruling is erroneous. Jurisprudence prescribes the minimum standards necessary to
prove the validity of a retrenchment: (a) the losses expected must 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 this
case, the retrenchment cannot be considered valid on the basis of the “judicial notice” taken by
the Labor Arbiter. (Anino v. NLRC, 290 SCRA 489, May 21, 1998)
Q. Included in a complaint for illegal dismissal is a claim for night shift differentials. The
employer did not deny that the complainant rendered night shift work. The labor arbiter
dismissed the claim for night shift differentials because the complainant allegedly failed to
substantiate his claim for night shift differentials. Is the ruling correct?
A. No, the ruling is erroneous. The fact that the complainant neglected to substantiate his claim
for night shift differentials is not prejudicial to his cause. The burden of proving payment rests
on the employer. The worker’s claim of non-payment of this benefit is a negative allegation
which need not be supported by evidence. The worker cannot adequately prove the fact of
non-payment of the night shift differentials since the pertinent employee files, payrolls, records,
and other similar documents are not in his possession but in the custody and absolute control of
petitioner. By choosing not to fully and completely disclose information to prove that it had paid
all the nights shift differentials due the worker, the employer failed to discharge the burden of
proof. (National Semiconductor Distribution, Ltd. V. NLRC, 291 SCRA 348, June 26, 1998)
Q. After the Labor Arbiter dismissed a complaint for illegal dismissal, the worker appealed. The
employer was not furnished a copy of the memorandum of appeal. Thus, the employer was not
aware of the appeal and did not participate in the appeal interposed by the worker. Without
the employer’s participation, the NLRC reversed the Labor Arbiter’s decision and ruled in favor
of the appellant worker. Is the decision valid?
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A. No, the NLRC’s decision is null and void. It is a cardinal rule in law that a decision or
judgment is fatally defective if rendered in violation of a party-litigant’s right to due process.
The fault lies with the NLRC and not with the appellant worker. While the New Rules of
Procedure of the NLRC require proof of service of the appeal on the other party, non-
compliance therewith will present no obstacle to the perfection of the appeal nor does it amount
to a jurisdictional defect to the NLRC’s taking cognizance thereof. While the law excuses the
appellant from notifying the other party of the appeal, no reason can be given by the NLRC that
would exempt it from informing the latter of the appeal and giving it an opportunity to be heard.
The case should be set for further proceedings to afford the employer the opportunity to be
heard. (Philippine National Construction Corporation v. NLRC, 292 SCRA 266, July 10,
1998)
Q. In their answer to a case for illegal dismissal, the employer filed position papers supported by
affidavits. Subsequently, the Labor Arbiter ordered the company to pay wage differentials and
other benefits. They appealed to the NLRC by filing a supplemental memorandum to correct
and amplify inadequate allegations and certain omissions. In this appeal, the seek to introduce
new evidence to prove that there was no employee-employer relationship. Should the NLRC
admit new evidence?
A. No. Hearings had already been scheduled, yet the employer chose merely to submit position
papers. As such, the company had every opportunity to submit before the labor arbiter the
evidence which they sought to adduce before the NLRC. (Santos v. NLRC; July 23, 1998)
Q. Petitioner was employed as Accounting Manager entrusted with the evaluation and
assessment of contacts. A contractor complained that petitioner was asking two thousand
pesos for every contract the contractor gets from the company. Petitioner admitted having
accepted money on four different occasions. The company terminated petitioner on this ground.
Was she validly dismissed?
A. Yes, the company’s reliance on petitioner’s assessment of contracts was based primarily on
trust and confidence. Her acceptance of money, even if voluntary on the contractor’s part, casts
doubt on her integrity. Having occupied a managerial position, petitioner maybe dismissed on
the ground of loss of trust and confidence. Even if she was a first-time offender, a company
may resort to acts of self-defense against a managerial employee who has breached their trust
and confidence. Furthermore, each of the four occasions is treated as a separate offense;
hence, militating her plea of first infraction. (Villanueva v. NLRC; July 27, 1998)
Q. Petitioners were dismissed from service after they were asked by the company to go through
drug-tests, as the company received information that they were smoking something (‘shabu’)
inside the work premises. Petitioners and the company submitted their respective position
papers on the incident. The Labor Arbiter found the dismissal based on the position papers as
valid which the NLRC affirmed. Can a full-blown trial be dispensed with by the labor arbiter?
A. Yes. Rules of evidence in courts shall not be controlling in any case brought before the
commission (Art. 221, LC). The Labor Code allows the labor arbiter and NLRC to decide the
case based on position papers and other documents. The holding of a trial is discretionary on
the labor arbiter and cannot be demanded as a matter of right by the parties. (Suarez v. NLRC;
July 31, 1998)
Q. A supervisory employee labor organization was issued a charter certificate by a national

federation to which the company’s rank and file union was also affiliated` with. It filed a petition
for certification election, opposed by the company because the union was allegedly composed
of both supervisory and rank and file employees since both unions are affiliated with the same
federation. Should the petition for certification elections be granted?
A. Yes. The affiliation of two local unions in a company with the same national federation is not
a negation of their independence (as unions) since in relation to the employer, the local unions
are considered as principals while the federation is deemed as their agent. The locals are
separate from each other and their affiliation with the same federation would not make them
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members of the same labor union. A supervisory organization is prohibited from joining the
same federation as that of the rank and file organization only if two conditions are present: 1.
The R & F employees are directly under the authority of supervisory employees and 2. The
national federation is actively involved in union activities in the company. (DLSU Medical
Center v. Laguesma; August 12, 1998)
Q. Private respondents were employed by PAL with a salary of P1,860. They got a salary
increase of P400/mo. for a total monthly compensation of P2,260 under the CBA.
Subsequently, RA 6640 was passed raising the minimum wage of worker. Their salaries were
adjusted again by adding P304 pursuant to the RA thus their total gross pay amounted to
P2,565. After four months, they were promoted and their basic pay of P1,860 was raised to
P2,300/mo. plus the CBA wage increase of P400/mo. thereby making their gross pay to
P2,700/mo.. The employees were not satisfied with their gross pay, invoking the P304 wage
increase under RA 6640. PAL however refused claiming that the increase of P440 which is the
difference between their new basic salary and their old basic salary (P2,300-1,860) was
sufficient compliance with the RA. Thus respondents instituted an action against PAL for
violations of RA 6640. Is the salary increase of the employees sufficient compliance with RA
6640? Should the CBA increase be credited to the wage increase under the RA?
A. No. Sec. 7 of the RA prohibits the diminution of existing benefits and allowances by workers.
Consequently, it was improper and not allowed by law for petitioner to apply or consider as
compliance, with the mandated wage hike of its workers, the salary increases corresponding to
their promotion in rank. Unlike the Wage Order Nos. 5 and 6 in the Apex ruling, there is no
creditability provision in RA 6640. It was not the intention of Congress to credit salary increases
by reason of CBA wage adjustments or promotions in rank for the mandated wage increase.
(PAL v. NLRC; Sept. 3,1998)
Q. Complaints for illegal dismissal were filed against respondent. Summons and notices of
hearings were sent to the respondent which were received by its bookkeeper. Thereafter, the
labor arbiter rendered a judgment by default after finding that the respondent tried merely
evaded all the summons and notices by refusing to claim its mails. Respondent contends that
the he was not validly served with summons since the bookkeeper cannot be considered an
agent under the Rules of Court and thus the labor arbiter never acquired jurisdiction over
respondent. Did the labor arbiter acquire jurisdiction over respondent?
A. Yes. Procedural rules are liberally construed and applied in quasi-judicial proceedings.
Substantial compliance in this case is considered adequate. The bookkeeper can be
considered an agent because his job is integrated with the corporation. (Pabon v. NLRC, Sept.
24,1998)
Q. Can a company, dissatisfied with the decision of the Labor Arbiter, file a Motion to Amend
the Order of the Labor Arbiter more than a month after the date of issuance of the Order?
A. No. To allow the amendment of the order will result in the circumvention of Sec. 17 of the
Rules of Procedure of the NLRC which provide that “No Motion for Reconsideration of any order
or decision of the Labor Arbiter shall be allowed.” To permit this would only allow the petitioner
to violate the statutory 10-day period requirement for appeal. (Schering Employees Labor
Union v. NLRC, Sept. 25,1998)
Q. Respondent was first hired by SMC (engaged in the manufacture of glass) for a period of 4
months to repair and upgrade its furnace. 10 days after his first contract ended, he was again
hired to drain another furnace for 3 months. Is he a project employee?
A. Yes. There are two kinds of project employees: 1.Those employed in a project usually
necessary or desirable in the usual trade or business (UNOD in UTOB) of the employer but is
separate and distinct from the other undertaking of the company; or 2.Those not UNOD in
UTOB but is also distinct and separate from the other undertaking of the company. But both
jobs begin and end at determined or determinable time. In the case at bar, the employee falls
under the second category. The process of manufacturing glass requires a furnace which is to
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be repaired only after being used continuously for varying period of 5-10 years. Therefore, the
job of the respondent is a project not UNOD in UTOB. (SMC v. NLRC, October 7,1998)
Q. Petitioner was employed as an assistant credit and collection manager. From the start, he
was informed that those not eligible for membership in the bargaining unit are not entitled to
CBA benefits, but to benefits at least equivalent or higher than that provided in the CBA.
Subsequently, petitioner was diagnosed with pulmonary disease, prompting him to apply for
optional retirement as provided by the CBA. He wished to retire on July 16,1992 but was asked
by the company to change it to April 30,1992. The employee, due to urgent need, agreed, for
which he received P100,000 as advances on his retirement pay. Could the employee avail of
the optional retirement benefit in the CBA? Could the employer vary the effective date of
retirement?
A. Yes, although managerial employees are not covered by the CBA, the employer voluntarily
agreed to grant them benefits at least equivalent or higher than that provided in the CBA. Thus,
this agreement is the applicable retirement contract under the Labor Code. Moreover, the
employer may vary the effective date of retirement as petitioner assented to the change, in
consideration for an advance of his retirement pay. So long as the agreement is voluntary and
reasonable, it is valid. (Martinez v. NLRC, October 12, 1998)
Q. Respondent employee was a truck driver who was dismissed because he allegedly drove
while drunk after he chase an office personnel with a knife. The incident resulted to the damage
of the ten-wheeler truck he drove. The employee only reported the incident on March 1993,
though it happened on December 1992. Prior to the accident, he was already caught stealing
diesel fuel from the company. As a result of these actions, he was dismissed for serious
misconduct. Was the dismissal valid? Can the company rely on past offenses to justify the
dismissal?
A. No, the reliance by petitioner corporation on his past offenses to justify his dismissal is
unavailing. The correct rule has always been that such previous offenses may be used as valid
justification for dismissal from work only if the infractions are related to the subsequent offense
upon which basis the termination is decreed. The vehicular accident causing damage to the
truck is not a just cause for dismissal. The penalty of dismissal is grossly disproportionate to the
offense of driving through reckless imprudence resulting in damage to property. He was
likewise deprived of due process as he was not afforded ample opportunity to be heard. If after
the thirty-day period the employee does not give his explanation of what happened, he must
again be sent a notice of dismissal stating the particular acts constituting the ground for
dismissal and an inquiry why he did not give his explanation. (La Carlota Planters Association
v. NLRC, October 27, 1998)
Q. PAL entered into a service agreement with STELLAR Corp., a corporation in the business of
job contracting janitorial services. After the agreement expired, PAL called for a bidding but in
the meantime allowed STELLAR to maintain the janitorial contract. Subsequently, PAL sent a
letter to STELLAR informing them that the contract would no longer be renewed. STELLAR,
terminated their services, so respondent employees filed a case for illegal dismissal against
PAL and STELLAR. The NLRC affirmed the decision of the labor arbiter finding the dismissal
illegal. Was there an employee-employer relationship existing between PAL and respondents?
And were they illegally dismissed?
A. No, there is no employee-employer relationship between PAL and the respondents. PAL is
not engaged in labor-only contracting evidenced by the service agreement that it would be
STELLAR who will employ the janitors. PAL was engaged in permissible job contracting and
the employees were employees of STELLAR not PAL. However, the employees were illegally
dismissed by STELLAR. They were regular employees not project employees. A project
employee must be employed in a project distinct, separate and identifiable from the main
business of the employer and its duration must be determined or determinable. While the
service agreement may have had a specific term, STELLAR disregarded it and repeatedly
renewed the agreement and continued hiring the respondents for thirteen years. (PAL. V.
NLRC, Nov. 9, 1998)
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Q. Several security guards of Sentinel Security, assigned to PHILAM were found to have been
illegally dismissed. Can PHILAM be made liable for the payment of backwages and separation
pay of the illegally dismissed employees?
A. Yes. Although an indirect employer should not be made liable without a finding that it had
committed or conspired in the illegal dismissal (Rosewood ruling), in the case at bar the
exoneration of PHILAM was not included in the DISPOSITIVE PORTION of the Court’s decision
despite the fact that it was clearly stated in the body of the decision that they were exonerated.
The decision did not completely exonerate PHILAM which, as an indirect employer is solidarily
liable with Sentinel for the complainants’ unpaid service incentive leave pursuant to Art. 106,
107 and 109 of the Labor Code. Should the contractor fail to pay the wages of its employees in
accordance with law, the indirect employer is jointly and severally liable with the contractor, but
such responsibility should be understood to be limited to the extent of work performed under the
contract, in the same manner and extent that he is liable to the employees directly employed by
him. (Sentinel Security v. NLRC, Nov. 16,1998)
Q. Producer’s Bank was placed by the Central Bank under a conservator to protect its assets.
When the retired employees sought the implementation of the CBA regarding their retirement
plan and uniform allowance, the conservator objected, resulting in an impasse between the
bank and the union. Should the CBA provisions be implemented, despite the bank’s status?
A. Yes. The conservator cannot rescind a valid and existing contract and the CBA is the law
between the contracting parties. Although the employees are already retired, retirement does
not affect their employment status when it involves all rights and benefits due them. The
retirement scheme was part of their employment package and the benefits under the scheme
constituted a continuing consideration for services rendered and effective inducement to remain
in the company. The employees were not pleading for the company’s generosity but were
demanding their rights under the CBA. (Producer’s Bank v. NLRC, Nov. 16,1998)
Q. After negotiations failed to produce any agreement, the exclusive bargaining agent of Coca-
Cola decided to file a notice of strike. Conciliation hearings were conducted but were
unavailing. The union conducted a strike vote on April 14, which shoed that the members were
in favor of conducting a strike. On April 20, the union staged the strike. The company filed a
petition to declare the strike illegal as it was staged without observing the mandatory seven-day
strike ban and that it was staged in bad faith. The company then fired alleged union officers by
virtue of the illegal strike. Was the strike legal? Was the termination of the employees (allegedly,
union officers) valid?
A. The strike was illegal for failure to observe the mandatory requirements of Articles 264 and
265 of the Labor Code. The failure of the union to observe the 7-day strike ban made the strike
illegal. While the strike vote was conducted around 7:30 am to 8:45 am and the strike held on
April 20 was around 8:30 am, the Civil Code states that in computing a period, the first day shall
be excluded and the last day included; hence the failure to observe 7 days. However, the
dismissal of the strikers was not valid. The employees were mere union members and not
officers who should not be dismissed unless they knowingly participate in illegal acts during a
strike. Although these employees signed the CBA, nowhere in these documents can it be found
that the cited employees signed it as union officers. Their active participation in the negotiations
did not render them union officers. (CCBPI Postmix Workers Union v. NLRC, Nov. 27,1998)
Q. A case for illegal dismissal was filed against Orlando Farms Growers Association, an
informal association of landowners engaged in the production of export quality bananas. Can an
unregistered association be considered an employer independently of the respective members it
represents?
A. Yes, being an unregistered association and having been formed solely to serve as an
affective medium for dealing collectively with another company is not an element of an
employee-employer relationship. The Labor Code does not require an employer to register
before he may come within the purview of the said law. (Orlando Farms Growers Association
v. NLRC, Nov. 25,1998)
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Q. Respondent employee was recruited for employment with Gulf Catering Company in Saudi
as a waitress. When she was deployed to Saudi, she was made to wash dishes, cooking pots
and utensils, janitorial work and other unrelated jobs in 12-hour shifts without overtime pay. Due
to the strenuous work, she was confined in a housing facility during which, she was not paid her
salaries. She worked again after getting well but was not paid her compensation.
Subsequently, she was hospitalized and went through surgical operations, again without
compensation. She was then dismissed on the ground of illness without any separation pay or
salary payment for the periods she was not allowed to work. She filed a complaint before POEA
against petitioner for underpaid salaries and damages. Was she illegally dismissed? Is the
employee entitled to the payment of underpaid salaries?
A. She was illegally dismissed because the manner by which she was terminated was in
violation of the Labor Code since her illness was not prohibited by law nor was it prejudicial to
her health as well as that of her co-employees (Art. 284). Her illness was not even contagious
(Carpal Tunnel Syndrome). As for the time she was hospitalized and she was not given any
compensation, the ‘no work-no pay’ rule does not apply since that period was due to her illness
which was clearly work-related. (Triple Eight Integrated Services v. NLRC, Dec. 3, 1998)
Q. Does Section 4, Rule V of the NLRC New Rules of Procedure require the Labor Arbiter to
propound clarificatory questions to the parties in order to determine whether a formal hearing is
necessary?
A. There is no legal justification for a mandatory interpretation. A reading of Sec 4 Rule V of the
New Rules of Procedure of the NLRC readily shows that clarificatory questions may be
propounded to the parties at the discretion of the LA. Aside from employing the word
“may” which denotes discretion negating a mandatory or obligatory effect, the provision
expressly states that it is discretionary on the part of the LA. (RDS Trucking vs NLRC,
294 SCRA NLRC)
Q. Melchor, a taxi driver under the boundary system, met a vehicular accident. After filing a
report to the office of respondents, he was allegedly advised to stop working and have a rest.
He thus filed a complaint for illegal dismissal. The company maintains that Melchor was not
illegally dismissed, there being in the first place no employer-employee relationship between
them. Is there an employer-employee relationship under the boundary system?
A. The employer-employee relationship was deemed to exist. (Martinez v. NLRC)

The relationship of taxi owners and taxi drivers is the same as that between jeepney
owners and jeepney drivers under the “boundary system”. The taxi operator exercises
control over the driver. In Martinez v NLRC this court already ruled that the relationship of
taxi owners and taxi drivers is the same as that between jeepney owners and jeepney
drivers under the “boundary system.” In both cases the employer-employee relationship
was deemed to exist, viz: “The relationship between jeepney owners/operators on one hand
and jeepney drivers on the other under the boundary system is that of employer-employee
and not of lessor-lessee.xxx Thus, private respondent were employees xxx because they
had been engaged to perform activities which were usually necessary or desirable in the
usual trade or business of the employer. (Paguio Transport Corporation v NLRC, 294
SCRA 65)
Q. Moneral Andal applied with G & M Phils. Inc. for an overseas employment as a domestic
helper in Riyadh KSA. She was hired for a term of 2 years (1991-1993) at a monthly basic
salary of $200.00. However, she was repatriated on 11 Jan 1992. Upon her repatriation she
filed a complaint before the POEA for illegal dismissal, non-payment and underpayment of
salaries. Impleaded as co-respondent in the complaint was Empire Insurance (petitioner), in its
capacity as the surety of G & M. Is Empire solidarily liable for the payment of the employee’s
monetary claims?
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A. Yes. Petitioner is solidarily liable with its principal. When Empire entered into suretyship
agreement with G & M Phils Inc it bound itself to answer for the debt or default of the
latter. Where the surety bound itself solidarily with the principal obligor, the former is so
dependent on the principal debtor such that the surety is considered in law as being the
same party as the debtor in relation to whatever is adjudged touching the obligation of
the latter, and the liabilities are interwoven as to be inseparable. The purpose of the
required bond is to insure that the rights of the overseas are violated by their employer
recourse would still be available to them against the local companies that recruited them
for the foreign principal. (Empire Insurance Company v NLRC, 294 SCRA 263)
Q. Private respondent is Samuel L. Bangloy was a production supervisor and radio

commentator of the DZJC-AM radio station in Laoag City, owned by MBC. Bangloy
subsequently applied for a leave of absence in order to run for Board Member in Ilocos Norte.
The company later on informed him that, as a matter of company policy, any employee who files
a certificate of candidacy for any elective national or local office would be considered resigned
from the company. Bangloy nonetheless ran, but lost. Neither was he permitted to return to
work. Is MBC’s policy that any employee who is running for elective public position shall be
considered to have voluntarily terminated his employment relations valid?
A. The policy is justified. Working for the government and the company at the same time is
clearly disadvantageous and prejudicial to the rights and interest not only of the company
but the public as well. In the event that the employee loses in the election, the impartiality
and cold neutrality of an employee as broadcast personality is suspect, thus readily
eroding and adversely affecting the confidence and trust of the listening public to
employer’s station. As such, the dismissal is justified. An employee may be dismissed for
willful disobedience of the lawful orders of his employer in connection with his work.
(Manila Broadcasting Company v NLRC, 294 SCRA 486)
Q. What are the requirements for a valid closure due to retrenchment?
A. The following requirements must be met to justify retrenchment. First, the loss should be
substantial and not merely de minimis. Second, the loss must be reasonably imminent,
perceived objectively and in good faith by the employer. In other words, there should be a
certain degree of urgency for the retrenchment. Third, the retrenchment must be reasonably
necessary and likely to effectively prevent the expected losses. Fourth, the employer should
have taken other measures prior or parallel to retrenchment to forestall losses, so retrenchment
may only be undertaken as a last resort. Finally, the alleged losses if already realized, and the
expected imminent losses to be forestalled must be proven by sufficient evidence. (Stainless
Steel Corporation v. NLRC, 11 March 1998)
Q. Victoria Abril was employed by PFCCI in different capacities from 1982-1988, until she went
on maternity leave. Upon her return in 1989, she discovered that another person had been
appointed to her former position. Nevertheless, she accepted another position as evidenced by
a contract which stipulated that her employment would be probationary for a period of 6 months.
After the period elapsed, she continued to work until she and her employer entered into another
employment contract for a period of 1 year, after which her employment was terminated. Abril
filed a case for illegal dismissal. PFCCI claims that her appointment had been fixed for a
specific project, and should therefore be considered as causal or contractual employment under
Article 280 of the Labor Code. Was Abril's termination valid? Is she a regular employee?
A. Article 281 of the Labor Code allows the employer to secure the services of an employee on
a probationary basis – allowing the employer to terminate the latter for just cause or upon failure
to qualify in accordance with reasonable standards set forth by the employer at the time of his
employment. A probationary employee is one who is on trial by an employer during which the
employer determines whether or not he is qualified for permanent employment. Probationary
employees, notwithstanding their limited tenure, are also entitled to security of tenure. Thus,
except for just cause as provided by law, or under the employment contract a probationary
employee cannot be terminated.
Under Article 280 of the Labor Code, there are 3 kinds of employees: regular, project
and casual employees. With respect to contractual employees, stipulations in employment
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contracts providing for term employment are valid when the period was 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 is
satisfactorily appears that the employer and employee dealt with each other in more or less
equal terms.
The present employment contract entered into initially provides that the period of
employment is for a fixed period. However, the succeeding provisions contradicted the same
when it provided that respondent would be under probationary status. Given the ambiguity in the
contract, and following the pronouncement in Villanueva v. NLRC (10 Sept. 1998), where a
contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein
should be construed strictly against the party who prepared it. Furthermore, all labor contracts
should be construed in favor of the laborer, pursuant to Article 1702 of the Civil Code. Thus,
notwithstanding the designation made by PFCCI, having completed the probationary period and
allowed to work thereafter, Abril became a regular employee who may be dismissed only for just
or authorized causes under the Labor Code. Hence, the dismissal, premised on the expiration of
the contract, is illegal. (Phil. Federation of Credit Cooperatives v. NLRC, 300 SCRA 72, 11
December 1998)
Q. X was dismissed by her employer, FTH. Upon her dismissal, FTH withheld 15 days worth of
her salary, and applied it to a X’s personal loan to the company’s general manager. Both the
labor arbiter and the NLRC approved the deduction of the amount of the personal loan from X’s
salary. Is this action of the labor arbiter correct?
A. Article 217 of the Labor Code limits the jurisdiction of labor arbiters to:
(a) unfair labor practice cases;
(b) termination disputes
(c) if accompanied by a claim for reinstatement, cases involving wages, rates of pay, hours of
work, and other terms and conditions of employment
(d) claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations
(e) cases arising from violations of Article 264 of the Labor Code, including questions on the
legality of strikes and lockouts
(f) all other claims from employer-employee relations, including those of persons in
domestic/household service involving an amount not exceeding P5,000 regardless of whether
accompanied by a claim for reinstatement (except for claims of Employees Compensation, SSS,
Medicare and maternity benefits)
As the personal loan did not arise from the employer-employee relationship, said loan
is not within the ambit of the Labor Arbiter's jurisdiction. Moreover, following Article 217 of the
Labor Code, if a claim does not fall within the exclusive original jurisdiction of the labor arbiter,
the NLRC cannot have appellate jurisdiction therein. Thus, the garnishment of Espino's salary
was disregarded. (Food Traders House v. NLRC, 300 SCRA 360, 21 December 1998)
Q. In a case for illegal dismissal, the Labor Arbiter found the dismissal of X unjustified, and
ordered the employer to reinstate X with full backwages. On appeal by the company, the NLRC
reversed the labor arbiter’s decision, in effect finding the termination legal. However, the NLRC
ordered the employer to pay X’s wages from 25 January 1991 (date of filing the appeal with the
NLRC) up to 23 September 1993 (promulgation of the NLRC decision), pursuant to Article 223
of the Labor Code. Under Article 223 of the Labor Code, the employer found to have illegally
dismissed an employee is required to reinstate the employee either actually or through payroll at
the employer's option. Does this requirement need execution of enforcement? Or was the LA's
decision immediately self-executory?
A. While the interpretation of Article 223 has been divergent, the Court in the 1997 Pioneer
Case laid down the doctrine that henceforth an award or order for reinstatement is self-
executory, and does not require a writ of execution, much less a motion for its issuance. Article
224 only applies to final and executory decisions which are not within the coverage of Article
223. Thus, the employer was bound to either re-admit X or include him in the payroll, and inform
X of its choice in order to enable him to act accordingly. Failing to exercise these options, the
company must pay his salary, which automatically accrued from notice of the LA's order until its
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reversal by the NLRC. International Container Terminal Services, Inc. v. NLRC 300 SCRA
335 (21 December 1998)
Q. Eduardo Felipe, employee of Hyundai Engineering and Construction Co., through its local
agent Omanfil, perished in an accident. Hyundai deposited 14,400 Malaysian Ringgit as Felipe's
death benefits in the Melacca labor office. This was done pursuant to Section 8 of Malaysia's
labor law, which provides that death benefits in a lump sum equal to 45 months earnings
($27,902.02) or MR 14,400 shall be awarded, whichever is less. Felipe's widow alleged that the
amount should be US$27,902.02, and that the deposit made by Hyundai to the Melacca labor
office did not constitute payment. What amount is the Felipe family entitled to?
A. The Felipe's are entitled to MR 14,400, in compliance with the provisions of Malaysia's labor
law. A manning agency cannot be faulted for following applicable foreign law. As a result,
Omanfil has discharged its monetary obligation to Mrs. Felipe. (Omanfil International
Manpower Devt. Corp v. NLRC, 300 SCRA 454 ,22 December 1998)
Q. X was one of the 2 employees of Gandara Mill Supply. In February 1995, X did not report to
work for 2 weeks, and when he returned, he was informed that someone had been hired to
replace him. However he was advised that he was to be readmitted in June of 1996. Was there
an illegal dismissal?
A. Admittedly, it is unclear whether respondent was actually dismissed. However, there is no

indication that he was to be reinstated. In effect, the offer to re-admit Germano was merely a
gesture used to mitigate the impact of his extended suspension. This is contrary to the explicit
provisions of the Labor Code, which provide that no preventive suspension should last more
than 30 days. As the supposed suspension was expected to last for more than the period
allowed by law, the suspension constitutes an illegal dismissal.
Even assuming that X's absence caused difficulty to the company, his dismissal was
unwarranted. Given the constitutional mandate of protection to labor, the rigid rules of procedure
may sometimes be dispensed with to give room for compassion. In calling for the protection of
labor, the Constitution does not condone wrongdoing by the employee, it nevertheless urges a
moderation of the sanctions to be applied, in the light of the many disadvantages of laborers.
(Gandara Mill Supply v. NLRC, 300 SCRA 702, 29 December 1998)
Q. The offices and factory of Master Shirt Co. were burned, so the company had to cease
operations. Management and the union held a conference with the NCMB, where they agreed
that the company would try to resume operations ASAP, but if this did not occur within 6
months, the workers would be paid their corresponding separation benefits. After 6 months, the
company failed to resume operations, but the company refused to grant separation pay, for it
had not recovered on their claim for damages against their insurance company. The union and
its members filed a complaint for illegal dismissal, separation pay and damages against Manila
Shirt Co. Are the employees entitled to separation pay?
A. Separation pay is paid to an employee whose services are validly terminated as a result of
retrenchment, suspension, closure of business or disease. IT does not necessarily follow that if
there is no illegal dismissal, no award of separation pay may be made. The basis for the award
in this case is the agreement entered into between the company and the employees. The
agreement is the law between the parties and must be enforced. The claim for damages is
unavailing, in the absence of malice or bad faith. (Master Shirt Co. v. NLRC, 300 SCRA 649,
29 December 1998)
Thank you to Cris, Yumi, Andrew and Sten.
1997 CASES
Q. In an illegal dismissal case, the Labor Arbiter ruled in favor of the complainant and ordered
his reinstatement. The employer appealed. Refusing to reinstate the worker pending appeal,
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the employer claims that the order of reinstatement needs a writ of execution. The employer
further maintains that even if a writ of execution was issued, a timely appeal coupled by the
posting of appropriate supersedeas bond effectively forestalled and stayed the execution of the
Labor Arbiter’s reinstatement order. Is the employer’s contention correct?
A. No, the employer’s contention is erroneous. The law as now worded employs the phrase
“shall immediately be executory” without qualification emphasizing the need for prompt
compliance. The term “shall” denotes an imperative obligation and is inconsistent with the idea
of discretion. The Labor Arbiter’s order of reinstatement does not need a writ of execution. It
is self-executory. The posting of a bond by the employer shall not stay the execution for
reinstatement. After receipt of the decision ordering reinstatement, the employer has the right
to chose whether to re-admit the employee to work under the same terms and conditions
prevailing prior to his dismissal or to reinstate the employee in the payroll. In either instance,
the employer has to inform the employee of his choice. (Pioneer Texturizing Corp. v. NLRC,
280 SCRA 806, October 16, 1997)
Q. When can R.A. No. 7641 (Retirement Pay Law), which took effect on January 7, 1993, be
given retroactive effect?
A. R.A. 7641 may be given retroactive effect where (1) the claimant for retirement benefits was
still the employee of the employer at the time the statute took effect; and (2) the claimant was in
compliance with the requirements for eligibility under the statute for such retirement benefits.
Thus, the law can apply to labor contracts still existing at the time the statute took effect and its
benefits can be reckoned not only from the date of the law’s enactment but retroactively to the
time said employment contracts have started. (Cabcaban v. NLRC, 277 SCRA 671, August
18, 1997)
Q. An insurance agent was required to solicit business exclusively for AFP Mutual Benefit
Association, Inc. pursuant to an Insurance Commission regulation. He was also bound by
company policies, memo/circulars, rules and regulations issued by the company relating to
payment of the agent’s accountabilities, availment by the agent of cash advances, incentives
and awards, and other matters concerning the selling of insurance, in accordance with the rules
promulgated by the Insurance Commission. Given this set of facts, can the insurance agent
be considered an employee of the company?
A. No, the facts are not sufficient to support the conclusion that there exists an employer-
employee relationship between the agent and the company. The significant factor in
determining the relationship of the parties is the presence or absence of supervisory authority to
control the method and the details of performance of the service being rendered, and the
degree to which the principal may intervene to exercise such control. Not every form of control,
however, may be accorded the effect of establishing an employer-employee relationship.
There is a difference between rules that merely serve as guidelines towards the achievement of
the mutually desired result without dictating the means or methods to be employed in attaining
it, and those that control or fix the methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it.
In this case, the rules that the agent should follow merely aim to promote the result desired,
primarily to conform to the requirements of the Insurance Commission. (AFP Mutual Benefit
Association v. NLRC, 267 SCRA 47, January 28, 1997)
Q. An employer appealed from the Labor Arbiter’s decision. Instead of posting cash or surety
bond, the employer posted a Real Estate Bond consisting of land and various improvements.
Is such property bond allowed?
A. While Article 223 of the Labor Code provides that an appeal by the employer may be
perfected only upon the posting of cash or surety bond, this provision should be given a liberal
interpretation. This policy stresses the importance of deciding cases on the basis of their
substantive merit and not on strict technical rules. When the real property bond sufficiently
protects the interests of the workers should they finally prevail, the appeal should be allowed.
(UERM-Memorial Medical Center v. NLRC, 269 SCRA 70, March 3, 1997)
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Q. CFTI, a close family corporation owned by the Naguiat family, stopped its taxi business
within Clark Air Base because of the phase-out of U.S. military presence at the said installation.
In an illegal dismissal complaint filed by CFTI’s dismissed employees, the Labor Arbiter ruled
that Sergio Naguiat, CFTI’s president who had actively engaged in the management and
operation of the corporation, was solidarily liable with CFTI for the separation pay due the
employees. Is the Labor Arbiter’s ruling correct?
A. Yes, the ruling is correct. Sergio Naguiat can be held solidarily liable with the corporation.
First, as the president of CFTI who actively managed the business, Naguiat falls within the
meaning of an “employer” as contemplated by the Labor Code, who may be held jointly and
severally liable for the obligations of the corporation to its dismissed employees. Second,
Section 100 of the Corporation Code states that stockholders actively engaged in the
management or operation of the business of a close corporation shall be personally liable for
corporate torts unless the corporation has obtained reasonably adequate liability insurance.
Tort is a breach of a legal duty. Since the Labor Code mandates the payment of separation
pay to employees in case of closure or cessation of operations not due to business losses,
failure to comply with this law-imposed duty can be considered a “corporate tort”. Hence,
pursuant to the Corporation Code, Naguiat should be held solidarily liable for this corporate tort.
In this case, the rule that a corporate officer cannot be held solidarily liable with a corporation in
the absence of evidence that he acted in bad faith is not applicable. (Naguiat v. NLRC, 269
SCRA 564, March 13, 1997)
***In another case, the Court held:
The fictional veil of a corporation can be pierced by the very same law which created it
when “the notion of the legal entity is used as a means to perpetrate fraud, an illegal act, as a
vehicle for the evasion of an existing obligation, and to confuse legitimate issues.” Under the
Labor Code, for instance, when a corporation violates a provision declared to be penal in
nature, the penalty shall be imposed upon the guilty officer or officers of the corporation.
To justify solidary liability, there must be an allegation or showing that the officers of the
corporation deliberately or maliciously designed to evade the financial obligation of the
corporation to its employees, or a showing that the officers indiscriminately stopped its business
to perpetrate an illegal act, as a vehicle for the evasion of existing obligations, in circumvention
of statutes, and to confuse legitimate issues. (Reahs Corporation v. NLRC, 271 SCRA 247,
April 15, 1997)
Q. Purificacion was a founding member, a member of the Board of Trustees, and the corporate
secretary of pamana Golden Care Medical Center Foundation, a non-stock corporation engaged
in extending medical and surgical services. In 1990, the Board of Trustees issued a
memorandum appointing Purificacion as Medical Director and Hospital Administrator of the
foundation’s medical center. A medical director and aa hospital administrator are considered
as corporate officers under the foundation’s by-laws. When the Board of Trustees relieved
Purificacion of her position as Medical Director and Hospital Administrator, she filed a complaint
for illegal dismissal and non-payment of wages before the Labor Arbiter. Does the Labor Arbiter
have jurisdiction over the case?
A. No, the Labor Arbiter has no jurisdiction over the case. The Securities and Exchange
Commission has jurisdiction. The charges filed by Purificacion partake of the nature of an intra-
corporate controversy. 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 such
employee. In this case, Purificacion was appointed by the Board of Trustees to offices stated in
the by-laws. She is deemed an officer of the corpporation. An officer’s dismissal is always a
corporate act, or an intra-corporate controversy, and the nature is not altered by the reason or
wisdom which the Board of Directors may have in taking such action. The question of
remuneration of an officer is likewise not a simple labor problem but a matter that comes within
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the area of corporate affairs and management and is a corporate controversy. (Tabang v.
NLRC, 266 SCRA 462, January 21, 1997)
Q. Reformist Union, a labor union staged a strike against R.B. Liner in 1989. R.B. Liner
petitioned the Secretary of Labor to assume jurisdiction over the dispute or certify it to the
NLRC. The Secretary certified the case to the NLRC for compulsory arbitration. The certified
case was dismissed after the union and the company reached an agreement providing, among
others, for the holding of a certification election. Later, when the union filed a complaint for
unfair labor practice against the company, i.e. illegal lockout that allegedly took place after the
strike and the election, R.B. Liner countered with another case that sought to declare the 1989
strike illegal. Can the company still contest the legality of the 1989 strike?
A. No, the company can no longer contest the legality of the strike. The company itself sought
compulsory arbitration in order to resolve that very issue. The dispute or strike was settled
when the company and the union entered into an agreement. By acceding to the peaceful
settlement brokered by the NLRC, the company waived the issue of the illegality of the strike.
The very nature of compulsory arbitration makes the settlement binding upon the company.
Compulsory arbitration has been defined both as “the process of settlement of labor disputes by
a government agency which has the authority to investigate and to make an award which is
binding on all the parties,” and as a mode of arbitration where the parties are “compelled to
accept the resolution of their dispute through arbitration by a third party.” Clearly, the legality of
the strike can no longer be reviewed. (Reformist Union of R.B. Liner, Inc. v. NLRC, 266
SCRA 713, January 27, 1997)
Q. From 1953 until 1991, Honorio worked as maintenance man, carpenter, plumber, electrician
and mason at the Tanjangco apartments and residential buildings. In short, he took charge of
the maintenance and repair of the buildings. He reported for work from 7:00 a.m. to 4:00 p.m..
He earned P180 a day (latest salary). When Honorio filed a complaint for illegal dismissal,
Tanjangco claimed that Honorio was an independent contractor. Tanjangco further claimed
that even assuming that Honorio can be considered an employee, he was merely a project
employee whose services were hired only with respect to a specific job and only while the same
exists.
(a) On the basis of this set of facts, can Honorio be considered an independent contractor?
A. No, Honorio was not an independent contractor but an employee of Tanjangco. He was not
compensated in terms of profits for his labor orservices like an independent contractor. Rather,
he was paid on a daily wage basis. It is absurd to expect that with such humble resources,
Honorio woulld have substantial capital or investment in the form of tools, equipment, and
machineries with which to conduct the business of supplying Tanjangco with manpower and
services for maintaining the apartments and buildings. The most important requisite of control
that determines the existence of an employer-employee relationship is present. The power of
control refers merely to the existence of the power and not to the actual exercise thereof.
Naturally, Honorio’s work as maintenance man had to be performed within the premises of
Tanjangco. It is not far-fetched to expect that Honorio had to observe the instructions and
specifications given by Tanjangco as to how his work had to be performed. Tanjangco could
easily exercise control on Honorio.
(b) What kind of an employee is Honorio?
A. Honorio is a regular employee. There are two kinds of regular employees: (1) those who are
engaged to perform activities which are usually necessary or desirable in the usual trade or
business of the employer; and (2) those who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which they are employed.
Whichever standard is applied, Honorio qualifies as a regular employee. Honorio cannot be
considered a project employee. If he was employed as a project employee, Tanjangco should
have submitted a report of termination to the nearest public employment office everytime his
employment is terminated due to completion of each project, as required by Policy Instruction
No. 20. There should have been filed as many reports of termination as there were projects
actually finished. (Aurora Land Projects Corp. v. NLRC, 266 SCRA 48, January 2, 1997)
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Q. Antonio was hired by Orient Express as crane operator subject to a 3-month probationary
period. After only one month and five days, he was dismissed. When he filed a complaint for
illegal dismissal, Orient Express claimed that he was terminated for poor job performance.
Orient Express did not inform Antonio about the standards of work required of him by which his
competency would be adjudged. When he was dismissed, Orient Express did not point out the
reasonable standards of work by which he was evaluated and how he failed to live up to such
standards. Is the dismissal valid?
A. No, the dismissal is not valid. The services of an employee hired on a probationary basis
may be terminated 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. Antonio’s dismissal cannot be sustained on this ground because Orient Express
failed to specify the reasonable standards by which Antonio’s alleged poor performance was
evaluated, much less to prove that such standards were made known to him at the time of his
recruitment. (Orient Express Placement Philippines v. NLRC, 273 SCRA 256, June 11,
1997)
Q. Capili was an instructor of a private educational institution. In 1993, the school informed
Capili that he would be eligible for retirement when he would reach the age of 60 years. Capili
answered that he was not opting to retire but would continue to serve until he reaches the age
of 65. When the school reiterated its position that it could retire him, Capili filed a complaint
questioning his forced retirement. Later, after receiving the Labor Arbiter’s decision but before
filing his appeal, Capili received partial payment of his retirement pay. During the pendency of
his apppeal with the NLRC, he received full payment of his retirement benefiits.
(a) Can an employee be compelled to retire at the age of sixty years?
A. No, an employee cannot be compelled to retire at the age of sixty years in the absence of a
provision on retirement in the CBA or if the employer has no retirement plan. Under the Labor
Code, as amended by R..A. NO. 7641, the option of the employer to retire an employee at age
60 no longer exists. Under the present rule, the option to retire upon reaching the age of 60
years or more but not beyond 65 is the exclusive prerogative of the employee if there is no
provision on retirement in the CBA or any agreement or if the employer has no retirement plan.
(b) Will the subsequent acceptance of retirement benefits estop an employee

from pursuing his complaint questioning the validity of his forced retirement?
A. Yes, the acceptance of retirement benefits will estop the employee from pursuing his case.
By accepting the retirement benefits, the employee is deemed to have opted to retire under the
present rule stated above. (Capili v. NLRC, 273 SCRA 576, June 17, 1997)
Q. Can an employee unilaterally withdraw his/her resignation?
A. No, an employee cannot unilaterally withdraw his/her resignation. Resignation, once

accepted, may not be withdrawn without the consent of the employer. If the employer consents
to the withdrawal, the employee retains the job. If the employer does not, the employee cannot
claim illegal dismissal. To say that an employee who has resigned is illegally dismissed is to
encroach upon the right of the employers to hire persons who will be of service to them. An
employment contract is consensual and voluntary. If the resignation is accepted by the
employer, its consequent effect is severance of the contract of employment. A resigned
employee who desires to take his job back has to reapply therefor and cannot demand an
appointment. (Philippines Today, Inc. v. NLRC, 267 SCRA 202, January 30, 1997)
Q. Can the employer dismiss an employee who is afflicted with pulmonary tuberculosis?
A. Yes, but only if there is a prior certification from a competent public authority that the disease
afflicting the employee sought to be dismissed is of such nature or at such stage that it cannot
be cured within six (6) months even with proper medical treatment. The fact that an employee
is suffering from a disease and whose continued employment is prohibited by law or is
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prejudicial to his health as well as to that of his co-employees does not ipso facto make the
employee a candidate for dismissal. (Tan v. NLRC, 271 SCRA 216, April 14, 1997)
Q. In the proceedings before the Labor Arbiter, only the unregistered trade name of the
employer–corporation, “Hacienda Lanutan,” and its administrator-manager were impleaded and
subsequently held liable for illegal dismissal. On appeal, the NLRC motu proprio included the
corporate name of the employer as jointly and severally liable for the workers’ claims. There is
no dispute that Hacienda Lanutan which was owned solely by the employer-corporation was
impleaded and heard. It was represented by its corporate officer in the proceedings before the
Labor Arbiter. Is the NLRC’s action justified?
A. Yes, the action is justified. In quasi-judicial proceedings, procedural rules governing service
of summons are not strictly construed. Substantial compliance thereof is sufficient. In labor
cases, punctillious adherence to stringent technical rules may be relaxed in the interest of the
worker; it should not defeat the complete and equitable resolution of the rights and obligations
of the parties. Furthermore, the NLRC is given the power to correct, amend, or waive any
error, defect or irregularity whether in the substance or in the form of the proceedings before it.
The non-inclusion of the corporate name of the employer was a mere procedural error which did
not at all affect the jurisdiction of the labor tribunals. (Pison-Arceo Agricultural and
Development Corp. v. NLRC, 279 SCRA 312, September 18, 1997)
The State is bound under the Constitution to afford full protection to labor and when conflicting
interests of labor and capital are to be weighed
on the scales of social justice
the heavier influence of the latter should be counterbalanced
with the sympathy and compassion
the law accords the less privileged worker.
This is only fair
if the worker is to be given the opportunity and the right
to assert and defend his/her cause
not as a subordinate
but as part of management with which he/she can negotiate on even plane.
Thus labor is not a mere employee of capital but its active and equal partner.
(Fuentes v. NLRC, 266 SCRA 24, January 2, 1997)

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SURVEY OF 2000-2001 LABOR CASES

SURVEY OF 2000-2001 LABOR CASES

Q: Company Y is engaged in road construction projects of the government. It engaged the

Q: A was hired by Isetann Department Store as a security checker to apprehend shoplifters. As

SURVEY OF 2000-2001 LABOR CASES

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A: Yes. Although there is no complete dissolution of petitioner’s undertaking, but a mere

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A: No. Company Q exhausted administrative remedies available to it by seeking an MR. The

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Q: In the above case, was the strike illegal?

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SURVEY OF 2000-2001 LABOR CASES

SURVEY OF 2000-2001 LABOR CASES

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Q: C, a managerial employee, was accused of sexually harassing a subordinate, S. After

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Q: L was employed by NAPCO-Luzmart, which was managed by petitioner Garcia. A mauling

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SURVEY OF 2000-2001 LABOR CASES

Q. A check was mis-posted, resulting in an overstatement of a client’s outstanding daily

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SURVEY OF 2000-2001 LABOR CASES

Q. Alleging serious business losses, Edge Apparel implemented a retrenchment program by

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SURVEY OF 2000-2001 LABOR CASES

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Q. A supervisory employee labor organization was issued a charter certificate by a national

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SURVEY OF 2000-2001 LABOR CASES