LABOR STANDARDS (Atty.

Nolasco)
J.SUAREZ II, 2ND SEM,SY 12-13
oMIDTERMS
I.GENERAL CONCEPTS
A.DEFINITION
a.LABOR
1. exertion by human beings of physical or mental efforts or
both towards the production of goods and services.
2. that sector or group in society which derives its livelihood
chiefly from rendition of work or services in exchange for
compensation under managerial direction
b.LABOR LAW the law governing the rights and duties of
Ers and Ees, 1st with respect to the terms and conditions of
employment, and 2nd, with respect to the labor disputes
arising from CBA respecting such terms and conditions.
Labor legislation are more specific than social legislation. All
labor legislation are social legislation. As to effect of
employment, it directly affects employment like wages. As to
purpose, it designated to meet the daily needs of workers. As
to coverage, covers employment for profit or gain. As to effect
to EEs, affect their work as to payor, benefits are paid by the
workers ER.
c.LABOR STANDARDS v. LABOR RELATION
1.labstan deals with the minimum standards as to wages,
hours of work and other terms and conditions of employment
that ERs must provide their EEs.
2.Labrel defines the status, rights and duties as well as the
institutional mechanism that govern the individual and
collective interactions between Ers, Ees and their
representatives.
d.SOCIAL LEGISLATION
1.laws that provide particular kinds of protection or benefits to
society or segments thereof in furtherance of social justice.
2.laws that requires payment of benefits by government
agencies to the worker or his family when and while he connot
work by reason of sickness, disability, old age, death and
similar hazards.
Broader than labor legislation. Not all social legislations are
labor legislation. As to effect of employment, it governs the
effect of employment like compensation for injuries. As to
purpose, it involves long range benefits. As to coverage,
covers employment for profit and non profit. As to effect to
EE, affects life of EE. As to payor, benefits are paid by
government agencies like EEs compensation commission.
B.SOURCES
a.CONSTITUTION
ARTICLE II:
Section 5. The maintenance of peace and order, the
protection of life, liberty, and property, and promotion of the
general welfare are essential for the enjoyment by all the
people of the blessings of democracy.
Section 9. The State shall promote a just and dynamic social
order that will ensure the prosperity and independence of the
nation and free the people from poverty through policies that
provide adequate social services, promote full employment, a
rising standard of living, and an improved quality of life for all.
Section 10. The State shall promote social justice in all
phases of national development.
Section 11. The State values the dignity of every human
person and guarantees full respect for human rights.
Section 13. The State recognizes the vital role of the youth
in nation-building and shall promote and protect their
physical, moral, spiritual, intellectual, and social well-being. It
shall inculcate in the youth patriotism and nationalism, and
encourage their involvement in public and civic affairs.
Section 14. The State recognizes the role of women in
nation-building, and shall ensure the fundamental equality
before the law of women and men.
Section 18. The State affirms labor as a primary social
economic force. It shall protect the rights of workers and
promote their welfare.
Section 20. The State recognizes the indispensable role of
the private sector, encourages private enterprise, and
provides incentives to needed investments.
ARTICLE III
Section 1. No person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be
denied the equal protection of the laws.
Section 4. No law shall be passed abridging the freedom of
speech, of expression, or of the press, or the right of the
people peaceably to assemble and petition the government
for redress of grievances.
Section 8. The right of the people, including those employed
in the public and private sectors, to form unions, associations,
or societies for purposes not contrary to law shall not be
abridged.
ARTICLE XIII
Section 1. The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of
all the people to human dignity, reduce social, economic, and

political inequalities, and remove cultural inequities by

equitably diffusing wealth and political power for the common
good.
To this end, the State shall regulate the acquisition,
ownership, use, and disposition of property and its
increments.
Section 2. The promotion of social justice shall include the
commitment to create economic opportunities based on
freedom of initiative and self-reliance.
Section 3. The State shall afford full protection to labor, local
and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance
with law. They shall be entitled to security of tenure, humane
conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting
their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility
between workers and ERs and the preferential use of
voluntary modes in settling disputes, including conciliation,
and shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and
ERs, recognizing the right of labor to its just share in the fruits
of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth.
Section 14. The State shall protect working women by
providing safe and healthful working conditions, taking into
account their maternal functions, and such facilities and
opportunities that will enhance their welfare and enable them
to realize their full potential in the service of the nation.
b.STATUTES and JURISPRUDENCE labor code, civil code,
special law, irr.
c.COMPANY PRACTICE/POLICY
Any benefit and supplement being enjoyed by EEs cannot be
reduced, diminished, discontinued or eliminated by the ER.
The principle of non-diminution of benefits is founded on the
Constitutional mandate to "protect the rights of workers and
promote their welfare,and to afford labor full protection. Said
mandate in turn is the basis of Article 4 of the Labor Code
which states that all doubts in the implementation and
interpretation of this Code, including its implementing rules
and regulations shall be rendered in favor of labor.
Jurisprudence is replete with cases which recognize the right
of EEs to benefits which were voluntarily given by the ER and
which ripened into company practice.
e.CONTRACT/CBA
C.SOCIAL JUSTICE/SPIRIT OF INTENTION
a. SOCIAL JUSTICE is neither communism, nor despotism,
nor atomism, nor anarchy, but the humanization of laws and
the equalization of social and economic forces by the State so
that justice in its rational and objectively secular conception
may at least be approximated. Social justice means the
promotion of the welfare of all the people, the adoption by the
Government of measures calculated to insure economic
stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in
the interrelations of the members of the community,
constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of
powers underlying the existence of all governments on the
time-honored principle of salus populi est supremalex.
b.APPLICATION
The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it
certainly will not condone the offense. Social justice cannot be
permitted to be refuge of scoundrels any more than can
equity be an impediment to the punishment of the guilty.
Those who invoke social justice may do so only if their hands
are clean and their motives blameless and not simply
because they happen to be poor. (PLDT v. NLRC)
Even though strikes and lockouts have been recognized as
effective bargaining tools, it is an antiquated notion that they
are truly beneficial, as they only provide short-term solutions
by forcing concessions from one party; but staging such
strikes would damage the working relationship between ERs
and EEs, thus endangering the business that they both want
to succeed. The more progressive and truly effective means of
dispute resolution, lies in mediation, conciliation, and
arbitration, which do not increase tension but instead provide
relief from them. In the end, an atmosphere of trust and
understanding has much more to offer a business relationship
than the traditional enmity that has long divided the ER and
the EE, (TOYOTA MOTORS PHIL. WORKERS ASSOC. v. NLRC)
It is true that there have been instances when the Court
awarded financial assistance to EEs who were terminated for
just causes, on grounds of equity and social justice. When the
EE commits an act of dishonesty, depravity, or iniquity, the
grant of financial assistance is misplaced compassion. It is
tantamount not only to condoning a patently illegal or
dishonest act, but an endorsement thereof. It will be an insult
to all the laborers who, despite their economic difficulties,

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LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
strive to maintain good values and moral conduct. (RENO v.
NLM)
c.INTENTION
However, we opt for liberality in the application of the rules to
the instant case in light of the following considerations. First,
the rule that negligence of counsel binds the client may be
relaxed where adherence thereto would result in outright
deprivation of the clients liberty or property or where the
interests of justice so require.[Second, this Court is not a slave
of technical rules, shorn of judicial discretion in rendering
justice, it is guided by the norm that on the balance,
technicalities take a backseat against substantive rights.
Thus, if the application of the rules would tend to frustrate
rather than promote justice, it is always within this Courts
power to suspend the rules or except a particular case from
its application.(MAGALLANES v. SUN YAT SEN)
D.ER-EE RELATIONSHIP
a.FOUR-FOLD TEST: 1)Selection and engagement of the Ee;
2)payment of wages; 3)power of dismissal; and 4)power of
control.
b.ECONOMIC REALITY/ DEPENDENCY TEST whether the
worker is dependent on the alleged ER for his continued
employment in that line of business.
2-TIERED approach
1.the putative ERs power to control EE with respect to means
and methods by which the work is to be accomplished; and
2.the underlying economic realities of the activity or
relationship.
c.WHO DETERMINES ER-EE RELATIONSHIP
It can be assumed that the DOLE in the exercise of its
visitorial and enforcement power somehow has to make a
determination of the existence of an ER-EE relationship. Such
prerogatival determination, however, cannot be coextensive
with the visitorial and enforcement power itself. Indeed, such
determination is merely preliminary, incidental and collateral
to the DOLEs primary function of enforcing labor standards
provisions.
The determination of the existence of ER-EE
relationship is still primarily lodged with the NLRC. This is the
meaning of the clause in cases where the relationship of EREE still exists in Art. 128 (b). (PEOPLES BROADCASTING
v.SEC. OF DOLE)
e.ON CALL/RETAINER
the Court finds that the schedule of work and the requirement
to be on call for emergency cases do not amount to such
control, but are necessary incidents to the Retainership
Agreement. The Court also notes that the Retainership
Agreement granted to both parties the power to terminate
their relationship upon giving a 30-day notice. Hence,
petitioner company did not wield the sole power of dismissal
or termination.
The Court agrees with the Labor Arbiter and the NLRC that
there is nothing wrong with the employment of respondent as
a retained physician of petitioner company and upholds the
validity of the Retainership Agreement which clearly stated
that no ER-EE relationship existed between the parties. The
Agreement also stated that it was only for a period of 1 year
beginning January 1, 1988 to December 31, 1998, but it was
renewed on a yearly basis.
Considering that there is no ER-EE relationship between the
parties, the termination of the Retainership Agreement, which
is in accordance with the provisions of the Agreement, does
not constitute illegal dismissal of respondent. Consequently,
there is no basis for the moral and exemplary damages
granted by the Court of Appeals to respondent due to his
alleged illegal dismissal.
E.MANAGEMENT PREROGATIVE
a.DEFINITION/BASIS:We have held that management is free
to regulate, according to its own discretion and judgment, all
aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, processes
to be followed, supervision of workers, working regulations,
transfer of EEs, work supervision, lay off of workers and
discipline, dismissal and recall of workers. The exercise of
management prerogative, however, is not absolute as it must
be exercised in good faith and with due regard to the rights of
labor. (JULIES BAKESHOP v. ARNAIZ)
An ER has the prerogative to prescribe reasonable rules and
regulations necessary for the proper conduct of its business,
to provide certain disciplinary measures in order to implement
said rules and to assure that the same would be complied
with. An ER enjoys a wide latitude of discretion in the
promulgation of policies, rules and regulations on workrelated activities of the EEs.
It is axiomatic that appropriate disciplinary sanction is within
the purview of management imposition.Thus, in the
implementation of its rules and policies, the ER has the choice
to do so strictly or not, since this is inherent in its right to
control and manage its business effectively. Consequently,
management has the prerogative to impose sanctions lighter
than those specifically prescribed by its rules, or to condone
completely the violations of its erring EEs. Of course, this
prerogative must be exercised free of grave abuse of
discretion, bearing in mind the requirements of justice and fair

play. Indeed, we have previously stated:Management also has

its own rights, which, as such, are entitled to respect and
enforcement in the interest of simple fair play.(SMC v. NLRC)
LIMITATIONS:
1.law
2.Contract or CBA
3.general principle of fair play and justice
b.GENERALLY NOT SUBJECT TO JUDICIAL INTERFERENCE
The state cant interfere as to whether the management will
strictly implement or not.(ARENO v. SKYCABLE)
c.EXERCISE IN GOOD FAITH
Despite an apparent reason to implement a retrenchment
program as a cost-cutting measure, respondent, however, did
not outrightly dismiss the workers affected by the closure of
Paper Mill No. 4 but gave them an option to be transferred to
posts of equal rank and pay. As can be seen, retrenchment
was utilized by respondent only as an available option in case
the affected EE would not want to be transferred. Respondent
did not proceed directly to retrench. This, to our mind, is an
indication of good faith on respondents part as it exhausted
other possible measures other than retrenchment. Besides,
the ERs prerogative to bring down labor costs by retrenching
must be exercised essentially as a measure of last resort,
after less drastic means have been tried and found wanting.
(PANTOJA v. SCA HYGIENE)
d.TRANSFER OR FROMOTION (DEMOTION)
respondent Reyes failed to justify petitioners transfer from
the position of chief bakers to utility/security personnel. We
find that the threat being alluded to by respondent Reyes
that the petitioners might introduce harmful foreign
substances in baking bread is imaginary and not real. We
recall that what triggered the petitioners reassignment was
the filing of their complaints against private respondents in
the NLRC. The petitioners were not even given an opportunity
to refute the reason for the transfer. The drastic change in
petitioners nature of work unquestionably resulted in, as
rightly perceived by them, a demeaning and humiliating work
condition. The transfer was a demotion in rank, beyond doubt.
There is demotion when an EE is transferred from a position of
dignity to a servile or menial job. One does not need to
stretch the imagination to distinguish the work of a chief
baker to that of a security cum utility man.(JULIES BAKESHOP
v. ARNAIZ)
F.EMPLOYMENT RESTRICTION
a.PROHIBITION AGAINST COMPETITIVE EMPLOYMENT
in determining whether the contract is reasonable or not, the
trial court should consider the following factors: (a) whether
the covenant protects a legitimate business interest of the ER;
(b) whether the covenant creates an undue burden on the EE;
(c) whether the covenant is injurious to the public welfare; (d)
whether the time and territorial limitations contained in the
covenant are reasonable; and (e) whether the restraint is
reasonable from the standpoint of public policy.(RIVERA v.
SOLIDBANK)
b.PROHIBITION ON EMPLOYMENT OF RELATIVES
i.BASED ON CONTRACT - If the terms of a CBA are clear and
have no doubt upon the intention of the contracting parties,
the literal meaning of its stipulation shall prevail. However, if,
in a CBA, the parties stipulate that the hirees must be
presumed of employment qualification standards but fail to
state such qualification standards in said CBA, the VA may
resort to evidence extrinsic of the CBA to determine the full
agreement intended by the parties. When a CBA may be
expected to speak on a matter, but does not, its sentence
imports ambiguity on that subject. The VA is not merely to
rely on the cold and cryptic words on the face of the CBA but
is mandated to discover the intention of the parties.
Recognizing the inability of the parties to anticipate or
address all future problems, gaps may be left to be filled in by
reference to the practices of the industry, and the step which
is equally a part of the CBA although not expressed in it. In
order to ascertain the intention of the contracting parties,
their contemporaneous and subsequent acts shall be
principally considered. The VA may also consider and rely
upon negotiating and contractual history of the parties,
evidence of past practices interpreting ambiguous provisions.
The VA has to examine such practices to determine the scope
of their agreement, as where the provision of the CBA has
been loosely formulated. Moreover, the CBA must be
construed liberally rather than narrowly and technically and
the Court must place a practical and realistic construction
upon it.(UNITED KIMBERLY v. KIMBERLY-CLARK)
ii.BONA
FIDE
EXCEOTION

OCCUPATIONAL

QUALIFICATION

c.PROHIBITION MARRYING EMPLOYESS OF COMPETITOR

G.ATTORNEYS FEES
we have ruled that attorney's fees may be awarded only when
the EE is illegally dismissed in bad faith and is compelled to
litigate or incur expenses to protect his rights by reason of the
unjustified acts of his ER. In this case, the NLRC deleted the
award of moral and exemplary damages precisely because of
the absence of evidence that respondent's suspension and
eventual dismissal were tainted with bad faith and malice.

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J.SUAREZ II, 2ND SEM,SY 12-13
We note that although the Labor Arbiter awarded attorney's
fees, the basis for the same was not discussed in the decision
nor borne out by the records of this case. There must always
be a factual basis for the award of attorney's fees. This is
consistent with the policy that no premium should be placed
on the right to litigate. For these reasons, we believe and so
rule that the award of attorney's fees should be deleted.
(PEPSI v. SANTOS)
H.QUITCLAMS AND COMPROMISE AGREEMENT
a.CONTENTS OF VALID QUITCLAIM/WAIVER
b.VALID AND BINDING AGREEMENT
c.QUITCLAIMS GENERALLY FROWNED UPON
II. THE LABOR CODE OF THE PHILIPPINES (PD442 as
amended)
A. PRELIMINARY TITLE
ART.1. Name of Decree this Decree shall be known as the
Labor Code of the Philippines.
ART.2. Date of Effectivity this Code shall take effect six
(6) months after its promulgation.
ART.5.Rules and regulation the DOLE and other
Government agencies charged with the administration and
enforcement of this code or any of its parts shall promulgate
the necessary implementing rules and regulation. Such rules
and regulations shall become effective fifteen (15) days after
announcement of their adoption in newspapers of general
circulation.
ART.3. Declaration of Basic Policy the State shall
(APERA): 1.afford protection of Labor; 2.promote full
employment;3.ensure equal work opportuniyies regardless of
sex, age, or creed;4.regulate the relations between workers
and ERs; and 5.assure the right of workers to (SCSJ):a.selforganization; b.collective bargaining; c.security of tenure; and
d.just and humane condition of work.
i.CONSTRUCTION IN FAVOR OF LABOR
Art. 4. Construction in favor of labor. All doubts in the
implementation and interpretation of the provisions of this
Code, including its implementing rules and regulations, shall
be resolved in favor of labor.
ii.SCOPE/APPLICATION
Art.6. Applicability all rights and benefits granted to
workers under this code shall, except as may otherwise de
provided herein, apply alike to all workers, whether
agricultural or non-agricultural.
Exceptions:
1. Government EEs;
2.EEs of the government corporations(LRTA v. VENUS);
3.Foreign governments;
4.international agencies, EEs of intergovernmental or
international organizations (SEAFDEC v. NLRC);
5.Corporate officers/inter-corporate disputes which fall under
the jurisdiction of the regular courts pursuant to Securities
Regulation Code; and
6.Local water districts except where NLRC jurisdiction is
invoked.
Petitioner SEAFDEC-AQD is an international agency beyond
the jurisdiction of public respondent NLRC. The RP became a
signatory to the Agreement establishing SEAFDEC. The
purpose of the Center is to contribute to the promotion of the
fisheries development in Southeast Asia by mutual cooperation among the member governments. The Council shall
be the supreme organ of the Center and all powers of the
Center shall be vested in the Council.
Being an intergovernmental organization, SEAFDEC including
its Departments (AQD), enjoys functional independence and
freedom from control of the state in whose territory its office
is located. Pursuant to its being a signatory to the Agreement,
It expressly waived the application of the Philippine laws on
the disbursement of funds of petitioner SEAFDEC-AQD.
(SEAFDEC v. NLRC)
PAL never ceased to be operated as a private corporation, and
was not subjected to the Civil Service Law. The Court can
allow that PAL, during the period material, was a governmentcontrolled corporation in the sense that the GSIS owned a
controlling interest over its stocks. One stubborn fact,
however, remains: Through the years, PAL functioned as a
private corporation and managed as such for profit. Their
personnel were never considered government EEs. It may
perhaps not be amiss for the Court to take judicial notice of
the fact that the civil service law and rules and regulations
have not actually been made to apply to PAL and its EEs. Of
governing application to them was the Labor Code. (PALOMA
v. PAL)
B.BOOK I, TITLE I, CHAPTER 1 (Art. 13,14,18,221,22)
READ: EO797
Art. 13. Definitions.
a."Worker" means any member of the labor force, whether
employed or unemployed.
b."Recruitment and placement" refers to any act of
canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or
abroad, whether for profit or not: Provided, That any person or

entity which, in any manner, offers or promises for a fee,

employment to two or more persons shall be deemed
engaged in recruitment and placement.
c."Private fee-charging employment agency" means any
person or entity engaged in recruitment and placement of
workers for a fee which is charged, directly or indirectly, from
the workers or ERs or both.
d."License" means a document issued by the Department of
Labor authorizing a person or entity to operate a private
employment agency.
e."Private recruitment entity" means any person or
association engaged in the recruitment and placement of
workers, locally or overseas, without charging, directly or
indirectly, any fee from the workers or ERs.
f."Authority" means a document issued by the Department of
Labor authorizing a person or association to engage in
recruitment and placement activities as a private recruitment
entity.
g."Seaman" means any person employed in a vessel engaged
in maritime navigation.
h."Overseas employment" means employment of a worker
outside the Philippines.
i.Emigrant" means any person, worker or otherwise, who
emigrates to a foreign country by virtue of an immigrant visa
or resident permit or its equivalent in the country of
destination.
Art. 14. Employment promotion. The Secretary of
Labor shall have the power and authority:
a.To organize and establish new employment offices in
addition to the existing employment offices under the
Department of Labor as the need arises;
b.To organize and establish a nationwide job clearance and
information system to inform applicants registering with a
particular employment office of job opportunities in other
parts of the country as well as job opportunities abroad;
c.develop and organize a program that will facilitate
occupational, industrial and geographical mobility of labor and
provide assistance in the relocation of workers from one area
to another; and
d.To require any person, establishment, organization or
institution to submit such employment information as may be
prescribed by the Secretary of Labor.
Art. 18. Ban on direct-hiring. No ER may hire a Filipino
worker for overseas employment except through the Boards
and entities authorized by the Secretary of Labor. Direct-hiring
by members of the diplomatic corps, international
organizations and such other ERs as may be allowed by the
Secretary of Labor is exempted from this provision.
NAME HIREES individual workers who are able to secure
contracts overseas employment on their own efforts and
representations without assistance or participation of any
agency. Their hiring nonetheless, shall pass through the POEA
for processing purpose. Not covered by ban on direct hiring.
Art. 21. Foreign service role and participation. To
provide ample protection to Filipino workers abroad, the labor
attaches, the labor reporting officers duly designated by the
Secretary of Labor and the Philippine diplomatic or consular
officials concerned shall, even without prior instruction or
advice from the home office, exercise the power and duty:
a.To provide all Filipino workers within their jurisdiction
assistance on all matters arising out of employment;
b.To insure that Filipino workers are not exploited or
discriminated against;
c.To verify and certify as requisite to authentication that the
terms and conditions of employment in contracts involving
Filipino workers are in accordance with the Labor Code and
rules and regulations of the Overseas Employment
Development Board and National Seamen Board;
d.To make continuing studies or researches and
recommendations on the various aspects of the employment
market within their jurisdiction;
e.To gather and analyze information on the employment
situation and its probable trends, and to make such
information available; and
f.To perform such other duties as may be required of them
from time to time.
Art. 22. Mandatory remittance of foreign exchange
earnings. It shall be mandatory for all Filipino workers abroad
to remit a portion of their foreign exchange earnings to their
families, dependents, and/or beneficiaries in the country in
accordance with rules and regulations prescribed by the
Secretary of Labor.
SEAMEN OR MARINERS 80%
WORKERS FOR FILIPINO CONTRACTORS/CONSTRUCTIOM CO. 70%
PROFESSIONALS WHOSE EMPLOYMENT CONTRACT PROVIDE
FOR LODGING FACILITIES 70%
PROFESSIONALS WITHOUT BOARD AND LODGING 50%
DOMESTIC AND OTHER SERVICE WORKERS 50%
C.BOOK I, TITLE I, CHAPTER 2 (Art. 25-35)
Art. 25. Private sector participation in the recruitment
and placement of workers. Pursuant to national
development objectives and in order to harness and maximize
the use of private sector resources and initiative in the
development and implementation of a comprehensive
employment program, the private employment sector shall
participate in the recruitment and placement of workers,

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J.SUAREZ II, 2ND SEM,SY 12-13
locally and overseas, under such guidelines, rules and
regulations as may be issued by the Secretary of Labor.
Art. 26. Travel agencies prohibited to recruit. Travel
agencies and sales agencies of airline companies are
prohibited from engaging in the business of recruitment and
placement of workers for overseas employment whether for
profit or not.
Art. 27. Citizenship requirement. Only Filipino citizens or
corporations, partnerships or entities at least seventy-five
percent (75%) of the authorized and voting capital stock of
which is owned and controlled by Filipino citizens shall be
permitted to participate in the recruitment and placement of
workers, locally or overseas.
Art. 28. Capitalization. All applicants for authority to hire or
renewal of license to recruit are required to have such
substantial capitalization as determined by the Secretary of
Labor.
Art. 29. Non-transferability of license or authority. No
license or authority shall be used directly or indirectly by any
person other than the one in whose favor it was issued or at
any place other than that stated in the license or authority be
transferred, conveyed or assigned to any other person or
entity. Any transfer of business address, appointment or
designation of any agent or representative including the
establishment of additional offices anywhere shall be subject
to the prior approval of the Department of Labor.
Art. 30. Registration fees. The Secretary of Labor shall
promulgate a schedule of fees for the registration of all
applicants for license or authority.
Art. 31. Bonds. All applicants for license or authority shall
post such cash and surety bonds as determined by the
Secretary of Labor to guarantee compliance with prescribed
recruitment procedures, rules and regulations, and terms and
conditions of employment as may be appropriate.
Art. 32. Fees to be paid by workers. Any person applying
with a private fee-charging employment agency for
employment assistance shall not be charged any fee until he
has obtained employment through its efforts or has actually
commenced employment. Such fee shall be always covered
with the appropriate receipt clearly showing the amount paid.
The Secretary of Labor shall promulgate a schedule of
allowable fees.
Art. 33. Reports on employment status. Whenever the
public interest requires, the Secretary of Labor may direct all
persons or entities within the coverage of this Title to submit
a report on the status of employment, including job
vacancies, details of job requisitions, separation from jobs,
wages, other terms and conditions and other employment
data.
Art. 35. Suspension and/or cancellation of license or
authority. The Minister of Labor shall have the power to
suspend or cancel any license or authority to recruit EEs for
overseas employment for violation of rules and regulations
issued by the Ministry of Labor, the Overseas Employment
Development Board, or for violation of the provisions of this
and other applicable laws, General Orders and Letters of
Instructions.
D.BOOK I, TITLE I, CHAPTER 3 (Art. 36-38)
Art. 36. Regulatory power. The Secretary of Labor shall
have the power to restrict and regulate the recruitment and
placement activities of all agencies within the coverage of this
Title and is hereby authorized to issue orders and promulgate
rules and regulations to carry out the objectives and
implement the provisions of this Title.
Art. 37. Visitorial Power. The Secretary of Labor or his duly
authorized representatives may, at any time, inspect the
premises, books of accounts and records of any person or
entity covered by this Title, require it to submit reports
regularly on prescribed forms, and act on violation of any
provisions of this Title.
i.ILLEGAL RECRUITMENT
a.DEFINITION - Art. 38. Illegal recruitment.
a.Any recruitment activities, including the prohibited practices
enumerated under Article 34 of this Code, to be undertaken
by non-licensees or non-holders of authority, shall be deemed
illegal and punishable under Article 39 of this Code. The
Department of Labor and Employment or any law
enforcement officer may initiate complaints under this Article.
b.Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving economic
sabotage and shall be penalized in accordance with Article 39
hereof.
Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons conspiring
and/or confederating with one another in carrying out any
unlawful or illegal transaction, enterprise or scheme defined
under the first paragraph hereof. Illegal recruitment is
deemed committed in large scale if committed against three
(3) or more persons individually or as a group.
c.The Secretary of Labor and Employment or his duly
authorized representatives shall have the power to cause the
arrest and detention of such non-licensee or non-holder of
authority if after investigation it is determined that his

activities constitute a danger to national security and public

order or will lead to further exploitation of job-seekers. The
Secretary shall order the search of the office or premises and
seizure of documents, paraphernalia, properties and other
implements used in illegal recruitment activities and the
closure of companies, establishments and entities found to be
engaged in the recruitment of workers for overseas
employment, without having been licensed or authorized to
do so.
b.PROHIBITED ACTS - Art. 34. Prohibited practices. It
shall be unlawful for any individual, entity, licensee, or holder
of authority:
a.To charge or accept, directly or indirectly, any amount
greater than that specified in the schedule of allowable fees
prescribed by the Secretary of Labor, or to make a worker pay
any amount greater than that actually received by him as a
loan or advance;
b.To furnish or publish any false notice or information or
document in relation to recruitment or employment;
c.To give any false notice, testimony, information or document
or commit any act of misrepresentation for the purpose of
securing a license or authority under this Code.
d.To induce or attempt to induce a worker already employed
to quit his employment in order to offer him to another unless
the transfer is designed to liberate the worker from oppressive
terms and conditions of employment;
e.To influence or to attempt to influence any person or entity
not to employ any worker who has not applied for
employment through his agency;
f.To engage in the recruitment or placement of workers in jobs
harmful to public health or morality or to the dignity of the
Republic of the Philippines;
g.To obstruct or attempt to obstruct inspection by the
Secretary of Labor or by his duly authorized representatives;
h.To fail to file reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such other
matters or information as may be required by the Secretary of
Labor.
i.To substitute or alter employment contracts approved and
verified by the Department of Labor from the time of actual
signing thereof by the parties up to and including the periods
of expiration of the same without the approval of the
Secretary of Labor;
j.To become an officer or member of the Board of any
corporation engaged in travel agency or to be engaged
directly or indirectly in the management of a travel agency;
and
k.To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations other than those authorized under this Code
and its implementing rules and regulations.
c.ELEMENTS OF ILLEGAL RECRUITMENT:
1. the offender is a licensee/non-licensee or holder/non-holder
of authority engaged in the recruitment and placement of
workers
2. the offender undertakes either any recruitment activities
defined under Art.13b, or any prohibited practices
enumerated under Art.34.
d.ILLEGAL RECRUITMENT IN LARGE SCALE OR BY A
SYNDICATE
LARGE SCALE illegal recruitment is committed AGAINST 3 or
more persons individually or as a group
SYNDICATE illegal recruitment is committed BY 3 or more
person who conspire or confederate with one another in
carrying out any unlawful or illegal transaction enterprise or
scheme.
READ:RA8042, as amended by RA10022
Section 5.Definition. - For purposes of this Act, illegal
recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring
workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not,
when undertaken by non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential Decree No.
442, as amended, otherwise known as the Labor Code of the
Philippines: Provided, That any such non-licensee or nonholder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed
so engaged. It shall likewise include the following acts,
whether committed by any person, whether a non-licensee,
non-holder, licensee or holder of authority:
"(a) To charge or accept directly or indirectly any amount
greater than that specified in the schedule of allowable fees
prescribed by the Secretary of Labor and Employment, or to
make a worker pay or acknowledge any amount greater than
that actually received by him as a loan or advance;
"(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
"(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the Labor
Code, or for the purpose of documenting hired workers with
the POEA, which include the act of reprocessing workers
through a job order that pertains to nonexistent work, work
different from the actual overseas work, or work with a
different ER whether registered or not with the POEA;
"(d) To include or attempt to induce a worker already
employed to quit his employment in order to offer him
another unless the transfer is designed to liberate a worker
from oppressive terms and conditions of employment;

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J.SUAREZ II, 2ND SEM,SY 12-13
"(e) To influence or attempt to influence any person or entity
not to employ any worker who has not applied for
employment through his agency or who has formed, joined or
supported, or has contacted or is supported by any union or
workers' organization;
"(f) To engage in the recruitment or placement of workers in
jobs harmful to public health or morality or to the dignity of
the Republic of the Philippines;
"(h) To fail to submit reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such other
matters or information as may be required by the Secretary of
Labor and Employment;
"(i) To substitute or alter to the prejudice of the worker,
employment contracts approved and verified by the
Department of Labor and Employment from the time of actual
signing thereof by the parties up to and including the period
of the expiration of the same without the approval of the
Department of Labor and Employment;
"(j) For an officer or agent of a recruitment or placement
agency to become an officer or member of the Board of any
corporation engaged in travel agency or to be engaged
directly or indirectly in the management of travel agency;
"(k) To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations, or for any other reasons, other than those
authorized under the Labor Code and its implementing rules
and regulations;
"(l) Failure to actually deploy a contracted worker without
valid reason as determined by the Department of Labor and
Employment;
"(m) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for
purposes of deployment, in cases where the deployment does
not actually take place without the worker's fault. Illegal
recruitment when committed by a syndicate or in large scale
shall be considered an offense involving economic sabotage;
and
"(n) To allow a non-Filipino citizen to head or manage a
licensed recruitment/manning agency.
"Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons conspiring
or confederating with one another. It is deemed committed in
large scale if committed against three (3) or more persons
individually or as a group.
"In addition to the acts enumerated above, it shall also be
unlawful for any person or entity to commit the following
prohibited acts:
"(1) Grant a loan to an overseas Filipino worker with interest
exceeding eight percent (8%) per annum, which will be used
for payment of legal and allowable placement fees and make
the migrant worker issue, either personally or through a
guarantor or accommodation party, postdated checks in
relation to the said loan;
"(2) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to avail of a
loan only from specifically designated institutions, entities or
persons;
"(3) Refuse to condone or renegotiate a loan incurred by an
overseas Filipino worker after the latter's employment
contract has been prematurely terminated through no fault of
his or her own;
"(4) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to undergo
health examinations only from specifically designated medical
clinics, institutions, entities or persons, except in the case of a
seafarer whose medical examination cost is shouldered by the
principal/shipowner;
"(5) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to undergo
training, seminar, instruction or schooling of any kind only
from specifically designated institutions, entities or persons,
except fpr recommendatory trainings mandated by
principals/shipowners where the latter shoulder the cost of
such trainings;
"(6) For a suspended recruitment/manning agency to engage
in any kind of recruitment activity including the processing of
pending workers' applications; and
"(7) For a recruitment/manning agency or a foreign
principal/ER to pass on the overseas Filipino worker or deduct
from his or her salary the payment of the cost of insurance
fees, premium or other insurance related charges, as provided
under the compulsory worker's insurance coverage.
"The persons criminally liable for the above offenses are the
principals, accomplices and accessories. In case of juridical
persons, the officers having ownership, control, management
or direction of their business who are responsible for the
commission of the offense and the responsible EEs/agents
thereof shall be liable.
"In the filing of cases for illegal recruitment or any of the
prohibited acts under this section, the Secretary of Labor and
Employment, the POEA Administrator or their duly authorized
representatives, or any aggrieved person may initiate the
corresponding criminal action with the appropriate office. For
this purpose, the affidavits and testimonies of operatives or
personnel from the Department of Labor and Employment,
POEA and other law enforcement agencies who witnessed the
acts constituting the offense shall be sufficient to prosecute
the accused.
"In the prosecution of offenses punishable under this section,
the public prosecutors of the Department of Justice shall
collaborate with the anti-illegal recruitment branch of the
POEA and, in certain cases, allow the POEA lawyers to take

the lead in the prosecution. The POEA lawyers who act as

prosecutors in such cases shall be entitled to receive
additional allowances as may be determined by the POEA
Administrator.
"The filing of an offense punishable under this Act shall be
without prejudice to the filing of cases punishable under other
existing laws, rules or regulations."1avvphi1
Section 6.Penalties.
"(a) Any person found guilty of illegal recruitment shall suffer
the penalty of imprisonment of not less than twelve (12) years
and one (1) day but not more than twenty (20) years and a
fine of not less than One million pesos (P1,000,000.00) nor
more than Two million pesos (P2,000,000.00).
"(b) The penalty of life imprisonment and a fine of not less
than Two million pesos (P2,000,000.00) nor more than Five
million pesos (P5,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined
therein.
"Provided, however, That the maximum penalty shall be
imposed if the person illegally recruited is less than eighteen
(18) years of age or committed by a non-licensee or nonholder of authority.
"(c) Any person found guilty of any of the prohibited acts shall
suffer the penalty of imprisonment of not less than six (6)
years and one (1) day but not more than twelve (12) years
and a fine of not less than Five hundred thousand pesos
(P500,000.00) nor more than One million pesos
(P1,000,000.00).
"If the offender is an alien, he or she shall, in addition to the
penalties herein prescribed, be deported without further
proceedings.
"In every case, conviction shall cause and carry the automatic
revocation of the license or registration of the
recruitment/manning agency, lending institutions, training
school or medical clinic."
Section 7.Prescription. Illegal recruitment cases under this
Rule shall prescribe in five (5) years; Provided, however, that
illegal recruitment cases involving economic sabotage shall
prescribed in twenty (20) years.
Section 8.Independent Action. The filing of an offense
punishable under this section shall be without prejudice to the
filing of cases punishable under other existing laws, rules or
regulations.
e.ILLEGAL RECRUITMENT AND ESTAFA
a person may be charged and convicted for both. Illegal
recruitment is a malum prohibitum, whereas estafa is malum
in se, meaning that the criminal intent is not necessary for
conviction in the former but is required in the latter.
Acts constituting estafa the accused represented
themselves to complainants to have capacity to send workers
abroad although they did not have authority or livense. It is by
this representation that they induced complainants to pay a
placement fee. Such acts constitute estafa under Art.315,
par.2 of the RPC.
f.POWERS OF THE SECRETARY OF LABOR
We reiterate that the Secretary of Labor, not being a judge,
may no longer issue search or arrest warrants. Hence, the
authorities must go through the judicial process. To that
extent, we declare Article 38, paragraph (c), of the Labor
Code, unconstitutional and of no force and effect.
Exception: in cases of deportation of illegal and undesirable
aliens whom the president or the commissioner of
immigration may order arrested, following a final order of
deportation. (SALAZAR v. ACHACOSO)
Note: the secretary of lanor may order closure of illegal
recruitment establishment because it is only administrative
and regulatory in nature.
g.MIGRANT WORKERS/OFW
0FW-Person who is to be engaged, is engaged or has been
engaged in a remunerated activity in a state of which he or
she is not a citizen or on board a vessel navigating the foreign
seas other than a government ship used for military or noncommercial purposes or on an installation located offshore or
on the high seas; to be used interchangeably with MIGRANT
WORKERS.
i.COMMENCEMENT OF EE-relationship
We rule that distinction must be made between the perfection
of the employment contract and the commencement of the
ER-EE relationship. The perfection of the contract, which in
this case coincided with the date of execution thereof,
occurred when petitioner and respondent agreed on the
object and the cause, as well as the rest of the terms and
conditions therein. The commencement of the ER-EE
relationship, as earlier discussed, would have taken place
had petitioner been actually deployed from the point of hire.
Thus, even before the start of any ER-EE relationship,
contemporaneous with the perfection of the employment
contract was the birth of certain rights and obligations, the
breach of which may give rise to a cause of action against the
erring party. Thus, if the reverse had happened, that is the
seafarer failed or refused to be deployed as agreed upon, he
would be liable for damages. (STOLT-NIELSEN v. MEDIGUILLO)
ii.SECTION 10 of RA8042
the subject clause in the 5th paragraph of Section 10 of R.A.
No. 8042 is violative of the right of petitioner and other OFWs

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J.SUAREZ II, 2ND SEM,SY 12-13
to equal protection. The subject clause or for three months
for every year of the unexpired term, whichever is less in the
5th paragraph of Section 10 of Republic Act No. 8042 is
DECLARED UNCONSTITUTIONAL. (SERRANO v. GALLANT
MARITIME SERVICES INC.)
iii.LIABILITY OF PRINCIPAL/AGENT FOR DAMAGES
the recruitment agency is solidarily liable with the foreign
principal for unpaid salaries of a worker it recruited. Before
recruiting, the agency is required to submit a document
containing its power to sue and be sued jointly and solidarily
with the principal or foreign based ER for any violation of the
recruitment agreement and the contracts of employment.
(Sec.10, Rule V of the implementing regulation of the LC)
Note: the recruitment agency may still be sued even if the
agency agreement between the recruitment agency and the
principal is already severed if no notice of the termination was
given to the EE based on Art. 1921.
Exception: where the workers themselves insisted for the
recruitment agency to send them back to their foreign ER
despite their knowledge of its ability to pay their wages, the
Court absolved the agency from liability.
Note: even if it was the principal of the manning agency who
entered into contract with the EE, the manning agent in the
Philippines is jointly and solidarily liable with the principal.
Note: a foreign corporation that, through unlicensed agents,
recruits workers in the country may be sued in and found
liable by Philippine Courts.
E. BOOK I, TITLE II, CHAPTER 3 (Art. 39-42)
Art. 39. Penalties.
a.The penalty of life imprisonment and a fine of One Hundred
Thousand Pesos (P1000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein;
b.Any licensee or holder of authority found violating or
causing another to violate any provision of this Title or its
implementing rules and regulations shall, upon conviction
thereof, suffer the penalty of imprisonment of not less than
two years nor more than five years or a fine of not less than
P10,000 nor more than P50,000, or both such imprisonment
and fine, at the discretion of the court;
c.Any person who is neither a licensee nor a holder of
authority under this Title found violating any provision thereof
or its implementing rules and regulations shall, upon
conviction thereof, suffer the penalty of imprisonment of not
less than four years nor more than eight years or a fine of not
less than P20,000 nor more than P100,000 or both such
imprisonment and fine, at the discretion of the court;
d.If the offender is a corporation, partnership, association or
entity, the penalty shall be imposed upon the officer or
officers of the corporation, partnership, association or entity
responsible for violation; and if such officer is an alien, he
shall, in addition to the penalties herein prescribed, be
deported without further proceedings;
e.In every case, conviction shall cause and carry the
automatic revocation of the license or authority and all the
permits and privileges granted to such person or entity under
this Title, and the forfeiture of the cash and surety bonds in
favor of the Overseas Employment Development Board or the
National Seamen Board, as the case may be, both of which
are authorized to use the same exclusively to promote their
objectives.
Title II
EMPLOYMENT OF NON-RESIDENT ALIENS
Art. 40. Employment permit of non-resident aliens. Any
alien seeking admission to the Philippines for employment
purposes and any domestic or foreign ER who desires to
engage an alien for employment in the Philippines shall obtain
an employment permit from the Department of Labor.
The employment permit may be issued to a non-resident alien
or to the applicant ER after a determination of the nonavailability of a person in the Philippines who is competent,
able and willing at the time of application to perform the
services for which the alien is desired.
For an enterprise registered in preferred areas of investments,
said
employment
permit
may
be
issued
upon
recommendation of the government agency charged with the
supervision of said registered enterprise.
Art. 41. Prohibition against transfer of employment.
a.After the issuance of an employment permit, the alien shall
not transfer to another job or change his ER without prior
approval of the Secretary of Labor.
b.Any non-resident alien who shall take up employment in
violation of the provision of this Title and its implementing
rules and regulations shall be punished in accordance with the
provisions of Articles 289 and 290 of the Labor Code.
In addition, the alien worker shall be subject to deportation
after service of his sentence.
Art. 42. Submission of list. Any ER employing non-resident
foreign nationals on the effective date of this Code shall
submit a list of such nationals to the Secretary of Labor within
thirty (30) days after such date indicating their names,
citizenship, foreign and local addresses, nature of
employment and status of stay in the country. The Secretary
of Labor shall then determine if they are entitled to an
employment permit.

a.DEFINITION
i. ART. 58. Definition of Terms. - As used in this Title:
(a) "Apprenticeship" means practical training on the job
supplemented by related theoretical instruction.
(b) An "apprentice" is a worker who is covered by a written
apprenticeship agreement with an individual ER or any of the
entities recognized under this Chapter.
(c) An "apprenticeable occupation" means any trade, form
of employment or occupation which requires more than three
(3) months of practical training on the job supplemented by
related theoretical instruction.
(d) "Apprenticeship agreement" is an employment
contract wherein the ER binds himself to train the apprentice
and the apprentice in turn accepts the terms of training.
ii.LEARNERS ART. 73. Learners defined. - Learners are
persons hired as trainees in semi-skilled and other industrial
occupations which are non-apprenticeable and which may be
learned through practical training on the job in a relatively
short period of time which shall not exceed three (3) months.
ii.HANDICAPPED WORKERS - ART. 78. Definition. Handicapped workers are those whose earning capacity is
impaired by age or physical or mental deficiency or injury.
READ: RA7796(TESDA LAW), SEC.4.
SEC. 4. Definition of Terms. - As used in this Act:
"Skill" shall mean the acquired and practiced ability to carry
out a task or job;
"Skills Development" shall mean the process through which
learners and workers are
systematically provided with
learning opportunities to acquire or upgrade, or both, their
ability, knowledge and behavior pattern required as
qualifications for a job or range of jobs in a given occupational
area;
"Technical Education" shall refer to the education process
designed at post-secondary and lower tertiary levels, officially
recognized as non-degree programs aimed at preparing
technicians, para-professionals and other categories of
middle-level workers by providing them with a broad range of
general education, theoretical, scientific and technological
studies, and related job skills training;
"Trade" shall mean any group of interrelated jobs or any
occupation which is traditionally or officially recognized as
craft or artisan in nature requiring specific qualifications that
can be acquired through work experience and/or training;
"Middle-Level Manpower" refers to those:
1.who have acquired practical skills and knowledge through
formal or non-formal education and training equivalent to at
least a secondary education but preferably at post-secondary
education with a corresponding degree of diploma; or
2.skilled workers who have become highly competent in their
trade or craft as attested by industry;
"Private Enterprises" refers to an economic system under
which property of all kinds can be privately owned and in
which individuals, alone or in association with another, can
embark on a business activity. This includes industrial,
agricultural, or agro-industrial establishments engaged in the
production, manufacturing, processing, repacking or assembly
of goods including service-oriented enterprises;
"Trainers" shall mean persons who direct the practice of skills
towards immediate improvement in some task;
"Trainors/trainers" shall mean persons who provide training to
trainers aimed at developing the latter's capacities for
imparting attitudes, knowledge, skills and behavior patters
required for specific jobs, tasks, occupations or group of
related occupations.
"Trainees" shall mean persons who are participants in a
vocational, administrative or technical training program for
the purpose of acquiring and developing job-related skills;
"Apprenticeship" training within employment with
compulsory related theoretical instruction involving a contract
between an apprentice and an ER on an approved
apprenticeable occupation;
"Apprentice" is a person undergoing training for an approved
apprenticeable occupation during an apprenticeship
agreement;
"Apprenticeship Agreement" is a contract wherein a
prospective ER binds himself to train the apprentice who in
turn accepts the terms of training for a recognized
apprenticeable occupation emphasizing the rights, duties and
responsibilities of each party;
"Apprenticeable Occupation" is an occupation officially
endorsed by a tripartite body and approved for apprenticeable
by the Authority;
"Learners" refers to persons hired as trainees in semi-skilled
and other industrial occupations which are nonapprenticeable. Learnership programs must be approved by
the Authority;
"User-Led" or "Market-Driven Strategy" refers to a strategy
which
promotes
strengthened
linkages
between
educational/training institutions and industry to ensure that
appropriate skills and knowledge are provided by the
educational system;
"Dual System/Training" refers to a delivery system of quality
technical and vocational education which requires training to
be carried out alternately in two venues: in-school and in the
production plant. In- school training provides the trainee the
theoretical foundation, basic training, guidance and human
formation, while in-plant training develops his skills and
proficiency in actual work conditions as it continues to
inculcate personal discipline and work values;

F.BOOK II, TITLE II, CHAPTERS 1-3

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J.SUAREZ II, 2ND SEM,SY 12-13
"Levy Grant System" refers to a legal contribution from
participating ERs who would be beneficiaries of the program
(often as a percentage of the payroll) which is subsequently
turned over or rebated to enterprises offering EE training
programs.
READ: RA7277(MAGNA CARTA FOR PERSONS WITH
DISABILITY) SEC.4,5,7,32
Sec. 4. Definition of Terms. For purposes of this Act,
these terms are defined as follows:
(a) Disabled persons are those suffering from restriction or
different abilities, as a result of a mental, physical or sensory
impairment, to perform an activity in the manner or within the
range considered normal for a human being;
(b) Impairment is any loss, diminution or aberration of
psychological, physiological, or anatomical structure or
function;
(c) Disability shall mean 1) a physical or mental impairment
that substantially limits one or more psychological,
physiological or anatomical function of an individual or
activities of such individual; 2) a record of such an
impairment; or 3) being regarded as having such an
impairment;
(d) Handicap refers to a disadvantage for a given individual,
resulting from an impairment or a disability, that limits or
prevents the function or activity, that is considered normal
given the age and sex of the individual;
(e) Rehabilitation is an integrated approach to physical, social,
cultural, spiritual, educational and vocational measures that
create conditions for the individual to attain the highest
possible level of functional ability;
(f) Social Barriers refer to the characteristics of institutions,
whether legal, economic, cultural, recreational or other, any
human group, community, or society which limit the fullest
possible participation of disabled persons in the life of the
group. Social barriers include negative attitudes which tend to
single out and exclude disabled persons and which distort
roles and inter-personal relationships;
(g) Auxiliary Aids and Services include:
(1) qualified interpreters or other effective methods of
delivering materials to individuals with hearing impairments;
(2) qualified readers, taped tests, or other effective methods
of delivering materials to individuals with visual impairments;
(3) acquisition or modification of equipment or devices; and
(4) other similar services and actions or all types of aids and
services that facilitate the learning process of people with
mental disability.
(h) Reasonable Accommodation include 1) improvement of
existing facilities used by EEs in order to render these readily
accessible to and usable by disabled persons; and 2)
modification of work schedules, reassignment to a vacant
position, acquisition or modification of equipment or devices,
appropriate adjustments or modifications of examinations,
training materials or company policies, rules and regulations,
the provision of auxiliary aids and services, and other similar
accommodations for disabled persons;
(i) Sheltered Employment refers to the provision of productive
work for disabled persons through workshops providing
special facilities, income-producing projects or homework
schemes with a view to giving them the opportunity to earn a
living thus enabling them to acquire a working capacity
required in open industry;
(j) Auxiliary Social Services are the supportive activities in the
delivery of social services to the marginalized sectors of
society;
(k) Marginalized Disabled Persons refer to disabled persons
who lack access to rehabilitative services and opportunities to
be able to participate fully in socioeconomic activities and
who have no means of livelihood and whose incomes fall
below the poverty threshold;
(l) Qualified Individual with a Disability shall mean an
individual with a disability who, with or without reasonable
accommodations, can perform the essential functions of the
employment position that such individual holds or desires.
However, consideration shall be given to the ER's judgment as
to what functions of a job are essential, and if an ER has
prepared a written description before advertising or
interviewing applicants for the job, this description shall be
considered evidence of the essential functions of the job;
(m) Readily Achievable means a goal can be easily attained
and carried out without much difficulty or expense. In
determining whether an action is readily achievable, factors
to be considered include
(1) the nature and cost of the action;
(2) the overall financial resources of the facility or facilities
involved in the action; the number of persons employed at
such facility; the effect on expenses and resources, or the
impact otherwise of such action upon the operation of the
facility;
(3) the overall financial resources of the covered entity with
respect to the number of its EEs; the number, type and
location of its facilities; and
(4) the type of operation or operations of the covered entity,
including the composition, structure and functions of the work
force of such entity; the geographic separateness,
administrative or fiscal relationship of the facility or facilities
in question to the covered entity.
(n) Public Transportation means transportation by air, land
and sea that provides the public with general or special
service on a regular and continuing basis;
(o) Covered Entity means an ER, employment agency, labor
organization or joint-labor management committee; and

(p) Commerce shall be taken to mean as travel, trade, traffic,

commerce, transportation, or communication among the
provinces or between any foreign country or any territory or
possession and any province.
Sec. 5. Equal Opportunity for Employment. No disable
person shall be denied access to opportunities for suitable
employment. A qualified disabled EE shall be subject to the
same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives
or allowances as a qualified able bodied person.
Five percent (5%) of all casual emergency and contractual
positions in the Departments of Social Welfare and
Development; Health; Education, Culture and Sports; and
other government agencies, offices or corporations engaged
in social development shall be reserved for disabled persons.
Sec. 7. Apprenticeship. Subject to the provisions of the
Labor Code as amended, disabled persons shall be eligible as
apprentices or learners: Provided, That their handicap is not
as much as to effectively impede the performance of job
operations in the particular occupation for which they are
hired; Provided, further, That after the lapse of the period of
apprenticeship, if found satisfactory in the job performance,
they shall be eligible for employment.
Sec. 32. Discrimination on Employment. No entity,
whether public or private, shall discriminate against a
qualified disabled person by reason of disability in regard to
job application procedures, the hiring, promotion, or discharge
of EEs, EE compensation, job training, and other terms,
conditions, and privileges of employment. The following
constitute acts of discrimination:
(a) Limiting, segregating or classifying a disabled job
applicant in such a manner that adversely affects his work
opportunities;
(b) Using qualification standards, employment tests or other
selection criteria that screen out or tend to screen out a
disabled person unless such standards, tests or other
selection criteria are shown to be job-related for the position
in question and are consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration
that:
(1) have the effect of discrimination on the basis of disability;
or
(2) perpetuate the discrimination of others who are subject to
common administrative control.
(d) Providing less compensation, such as salary, wage or other
forms of remuneration and fringe benefits, to a qualified
disabled EE, by reason of his disability, than the amount to
which a non-disabled person performing the same work is
entitled;
(e) Favoring a non-disabled EE over a qualified disabled EE
with respect to promotion, training opportunities, study and
scholarship grants, solely on account of the latter's disability;
(f) Re-assigning or transferring a disabled EE to a job or
position he cannot perform by reason of his disability;
(g) Dismissing or terminating the services of a disabled EE by
reason of his disability unless the ER can prove that he
impairs the satisfactory performance of the work involved to
the prejudice of the business entity: Provided, however, That
the ER first sought to provide reasonable accommodations for
disabled persons;
(h) Failing to select or administer in the most effective manner
employment tests which accurately reflect the skills, aptitude
or other factor of the disabled applicant or EE that such tests
purports to measure, rather than the impaired sensory,
manual or speaking skills of such applicant or EE, if any; and
(i) Excluding disabled persons from membership in labor
unions or similar organizations.
READ: RA7610(PROTECTION AGAINST CHILD ABUSE)
SEC.12
Sec. 12. Employment of Children. Children below fifteen
(15) years of age may be employed except:
(1) When a child works directly under the sole responsibility of
his parents or legal guardian and where only members of the
ER's family are employed: Provided, however, That his
employment neither endangers his life, safety and health and
morals, nor impairs his normal development: Provided,
further, That the parent or legal guardian shall provide the
said minor child with the prescribed primary and/or secondary
education; or
(2) When a child's employment or participation in public &
entertainment or information through cinema, theater, radio
or television is essential: Provided, The employment contract
concluded by the child's parent or guardian, with the express
agreement of the child concerned, if possible, and the
approval of the Department of Labor and Employment:
Provided, That the following requirements in all instances are
strictly complied with:
(a) The ER shall ensure the protection, health, safety and
morals of the child;
(b) the ER shall institute measures to prevent the child's
exploitation or discrimination taking into account the system
and level of remuneration, and the duration and arrangement
of working time; and;
(c) The ER shall formulate and implement, subject to the
approval and supervision of competent authorities, a
continuing program for training and skill acquisition of the
child.
In the above exceptional cases where any such child may be
employed, the ER shall first secure, before engaging such
child, a work permit from the Department of Labor and

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LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
Employment which shall ensure observance of the above
requirement.
The Department of Labor Employment shall promulgate rules
and regulations necessary for the effective implementation of
this Sec.

"Field personnel" shall refer to non-agricultural EEs who

regularly perform their duties away from the principal place of
business or branch office of the ER and whose actual hours of
work in the field cannot be determined with reasonable
certainty.

b.REQUIREMENTS/EFFECT OF AN INVALID AGREEMENT

Since Palad is not considered an apprentice because the
apprenticeship agreement was enforced before the TESDAs
approval of petitioners apprenticeship program, Palad is
deemed a regular EE performing the job of a "fish cleaner."
Clearly, the job of a "fish cleaner" is necessary in petitioners
business as a tuna and sardines factory. Under Article 28021
of the Labor Code, an employment is deemed regular where
the EE has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade
of the ER. (CENTURY CANNING v. CA)

i.MANAGERIAL
EES
v.
MANAGERIAL
STAFF/SUPERVISORS
READ: TITLE I, BOOK III, RULE1,SEC.2(b) AND (c),
OMNIBUS RULES OF THE LABOR CODE
SECTION 2. Exemption. The provisions of this Rule shall
not apply to the following persons if they qualify for
exemption under the conditions set forth herein:
(a) Government EEs whether employed by the National
Government or any of its political subdivision, including those
employed
in
government-owned
and/or
controlled
corporations;

Even if we recognize the companys need to train its EEs

through apprenticeship, we can only consider the first
apprenticeship agreement for the purpose. With the
expiration of the first agreement and the retention of the EEs,
Atlanta had, to all intents and purposes, recognized the
completion of their training and their acquisition of a regular
EE status. To foist upon them the second apprenticeship
agreement for a second skill which was not even mentioned in
the agreement itself,is a violation of the Labor Codes
implementing rules60 and is an act manifestly unfair to the
EEs, to say the least. This we cannot allow.(ATLANTA v.
SEBOLINO)

(b) Managerial EEs, if they meet all of the following

conditions:
(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department
or sub-division thereof.
(2) They customarily and regularly direct the work of two or
more EEs therein.
(3) They have the authority to hire or fire EEs of lower rank; or
their suggestions and recommendations as to hiring and firing
and as to the promotion or any other change of status of
other EEs, are given particular weight.

c.DISABLED PERSONS ATTAINING REGULAR STATUS

Without a doubt, the task of counting and sorting bills is
necessary and desirable to the business of respondent bank.
As held by the Court, "Articles 280 and 281 of the Labor Code
put an end to the pernicious practice of making permanent
casuals of our lowly EEs by the simple expedient of extending
to them probationary appointments, ad infinitum." The
contract signed by petitioners is akin to a probationary
employment, during which the bank determined the EEs'
fitness for the job. When the bank renewed the contract after
the lapse of the six-month probationary period, the EEs
thereby became regular EEs. No ER is allowed to determine
indefinitely the fitness of its EEs.(BERNARDO v. NLRC)
G.BOOK III(CONDITIONS OF EMPLOYMENT)
1.TITLE I, CHAPTER I, ART.82-90
ART. 83. Normal hours of work. - The normal hours of work
of any EE shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population
of at least one million (1,000,000) or in hospitals and clinics
with a bed capacity of at least one hundred (100) shall hold
regular office hours for eight (8) hours a day, for five (5) days
a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for
six (6) days or forty-eight (48) hours, in which case, they shall
be entitled to an additional compensation of at least thirty
percent (30%) of their regular wage for work on the sixth day.
For purposes of this Article, "health personnel" shall include
resident
physicians,
nurses,
nutritionists,
dietitians,
pharmacists,
social
workers,
laboratory
technicians,
paramedical technicians, psychologists, midwives, attendants
and
all
other
hospital
or
clinic
personnel.
chanroblesvirtuallawlibrary
ART. 85. Meal periods. - Subject to such regulations as the
Secretary of Labor may prescribe, it shall be the duty of every
ER to give his EEs not less than sixty (60) minutes time-off for
their regular meals.
ART. 86. Night shift differential. - Every EE shall be paid a
night shift differential of not less than ten percent (10%) of his
regular wage for each hour of work performed between ten
oclock in the evening and six oclock in the morning.
ART. 87. Overtime work. - Work may be performed beyond
eight (8) hours a day provided that the EE is paid for the
overtime work, an additional compensation equivalent to his
regular wage plus at least twenty-five percent (25%) thereof.
Work performed beyond eight hours on a holiday or rest day
shall be paid an additional compensation equivalent to the
rate of the first eight hours on a holiday or rest day plus at
least thirty percent (30%) thereof.
ART. 88. Undertime not offset by overtime. - Undertime
work on any particular day shall not be offset by overtime
work on any other day. Permission given to the EE to go on
leave on some other day of the week shall not exempt the ER
from paying the additional compensation required in this
Chapter.
ART. 90. Computation of additional compensation. - For
purposes of computing overtime and other additional
remuneration as required by this Chapter, the "regular wage"
of an EE shall include the cash wage only, without deduction
on account of facilities provided by the ER.
a.COVERAGE - ART. 82. Coverage. - The provisions of this
Title shall apply to EEs in all establishments and undertakings
whether for profit or not, but not to government EEs,
managerial EEs, field personnel, members of the family of the
ER who are dependent on him for support, domestic helpers,
persons in the personal service of another, and workers who
are paid by results as determined by the Secretary of Labor in
appropriate regulations.
As used herein, "managerial EEs" refer to those whose
primary duty consists of the management of the
establishment in which they are employed or of a department
or subdivision thereof, and to other officers or members of the
managerial staff.

(c) Officers or members of a managerial staff if they

perform the following duties and responsibilities:
(1) The primary duty consists of the performance of work
directly related to management policies of their ER;
(2) Customarily and regularly exercise discretion and
independent judgment; and
(3) (i) Regularly and directly assist a proprietor or a
managerial EE whose primary duty consists of the
management of the establishment in which he is employed or
subdivision thereof; or (ii) execute under general supervision
work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute, under
general supervision, special assignments and tasks; and
(4) Who do not devote more than 20 percent of their hours
worked in a work week to activities which are not directly and
closely related to the performance of the work described in
paragraphs (1), (2) and (3) above.
a.TEST OF MANAGERIAL/SUPERVISORY STATUS
The test of supervisory or managerial status depends on
whether a person possesses authority to act in the interest of
his ER and whether such authority is not merely routinary or
clerical in nature, but requires the use of independent
judgment.
ii.FIELD PERSONNEL
READ: TITLE I, BOOK III, RULE1,SEC.2(f) OMNIBUS
RULES OF THE LABOR CODE
(f) Non-agricultural field personnel if they regularly perform
their duties away from the principal or branch office or place
of business of the ER and whose actual hours of work in the
field cannot be determined with reasonable certainty
a.DRIVER/CONDUCTOR
it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those
'whose actual hours of work in the field cannot be determined
with reasonable certainty. EEs engaged on task or contract
basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive
leave, unless, they fall under the classification of field
personnel.
AUTOBUS contention that since he is paid on commission
basis exempts him from service incentive pay is MISPLACED.
To ascertain an EEs entitlement to service incentive pay is
whether he is field personnel.
Accdg. to the Bureau of Working Conditions (BWC), Advisory
Opinion to Philippine Technical-Clerical Commercial EEs
Association :
As a general rule, [field personnel] are those whose
performance of their job/service is not supervised by the ER or
his representative, the workplace being away from the
principal office and whose hours and days of work cannot be
determined with reasonable certainty; hence, they are paid
specific amount for rendering specific service or performing
specific work. If required to be at specific places at specific
times, EEs including drivers cannot be said to be field
personnel despite the fact that they are performing work
away from the principal office of the EE.
it is not just about location but also with the fact that the EE's
performance is unsupervised by the ER& if actual hours of
work in the field can be determined with reasonable certainty
by the ER. in every terminal or stop there is a person who will
check the bus, punch the cards of the conductor. Thus, it
shows control of Autobus over the driver, hence, he his not a
field EE but a regular EE.(AUTOBUS v. BAUTISTA)
b.ACTUAL HOURS OF WORK CANNOT BE DETERMINED
WITH REASONABLE CERTAINTY
in the case at bar, during the entire course of their fishing
voyage, fishermen employed by petitioner have no choice but
to remain on board its vessel. Although they perform nonagricultural work away from petitioner's business offices, the

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LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
fact remains that throughout the duration of their work they
are under the effective control and supervision of petitioner
through the vessel's patron or master as the NLRC correctly
held.(MERCIDAR v. NLRC)
iii.FAMILY MEMBERS
members of the family of the ER who are dependent on him
for support. They are not covered by this title because the
amount given by the ER by way of support may far exceed
the benefits to which the EE is entitled under the provisions of
law.
iv.DOMESTIC SERVANTS/PERSONS IN THE PERSONAL
SERVICE OF ANOTHER
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as
amended, the terms househelper or domestic servant are
defined as follows:The term househelper as used herein is
synonymous to the term domestic servant and shall refer to
any person, whether male or female, who renders services in
and about the ERs home and which services are usually
necessary or desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the personal comfort and
enjoyment of the ERs family.
The foregoing definition clearly contemplates such
househelper or domestic servant who is employed in the ERs
home to minister exclusively to the personal comfort and
enjoyment of the ERs family. Such definition covers family
drivers, domestic servants, laundry women, yayas, gardeners,
houseboys and similar househelps.
READ: TITLE I, BOOK III, RULE1,SEC.2(d) OMNIBUS
RULES OF THE LABOR CODE
(d) Domestic servants and persons in the personal service of
another if they perform such services in the ER's home which
are usually necessary or desirable for the maintenance and
enjoyment thereof, or minister to the personal comfort,
convenience, or safety of the ER as well as the members of
his ER's household
The criteria is the personal comfort and enjoyment of the
family of the ER in the home of said ER. While it may be true
that the nature of the work of a househelper, domestic
servant or laundrywoman in a home or in a company
staffhouse may be similar in nature, the difference in their
circumstances is that in the former instance they are actually
serving the family while in the latter case, whether it is a
corporation or a single proprietorship engaged in business or
industry or any other agricultural or similar pursuit, service is
being rendered in the staffhouses or within the premises of
the business of the ER. In such instance, they are EEs of the
company or ER in the business concerned entitled to the
privileges of a regular EE.
The mere fact that the househelper or domestic servant is
working within the premises of the business of the ER and in
relation to or in connection with its business, as in its
staffhouses for its guest or even for its officers and EEs,
warrants the conclusion that such househelper or domestic
servant is and should be considered as a regular EE of the ER
and not as a mere family househelper or domestic servant as
contemplated in Rule XIII, Section 1(b), Book 3 of the Labor
Code, as amended.
In the case at bar, the petitioner itself admits in its position
paper [33] that respondent worked at the company premises
and her duty was to cook and prepare its EEs lunch and
merienda. Clearly, the situs, as well as the nature of
respondents work as a cook, who caters not only to the needs
of Mr. Tan and his family but also to that of the petitioners
EEs, makes her fall squarely within the definition of a regular
EE under the doctrine enunciated in the Apex Mining case.
That she works within company premises, and that she does
not cater exclusively to the personal comfort of Mr. Tan and
his family, is reflective of the existence of the petitioners
right of control over her functions, which is the primary
indicator of the existence of an ER-EE relationship.
(REMINGTON v. CASTANEDA)
v.WORKERS PAID BY RESULT
(e) Workers who are paid by results, including those who are
paid on piece-work, "takay," "pakiao" or task basis, and other
non-time work if their output rates are in accordance with the
standards prescribed under Section 8, Rule VII, Book Three of
these regulations, or where such rates have been fixed by the
Secretary of Labor and Employment in accordance with the
aforesaid Section.
READ: TITLE I, BOOK III, RULE7, SEC.8 OMNIBUS RULES
OF THE LABOR CODE
va.CATEGORIES
1) those whose time and performance are supervised by the
ER. (Here, there is an element of control and supervision over
the manner as to how the work is to be performed. A piecerate worker belongs to this category especially if he performs
his work in the company premises.); and
(2) those whose time and performance are unsupervised.
(Here, the ERs control is over the result of the work. Workers
on pakyao and takay basis belong to this group.)
Both classes of workers are paid per unit accomplished.
Piece-rate payment is generally practiced in garment factories
where work is done in the company premises, while payment

on pakyao and takay basis is commonly observed in the

agricultural industry, such as in sugar plantations where the
work is performed in bulk or in volumes difficult to quantify.
Petitioners belong to the first category, i.e., supervised EEs.
(LAMBO v. NLRC)
vb.PAKYAW
b.HOURS WORK - ART. 84. Hours worked. - Hours worked
shall include (a) all time during which an EE is required to be
on duty or to be at a prescribed workplace; and (b) all time
during which an EE is suffered or permitted to work.
Rest periods of short duration during working hours shall be
counted as hours worked. (same with R1S3 of the omnibus)
i.PRINCIPLES IN DETERMINING HOURS WORKED
READ: TITLE I, BOOK III, RULE1, SEC.3-4 OMNIBUS
RULES OF THE LABOR CODE
SECTION 4. Principles in determining hours worked.
The following general principles shall govern in determining
whether the time spent by an EE is considered hours worked
for purposes of this Rule:
(a) All hours are hours worked which the EE is required to give
his ER, regardless of whether or not such hours are spent in
productive labor or involve physical or mental exertion.(basis
of engage to wait and assembly time)
(b) An EE need not leave the premises of the work place in
order that his rest period shall not be counted, it being
enough that he stops working, may rest completely and may
leave his work place, to go elsewhere, whether within or
outside the premises of his work place.(basis of meal break
and assembly time)
(c) If the work performed was necessary, or it benefited the
ER, or the EE could not abandon his work at the end of his
normal working hours because he had no replacement, all
time spent for such work shall be considered as hours worked,
if the work was with the knowledge of his ER or immediate
supervisor.(basis of no off-setting rule)
(d) The time during which an EE is inactive by reason of
interruptions in his work beyond his control shall be
considered working time either if the imminence of the
resumption of work requires the EE's presence at the place of
work or if the interval is too brief to be utilized effectively and
gainfully in the EE's own interest.(basis of semestral break
and powere interruption)
ii.ENGAGED TO WAIT RULE/IDLE TIME
READ: TITLE I, BOOK III, RULE1, SEC.5(a) OMNIBUS
RULES OF THE LABOR CODE
SECTION 5. Waiting time. (a) Waiting time spent by an
EE shall be considered as working time if waiting is an integral
part of his work; (b)the EE is required or engaged by the ER to
wait; and c) An EE who is required to remain on call in the
ER's premises or so close thereto that he cannot use the time
effectively and gainfully for his own purpose.
When the work is NOT CONTINUOS, the time during which the
laborer is not working AND CAN LEAVE HIS WORKING PLACE
and can rest completely, shall NOT TO BE COUNTED. For the
purposes of this case, We do not need to set for seamen a
criterion different from that applied to laborers on land, for
under the provisions of the above quoted section, the only
thing to be done is to determine the meaning and scope of
the term "working place" used therein. As We understand this
term, a laborer need not leave the premises of the factory,
shop or boat in order that his period of rest shall not be
counted, it being enough that he "cease to work", may rest
completely and leave or may leave at his will the spot where
he actually stays while working, to go somewhere else,
whether within or outside the premises of said factory, shop
or boat. If these requisites are complied with, the period of
such rest shall not be counted. (LUZON STEVEDORING v.
LUZON MARINE)
From these facts, the CIR correctly concluded that work in
petitioner company was CONTINUOS and therefore the
mealtime breaks should be COUNTED as working time for
purposes of overtime compensation. (NDC v. CIR)
ENGAGED TO WAIT/REQUIRED TO WAIT.
Waiting is an integral part of the job; the time spent waiting is
compensable>
WAITING TO BE ENGAGED/NOT REQUIRED TO WAIT
Idle time is not working time; it is not compensable.
iii.ON CALL
READ: TITLE I, BOOK III, RULE1, SEC.5(b) OMNIBUS
RULES OF THE LABOR CODE
b) An EE who is required to remain on call in the ER's
premises or so close thereto that he cannot use the time
effectively and gainfully for his own purpose shall be
considered as working while on call. An EE who is not required
to leave word at his home or with company officials where he
may be reached is not working while on call.
However, if he is NOT REQUIRED TO REMAIN on call in the
ERs premises BUT IS MERELY REQUIRED TO LEAVE WORD AT
HIS HOME OR WITH THE COMPANY OFFICIALS where he may
be reached, he is not considered working while on call.
Further, management retains the prerogative, whenever
exigencies of the service so require, to change the working
hours of its EEs. So long as such prerogative is exercised in
good faith for the advancement of the ER's interest and not

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J.SUAREZ II, 2ND SEM,SY 12-13
for the purpose of defeating or circumventing the rights of the
EEs under special laws or under valid agreements, this Court
will uphold such exercise.(SIME DARBY v. NLRC)
iv.ASSEMBLY TIME
The thirty (30)-minute assembly time long practiced and
institutionalized by mutual consent of the parties under Article
IV, Section 3, of theCBA cannot be considered as waiting time
within the purview of Section 5, Rule I, Book III of the Rules
and Regulations Implementing the Labor Code.
Furthermore, the thirty (30)-minute assembly is a deeplyrooted, routinary practice of the EEs, and the proceedings
attendant thereto are not infected with complexities as to
deprive the workers the time to attend to other personal
pursuits. They are not new EEs as to require the company to
deliver long briefings regarding their respective work
assignments. Their houses are situated right on the area
where the farm are located, such that after the roll call, which
does not necessarily require the personal presence, they can
go back to their houses to attend to some chores. In short,
they are not subject to the absolute control of the company
during this period, otherwise, their failure to report in the
assembly time would justify the company to impose
disciplinary measures. The CBA does not contain any
provision to this effect; the record is also bare of any proof on
this point. This, therefore, demonstrates the indubitable fact
that the thirty (30)-minute assembly time was not primarily
intended for the interests of the ER, but ultimately for the EEs
to indicate their availability or non-availability for work during
every working day.(ARICA v. NLRC)
v.COMMUTING TIME, TRAVEL TIME AT LECTURES,
SEMINARS ETC.
READ: TITLE I, BOOK III, RULE1, SEC.6 OMNIBUS RULES
OF THE LABOR CODE
SECTION 6. Lectures, meetings, training programs.
Attendance at lectures, meetings, training programs, and
other similar activities shall not be counted as working time if
all of the following conditions are met:
(a) Attendance is outside of the EE's regular working hours;
(b) Attendance is in fact voluntary; and
(c) The EE does not perform any productive work during such
attendance.
TRAVEL FROM HOME TO WORK normal travel from home to
work which is NOT working time. Generally, not compensable
because it is a normal incident of employment. Exception: a)
made to work on an emergency call and travel is necessary in
proceeding to the workplace; b) travel done through a
conveyance provided by the ER; c) travel done under the
supervision and control of the ER; and e) travel done under
vexing and dangerous circumstance.
TRAVEL THAT IS ALL IN DAYS WORK the time spent by EE in
travel as part of his principal activity, like travel from jobsite
to jobsite during the workday. Compensable and must be
counted as hours worked.
TRAVEL AWAY FROM HOME travel that keeps an EE away
from home overnight. Considered as working time when it
cuts across an EEs workday because it substitutes for the
hours that the EE should have been in the office.
vi.SEMESTRAL BREAK
compensable hours worked apply to regular full-time teachers
only. It is a form of interruption beyond their control.
The "No work, no pay" principle does not apply in the instant
case. The petitioner's members received their regular salaries
during this period. It is clear from the . . . law that it
contemplates a "no work" situation where the EEs voluntarily
absent themselves. Petitioners, in the case at bar, certainly do
not, ad voluntatem absent themselves during semestral
breaks. Rather, they are constrained to take mandatory leave
from work. For this, they cannot be faulted nor can they be
begrudged that which is due them under the law. To a certain
extent, the private respondent can specify dates when no
classes would be held. Surely, it was not the intention of the
framers of the law to allow ERs to withhold EE benefits by the
simple expedient of unilaterally imposing "no work" days and
consequently avoiding compliance with the mandate of the
law for those days. (UNIV. PANGASINAN FACULTY v. UNIV.
PANGASINAN)
vii.POWER INTERRUPTION/BROWNOUT
1. 1ST 20mins is compensable
2. succeeding minutes not compensable
3. if despite the lapse of 1 st 20mins, the EEs are required to
stay in their workplace, such time is compensable.
viii.EXCEPTION TO 8-HOUR RULE
ART. 89. Emergency overtime work. - Any EE may be
required by the ER to perform overtime work in any of the
following cases:chan robles virtual law library
(a) When the country is at war or when any other national or
local emergency has been declared by the National Assembly
or the Chief Executive;
(b) When it is necessary to prevent loss of life or property or
in case of imminent danger to public safety due to an actual
or impending emergency in the locality caused by serious
accidents, fire, flood, typhoon, earthquake, epidemic, or other
disaster or calamity;

(c) When there is urgent work to be performed on machines,

installations, or equipment, in order to avoid serious loss or
damage to the ER or some other cause of similar nature;
(d) When the work is necessary to prevent loss or damage to
perishable goods; and
(e) Where the completion or continuation of the work started
before the eighth hour is necessary to prevent serious
obstruction or prejudice to the business or operations of the
ER.
Any EE required to render overtime work under this Article
shall be paid the additional compensation required in this
Chapter.
In addition:
1.PART-TIME WORK not prohibited. the 8-hour labor law
prescribes the maximum but not the minimum.
2.COMPRESSED WORK WEEK(CWW)
3.FLEXIBLE WORK ARRANGEMENT
4.12-HOUR WORKSHIFT W/ OT is validated by consent and
ots
4-hour
OT
pay
becomes
a
contractual
commitment(INTERPHIL LAB. EES UNION v. INTERPHIL)
5.NORMAL HOURS OF WORK OF HEALTH PERSONNEL
ix. COMPRESSED WORK WEEK(CWW)
requisites:
1.it is expressly and voluntarily supported by majority of the
EEs affected;
2.if work is hazardous, a certification is needed from
accredited safety organization or the firms safety committee
that work beyond 8-hours is within the limits or levels of
exposure set by DOLEs occupational safety and health
standards; and
3.the DOLE is dyly notified
Reversion to the normal 8-hour workday shall not constitute a
diminution of benefits but considered as a legitimate exercise
of management prerogative provided that prior notice of suce
reversion is given within a reasonable period of time.
x.FLEXIBLE SCHEDULE FOR SOLO PARENTS
READ: RA8972 SEC.3(a)(e)
Section 3.Definition of Terms. - Whenever used in this Act,
the following terms shall mean as follows:
(a) "Solo parent" - any individual who falls under any of the
following categories:
(1) A woman who gives birth as a result of rape and other
crimes against chastity even without a final conviction of the
offender: Provided, That the mother keeps and raises the
child;
(2) Parent left solo or alone with the responsibility of
parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of
parenthood while the spouse is detained or is serving
sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of
parenthood due to physical and/or mental incapacity of
spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of
parenthood due to legal separation or de facto separation
from spouse for at least one (1) year, as long as he/she is
entrusted with the custody of the children;
(6) Parent left solo or alone with the responsibility of
parenthood due to declaration of nullity or annulment of
marriage as decreed by a court or by a church as long as
he/she is entrusted with the custody of the children;
(7) Parent left solo or alone with the responsibility of
parenthood due to abandonment of spouse for at least one (1)
year;
(8) Unmarried mother/father who has preferred to keep and
rear her/his child/children instead of having others care for
them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and
support to a child or children;
(10) Any family member who assumes the responsibility of
head of family as a result of the death, abandonment,
disappearance or prolonged absence of the parents or solo
parent.
A change in the status or circumstance of the parent claiming
benefits under this Act, such that he/she is no longer left
alone with the responsibility of parenthood, shall terminate
his/her eligibility for these benefits.
(b) "Children" - refer to those living with and dependent upon
the solo parent for support who are unmarried, unemployed
and not more than eighteen (18) years of age, or even over
eighteen (18) years but are incapable of self-support because
of mental and/or physical defect/disability.
(c) "Parental responsibility" - with respect to their minor
children shall refer to the rights and duties of the parents as
defined in Article 220 of Executive Order No. 209, as
amended, otherwise known as the "Family Code of the
Philippines."
(d) "Parental leave" - shall mean leave benefits granted to a
solo parent to enable him/her to perform parental duties and
responsibilities where physical presence is required.
(e) "Flexible work schedule" - is the right granted to a solo
parent EE to vary his/her arrival and departure time without
affecting the core work hours as defined by the ER.
xi.MEAL BREAL, COFFEE BREAK
ART. 85. Meal periods. - Subject to such regulations as the
Secretary of Labor may prescribe, it shall be the duty of every
ER to give his EEs not less than sixty (60) minutes time-off for
their regular meals.
READ: TITLE I, BOOK III, RULE1, SEC.7 OMNIBUS RULES
OF THE LABOR CODE

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J.SUAREZ II, 2ND SEM,SY 12-13
SECTION 7. Meal and Rest Periods. Every ER shall give his
EEs, regardless of sex, not less than one (1) hour time-off for
regular meals, except in the following cases when a meal
period of not less than twenty (20) minutes may be given by
the ER provided that such shorter meal period is credited as
compensable hours worked of the EE:
(a) Where the work is non-manual work in nature or does not
involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than
sixteen (16) hours a day;
(c) In case of actual or impending emergencies or there is
urgent work to be performed on machineries, equipment or
installations to avoid serious loss which the ER would
otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of
perishable goods.
Rest periods or coffee breaks running from five (5) to twenty
(20) minutes shall be considered as compensable working
time.
RULES ON MEAL PERIOD
1.not be less than 60mins, it is compensable.
Except where during the so-called meal period, the laborers
are required to standby for emergency work or said meal
period is not one of complete rest, such period is considered
OT(hours worked)
2.less than 60mins but not less than 20mins and the
shortened mealtime must be with full pay under the following
circumstances: a)non-manual work in nature or does not
involve strenuous physical exertion; b)establishment regularly
operates not less than 16hours a day; c)actual or impending
emergencies or there is urgent work to be performed on
machineries, equipments or installation to avoid serious loss
which the ER would otherwise suffer; and d)necessary to
prevent serious loss of perishable goods
3.less than 20mins, it becomes only a rest period and is thus
considered as work time.
Meal period during OT work is not given to workers performing
OT for the reason that OT work is usually for a short period
ranging from 1-3hours and to deduct from the same 1full hour
as meal period may reduce the EEs OT work to nothing.
SHORTENED MEAL BREAK UPON EEs REQUEST not
compensable.
Requisites:
1.EEs voluntarily agree in writing and waived the OT pay;
2.no diminution in the salary and other FB of the EEs already
existing;
3.work is not physically strenuous and they are provided with
adequate coffee breaks in the AM and PM;
4.value of benefits is equal to compensation due to them;
5.OT pay will become due and demandable if ever they are
permitted or made to work beyond 4:30 PM; and
6.the arrangement is of temporary duration.
Thus, the 8-hour work period does not include the meal break.
Nowhere in the law may it be inferred that EEs must take their
meals within the company premises. EEs are not prohibited
from going out of the premises as long as they return to their
posts on time. Private respondent's act, therefore, of going
home to take his dinner does not constitute abandonment.
(PAL v. NLRC)
xii.REST PERIOD
READ: TITLE I, BOOK III, RULE1, SEC.7(LAST
PAR.)OMNIBUS RULES OF THE LABOR CODE
Rest periods or coffee breaks running from five (5) to twenty
(20) minutes shall be considered as compensable working
time.

FINALS
e.SPECIAL LEAVES
MATERNITY LEAVE(RA7322) A covered female EE (Ee) is entitled
to a daily maternity benefit equivalent to 100% of her present basic
salary, allowances and other benefits or the cash equivalent of such
benefits for 60 days or 78 days in case of caesarian delivery.
Requirements:1)There is childbirth, abortion or miscarriage: and
2)She has paid at least 3 monthly contributions
Conditions for entitlement:
1)The Ee shall have notified her ER (Er) of her pregnancy and the
probable date of her childbirth which notice shall be transmitted to
the SSS;
2)The payment shall be advanced by the Er in 2 equal installments
within 30 days from the filing of the maternity leave application;
3)In case of caesarian delivery, the Ee shall be paid the daily
maternity benefit for 78 days;
4)Payment of daily maternity benefits shall be a bar to the recovery
of sickness benefits for the same compensable period of 60 days for
the same childbirth, abortion, or miscarriage;
5)The maternity benefits provided under Section 14A shall be paid
only for the first four deliveries;
6) The SSS shall immediately reimburse the Er of 100% of the
amount of maternity benefits advanced to the Ee by the Er upon
receipt of satisfactory proof of such payment and legality thereof;
and

7)If an Ee should give birth or suffer abortion or miscarriage without

the required contributions having been remitted for her by her Er to
the SSS, or without the latter having been previously notified by the
Er of the time of the pregnancy, the Er shall pay to the SSS
damages equivalent to the benefits which
PATERNITY LEAVE(RA8187) Notwithstanding any law, rules and
regulations to the contrary, every married male EE in the private
and public sectors shall be entitled to a paternity leave of 7 days
with full pay for the first 4 deliveries of the legitimate spouse with
whom he is cohabiting. purposes of enabling him to effectively lend
support to his wife in her period of recovery and/or in the nursing of
the newlyborn child.

Requirements:
The male EE (Ee) applying for paternity leave shall:
1.Notify his ER (Er) of the pregnancy of his legitimate spouse and
2.The expected date of such delivery.
Conditions for entitlement:
The male Ee is;
1.Legally married to, and is cohabiting with the woman who delivers
the baby
2.Ee of private or public sector;
3.Only for the first 4 deliveries of legitimate spouse with whom he is
cohabiting; and
4.Notify his Er of the pregnancy of his legitimate spouse and the
expected date of such delivery
delivery shall include childbirth or any miscarriage. Shall not be
convertible to cash.
SOLO PARENT LEAVE(RA8972) SEC.8 - Parental Leave. - In
addition to leave privileges under existing laws, parental leave of
not more than seven (7) working days every year shall be granted
to any solo parent EE who has rendered service of at least one (1)
year.
Conditions for entitlement:
1. He or she must fall among those referred to as solo parent
2. Must have the actual and physical custody of the child or children
3. Must have at least rendered service of one year to his or her ER
4. He or she must remain a solo parent
A change in the status or circumstance of the parent claiming
benefits under this Act, such that he/she is no longer left alone with
the responsibility of parenthood, shall terminate his/her eligibility
for these benefits. (Sec.3)
If unutilized, is not convertible to cash unless otherwise agreed.
Non-compliance with the law may make ER liable for damages.
No ER shall discriminate against any solo parent EE with respect to
terms and conditions of employment on account of his/her status.
BATTERED WOMAN LEAVE(RA9262) SEC.43 Entitled Leave
Victims under this Act shall be entitled to take a paid leave of
absence up to ten (10) days in addition to other paid leaves under
the Labor Code and Civil Service Rules and Regulations, extendible
when necessity arises as specified in the protection order.
Any ER who shall prejudice the right of the person under this
section shall be penalized in accordance with the provisions of the
Labor Code and Civil Service Rules and Regulations. Likewise, an ER
who shall prejudice any person for assisting a co-EE who is a victim
under this Act shall likewise be liable for discrimination.
EE has to submit a certification from punong barangay, kagawad,
prosecutor or clerk of court that ang action under the said Act has
been filed and is pending.
MAGNA CARTA OF WOMEN(RA9710) SEC.18 - Special Leave
Benefits for Women. - A woman EE having rendered continuous
aggregate employment service of at least six (6) months for the
last twelve (12) months shall be entitled to a special leave benefit
of two (2) months with full pay based on her gross monthly
compensation following surgery caused by gynecological disorders.
Filing of complaint under this Act shall not preclude the offended
party from pursuing other remedies available under the law and to
invoke any provisions of existing laws especially those recently
enacted laws protecting women and their children.
If violence has been proven to be perpetrated by agents of the
state, including but not limited to extrajudicial kills, enforced
disappearances, torture, and internal displacements, such shall be
considered aggravating offenses with corresponding penalties
depending on the severity of the offenses.
f.Service Charges: TipS
ART. 96. Service charges. - All service charges collected by
hotels, restaurants and similar establishments shall be distributed
at the rate of eighty-five percent (85%) for all covered EEs and
fifteen percent (15%) for management. The share of the EEs shall
be equally distributed among them. In case the service charge is
abolished, the share of the covered EEs shall be considered
integrated in their wages.
BOOKIII, RULEIV
SECTION 1. Coverage. This rule shall apply to all EEs except:

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J.SUAREZ II, 2ND SEM,SY 12-13
(a) Those of the government and any of the political subdivision,
including government-owned and controlled corporation;
(b) Those of retail and service establishments regularly employing
less than ten (10) workers;
(c) Domestic helpers and persons in the personal service of
another;
(d) Managerial EEs as defined in Book Three of the Code;
COVERED Ees
MANAGEMENT
85%

15%

Equally distributed among them

1.To answer for

losses
and
breakages and
2.Distributed to Ees
receiving
more
than
P2000
a
month
at
the
discretion of the
management.

(e) Field personnel and other EEs whose time and performance is
unsupervised by the ER including those who are engaged on task or
contract basis, purely commission basis, or those who are paid a
fixed amount for performing work irrespective of the time
consumed in the performance thereof.cralaw
SECTION 2. Status of EEs paid by the month. EEs who are
uniformly paid by the month, irrespective of the number of working
days therein, with a salary of not less than the statutory or
established minimum wage shall be paid for all days in the month
whether worked or not.cralaw
For this purpose, the monthly minimum wage shall not be less than
the statutory minimum wage multiplied by 365 days divided by
twelve.cralaw
SECTION 3. Holiday Pay. Every ER shall pay his EEs their regular
daily wage for any worked regular holidays.cralaw
As used in the rule, the term 'regular holiday' shall exclusively refer
to: New Year's Day, Maundy Thursday, Good Friday, the ninth of
April, the first of May, the twelfth of June, the last Sunday of August,
the thirtieth of November, the twenty-fifth and thirtieth of
December. Nationwide special days shall include the first of
November and the last day of December.cralaw
As used in this Rule legal or regular holiday and special holiday
shall now be referred to as 'regular holiday' and 'special day',
respectively.cralaw
SECTION 4. Compensation for holiday work. Any EE who is
permitted or suffered to work on any regular holiday, not exceeding
eight (8) hours, shall be paid at least two hundred percent (200%)
of his regular daily wage. If the holiday work falls on the scheduled
rest day of the EE, he shall be entitled to an additional premium pay
of at least 30% of his regular holiday rate of 200% based on his
regular wage rate.cralaw
SECTION 5. Overtime pay for holiday work. For work performed
in excess of eight hours on a regular holiday, an EE shall be paid an
additional compensation for the overtime work equivalent to his
rate for the first eight hours on such holiday work plus at least 30%
thereof.cralaw
Where the regular holiday work exceeding eight hours falls on the
scheduled rest day of the EE, he shall be paid an additional
compensation for the overtime work equivalent to his regular
holiday-rest day for the first 8 hours plus 30% thereof. The regular
holiday rest day rate of an EE shall consist of 200% of his regular
daily wage rate plus 30% thereof.cralaw
i.TIPS, DEFINED
A tip may range from pure gift out of benevolence or friendship, to
a compensation for a service measured by its supposed value but
not fixed by an agreement, although usually the word is applied to
what is paid to a servant in addition to the regular compensation for
his service in order to secure better service or in recognition of it. It
has been said that a tip denotes a voluntary act, but it also has
been said that from the very beginning of the practice of tipping it
was evident that, whether considered from the standpoint of the
giver or the recipient, a tip lacked the essential element of a gift,
namely, the free bestowing of a gratuity without a consideration,
and that, despite its apparent voluntariness, there is an element of
compulsion in tipping.
Tipping is done to get the attention and secure the immediate
services of a waiter, porter or others for their services. Since a tip is
considered a pure gift out of benevolence or friendship, it can not
be demanded from the customer. Whether or not tips will be given
is dependent on the will and generosity of the giver. Although a
customer may give a tip as a consideration for services rendered,
its value still depends on the giver. They are given in addition to the
compensation by the ER. A gratuity given by an ER in order to
inspire the EE to exert more effort in his work is more appropriately
called a bonus.
The contract of employment between petitioners and Orlando is
categorical that the monthly salary of Orlando is US$450.00 flat
rate. This already included his overtime pay which is integrated in
his 12 hours of work. The words plus tips of US$2.00 per
passenger per day were written at the line for overtime. Since
payment for overtime was included in the monthly salary of
Orlando, the supposed tips mentioned in the contract should be
deemed included thereat.

It is presumed that the parties were aware of the plain, ordinary

and common meaning of the word tip. As a bartender, Orlando
can not feign ignorance on the practice of tipping and that tips are
normally paid by customers and not by the ER. (ACE NAVIGATION
CO. v. CA)
ii.WHEN NOT ENTITLED
As regards the share of Damalerio in the service charges collected
during the period of his preventive suspension, the same form part
of his earnings, and his dismissal having been adjudged to be
illegal, he is entitled not only to full backwages but also to other
benefits, including a just share in the service charges, to be
computed from the start of his preventive suspension until his
reinstatement.
However, mindful of the animosity and strained relations between
the parties, emanating from this litigation, we uphold the ruling a
quo that in lieu of reinstatement, separation pay may be given to
the private respondent, at the rate of one (1) month pay for every
year of service. Should petitioner opt in favor of separation pay, the
private respondent shall no longer be entitled to share in the
service charges collected during his preventive suspension.
(MARANAW HOTELS AND RESORT CORPORATION)
Q: What are service charges (SC)?
A: These are charges collected by hotels, restaurants and similar
establishments and shall be distributed at the rate of:
Q: Who are covered Ees?
A: GR: All Ees are covered, regardless of their position, designation,
employment status, irrespective of the method by which their
wages are paid.
Note: Applies only to hotels, restaurants and similar establishment
collecting service charges.
XPN: Managerial Ees. (Sec. 2, Rule VI, Book III, IRR)
Q: When is the share of EE distributed and paid to them?
A: Not less than once every 2 weeks or twice a month at intervals
not exceeding 16 days.
Q: What happens if the Service Charge is abolished?
A: The share of the covered Ees shall be considered integrated in
their wages on the basis of the average monthly share of each Ees
for the past 12 months immediately preceding the abolition.
Note: Service charges form part of the award in illegal dismissal
cases.
f.13TH MONTH PAY
READ: PD851
Section 1. Payment of 13-month Pay All ERs covered by
Presidential Decree No. 851, hereinafter referred to as the "Decree",
shall pay to all their EEs receiving a basic salary of not more than
P1,000 a month a thirteenth-month pay not later than December 24
of every year.
Section 2. Definition of certain terms As used in this issuance.
(a) "Thirteenth-moth pay" shall mean one twelfth (1/12) of the basic
salary of an EE within a calendar year;
(b) "Basic salary" shall include all remunerations or earnings paid
by an ER to an EE for services rendered but may not include cost-ofliving allowances granted pursuant to Presidential Decree No. 525
or Letter of Instructions No. 174, profit-sharing payments, and all
allowances and monetary benefits which are not considered or
integrated as part of the regular or basic salary of the EE at the
time of the promulgation of the Decree on December 16, 1975.
Section 3.ERs covered The Decree shall apply to all ERs except to:
(a) Distressed ERs, such as (1) those which are currently incurring
substantial losses or (2) in the case of non-profit institutions and
organizations, where their income, whether from donations,
contributions, grants and other earnings from any source, has
consistently declined by more than forty (40%) percent of their
normal income for the last two (2) years, subject to the provision of
Section 7 of this issuance;
(b) The Government and any of its political subdivisions, including
government-owned and controlled corporations, except those
corporations operating essentially as private subsidiaries of the
Government;
(c) ERs already paying their EEs 13-month pay or more in a
calendar year of its equivalent at the time of this issuance;
(d) ERs of household helpers and persons in the personal service of
another in relation to such workers; and
(e) ERs of those who are paid on purely commission, boundary, or
task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis in
which case the ER shall be covered by this issuance insofar as such
workers are concerned.
As used herein, workers paid on piece-rate basis shall refer to those
who are paid a standard amount for every piece or unit of work
produced that is more or less regularly replicated, without regard to
the time spent in producing the same.
The term "its equivalent" as used in paragraph c) hereof shall
include Christmas bonus, mid-year bonus, profit-sharing payments
and other cash bonuses amounting to not less than 1/12th of the
basic salary but shall not include cash and stock dividends, cost of
living allowances and all other allowances regularly enjoyed by the
EE, as well as non-monetary benefits. Where an ER pays less than
1/12th of the EEs basic salary, the ER shall pay the difference.
Section 4. EEs covered Except as provided in Section 3 of this
issuance, all EEs of covered ERs shall be entitled to benefit provided
under the Decree who are receiving not more than P1,000 a month,

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J.SUAREZ II, 2ND SEM,SY 12-13
regardless of their position, designation or employment status, and
irrespective of the method by which their wages are paid, provided
that they have worked for at least one month during the calendar
year.
Section 5. Option of covered ERs A covered ER may pay one-half
of the 13th-month pay required by the Decree before the opening
of the regular school year and the other half on or before the 24th
day of December of every year.
In any establishment where a union has been recognized or
certified as the collective bargaining agent of the EEs therein, the
periodicity or frequency of payment of the 13th month pay may be
the subject of agreement.
Nothing herein shall prevent ERs from giving the benefits provided
in the Decree to their EEs who are receiving more than One
Thousand (P1,000) Pesos a month or benefits higher than those
provided by the Decree.
Section 6. Special feature of benefit The benefits granted under
this issuance shall not be credited as part of the regular wage of the
EEs for purposes of determining overtime and premium pay, fringe
benefits, as well as premium contributions to the State Insurance
Fund, social security, medicare and private welfare and retirement
plans.
Section 7. Exemption of Distressed ERs Distressed ERs shall
qualify for exemption from the requirement of the Decree upon
prior authorization by the Secretary of Labor. Petitions for
exemptions may be filed within the nearest regional office having
jurisdiction over the ER not later than January 15, 1976. The
regional offices shall transmit the petitions to the Secretary of Labor
within 24 hours from receipt thereof.
Section 8. Report of compliance Every covered ER shall make a
report of his compliance with the Decree to the nearest regional
labor office not later than January 15 of each year.
The report shall conform substantially with the following form:
REPORT ON COMPLIANCE WITH PD NO. 851
1. Name of establishment
2. Address
3. Principal product or business
4. Total employment
5. Total number of workers benefited
6. Amount granted per EE
7. Total amount of benefits granted
8. Name, position and tel. no. of person giving information
Section 9. Adjudication of claims Non-payment of the thirteenthmonth pay provided by the Decree and these rules shall be treated
as money claims cases and shall be processed in accordance with
the Rules Implementing the Labor Code of the Philippines and the
Rules of the National Labor Relations Commission.
Section 10. Prohibition against reduction or elimination of benefits
Nothing herein shall be construed to authorize any ER to eliminate,
or diminish in any way, supplements, or other EE benefits or
favorable practice being enjoyed by the EE at the time of
promulgation of this issuance.
i.EES NOT ENTITLED
Respondent is not a rank-and-file EE and is, therefore, not entitled
to thirteenth-month pay. However, the NLRC and the CA are correct
in refusing to award 14th and 15th month pay as well as the
monthly salary increase of 10 percent per year for two years based
on her latest salary rate. The respondent must show that these
benefits are due to her as a matter of right. Mere allegations by the
respondent do not suffice in the absence of proof supporting the
same.
With respect to salary increases in particular, the
respondent must likewise show that she has a vested right to the
same, such that her salary increases can be made a component in
the computation of backwages. What is evident is that salary
increases are a mere expectancy. They are by nature volatile and
dependent on numerous variables, including the companys fiscal
situation, the EEs future performance on the job, or the EEs
continued stay in a position. In short, absent any proof, there is no
vested right to salary increases.(HOUSE OF SARA LEE, vs. CYNTHIA
F. REY)
The coverage of the Contract includes Compensation, Overtime,
Sundays and Holidays, Vacations, Living Allowance, Sickness, Injury
and Death, Transportation and Travel Expense, Subsistence and
Living Quarters. It does not provide for the payment of 13th month
pay. The Contract of Employment,[22] which is the standard
employment contract of the POEA, likewise does not provide for the
payment of 13th month pay. Hence, in the absence of any provision
in his Contract governing the payment of 13th month pay, Tanchico
is not entitled to the benefit.( PETROLEUM SHIPPING LIMITED(ESSO)
vs. NLRC)
ii.BASIS FOR COMPUTATION
Under the Revised Guidelines on the Implementation of the 13th
month pay issued on November 16, 1987, the salary ceiling of
P1,000.00 under P.D. No. 851 was removed. It further provided that
the minimum 13th month pay required by law shall not be less than
one-twelfth (1/12) of the total basic salary earned by an EE within a
calendar year. The guidelines pertinently provides: The basic
salary of an EE for the purpose of computing the 13th month pay
shall include all remunerations or earnings paid by his ER for
services rendered but does not include allowances and monetary
benefits which are not considered or integrated as part of the
regular or basic salary, such as the cash equivalent of unused
vacation and sick leave credits, overtime premium, night
differential and holiday pay, and cost-of-living allowances.

For EEs receiving regular wage, we have interpreted basic salary

to mean, not the amount actually received by an EE, but 1/12 of
their standard monthly wage multiplied by their length of service
within a given calendar year.
Thus, we exclude from the
computation of basic salary payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay and
premiums for work done on rest days and special holidays.
The revised guidelines also provided for a pro-ration of this benefit
only in cases of resignation or separation from work. As the rules
state, under these circumstances, an EE is entitled to a pay in
proportion to the length of time he worked during the year,
reckoned from the time he started working during the calendar
year.The Court of Appeals thus held that: Considering the foregoing,
the computation of the 13th month pay should be based on the
length of service and not on the actual wage earned by the worker.
(HONDA PHILS., INC., vs. SAMAHAN NG MALAYANG MANGGAGAWA
SA HONDA)
iii.BONUS
the Christmas bonus was included in the 13th month pay, then
there would be no need for having a specific provision on Christmas
bonus in the CBA. But it did provide for a bonus in graduated
amounts depending on the length of service of the EE. The
intention is clear therefore that the bonus provided in the CBA was
meant to be in addition to the legal requirement. Moreover, why
exclude the payment of the 1978 Christmas bonus and pay only the
1979-1980 bonus. The classification of the company's workers in
the CBA according to their years of service supports the allegation
that the reason for the payment of bonus was to give bigger reward
to the senior EEs a purpose which is not found in P.D. 851. A
bonus under the CBA is an obligation created by the contract
between the management and workers while the 13th month pay is
mandated by the law.(UNITED CMC TEXTILE WORKERS UNION vs.LA
and VALENZUELA)
An ER cannot be forced to distribute bonuses which it can no longer
afford to pay, a bonus is an amount granted and paid to anEE for
his industry and loyalty which contributed to the success of the ERs
business and made possible the realization of profile. It is an act of
generosity and is a management prerogative, given in addition to
what is ordinarily received by or strictly due the recipient. Thus, it is
not a demandable and enforceable obligation, except when it is
made part of the wage, salary or compensation of the EE.
(PRODUCERS BANK OF THE PHILIPPINES vs. NLRC)
3. TITLE II, CHAPTER III, ART.96-105, 110-119, 123-129
ART. 98. Application of Title. - This Title shall not apply to
farm tenancy or leasehold, domestic service and persons
working in their respective homes in needle work or in any cottage
industry duly registered in accordance with law.
ART. 102. Forms of payment. - No ER shall pay the wages of an
EE by means of promissory notes, vouchers, coupons, tokens,
tickets, chits, or any object other than legal tender, even when
expressly requested by the EE.
Payment of wages by check or money order shall be allowed when
such manner of payment is customary on the date of effectivity of
this Code, or is necessary because of special circumstances as
specified in appropriate regulations to be issued by the Secretary of
Labor and Employment or as stipulated in a collective bargaining
agreement.
ART. 103. Time of payment. - Wages shall be paid at least once
every two (2) weeks or twice a month at intervals not exceeding
sixteen (16) days. If on account of force majeure or circumstances
beyond the ERs control, payment of wages on or within the time
herein provided cannot be made, the ER shall pay the wages
immediately after such force majeure or circumstances have
ceased. No ER shall make payment with less frequency than once a
month.
The payment of wages of EEs engaged to perform a task which
cannot be completed in two (2) weeks shall be subject to the
following conditions, in the absence of a collective bargaining
agreement or arbitration award:
(1) That payments are made at intervals not exceeding sixteen (16)
days, in proportion to the amount of work completed;
(2) That final settlement is made upon completion of the work.
ART. 104. Place of payment. - Payment of wages shall be
made at or near the place of undertaking, except as otherwise
provided by such regulations as the Secretary of Labor and
Employment may prescribe under conditions to ensure greater
protection of wages.
ART. 112. Non-interference in disposal of wages. - No ER shall
limit or otherwise interfere with the freedom of any EE to dispose of
his wages. He shall not in any manner force, compel, or oblige his
EEs to purchase merchandise, commodities or other property from
any other person, or otherwise make use of any store or services of
such ER or any other person.
ART. 113. Wage deduction. - No ER, in his own behalf or in behalf
of any person, shall make any deduction from the wages of his EEs,
except:
(a) In cases where the worker is insured with his consent by the ER,
and the deduction is to recompense the ER for the amount paid by
him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the ER or authorized in
writing by the individual worker concerned; and
(c) In cases where the ER is authorized by law or regulations issued
by the Secretary of Labor and Employment.

Page 13 of 125

LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
ART. 114. Deposits for loss or damage. - No ER shall require his
worker to make deposits from which deductions shall be made for
the reimbursement of loss of or damage to tools, materials, or
equipment supplied by the ER, except when the ER is engaged in
such trades, occupations or business where the practice of making
deductions or requiring deposits is a recognized one, or is
necessary or desirable as determined by the Secretary of Labor and
Employment in appropriate rules and regulations.

at bench, the items provided were given freely by SLL for the
purpose of maintaining the efficiency and health of its workers
while they were working at their respective projects

ART. 119. False reporting. - It shall be unlawful for any person to

make any statement, report, or record filed or kept pursuant to the
provisions of this Code knowing such statement, report or record to
be false in any material respect.

As a general rule, on payment of wages, a party who alleges

payment as a defense has the burden of proving it.Specifically with
respect to labor cases, the burden of proving payment of monetary
claims rests on the ER, the rationale being that the pertinent
personnel files, payrolls, records, remittances and other similar
documents which will show that OT, differentials, SIL and other
claims of workers have been paid are not in the possession of the
worker but in the custody and absolute control of the ER. (SLL
INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, vs.
NLRC)
A: FACILITIES
SUPPLEMENT
Items of expenses necessary
Extra
remuneration
or
for the laborers and his
special privileges or benefits
familys
existence
and
given to or received by the
subsistence
laborers over and above
their ordinary earnings or
Note: Does not include tools
of trade or articles / services
wages (Atok Big Wedge
Mining Co. v. Atok Big
primarily for the benefit of the
Er or necessary to the conduct
Wedge Mutual Benefit Assoc,
of the Ers business.
G.R. No. L7349, July 19,
1955) .
Forms part of the wage
Independent of wage
Deductible from wage
Not wage deductible
For the benefit of the worker
Granted for the convenience
and his family.
of the Er.

a.NO WORK, NO
APPLICABILITY

WAGE

SALARY

Compensation for manual labor

(skilled or unskilled) also known as
blue collared workers, paid at
stated times and measured by the
day, week, month or season.

Paid to white collared

workers and denotes
higher
degree
of
employment or a superior
grade of services and
implies a position in
office.
Out gesture of a larger
and
more
important
service

ART. 115. Limitations. - No deduction from the deposits of an EE

for the actual amount of the loss or damage shall be made unless
the EE has been heard thereon, and his responsibility has been
clearly shown.
ART. 117. Deduction to ensure employment. - It shall be
unlawful to make any deduction from the wages of any EE for the
benefit of the ER or his representative or intermediary as
consideration of a promise of employment or retention in
employment.
ART. 118. Retaliatory measures. - It shall be unlawful for an ER
to refuse to pay or reduce the wages and benefits, discharge or in
any manner discriminate against any EE who has filed any
complaint or instituted any proceeding under this Title or has
testified or is about to testify in such proceedings.

PAY

PRINCIPLE;

APPLICABILITY/NON-

GR: If there is no work performed by the Ee, without the fault of the
Er, there can be no wage or pay.
XPN: The laborer was able, willing and ready to work but was:

1.
2.
3.
4.
5.

Prevented by management;
Illegally locked out;
Illegally suspended;
Illegally dismissed
Otherwise illegally prevented from

The petitioners herein do not deny their participation in the June 15,
1993 strike. As such, they did not suffer any loss of earnings during
their absence from work. Their reinstatement sans backwages is in
order, to conform to the policy of a fair days wage for a fair days
labor. Under the principle of a fair days wage for a fair days labor,
the petitioners were not entitled to the wages during the period of
the strike (even if the strike might be legal), because they
performed no work during the strike. Verily, it was neither fair nor
just that the dismissed EEs should litigate against their ER on the
latters time. DANILO ESCARIO vs. NLRC)
b.WAGES/SALARIES, FACILITIES, SUPPLEMENT
Specifically, "wage" is defined in letter (f) as the remuneration or
earnings, however designated, capable of being expressed in terms
of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which
is payable by an ER to an EE under a written or unwritten contract
of employment for work done or to be done, or for services
rendered or to be rendered and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging,
or other facilities customarily furnished by the ER to the EE.
"Customary" is founded on long-established and constant practice
connoting regularity. The receipt of an allowance on a monthly basis
does not ipso facto characterize it as regular and forming part of
salary because the nature of the grant is a factor worth considering.
We agree with the observation of the OSG that the subject
allowances were temporarily, not regularly, received by petitioners
because In the case of the housing allowance, once a vacancy
occurs in the company-provided housing accommodations, the EE
concerned transfers to the company premises and his housing
allowance is discontinued . On the other hand, the transportation
allowance is in the form of advances for actual transportation
expenses subject to liquidation,given only to EEs who have personal
cars. The Bislig allowance is given to Division Managers and
corporate officers assigned in Bislig, Surigao del Norte. Once the
officer is transferred outside Bislig, the allowance stops.(LIDUVINO
M. MILLARES et al. vs. NLRC)
Q: When can the cost of facilities furnished by the Er be charged
against an Ee?
A: In order that the cost be charged against the Ee, the latters
acceptance of such facilities must be voluntary.
Q: What are the requirements for deducting values for facilities?
A:1.Proof must be shown that such facilities are customarily
furnished by the trade
2.The provision of deductible facilities must be voluntarily accepted
in writing
3.The facilities must be charged at fair and reasonable value
(Mabeza v. NLRC, G.R. No. 118506, April 18, 1997)
In short, the benefit or privilege given to the EE which constitutes
an extra remuneration above and over his basic or ordinary earning
or wage is supplement; and when said benefit or privilege is part of
the laborers' basic wages, it is a facility. The distinction lies not so
much in the kind of benefit or item (food, lodging, bonus or sick
leave) given, but in the purpose for which it is given.23 In the case

Considerable pay for a lower and

less responsible character of
employment.
GR: Not subject to execution
XPN: Debts incurred for food,
shelter, clothing and medical
attendance.

Subject to execution.

i.BONUS INCLUDED/NOT INCLUDED; A DEMANDABLE

OBLIGATION
The general rule is that a bonus is a gratuity or an act of liberality
which the recipient has no right to demand as a matter of right. 8 A
bonus, however, is a demandable or enforceable obligation when it
is made part of the wage or salary or compensation of the EE. 9
Whether or not a bonus forms part of wages depends upon the
circumstances and conditions for its payment. If it is additional
compensation which the ER promised and agreed to give without
any conditions imposed for its payment, such as success of
business or greater production or output, then it is part of the wage.
But if it is paid only if profits are realized or if a certain level of
productivity is achieved, it can not be considered part of the wage.
Where it is not payable to all but only to some EEs and only when
their labor becomes more efficient or more productive, it is only an
inducement for efficiency, a prize therefor, not a part of the wage.
( METRO TRANSIT ORGANIZATION, INC. vs. NLRC)
ii.SALES ON COMMISSION
Considering the above circumstances, the Third Division held,
correctly, that the sales commissions were an integral part of the
basic salary structure of Philippine Duplicators' EEs-salesmen.
These commissions are not overtime payments, nor profit-sharing
payments nor any other fringe benefit. Thus, the salesmen's
commissions, comprising a pre-determined percent of the selling
price of the goods sold by each salesman, were properly included in
the term "basic salary" for purposes of computing their 13th month
pay. (PHIL. DUPLICATORS INC. vs. NLRC)
iii.MEAL COUPONS
In determining whether a benefit or privilege, is a supplement or a
facility the criterion is not the kind of benefit or item but its
purpose. The benefit or privilege given to the EEs which
constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and if it forms part of the
EEs basic wage. It is facility. Therefore, no deduction should be
made from the wages of the members of a commercial ship for
meals freely given them by their employer not as part of their
wages but as a necessary matter in the maintenance of their health
and efficiency, such benefit being in the nature of a supplement.
(STATES MARINE CORP. vs. CEBU SEAMENS ASSOC.)
c.EQUAL PAY FOR EQUAL WORK OF EQUAL VALUE
The School contends that petitioner has not adduced evidence that
local-hires perform work equal to that of foreign-hires. The Court
finds this argument a little cavalier. If an ER accords EEs the same
position and rank, the presumption is that these EEs perform equal
work. This presumption is borne by logic and human experience. If
the ER pays one EE less than the rest, it is not for that EE to explain
why he receives less or why the others receive more. That would be
adding insult to injury. The ER has discriminated against that EE; it
is for the ER to explain why the EE is treated unfairly. (INTL
SCHOOL ALLIANCE OF EDUCATORS vs. QUISUMBING)

Page 14 of 125

LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
d.WITHHOLDING OF WAGES
ART. 116. Withholding of wages and kickbacks prohibited. - It shall
be unlawful for any person, directly or indirectly, to withhold any
amount from the wages of a worker or induce him to give up any
part of his wages by force, stealth, intimidation, threat or by any
other means whatsoever without the workers consent.
Management prerogative refers to the right of an ER to regulate all
aspects of employment, such as the freedom to prescribe work
assignments, working methods, processes to be followed,
regulation regarding transfer of EEs, supervision of their work, layoff and discipline, and dismissal and recall of work. Although
management prerogative refers to the right to regulate all aspects
of employment, it cannot be understood to include the right to
temporarily withhold salary/wages without the consent of the EE. To
sanction such an interpretation would be contrary to Article 116 of
the Labor Code, x x x Any withholding of an EEs wages by an ER
may only be allowed in the form of wage deductions under the
circumstances provided in Article 113 of the Labor Code. (SHS
PERFORATED MATERIALS vs. DIAZ)
e.DIRECT PAYMENT PRINCIPELE
ART. 105. Direct payment of wages. - Wages shall be paid
directly to the workers to whom they are due, except:
(a) In cases of force majeure rendering such payment impossible or
under other special circumstances to be determined by the
Secretary of Labor and Employment in appropriate regulations, in
which case, the worker may be paid through another person under
written authority given by the worker for the purpose; or
(b) Where the worker has died, in which case, the ER may pay the
wages of the deceased worker to the heirs of the latter without the
necessity of intestate proceedings. The claimants, if they are all of
age, shall execute an affidavit attesting to their relationship to the
deceased and the fact that they are his heirs, to the exclusion of all
other persons. If any of the heirs is a minor, the affidavit shall be
executed on his behalf by his natural guardian or next-of-kin. The
affidavit shall be presented to the ER who shall make payment
through the Secretary of Labor and Employment or his
representative. The representative of the Secretary of Labor and
Employment shall act as referee in dividing the amount paid among
the heirs. The payment of wages under this Article shall absolve the
ER of any further liability with respect to the amount paid.
f.NON-DIMINUTION OF BENEFITS PRINCIPLE
Article 100 of the Labor Code, otherwise known as the NonDiminution Rule, mandates that benefits given to EEs cannot be
taken back or reduced unilaterally by the ER because the benefit
has become part of the employment contract, written or unwritten.
The rule against diminution of benefits applies if it is shown that the
grant of the benefit is based on an express policy or has ripened
into a practice over a long period of time and that the practice is
consistent and deliberate. Nevertheless, the rule will not apply if
the practice is due to error in the construction or application of a
doubtful or difficult question of law. But even in cases of error, it
should be shown that the correction is done soon after discovery of
the error. (CENTRAL AZUCARERA DE TARLAC vs. CENTRAL
AZUCARERA DE TARLAC LABOR UNION)
g.PREFERENTIAL RIGHT IN CASE OF BANKRUPTCY
We have repeatedly stressed that before the workers' preference
provided by Article 110 may be invoked, there must first be a
declaration of bankruptcy or a judicial liquidation of the ER's
business. xxx xxx In DBP v. Santos, supra, the Court discussed the
import of Article 110 and Section 10 of Rule VIII, Book III and stated:
"It is quite clear from the provisions that a declaration of
bankruptcy or ajudicial liquidation must be present before the
worker's preference may be enforced. Thus, Article 110 of the Labor
Code and its implementing rule cannot be invoked by the
respondents in this case absent a formal declaration of bankruptcy
or a liquidation order.
In the event of bankruptcy or liquidation of an ER's business, his
workers shall enjoy first preference as regards their unpaid wages
and other monetary claims, any provision of law to the contrary
notwithstanding. Such unpaid wages,and monetary claims shall be
paid in full before the claims of the Government and other creditors
may be paid." (Italics ours.) We ruled in DBP v. NLRC, supra, that
the amendment "expands worker preference to cover not only
unpaid wages but also other monetary claims to which even claims
of the Government must be deemed subordinate." Hence, under
the new law, even mortgage credits are subordinate to workers'
claims. In this connection, respondent NLRC ruled: "Lastly, while we
are cognizant of the pronouncement of the Supreme Court with
respect to Art. 110 and while we hold in respect said
pronouncements, we are of the earnest view that considering that
Art. 110 has been amended by RA 6715, complainants' preference
over government claims and other creditors be adhered to." (Rollo,
p. 65) R.A. No. 6715, however, took effect only on March 21; 1989.
The amendment cannot therefore be retroactively applied to, nor
can it affect, the mortgage credit which was secured by the
petitioner several years prior to its effectivity. (DBP vs. NLRC)
h.ATTORNEYS FEES
ART. 111. Attorneys fees. - (a) In cases of unlawful withholding of
wages, the culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any
judicial or administrative proceedings for the recovery of wages,
attorneys fees which exceed ten percent of the amount of wages
recovered.
ORDINARY vs. EXTRAORDINARY ATTYS FEES: In its ordinary
concept, an attorney's fee is the reasonable compensation paid to a
lawyer by his client for the legal services he has rendered to the
latter. The basis of this compensation is the fact of his employment

by and his agreement with the client. In its extraordinary concept,

an attorney's fee is an indemnity for damages ordered by the court
to be paid by the losing party in a litigation. The basis of this is any
of the cases provided by law where such award can be made, such
as those authorized in Article 2208, Civil Code, and is payable not
to the lawyer but to the client, unless they have agreed that the
award shall pertain to the lawyer as additional compensation or as
part thereof.
As an adjunctive episode of the action for the recovery of bonus
differentials in NLRC-NCR Certified Case No. 0466, private
respondent's present claim for attorney's fees may be filed before
the NLRC even though or, better stated, especially after its earlier
decision had been reviewed and partially affirmed. It is well settled
that a claim for attorney's fees may be asserted either in the very
action in which the services of a lawyer had been rendered or in a
separate action.
With respect to the first situation, the remedy for recovering
attorney's fees as an incident of the main action may be availed of
only when something is due to the client. Attorney's fees cannot be
determined until after the main litigation has been decided and the
subject of the recovery is at the disposition of the court. The issue
over attorney's fees only arises when something has been
recovered from which the fee is to be paid.
While a claim for attorney's fees may be filed before the judgment
is rendered, the determination as to the propriety of the fees or as
to the amount thereof will have to be held in abeyance until the
main case from which the lawyer's claim for attorney's fees may
arise has become final. Otherwise, the determination to be made by
the courts will be premature. 24Of course, a petition for attorney's
fees may be filed before the judgment in favor of the client is
satisfied or the proceeds thereof delivered to the client.
GENERAL
RETAINER/RETAINER
FEE(COMPENSTATION
FOR
COMMITMENT TO RENDER LEGAL SERVICES) vs. SPECIAL
RETAINER(REMUNERATION FOR LEGAL SERVICES ACTUALLY
RENDERED)
The difference between a compensation for a commitment to
render legal services and a remuneration for legal services actually
rendered can better be appreciated with a discussion of the two
kinds of retainer fees a client may pay his lawyer. These are a
general retainer, or a retaining fee, and a special
retainer.
A general retainer, or retaining fee, is the fee paid to a lawyer to
secure his future services as general counsel for any ordinary legal
problem that may arise in the routinary business of the client and
referred to him for legal action. The future services of the lawyer
are secured and committed to the retaining client. For this, the
client pays the lawyer a fixed retainer fee which could be monthly
or otherwise, depending upon their arrangement. The fees are paid
whether or not there are cases referred to the lawyer. The reason
for the remuneration is that the lawyer is deprived of the
opportunity of rendering services for a fee to the opposing party or
other parties. In fine, it is a compensation for lost opportunities.
A special retainer is a fee for a specific case handled or special
service rendered by the lawyer for a client. A client may have
several cases demanding special or individual attention. If for every
case there is a separate and independent contract for attorney's
fees, each fee is considered a special retainer.(TRB vs. NLRC)
i.WAGE ORDER
ART. 123. Wage Order. - Whenever conditions in the region so
warrant, the Regional Board shall investigate and study all pertinent
facts; and based on the standards and criteria herein prescribed,
shall proceed to determine whether a Wage Order should be issued.
Any such Wage Order shall take effect after fifteen (15) days from
its complete publication in at least one (1) newspaper of general
circulation in the region.
In the performance of its wage-determining functions, the Regional
Board shall conduct public hearings/consultations, giving notices to
EEs and ERs groups, provincial, city and municipal officials and
other interested parties.
Any party aggrieved by the Wage Order issued by the Regional
Board may appeal such order to the Commission within ten (10)
calendar days from the publication of such order. It shall be
mandatory for the Commission to decide such appeal within sixty
(60) calendar days from the filing thereof.
The filing of the appeal does not stay the order unless the person
appealing such order shall file with the Commission, an undertaking
with a surety or sureties satisfactory to the Commission for the
payment to the EEs affected by the order of the corresponding
increase, in the event such order is affirmed. (As amended by
Republic Act No. 6727, June 9, 1989).
Q: What are the standards or criteria for minimum wage setting?
A: In the determination of such regional minimum wages, the
Regional Board shall, among other relevant factors consider the
following:
a)The demand for living wages
b)Wage adjustment visavis the consumer price index
c)The cost of living and changes or increases therein
d)The needs of workers and their families
e)The need to induce industries to invest in the countryside
f)Improvements in standards of living
g)The prevailing wage levels
h)Fair return of the capital invested and capacity to pay of ERs
i)Effects on employment generation and family income

Page 15 of 125

LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
j)The equitable distribution of income and wealth along the
imperatives of economic and social development
Q: What is salary ceiling method?
A: A method of minimum wage adjustment whereby the wage
adjustment is applied to Ees receiving a certain denominated
ceiling. In other words, workers already being paid more than the
existing minimum wage are also to be given a wage increase.
(ECOP v. NWCP, G.R. No. 96169, Sep. 24, 1991)
Q: What is a floor wage method?
A: It involves the fixing of a determinate amount to be added to the
prevailing statutory minimum wage rates.
j.WAGE DISTORTION
Elaborating on this statutory definition, this Court ruled: Wage
distortion presupposes a classification of positions and ranking of
these positions at various levels. One visualizes a hierarchy of
positions with corresponding ranks basically in terms of wages and
other emoluments. Where a significant change occurs at the lowest
level of positions in terms of basic wage without a corresponding
change in the other level in the hierarchy of positions, negating as a
result thereof the distinction between one level of position from the
next higher level, and resulting in a parity between the lowest level
and the next higher level or rank, between new entrants and old
hires, there exists a wage distortion.

A: Art. 128
VP and EP of
SLE

Art. 129
RD

Art. 217(a)(6)
LA

Inspection of
establishments
and issuance of
orders to compel
compliance with
labor standards,
wage orders and
other labor laws
Enforcement of
labor legislation
in general

Adjudication of Ees
claims for wages
and benefits

LA exercises
original and
exclusive
jurisdiction

Limited to monetary
claims

All other claims

arising from Er
Ee relations

Proceeding is an
offshoot of
routine
inspections

Initiated by sworn
complaints filed by
any interested party

No jurisdictional
reqts

Jurisdictional reqts:
1) Complaint arises
from ErEe
relationship
2) Claimant is an Ee
or person employed
in domestic or
household service or
a HH
3) Complaint does
NOT include a claim
for reinstatement
4) Aggregate money
claim of EACH
claimant does not
exceed P5,000
Appealable to NLRC

LA decides case
within 30
calendar days
after submission
of the case by
the parties for
decision
1) All other
claims arising
from ErEe
relations
2) Including
those of persons
in domestic or
household
service
3) Involving an
amount
exceeding P5,000
4) Whether or not
accompanied
with a claim for
reinstatement
Appealable to
NLRC

The concept of wage distortion assumes an existing grouping or

classification of EEs which establishes distinctions among such EEs
on some relevant or legitimate basis. This classification is reflected
in a differing wage rate for each of the existing classes of EEs.
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary
rates;
2. A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a higher one;
3. The elimination of the distinction between the two levels;
4. The existence of the distortion in the same region of the country.
A wage parity between EEs in different rungs is not at issue here,
but a wage disparity between EEs in the same rung but located in
different regions of the country. Contrary to petitioners postulation,
a disparity in wages between EEs holding similar positions but in
different regions does not constitute wage distortion as
contemplated by law..
Petitioners claim of wage distortion must also be denied for one
other reason. The difference in wages between EEs in the same pay
scale in different regions is not the mischief sought to be banished
by the law. In fact, Republic Act No. 6727 (the Wage Rationalization
Act), recognizes existing regional disparities in the cost of living.
Section 2 of said law provides: SEC. 2. It is hereby declared the
policy of the State to rationalize the fixing of minimum wages and
to promote productivity-improvement and gain-sharing measures to
ensure a decent standard of living for the workers and their
families; to guarantee the rights of labor to its just share in the
fruits of production; to enhance employment generation in the
countryside through industry dispersal; and to allow business and
industry reasonable returns on investment, expansion and growth.
Petitioner also avers that the implementation of the Wage Order in
only one region violates the equal-pay-for-equal-work principle. This
is not correct. At the risk of being repetitive, we stress that RA 6727
mandates that wages in every region must be set by the particular
wage board of that region, based on the prevailing situation therein.
Necessarily, the wages in different regions will not be uniform.
Thus, under RA 6727, the minimum wage in Region 1 may be
different from that in Region 13, because the socioeconomic
conditions in the two regions are different. (PRUBANKERS ASSOC.
vs. PRUDENTIAL BANK AND TRUST CO.)
Q: Can the issue of WD be raised in a notice of strike?
A: No. WD is nonstrikeable. (Ilaw at Buklod ng Manggagawa v.
NLRC, G.R. No. 91980, June 27, 1991.) WD is neither a deadlock in
collective bargaining nor ULP.
Q: Is the Er legally obliged to correct WD?
A: The Er and the union shall negotiate to correct the distortions. If
there is no union, the Er and the workers shall endeavor to correct
such distinctions.
A: Organized
Unorganized Establishments
Establishment
(without union)
(with union)
The Er and the union shall
The Er and the workers shall
negotiate to correct distortion.
endeavor to correct the
distortion.
Any dispute shall be resolved
Any dispute shall be settled
through a grievance procedure
through the NCMB.
under the CBA.
If it remains unresolved, it
If it remains unresolved within 10
shall be dealt with through
days it shall be referred to the
voluntary arbitration.
NLRC.
The dispute will be resolved
The NLRC shall conduct
within 10 days from the time
continuous hearings and decide
the dispute was referred to
the dispute within 20 days from
voluntary arbitration.
the time the same was referred.

k.VISITORIAL/ENFORCEMENT/ADJUDICATORY POWER

Appealable to SLE
(In case
compliance order
is issued by
Regional Office)

DOLE REGIONAL DIRECTORS(Small Money Claims)

Q: What is the rule on the recovery of simple money claims?
A:
1.The aggregate money claim of each EE (Ee) or househelper (HH)
does not exceed P5,000.
2.The claim is presented by an Ee or person employed in the
domestic or household service or HH.
3.The claim arises from ErEe relationship.
4.The claimant does not seek reinstatement.
Note: In the absence of any of the ff. requisites, it is the labor
arbiter (LA) who shall have the jurisdiction over the claims arising
from ErEe relations, except claims for Ees compensation, SSS,
Philhealth, and maternity benefits, pursuant to Art.217 of the Labor
Code.
The proceedings before the Regional Office shall be summary and
nonlitigious in nature.

Q: What is the adjudicatory power of the Regional Director (RD)?

A: The RD or any of his duly authorized hearing officer is
empowered through summary proceeding and after due notice, to
hear and decide cases involving recovery of wages and other
monetary claims and benefits, including legal interests
DOLE SECRETARY OF LABOR(V/E)
Q: What constitute visitorial power?
A:1.Access to ERs records and premises at any time of the day or
night, whenever work is being undertaken
2.To copy from said records
3.Question any EE and investigate any fact, condition or matter
which may be necessary to determine violations or which may aid
in the enforcement of the Labor Code and of any labor law, wage
order, or rules and regulation issued pursuant thereto.
Q: Give 4 instances where the visitorial power of the SLE may be
exercised under the Labor Code.
A: Power to:
1.Inspect books of accounts and records of any person or entity
engaged in recruitment and placement, require it to submit reports
regularly on prescribed forms and act in violations of any provisions
of the LC on recruitment and placement. (Art. 37)
2.Have access to ERs records and premises to determine violations
of any provisions of the LC on recruitment and placement. (Art.
128)
3.Conduct industrial safety inspections of establishments. (Art. 165)
4.Inquire into the financial activities of legitimate labor
organizations (LLO) and examine their books of accounts upon the
filing of the complaint under oath and duly supported by the written

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J.SUAREZ II, 2ND SEM,SY 12-13
consent of at least 20% of the total membership of the LO
concerned.
Q: What is enforcement power?
A: It is the power of the SLE to:
1.Issue compliance orders
2.Issue writs of execution for the enforcement of their orders,
except in cases where the ER (Er) contests the findings of the labor
officer and raise issues supported by documentary proof which
were not considered in the course of inspection
3.Order stoppage of work or suspension of operation when non
compliance with the law or implementing rules and regulations
poses grave and imminent danger to health and safety of workers
in the workplace
4.Require Ers to keep and maintain such employment records as
may be necessary in aid to the visitorial and enforcement powers
5.Conduct hearings within 24 hours to determine whether:a.An
order for stoppage of work or suspension of operations shall be
lifted or not; and b.Er shall pay EEs concerned their salaries in case
the violation is attributable to his fault. (As amended by RA 7730;
Guico v. Secretary,
Q: What are the instances when enforcement power may not be
used?
A:
1.Case does not arise from the exercise of visitorial power
2.When ErEe relationship ceased to exist at the time of the
inspection
3.If ER contests the finding of the Labor Regulation Officer and such
contestable issue is not verifiable in the normal course of inspection
4.TITLE iii, ARTS. 122-155
ART. 122. Creation of Regional Tripartite Wages and
Productivity Boards. - There is hereby created Regional Tripartite
Wages and Productivity Boards, hereinafter referred to as Regional
Boards, in all regions, including autonomous regions as may be
established by law. The Commission shall determine the
offices/headquarters of the respective Regional Boards.
The Regional Boards shall have the following powers and functions
in their respective territorial jurisdictions:
(a) To develop plans, programs and projects relative to wages,
incomes and productivity improvement for their respective regions;
(b) To determine and fix minimum wage rates applicable in their
regions, provinces or industries therein and to issue the
corresponding wage orders, subject to guidelines issued by the
Commission;
(c) To undertake studies, researches, and surveys necessary for the
attainment of their functions, objectives and programs, and to
collect and compile data on wages, incomes, productivity and other
related information and periodically disseminate the same;
(d) To coordinate with the other Regional Boards as may be
necessary to attain the policy and intention of this Code;
(e) To receive, process and act on applications for exemption from
prescribed wage rates as may be provided by law or any Wage
Order; and
(f) To exercise such other powers and functions as may be
necessary to carry out their mandate under this Code.
Implementation of the plans, programs, and projects of the Regional
Boards referred to in the second paragraph, letter (a) of this Article,
shall be through the respective regional offices of the Department
of Labor and Employment within their territorial jurisdiction;
Provided, however, That the Regional Boards shall have technical
supervision over the regional office of the Department of Labor and
Employment with respect to the implementation of said plans,
programs and projects.
Each Regional Board shall be composed of the Regional Director of
the Department of Labor and Employment as chairman, the
Regional Directors of the National Economic and Development
Authority and the Department of Trade and Industry as vicechairmen and two (2) members each from workers and ERs
sectors who shall be appointed by the President of the Philippines,
upon the recommendation of the Secretary of Labor and
Employment, to be made on the basis of the list of nominees
submitted by the workers and ERs sectors, respectively, and who
shall serve for a term of five (5) years.
Each Regional Board to be headed by its chairman shall be assisted
by a Secretariat. (As amended by Republic Act No. 6727, June 9,
1989).
ART. 130. Nightwork prohibition. - No woman, regardless of
age, shall be employed or permitted or suffered to work, with or
without compensation:
(a) In any industrial undertaking or branch thereof between ten
oclock at night and six oclock in the morning of the following day;
or
(b) In any commercial or non-industrial undertaking or branch
thereof, other than agricultural, between midnight and six oclock in
the morning of the following day; or
(c) In any agricultural undertaking at nighttime unless she is given
a period of rest of not less than nine (9) consecutive hours.
ART. 131. Exceptions. - The prohibitions prescribed by the
preceding Article shall not apply in any of the following cases:
(a) In cases of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other
disasters or calamity, to prevent loss of life or property, or in cases
of force majeure or imminent danger to public safety;

(b) In case of urgent work to be performed on machineries,

equipment or installation, to avoid serious loss which the ER would
otherwise suffer;
(c) Where the work is necessary to prevent serious loss of
perishable goods;
(d) Where the woman EE holds a responsible position of managerial
or technical nature, or where the woman EE has been engaged to
provide health and welfare services;
(e) Where the nature of the work requires the manual skill and
dexterity of women workers and the same cannot be performed
with equal efficiency by male workers;
(f) Where the women EEs are immediate members of the family
operating the establishment or undertaking; and
(g) Under other analogous cases exempted by the Secretary of
Labor and Employment in appropriate regulations.
ART. 132. Facilities for women. - The Secretary of Labor and
Employment shall establish standards that will ensure the safety
and health of women EEs. In appropriate cases, he shall, by
regulations, require any ER to:
(a) Provide seats proper for women and permit them to use such
seats when they are free from work and during working hours,
provided they can perform their duties in this position without
detriment to efficiency;
(b) To establish separate toilet rooms and lavatories for men and
women and provide at least a dressing room for women;
(c) To establish a nursery in a workplace for the benefit of the
women EEs therein; and
(d) To determine appropriate minimum age and other standards for
retirement or termination in special occupations such as those of
flight attendants and the like.
Article 134.Family Planning Services; Incentives for Family
Planning.- (a) Establishments which are required by law to
maintain a clinic or infirmary shall provide free family planning
services to their EEs which shall include, but not be limited to, the
application or use of contraceptive pills and intrauterine devices.
(b) In coordination with other agencies of the government engaged
in the promotion of family planning, the Department of Labor and
Employment shall develop and prescribe incentive bonus schemes
to encourage family planning among female workers in any
establishment or enterprise.
Article 135.Discrimination Prohibited. It shall be unlawful for
any ER to discriminate against any woman EE with respect to terms
and conditions of employment solely on account of her sex.
The following are acts of discrimination:
(a) Payment of a lesser compensation, including wage, salary or
other form of remuneration and fringe benefits, to a female EE as
against a male EE, for work of equal value; and
(b) Favoring a male EE over a female EE with respect to promotion,
training opportunities, study and scholarship grants solely on
account of their sexes.
Criminal liability for the willful commission of any unlawful act as
provided in this Article or any violation of the rules and regulations
issued pursuant to Section 2 hereof shall be penalized as provided
in Articles 288 and 289 of this Code: Provided, That the institution
of any criminal action under this provision shall not bar the
aggrieved EE from filing an entirely separate and distinct action for
money claims, which may include claims for damages and other
affirmative reliefs. The actions hereby authorized shall proceed
independently of each other. (As amended by Republic Act No.
6725, May 12, 1989).
Article 137.Prohibited Acts. (a) It shall be unlawful for any ER:
(1) To deny any woman EE the benefits provided for in this Chapter
or to discharge any woman employed by him for the purpose of
preventing her from enjoying any of the benefits provided under
this Code;
(2) To discharge such woman on account of her pregnancy, or while
on leave or in confinement due to her pregnancy;
(3) To discharge or refuse the admission of such woman upon
returning to her work for fear that she may again be pregnant.
Article 138.Classification of Certain Women Workers. Any
woman who is permitted or suffered to work, with or without
compensation, in any night club, cocktail lounge, massage clinic,
bar or similar establishments under the effective control or
supervision of the ER for a substantial period of time as determined
by the Secretary of Labor and Employment, shall be considered as
an EE of such establishment for purposes of labor and social
legislation.
Article 139.Minimum Employable Age.- (a) No child below
fifteen (15) years of age shall be employed, except when he works
directly under the sole responsibility of his parents or guardian, and
his employment does not in any way interfere with his schooling.
(b) Any person between fifteen (15) and eighteen (18)
years of age may be employed for such number of hours and such
periods of the day as determined by the Secretary of Labor and
Employment in appropriate regulations.
(c) The foregoing provisions shall in no case allow the
employment of a person below eighteen (18) years of age in an
undertaking which is hazardous or deleterious in nature as
determined by the Secretary of Labor and Employment.

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J.SUAREZ II, 2ND SEM,SY 12-13

Article 140.Prohibition Against Child Discrimination. - No ER

shall discriminate against any person in respect to terms and
conditions of employment on account of his age.
Article 141.Coverage. - This Chapter shall apply to all persons
rendering services in households for compensation.
Domestic or household service shall mean service in the ERs
home which is usually necessary or desirable for the maintenance
and enjoyment thereof and includes ministering to the personal
comfort and convenience of the members of the ERs household,
including services of family drivers.
Article 142.Contract of Domestic Service. The original
contract of domestic service shall not last for more than two (2)
years but it may be renewed for such periods as may be agreed
upon by the parties.
Article 143.Minimum Wage. (a) Househelpers shall be paid the
following minimum wage rates:
(1) Eight hundred pesos (P800.00) a month for househelpers in
Manila, Quezon, Pasay, and Caloocan cities and municipalities of
Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon,
Paranaque, Las Pias, Pasig, Marikina, Valenzuela, Taguig and
Pateros in Metro Manila and in highly urbanized cities;
(2) Six hundred fifty pesos (P650.00) a month for those in other
chartered cities and first-class municipalities; and
(3) Five hundred fifty pesos (P550.00) a month for those in other
municipalities.
Provided, That the ERs shall review the employment contracts of
their househelpers every three (3) years with the end in view of
improving the terms and conditions thereof.
Provided, further, That those househelpers who are receiving at
least One thousand pesos (P1,000.00) shall be covered by the
Social Security System (SSS) and be entitled to all the benefits
provided thereunder. (As amended by Republic Act No. 7655,
August 19, 1993).
Article 144.Minimum Cash Wage. The minimum wage rates
prescribed under this Chapter shall be the basic cash wages which
shall be paid to the househelpers in addition to lodging, food and
medical attendance.
Article 145.Assignment to Non-Household Work. No
househelper shall be assigned to work in a commercial, industrial or
agricultural enterprise at a wage or salary rate lower than that
provided for agricultural or non-agricultural workers as prescribed
herein.
Article 146.Opportunity for Education. If the househelper is
under the age of eighteen (18) years, the ER shall give him or her
an opportunity for at least elementary education. The cost of
education shall be part of the househelpers compensation, unless
there is a stipulation to the contrary.
Article 147.Treatment of Househelpers. The ER shall treat the
househelper in a just and humane manner. In no case shall physical
violence be used upon the househelper.
Article 148.Board, Lodging, and Medical Attendance. The ER
shall furnish the househelper, free of charge, suitable and sanitary
living quarters as well as adequate food and medical attendance.
Article 149.Indemnity for Unjust Termination of Services. If
the period of household service is fixed, neither the ER nor the
househelper may terminate the contract before the expiration of
the term, except for a just cause. If the househelper is unjustly
dismissed, he or she shall be paid the compensation already earned
plus that for fifteen (15) days by way of indemnity.
If the househelper leaves without justifiable reason, he or she shall
forfeit any unpaid salary due him or her not exceeding fifteen (15)
days.
Article 150.Service of Termination Notice. If the duration of
the household service is not determined either in stipulation or by
the nature of the service, the ER or the househelper may give
notice to put an end to the relationship five (5) days before the
intended termination of the service.
ANTI-SEXUAL HARASSMENT ACT(RA7877) SEC.3-6
Q: Who may be held liable for sexual harassment?
A: In a work, education or trainingrelated environment sexual
harassment may be committed by an:
1.Ee ; 2.Manager ; 3.Supervisor ; 4. Agent of the (Er); 5. Teacher,
instructor, professor; 6. Coach, trainer, or 7. Any other person who,
having authority, influence or moral ascendancy over another in a
work or training or education environment: a. Demands, b.
Requests or c. Requires any sexual favor from the other, regardless
of whether the demand, request or requirement for submission is
accepted by the object of R.A. 7877. (Sec. 3)
Q: How is sexual harassment committed?
A: Generally, a person liable demands, requests, or otherwise
requires any sexual favor from the other, regardless of whether the

demand, request or requirement for submission is accepted by the

latter.
Q: Under the Sexual Harassment Act, does the definition of sexual
harassment require a categorical demand or request for sexual
favor?
A: No. It is true that the provision calls for a demand, request or
requirement of a sexual favor. But it is not necessary that the
demand, request or requirement of a sexual favor be articulated in
a categorical manner. It may be discerned, with equal certitude,
from the acts of the offender. Likewise, it is not essential that the
demand, request or requirement be made as a condition for
continued employment or for promotion to a higher position. It is
enough that the respondents acts result in creating an
intimidating, hostile or offensive environment for the EE. (Domingo
v. Rayala, G.R. No. 155831, Feb. 18, 2008)
Q: When is sexual harassment committed?
A: Specifically:
1. In a workrelated or employment environment:
a. The sexual favor is made as a condition in the hiring or in the
employment, reemployment or continued employment of said
individual, or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant
the sexual favor results in limiting, segregating or classifying the Ee
which in a way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said Ee;
b. The above acts would impair the Ees rights or privileges under
existing labor laws; or
c. The above acts would result in an intimidating, hostile, or
offensive environment for the Ee.
2. In an education or training environment:
a. Against one who is under the care, custody or supervision of the
offender;
b. Against one whose education, training, apprenticeship or
tutorship is entrusted to the offender;
c. Sexual favor is made a condition to the giving of a passing grade,
or the granting of honors and scholarships, or the payment of a
stipend, allowance or other benefits, privileges, or considerations;
or
d. Sexual advances result in an intimidating, hostile or offensive
environment for the student, trainee or apprentice.

Q: What are the duties of the Er or head of office in a work related,

education or training environment?
A:
1.Prevent or deter the commission of acts of sexual harassment and
2.Provide the procedures for the resolution, settlement or
prosecution of acts of sexual harassment.
Towards this end, the Er or head of office shall:
1.Promulgate appropriate rules and regulations in consultation with
the jointly approved by the Ees or students or trainees, through
their duly designated representatives, prescribing the procedure for
the investigation or sexual harassment cases and the
administrative sanctions therefore. (Sec. 4)
Note: Administrative sanctions shall not be a bar to prosecution in
the proper courts for unlawful acts of sexual harassment.
The said rules and regulations issued shall include, among others,
guidelines on proper decorum in the workplace and educational or
training institutions.
1.Create a committee on decorum and investigation of cases on
sexual harassment.
2.The Er or head of office, education or training institution shall
disseminate or post a copy of this R.A. 7877 for the information of
all concerned
Q: What is the liability of the Er, head of office, educational
training institution?
A: Ee shall be solidarily liable for damages arising from the acts
sexual harassment committed in the employment, education
training environment provided:
1.The Er or head of office, educational or training institution
informed of such acts by the offended party; and
2.No immediate action is taken thereon. (Sec. 5)

or
of
or
is

Q: Can an independent action for damages be filed?

A: Yes. Nothing under R.A. 7877 shall preclude the victim of work,
education or trainingrelated sexual harassment from instituting a
separate and independent action for damages and other affirmative
relief. (Sec. 6)

Q: What is the threefold liability rule in sexual harassment cases?

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J.SUAREZ II, 2ND SEM,SY 12-13
A: An act of sexual harassment may give rise to civil, criminal and
administrative liability on the part of the offender, each proceeding
independently of the others.
Q: When does the action prescribe?
A: Any action shall prescribe in 3 years.
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as
amended, the terms househelper or domestic servant are
defined as follows: The term househelper as used herein is
synonymous to the term domestic servant and shall refer to any
person, whether male or female, who renders services in and about
the ERs home and which services are usually necessary or
desirable for the maintenance and enjoyment thereof, and
ministers exclusively to the personal comfort and enjoyment of the
ERs family. The foregoing definition clearly contemplates such
househelper or domestic servant who is employed in the ERs home
to minister exclusively to the personal comfort and enjoyment of
the ERs family. Such definition covers family drivers, domestic
servants, laundry women, yayas, gardeners, houseboys and other
similar househelps
RA10151
(APEX MINING vs. NLRC)
(BARCENAS vs. NLRC)
(BACSIN vs. WAHIMAN)
5.BOOK FOUR, ARTS-156-161
Article 156.First-Aid Treatment. Every ER shall keep in his
establishment such first-aid medicines and equipment as the nature
and conditions of work may require, in accordance with such
regulations as the Department of Labor and Employment shall
prescribe.
The ER shall take steps for the training of a sufficient
number of EEs in first-aid treatment.
Article 157.Emergency Medical and Dental Services. It shall
be the duty of every ER to furnish his EEs in any locality with free
medical and dental attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the number of
EEs exceeds fifty (50) but not more than two hundred (200) except
when the ER does not maintain hazardous workplaces, in which
case, the services of a graduate first-aider shall be provided for the
protection of workers, where no registered nurse is available. The
Secretary of Labor and Employment shall provide by appropriate
regulations, the services that shall be required where the number of
EEs does not exceed fifty (50) and shall determine by appropriate
order, hazardous workplaces for purposes of this Article;
(b) The services of a full-time registered nurse, a part-time
physician and dentist, and an emergency clinic, when the number
of EEs exceeds two hundred (200) but not more than three hundred
(300); and
(c) The services of a full-time physician, dentist and a full-time
registered nurse as well as a dental clinic and an infirmary or
emergency hospital with one bed capacity for every one hundred
(100) EEs when the number of EEs exceeds three hundred (300).
In cases of hazardous workplaces, no ER shall engage the services
of a physician or a dentist who cannot stay in the premises of the
establishment for at least two (2) hours, in the case of those
engaged on part-time basis, and not less than eight (8) hours, in
the case of those employed on full-time basis. Where the
undertaking is non-hazardous in nature, the physician and dentist
may be engaged on retainer basis, subject to such regulations as
the Secretary of Labor and Employment may prescribe to insure
immediate availability of medical and dental treatment and
attendance in case of emergency. (As amended by Section 26,
Presidential Decree No. 570-A, November 1, 1974).
Article 158.When Emergency Hospital Not Required. The
requirement for an emergency hospital or dental clinic shall not be
applicable in case there is a hospital or dental clinic which is
accessible from the ERs establishment and he makes arrangement
for the reservation therein of the necessary beds and dental
facilities for the use of his EEs.
Article 159.Health Program. The physician engaged by an ER
shall, in addition to his duties under this Chapter, develop and
implement a comprehensive occupational health program for the
benefit of the EEs of his ER.
Article 160.Qualifications of Health Personnel. The
physicians, dentists and nurses employed by ERs pursuant to this
Chapter shall have the necessary training in industrial medicine and
occupational safety and health. The Secretary of Labor and
Employment, in consultation with industrial, medical, and
occupational safety and health associations, shall establish the
qualifications, criteria and conditions of employment of such health
personnel.
ART. 161. Assistance of ER. - It shall be the duty of any ER to
provide all the necessary assistance to ensure the adequate and
immediate medical and dental attendance and treatment to an
injured or sick EE in case of emergency.
(OCEAN BUILDERS vs. SPS. CUBCUB)
(ECASINAS vs. SHANGRI-LA)

ART. 278. Coverage. - The provisions of this Title shall apply to all
establishments or undertakings, whether for profit or not.
ART. 279. Security of tenure. - In cases of regular employment, the
ER shall not terminate the services of an EE except for a just cause
or when authorized by this Title. An EE who is unjustly dismissed
from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement. (As amended
by Section 34, Republic Act No. 6715, March 21, 1989).
.
1.CLASSIFICATION OF EES
i.CONTRACTOR, INDEPENDENT CONTRACTOR, LABOR-ONLY
CONTRACTOR (ARTS.-106-109)
ART. 106. Contractor or subcontractor. - Whenever an ER
enters into a contract with another person for the performance of
the formers work, the EEs of the contractor and of the latters
subcontractor, if any, shall be paid in accordance with the
provisions of this Code.
In the event that the contractor or subcontractor fails to pay the
wages of his EEs in accordance with this Code, the ER shall be
jointly and severally liable with his contractor or subcontractor to
such EEs to the extent of the work performed under the contract, in
the same manner and extent that he is liable to EEs directly
employed by him.
The Secretary of Labor and Employment may, by appropriate
regulations, restrict or prohibit the contracting-out of labor to
protect the rights of workers established under this Code. In so
prohibiting or restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine
who among the parties involved shall be considered the ER for
purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.
There is "labor-only" contracting where the person supplying
workers to an ER does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are
performing activities which are directly related to the principal
business of such ER. In such cases, the person or intermediary shall
be considered merely as an agent of the ER who shall be
responsible to the workers in the same manner and extent as if the
latter were directly employed by him.
ART. 107. Indirect ER. - The provisions of the immediately
preceding article shall likewise apply to any person, partnership,
association or corporation which, not being an ER, contracts with an
independent contractor for the performance of any work, task, job
or project.
ART. 108. Posting of bond. - An ER or indirect ER may require the
contractor or subcontractor to furnish a bond equal to the cost of
labor under contract, on condition that the bond will answer for the
wages due the EEs should the contractor or subcontractor, as the
case may be, fail to pay the same.
ART. 109. Solidary liability. - The provisions of existing laws to
the contrary notwithstanding, every ER or indirect ER shall be held
responsible with his contractor or subcontractor for any violation of
any provision of this Code. For purposes of determining the extent
of their civil liability under this Chapter, they shall be considered as
direct ERs.
In declaring BMSI as an independent contractor, the CA, in the
challenged Decision, heavily relied on the provisions of the
Agreement, wherein BMSI declared that it was an independent
contractor, with substantial capital and investment.De Los Santos v.
NLRC, 372 SCRA 723 (2001), instructed us that the character of the
business, i.e., whether as labor-only contractor or as job contractor,
should be measured in terms of, and determined by, the criteria set
by statute. The parties cannot dictate by the mere expedience of a
unilateral declaration in a contract the character of their business.
Thus, in distinguishing between prohibited labor-only contracting
and permissible job contracting, the totality of the facts and the
surrounding circumstances of the case are to be considered. Laboronly contracting, a prohibited act, is an arrangement where the
contractor or subcontractor merely recruits, supplies, or places
workers to perform a job, work, or service for a principal. In laboronly contracting, the following elements are present: (a) the
contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work, or service under its
own account and responsibility; and (b) the EEs recruited, supplied,
or placed by such contractor or subcontractor perform activities
which are directly related to the main business of the principal. On
the other hand, permissible job contracting or subcontracting refers
to an arrangement whereby a principal agrees to put out or farm
out with the contractor or subcontractor the performance or
completion of a specific job, work, or service within a definite or
predetermined period, regardless of whether such job, work, or
service is to be performed or completed within or outside the
premises of the principal.
A person is considered engaged in legitimate job contracting or
subcontracting if the following conditions concur: (a) The contractor
carries on a distinct and independent business and undertakes the
contract work on his account under his own responsibility according
to his own manner and method, free from the control and direction
of his ER or principal in all matters connected with the performance
of his work except as to the results thereof; (b) The contractor has
substantial capital or investment; and (c) The agreement between
the principal and the contractor or subcontractor assures the
contractual EEs entitlement to all labor and occupational safety
and health standards, free exercise of the right to self-organization,
security of tenure, and social welfare benefits.

6.BOOK SIX, POST-EMPLOYMENT

a.TERMINATION OF EMPLOYMENT (ARTS.278-286)

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J.SUAREZ II, 2ND SEM,SY 12-13
EEs need not prove that the contractor does not have substantial
capital,investment, and tools to engage in job-contracting.LSC
was unable to present proof that BMSI had substantial capital. The
record before us is bereft of any proof pertaining to the contractors
capitalization, nor to its investment in tools, equipment, or
implements actually used in the performance or completion of the
job, work, or service that it was contracted to render. What is clear
was that the equipment used by BMSI were owned by, and merely
rented from, LSC. In Mandaue Galleon Trade, Inc. v. Andales, 548
SCRA 17 (2008), we held: The law casts the burden on the
contractor to prove that it has substantial capital, investment, tools,
etc. EEs, on the other hand, need not prove that the contractor
does not have substantial capital, investment, and tools to engage
in job-contracting
The CA erred in considering BMSIs Certificate of Registration as
sufficient proof that it is an independent contractor. In San Miguel
Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito
Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N.
Policarpio, 623 SCRA 114 (2010), we held that a Certificate of
Registration issued by the Department of Labor and Employment is
not conclusive evidence of such status. The fact of registration
simply prevents the legal presumption of being a mere labor-only
contractor from arising.
BMSI can only be classified as a labor-only contractor. The CA,
therefore, erred when it ruled otherwise. Consequently, the workers
that BMSI supplied to LSC became regular EEs of the latter. Having
gained regular status, petitioners were entitled to security of tenure
and could only be dismissed for just or authorized causes and after
they had been accorded due process. Petitioners lost their
employment when LSC terminated its Agreement with BMSI.
However, the termination of LSCs Agreement with BMSI cannot be
considered a just or an authorized cause for petitioners dismissal.
(BABAS vs. LORENZO SHIPPING)
In this case the Labor Arbiter, the NLRC, and the Court of Appeals
were unanimous in finding that FVA was a legitimate job contractor.
Among the circumstances that established the status of FVA as a
legitimate job contractor are: (1) FVA is registered with the DOLE
and the DTI; (2) FVA has a Contract for Services with Dusit for the
supply of valet parking and door attendant services; (3) FVA has an
independent business and provides valet parking and door
attendant services to other clients like Mandarin Oriental, Manila
Hotel, Peninsula Manila Hotel, Westin Philippine Plaza, Golden B
Hotel, Pan Pacific Manila Hotel, and Strikezone Bowling Lane; and
(4) FVAs total assets from 1997 to 1999 amount toP1,502,597.70
to P9,021,335.13. In addition, it provides the uniforms and lockers
of its EEs. (OREGAS vs. NLRC)
In determining whether there is labor-only contracting, the control
test is merely one of the factors to consider; Finding that a
contractor is a labor-only contractor, as opposed to permissible
job contracting, is equivalent to declaring that there is an ER-EE
relationship between the principal and the EEs of the supposed
contractor, and the labor-only contractor is considered as a mere
agent of the principal, the real ER (ALIVIADO vs. PROCTER AND
GAMBLE)
Independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary
EEs. The specific selection and hiring of SONZA, because of his
unique skills, talent and celebrity status not possessed by ordinary
EEs, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. If SONZA did not possess
such unique skills, talent and celebrity status, ABS-CBN would not
have entered into the Agreement with SONZA but would have hired
him through its personnel department just like any other EE. In any
event, the method of selecting and engaging SONZA does not
conclusively determine his status. We must consider all the
circumstances of the relationship, with the control test being the
most important element.
All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBNs
EE, there would be no need for the parties to stipulate on benefits
such as SSS, Medicare, x x x and 13th month pay which the law
automatically incorporates into every ER-EE contract. Whatever
benefits SONZA enjoyed arose from contract and not because of an
ER-EE relationship.
SONZAs talent fees, amounting to P317,000 monthly in the second
and third year, are so huge and out of the ordinary that they
indicate more an independent contractual relationship rather than
an ER-EE relationship. ABS-CBN agreed to pay SONZA such huge
talent fees precisely because of SONZAs unique skills, talent and
celebrity status not possessed by ordinary EEs. Obviously, SONZA
acting alone possessed enough bargaining power to demand and
receive such huge talent fees for his services. The power to bargain
talent fees way above the salary scales of ordinary EEs is a
circumstance indicative, but not conclusive, of an independent
contractual relationship.
Applying the control test to the present case, we find that SONZA is
not an EE but an independent contractor. The control test is
themost important test our courts apply in distinguishing an EE
from an independent contractor. This test is based on the extent of
control the hirer exercises over a worker. The greater the
supervision and control the hirer exercises, the more likely the
worker is deemed an EE. The converse holds true as wellthe less
control the hirer exercises, the more likely the worker is considered
an independent contractor.
Being an exclusive talent does not by itself mean that SONZA is an
EE of ABS-CBN. Even an independent contractor can validly provide

his services exclusively to the hiring party. In the broadcast

industry, exclusivity is not necessarily the same as control. (SONZA
vs. ABS-CBN)
(GARDEN OF MEMORIES vs. NLRC)
ii.REGULAR, PROJECT/SEASONAL, PROBATIONARY, CASUAL
EES (ARTS.280-281)
ART. 280. Regular and casual employment. - The provisions of
written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be
deemed to be regular where the EE has been engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the ER, except where the employment has
been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the
engagement of the EE or where the work or service to be performed
is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, That any EE who has rendered
at least one year of service, whether such service is continuous or
broken, shall be considered a regular EE with respect to the activity
in which he is employed and his employment shall continue while
such activity exists.
ART. 281. Probationary employment. - Probationary employment
shall not exceed six (6) months from the date the EE started
working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an EE who has been
engaged on a probationary basis may be terminated for a just
cause or when he fails to qualify as a regular EE in accordance with
reasonable standards made known by the ER to the EE at the time
of his engagement. An EE who is allowed to work after a
probationary period shall be considered a regular EE
As can be gleaned from this provision, there are two kinds of
regular EEs, namely: (1) those who are engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the ER; 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. Simply stated,
regular EEs are classified into: regular EEs by nature of work; and
regular EEs by years of service. The former refers to those EEs who
perform a particular activity which is necessary or desirable in the
usual business or trade of the ER, regardless of their length of
service; while the latter refers to those EEs who have been
performing the job, regardless of the nature thereof, for at least a
year. If the EE has been performing the job for at least one year,
even if the performance is not continuous or merely intermittent,
the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not
indispensability, of that activity to the business.
A project EE is assigned to carry out a specific project or
undertaking the duration and scope of which are specified at the
time the EE is engaged in the project. A project is a job or
undertaking which is distinct, separate and identifiable from the
usual or regular undertakings of the company. A project EE is
assigned to a project which begins and ends at determined or
determinable times.
The principal test used to determine whether EEs are project EEs as
distinguished from regular EEs, is whether or not the EEs were
assigned to carry out a specific project or undertaking, the duration
or scope of which was specified at the time the EEs were engaged
for that project. In this case, apart from respondents bare
allegation that petitioner was a project EE, it had not shown that
petitioner was informed that he would be assigned to a specific
project or undertaking. Neither was it established that he was
informed of the duration and scope of such project or undertaking
at the time of his engagement.
Respondent did not report the termination of petitioners supposed
project employment to the Department of Labor and Employment
(DOLE). Department Order No. 19 (as well as the old Policy
Instructions No. 20) requires ERs to submit a report of an EEs
termination to the nearest public employment office every time the
employment is terminated due to a completion of a project.
Respondents failure to file termination reports, particularly on the
cessation of petitioners employment, was an indication that the
petitioner was not a project but a regular EE. (GOMA vs. PAMPLONA
PLANTATION)
Seafarers are not covered by the term regular employment, as
defined under Article 280 of the Labor Codethey are considered
contractual EEs whose rights and obligations are governed primarily
by the Philippine Overseas Employment Administration (POEA)
Standard Employment Contract for Filipino Seamen (POEA Standard
Employment Contract), the Rules and Regulations Governing
Overseas Employment, and, more importantly, by R.A. No. 8042; It
is an accepted maritime industry practice that the employment of
seafarers is for a fixed period only.It is well to remind both parties
that, as early as Brent School, Inc. v. Zamora, 181 SCRA 702 (1990),
we already held that seafarers are not covered by the term regular
employment, as defined under Article 280 of the Labor Code. This
was reiterated in Coyoca v. National Labor Relations Commission,
243 SCRA 190 (1995).Instead, they are considered contractual EEs
whose rights and obligations are governed primarily by the POEA
Standard Employment Contract for Filipino Seamen (POEA Standard
Employment Contract)
the Rules and Regulations Governing Overseas Employment, and,
more importantly, by Republic Act No. 8042, otherwise known as
The Migrant Workers and Overseas Filipinos Act of 1995. Even the
POEA Standard Employment Contract itself mandates that in no

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J.SUAREZ II, 2ND SEM,SY 12-13
case shall a contract of employment concerning seamen exceed 12
months. It is an accepted maritime industry practice that the
employment of seafarers is for a fixed period only. The Court
acknowledges this to be for the mutual interest of both the seafarer
and the ER. Seafarers cannot stay for a long and indefinite period of
time at sea as limited access to shore activity during their
employment has been shown to adversely affect them.
Furthermore, the diversity in nationality, culture and language
among the crew necessitates the limitation of the period of
employment.
The Court quoted with favor the NLRCs explanation that the
reference to permanent and probationary masters and EEs was a
misnomer. It did not change the fact that the contract for
employment was for a definite period of time. In using the terms
probationary and permanent vis--vis seafarers, what was
really meant was eligible for re-hire. This is the only logical
explanation possible as the parties cannot and should not violate
the POEAs directive that a contract of enlistment must not exceed
12 months. (DELA CRUZ vs. MAERSK FILIPINAS CREWING)
Thus, the work provided by petitioner depends on the availability of
such contracts or projects. The duration of the employment of his
work force is not permanent but coterminous with the projects to
which the workers are assigned. Viewed in this context, the
respondents are considered as project EEs of petitioner. Indeed, the
status of respondents as project EEs was upheld by the Court of
Appeals based on the findings of facts of the Labor Arbiter and the
NLRC.
However, respondents, even if working as project EEs, enjoy
security of tenure. Section 3, Article XIII, of the Constitution
guarantees the right of workers to security of tenure, and because
of this, an EE may only be terminated for just or authorized causes
that must comply with the due process requirements mandated by
law.
The employment of a project worker hired for a specific phase of a
construction project is understood to be coterminous with the
completion of such phase and not upon the accomplishment of the
whole project, and a worker hired for a particular phase of a
construction project can be dismissed upon the completion of such
phase (SABEROLA vs. SUAREZ)
if petitioners were repeatedly and successively re-hired, still it did
not qualify them as regular EEs, as length of service is not the
controlling determinant of the employment tenure of a project EE,
but whether the employment has been fixed for a specific project or
undertaking, its completion has been determined at the time of the
engagement of the EE. Further, the proviso in Article 280, stating
that an EE who has rendered service for at least one (1) year shall
be considered a regular EE, pertains to casual EEs and not to
project EEs. (CASERES vs. UNIVERSAL ROBINA)
(ARO vs. NLRC)
The Manual of Regulations for Private Schools, and not the Labor
Code, determines whether or not a faculty member in an
educational institution has attained regular or permanent status. In
University of Santo Tomas v. National Labor Relations Commission
the Court en banc said that under Policy Instructions No. 11 issued
by the Department of Labor and Employment, the probationary
employment of professors, instructors and teachers shall be subject
to the standards established by the Department of Education and
Culture. Said standards are embodied in paragraph 75 (now
Section 93) of the Manual of Regulations for Private Schools.
Section 93 of the 1992 Manual of Regulations for Private Schools
provides that full-time teachers who have satisfactorily completed
their probationary period shall be considered regular or permanent.
Moreover, for those teaching in the tertiary level, the probationary
period shall not be more than six consecutive regular semesters of
satisfactory service. The requisites to acquire permanent
employment, or security of tenure, are (1) the teacher is a full-time
teacher; (2) the teacher must have rendered three consecutive
years of service; and (3) such service must have been satisfactory.
As previously held, a part-time teacher cannot acquire permanent
status. Only when one has served as a full-time teacher can he
acquire permanent or regular status. The petitioner was a part-time
lecturer before she was appointed as a full-time instructor on
probation. As a part-time lecturer, her employment as such had
ended when her contract expired. Thus, the three semesters she
served as part-time lecturer could not be credited to her in
computing the number of years she has served to qualify her for
permanent status.
Completing the probation period does not automatically qualify her
to become a permanent EE of the university. Petitioner could only
qualify to become a permanent EE upon fulfilling the reasonable
standards for permanent employment as faculty member.
Consistent with academic freedom and constitutional autonomy, an
institution of higher learning has the prerogative to provide
standards for its teachers and determine whether these standards
have been met. At the end of the probation period, the decision to
re-hire an EE on probation, belongs to the university as the ER
alone.
We reiterate, however, that probationary EEs enjoy security of
tenure, but only within the period of probation. Likewise, an EE on
probation can only be dismissed for just cause or when he fails to
qualify as a regular EE in accordance with the reasonable standards
made known by the ER at the time of his hiring. Upon expiration of
their contract of employment, academic personnel on probation
cannot automatically claim security of tenure and compel their ERs
to renew their employment contracts. In the instant case,

petitioner, did not attain permanent status and was not illegally
dismissed. As found by the NLRC, her contract merely expired.
(LACUESTA vs. ATENEO)
In the cases of Espiritu Santo Parochial School vs. NLRC and Colegio
San Agustin vs. NLRC, the court recognized the distinction between
a calendar year and a school year. InEspiritu Santo Parochial School,
we held: x x x the petitioners can not talk of a three-year
probationary employment expiring each school year. If it expires
per school year, it is not a three-year period. Then in Colegio San
Agustin, we said: x x x As applied to private school teachers, the
probationary period is three years as provided in the Manual of
Regulations for Private Schools. It must be stressed that the law
speaks of three years not three school years. x x x Needless to say,
a calendar year consists of twelve (12) months, while a school year
consists only of ten (10) months. A school year begins in June of
one calendar year and ends in March of the succeeding calendar
year.
Public respondent therefore erred in finding that private
respondents probationary employment was supposed to end in
June 1992. The contract clearly states the duration of private
respondents termit shall begin at the opening of school year
1989-1990 (i.e., June 1989) and shall end at the closing of school
year 1991-1992 (i.e., March, 1992). Hence, petitioners are not
obliged to pay private respondent her salary for the months of April,
May and June as her employment already ceased in March, in
accordance with the provisions of her employment contract. (MT.
CARMEL CPLLEGE vs. NLRC)
2.TERMINATION BY ER
a.JUST CAUSE
ART.285B - An EE may put an end to the relationship without
serving any notice on the ER for any of the following just causes:
1. Serious insult by the ER or his representative on the honor and
person of the EE;
2. Inhuman and unbearable treatment accorded the EE by the ER or
his representative;
3. Commission of a crime or offense by the ER or his representative
against the person of the EE or any of the immediate members of
his family; and
4. Other causes analogous to any of the foregoing.
b.WITHOUT CAUSE
ART.285A - An EE may terminate without just cause the EE-ER
relationship by serving a written notice on the ER at least one (1)
month in advance. The ER upon whom no such notice was served
may hold the EE liable for damages.
i.RESIGNATION
Generally, an EE who voluntarily resigns from employment is not
entitled to separation pay. In the present case, however, upon the
request of petitioner, private respondent agreed to a scheme
whereby the former would receive separation pay despite having
resigned voluntarily. Thus, the terms and conditions they both
agreed upon constituted a contract freely entered into, which
should be performed in good faith, as it constituted the law
between the parties.
Not all waivers and quitclaims are invalid as against public policy. If
the agreement was voluntarily entered into and represented a
reasonable settlement, it is binding on the parties and may not
later be disowned, simply because of a change of mind.
Voluntary resignation is defined as the act of an EE, who finds
himself in a situation in which he believes that personal reasons
cannot be sacrificed in favor of the exigency of the service; thus, he
has no other choice but to disassociate himself from his
employment. As discussed above, petitioner negotiated for a
resignation with separation pay as the manner in which his
employment relations with private respondent would end. He was
already suffering from a lingering illness at the time he tendered his
resignation. His continued employment would have been
detrimental not only to his health, but also to his performance as an
EE of private respondent.
Clearly then, the claim of petitioner that he was illegally dismissed
cannot be sustained, considering that his voluntary resignation has
been indubitably estab-lished as a fact by the three tribunals below.
Indeed, illegal dismissal and voluntary resignation are adversely
opposed modes of terminating employment relations, in that the
presence of one precludes that of the other. (ALFARO vs. CA)
Clearly, therefore, private respondent Ernesto de la Cruz was
required by the employment contract not only to pay his own
repatriation expenses but also to give thirty (30) days notice should
he decide to terminate his employment prior to the expiration of
the period provided in the contract. When the Master approved his
request for relief, the Master emphasized that private respondent
was required to give thirty (30) days notice and to shoulder his own
repatriation expenses. Approval of his request for relief, therefore,
did not constitute a waiver by petitioners of the provisions of the
contract, as private respondent would have us believe, for it was
made clear to him that the provisions of the contract, insofar as the
thirty (30) days notice and repatriation expenses were concerned,
were to be enforced.
Resignations, once accepted and being the sole act of the EE, may
not be withdrawn without the consent of the ER.
In the instant case, the Master had already accepted the
resignation and, although the private respondent was being
required to serve the thirty (30) days notice provided in the
contract, his resignation was already approved. Private respondent
cannot claim that his resignation ceased to be effective because he

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J.SUAREZ II, 2ND SEM,SY 12-13
was not immediately discharged in Port Pylos, Greece, for he could
no longer unilaterally withdraw such resignation. When he later
signified his intention of continuing his work, it was already up to
the petitioners to accept his withdrawal of his resignation. The mere
fact that they did not accept such withdrawal did not constitute
illegal dismissal for acceptance of the withdrawal of the resignation
was their (petitioners) sole prerogative.
Once an EE resigns and his resignation is accepted, he no longer
has any right to the job. If the EE later changes his mind, he must
ask for approval of the withdrawal of his resignation from his ER, as
if he were re-applying for the job. It will then be up to the ER to
determine whether or not his service would be continued. If the ER
accepts said withdrawal, the EE retains his job. If the ER does not,
as in this case, the EE cannot claim illegal dismissal for the ER has
the right to determine who his EEs will be. To say that an EE who
has resigned is illegally dismissed, is to encroach upon the right of
ERs to hire persons who will be of service to them.
Under the terms of the employment contract, it is the ships Master
who determines where a seaman requesting relief may be signed
off. It is, therefore, erroneous for private respondent to claim that
his resignation was effective only in Greece and that because he
was not immediately allowed to disembark in Greece (as the ER
wanted compliance with the contractual conditions for termination
on the part of the EE), the resignation was to be deemed
automatically withdrawn.(INTERTROD MARITIME vs. NLRC)
We are not unaware that the execution of the resignation letters
was undisputed, but the aforementioned circumstances of this case
and the fact that private respondents filed a complaint for illegal
dismissal from employment against Blue Angel completely negate
the claim that private respondents voluntarily resigned. Wellentrenched is the rule that resignation is inconsistent with the filing
of a complaint for illegal dismissal. To constitute resignation, the
resignation must be unconditional with the intent to operate as
such. There must be clear intention to relinquish the position. In this
case, private respondents actively pursued their illegal dismissal
case against Blue Angel such that they cannot (BLUE ANGEL
MANPOWER AND SECURITY SERVICES vs. CA)
From the totality of evidence on record, it was clearly demonstrated
that respondent Cinderella has sufficiently discharged its burden to
prove that petitioners resignation was voluntary. In voluntary
resignation, the EE is compelled by personal reason(s) to
disassociate himself from employment. It is done with the intention
of relinquishing an office, accompanied by the act of abandonment.
To determine whether the EE indeed intended to relinquish such
employment, the act of the EE before and after the alleged
resignation must be considered. Petitioner relinquished her position
when she submitted the letters of resignation. The resignation
letter submitted on February 15, 2000 confirmed the earlier
resignation letter she submitted on February 7, 2000. The
resignation letter contained words of gratitude which can hardly
come from an EE forced to resign.
Petitioner stopped reporting for work although she met with the
officers of the corporation to settle her accountabilities but never
raised the alleged intimidation employed on her. Also, though the
complaint was filed within the 4-year prescriptive period, its belated
filing supports the contention of respondent that it was a mere
afterthought. Taken together, these circumstances are substantial
proof that petitioners resignation was voluntary. Hence, petitioner
cannot take refuge in the argument that it is the ER who bears the
burden of proof that the resignation is voluntary and not the
product of coercion or intimidation. Having submitted a resignation
letter, it is then incumbent upon her to prove that the resignation
was not voluntary but was actually a case of constructive dismissal
with clear, positive, and convincing evidence. Petitioner failed to
substantiate her claim of constructive dismissal.
We enumerated the requisites for intimidation to vitiate consent as
follows: (1) that the intimidation caused the consent to be given;
(2) that the threatened act be unjust or unlawful; (3) that the threat
be real or serious, there being evident disproportion between the
evil and the resistance which all men can offer, leading to the
choice of doing the act which is forced on the person to do as the
lesser evil; and (4) that it produces a well-grounded fear from the
fact that the person from whom it comes has the necessary means
or ability to inflict the threatened injury to his person or property. x
xx
None of the above requisites was established by petitioner. Other
than the allegation that Mr. Tecson intimidated petitioner into
resigning, there were no other proofs presented to support a finding
of forced resignation to stand against respondents denial and proof
against dismissal. Neither can we consider the conduct of audits
and other internal investigations as a form of harassment against
petitioner. Said investigation was legitimate and justified,
conducted in view of the discovery of the anomalous transaction
involving the EEs of the respondent including petitioner. (VICENTE
vs. CA)
C.CIVIC AND MILITARY DUTY
ART. 286. When employment not deemed terminated. - The
bona-fide suspension of the operation of a business or undertaking
for a period not exceeding six (6) months, or the fulfillment by
the EE of a military or civic duty shall not terminate
employment. In all such cases, the ER shall reinstate the EE to his
former position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from the
resumption of operations of his ER or from his relief from the
military or civic duty.
3.TERMINATION BY ER

a.SUBSTANTIVE DUE PROCESS

1.JUST CAUSES
ART.282B - Termination by ER. - An ER may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the EE of the
lawful orders of his ER or representative in connection with his
work;
(b) Gross and habitual neglect by the EE of his duties;
(c) Fraud or willful breach by the EE of the trust reposed in him by
his ER or duly authorized representative;
(d) Commission of a crime or offense by the EE against the person
of his ER or any immediate member of his family or his duly
authorized representatives; and
(e) Other causes analogous to the foregoing.
1.1.SERIOUS MISCONDUCT (ART.282A)
(COLEGIO DE SAN JUAN DE LETRAN-CALAMBA vs. VILLAS)
Misconduct is defined as the transgression of some established
and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error
in judgment. For serious misconduct to justify dismissal under the
law, (a) it must be serious, (b) must relate to the performance of
the EEs duties; and (c) must show that the EE has become unfit to
continue working for the ER.
We reject petitionersclaim that respondent company failed to
observe the requirements of procedural due process. In the
dismissal of EEs, it has been consistently held that the twin
requirements of notice and hearing are essential elements of due
process. The ER must furnish the EE with two written notices before
termination of employment can be legally effected: (a) a notice
apprising the EE of the particular acts or omissions for which his
dismissal is sought, and (b) a subsequent notice informing the EE of
the ERs decision to dismiss him.
With regard to the requirement of a hearing, the essence of due
process lies in an opportunity to be heard. Such opportunity was
afforded the petitioner when she was asked to explain her side of
the story. InMetropolitan Bank and Trust Company v. Barrientos, 481
SCRA 311 (2006), we held that, the essence of due process lies
simply in an opportunity to be heard, and not that an actual hearing
should always and indispensably be held. Similarly in Philippine
Pasay Chung Hua Academy v. Edpan, 578 SCRA 262 (2009), we held
that, [e]ven if no hearing or conference was conducted, the
requirement of due process had been met since he was accorded a
chance to explain his side of the controversy. (NAGKAKAISANG
LAKAS NG MANGGAGAWA SA KEIHIN vs. KEIHIN PHIL)
We have consistently held that in order to constitute a valid
dismissal, two requisites must concur: (a) the dismissal must be for
any of the causes expressed in Art. 282 of the Labor Code, and (b)
the EE must be accorded due process, basic of which are the
opportunity to be heard and defend himself.
On the outset, it must be stressed that to constitute immorality, the
circumstances of each particular case must be holistically
considered and evaluated in light of the prevailing norms of
conduct and applicable laws. American jurisprudence has defined
immorality as a course of conduct which offends the morals of the
community and is a bad example to the youth whose ideals a
teacher is supposed to foster and to elevate, the same including
sexual misconduct. Thus, in petitioners case, the gravity and
seriousness of the charges against him stem from his being a
married man and at the same time a teacher.
Consequently, it is but stating the obvious to assert that teachers
must adhere to the exacting standards of morality and decency.
There is no dichotomy of morality. A teacher, both in his official and
personal conduct, must display exemplary behavior. He must freely
and willingly accept restrictions on his conduct that might be
viewed irksome by ordinary citizens. In other words, the personal
behavior of teachers, in and outside the classroom, must be beyond
reproach.
Accordingly, 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 the students. Likewise, they
must observe a high standard of integrity and honesty.
the foregoing, it seems obvious that when a teacher engages in
extra-marital relationship, especially when the parties are both
married, such behavior amounts to immorality, justifying his
termination from employment.
Having concluded that immorality is a just cause for dismissing
petitioner, it is imperative that the private respondent prove the
same. Since the burden of proof rests upon the ER to show that the
dismissal was for a just and valid cause, the same must be
supported by substantial evidence. (SANTOS vs. NLRC)
(SAMSON vs. NLRC)
Petitioners reliance on the authorities it cited that sleeping on the
job is always a valid ground for dismissal, is misplaced. The
authorities cited involved security guards whose duty necessitates
that they be awake and watchful at all times inasmuch as their
function, to use the words in Luzon Stevedoring Corp. v. Court of
Industrial Relations, is to protect the company from pilferage or
loss. Accordingly, the doctrine laid down in those cases is not
applicable to the case at bar.
While an ER enjoys a wide latitude of discretion in the promulgation
of policies, rules and regulations on work-related activities of the
EEs, those directives, however, must always be fair and reasonable,

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J.SUAREZ II, 2ND SEM,SY 12-13
and the corresponding penalties, when prescribed, must be
commensurate to the offense involved and to the degree of the
infraction. In the case at bar, the dismissal meted out on private
respondent for allegedly sleeping on the job, under the attendant
circumstances, appears to be too harsh a penalty, considering that
he was being held liable for first time, after nine (9) long years of
unblemished service, for an alleged offense which caused no
prejudice to the ER, aside from absence of substantiation of the
alleged offense. The authorities cited by petitioner are also
irrelevant for the reason that there is no evidence on the depravity
of conduct, willfulness of the disobedience, or conclusiveness of
guilt on the part of private respondent. Neither was it shown that
private respondents alleged negligence or neglect of duty, if any,
was gross and habitual. Thus, reinstatement is just and proper. (VH
MANUFACTURING vs. NLRC)
1.2.WILLFUL DISOBEDIENCE (ART.282A)
Willful disobedience of the ERs lawful orders, as a just cause for the
dismissal of an EE, envisages the concurrence of at least two
requisites: (1) the EEs assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful and
perverse attitude; and (2) the order violated must have been
reasonable, lawful, made known to the EE and must pertain to the
duties which he had been engaged to discharge.
(ROSARIO vs. VICTORY RICE MILL) (SMC vs. PONTILLAS)
1.3.GROSS AND HABITUAL NEGLECT OF DUTY (ART.282B)
To quote petitioner National Bookstores Personnel Manager Padilla,
Jr., we are constrained to terminate your employment or services
with the Company effective immediately for gross neglect of duty
and loss of confidence. Gross neglect of duty and loss of
confidence are just causes for termination of employment by an ER.
Gross negligence has been defined as the 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. A perusal of the records of the
case does not in any way show that private respondents were even
remotely negligent of their duties so as to cause the loss of
petitioner National Bookstores funds. Private respondents were
able to illustrate with candor and sincerity the procedure they took
prior to the loss which was witnessed by an EE of petitioner
National Bookstore. They were in fact subjected to a thorough body
search by petitioner National Bookstores lady guard before leaving
their place of work on the date in issue, a claim not controverted by
petitioners. Moreover, it was not even shown that they had access
to the vault where the money was kept.
Significantly, in order to constitute a just cause for the EEs
dismissal, the neglect of duties must not only be gross but also
habitual. Thus, the single or isolated act of negligence does not
constitute a just cause for the dismissal of the EE. Verily, assuming
arguendo that private respondents were negligent, although we
find otherwise, it could only be a single or an isolated act that
cannot be categorized as habitual, hence, not a just cause for their
dismissal.(NATIONAL BOOKSTORE vs. CA)
Aboitiz had run out of Large Quickbox. However, records show that
Salas made a requisition for Quickboxas early as May 21, 2003; that
he made several follow-ups with Eric Saclamitao regarding the
request; and that he even talked to the supplier to facilitate the
immediate delivery of the Quickbox. It cannot be gainsaid that
Salas exerted efforts to avoid a stock out ofQuickbox. Accordingly,
he cannot be held liable for gross negligence. If there is anything
that Salas can be faulted for, it is his failure to promptly inform his
immediate supervisor, Mr. Ed Dumago, of the non-delivery of the
requisitioned items. Nevertheless, such failure did not amount to
gross neglect of duty or to willful breach of trust, which would
justify his dismissal from service.(SALAS vs. ABOITIZ)
repeated and habitual infractions, committed despite several
warnings, constitute gross misconduct; Habitual absenteeism
without leave constitutes gross negligence and is sufficient to
justify termination of an EE.Habitual neglect implies repeated
failure to perform ones duties for a period of time. Buguats
repeated acts of absences without leave and her frequent tardiness
reflect her indifferent attitude to and lack of motivation in her work.
Her repeated and habitual infractions, committed despite several
warnings, constitute gross misconduct. Habitual absenteeism
without leave constitute gross negligence and is sufficient to justify
termination of an EE.
We find the penalty of dismissal from the service reasonable and
appropriate to Buguats infraction. Her repeated negligence is not
tolerable; neither should it merit the penalty of suspension only. The
record of an EE is a relevant consideration in determining the
penalty that should be meted out. Buguat committed several
infractions in the past and despite the warnings and suspension,
she continued to display a neglectful attitude towards her work. An
EEs past misconduct and present behavior must be taken together
in determining the proper imposable penalty. The totality of
infractions or the number of violations committed during the period
of employment shall be considered in determining the penalty to be
imposed upon an erring EE. The offenses committed by him should
not be taken singly and separately but in their totality. Fitness for
continued employment cannot be compartmentalized into tight
little cubicles of aspects of character, conduct, and ability separate
and independent of each other. It is the totality, not the
compartmentalization, of such company infractions that Buguat had
consistently committed which justified her dismissal.
Management has the prerogative to discipline its EEs and to impose
appropriate penalties on erring workers pursuant to company rules
and regulations. On the other hand, the law also recognizes the
right of the ER to expect from its workers not only good
performance, adequate work and diligence, but also good conduct

and loyalty. The ER may not be compelled to continue to employ

such persons whose continuance in the service will patently be
inimical to his interests. (CHALLENGE SOCKS vs. CA)
We, therefore, agree with the Labor Arbiters findings, to wit: The
imputed absence and tardiness of the complainant are
documented. He faltered on his attendance 38 times of the 66
working days. His last absences on 11, 13, 14, 15 and 16 March
2000 were undertaken without even notice/permission from
management. These attendance delinquencies may be
characterized as habitual and are sufficient justifications to
terminate the complainants employment. On this score, Valiao v.
Court of Appeals, 435 SCRA 543 (2004), is instructive: xxx It bears
stressing that petitioners absences and tardiness were not isolated
incidents but manifested a pattern of habituality. xxx The totality of
infractions or the number of violations committed during the period
of employment shall be considered in determining the penalty to be
imposed upon an erring EE. The offenses committed by him should
not be taken singly and separately but in their totality. Fitness for
continued employment cannot be compartmentalized into tight
little cubicles of aspects of character, conduct, and ability separate
and independent of each other.
We cannot simply tolerate injustice to ERs if only to protect the
welfare of undeserving EEs. As aptly put by then Associate Justice
Leonardo A. Quisumbing: Needless to say, so irresponsible an EE
like petitioner does not deserve a place in the workplace, and it is
within the managements prerogative xxx to terminate his
employment. Even as the law is solicitous of the welfare of EEs, it
must also protect the rights of an ER to exercise what are clearly
management prerogatives. As long as the companys exercise of
those rights and prerogative is in good faith to advance its interest
and not for the purpose of defeating or circumventing the rights of
EEs under the laws or valid agreements, such exercise will be
upheld. (MANSION PRINTING vs. BITARA)
Under the circumstances, MERALCOs sanction of dismissal will not
be commensurate to Beltrans inadvertence not only because there
was no clear showing of bad faith and malice but also in
consideration of her untainted record of long and dedicated service
to MERALCO. In the similar case of Philippine Long Distance
Telephone Company v. Berbano, Jr., 606 SCRA 81 (2009), we held
that: The magnitude of the infraction committed by an EE must be
weighed and equated with the penalty prescribed and must be
commensurate thereto, in view of the gravity of the penalty of
dismissal or termination from the service. The ER should bear in
mind that in termination cases, what is at stake is not simply the
EEs job or position but [her] very livelihood. Where a penalty less
punitive would suffice, whatever missteps may be committed by an
EE ought not to be visited with a consequence so severe such as
dismissal from employment. Hence, we find no reversible error or
any grave abuse of discretion on the part of the CA in ordering
Beltrans reinstatement without backwages. The forfeiture of her
salary is an equitable punishment for the simple negligence
committed. (MERALCO vs. BELTRAN)
1.4.LOSS OF TRUST AND CONFIDENCE (ART.282C)
MANAGERIAL vs. RANK AND FILE EES
Significantly, (t)ampering with electric meters or metering
installations of the Company or the installation of any device, with
the purpose of defrauding the Company is classified as an act of
dishonesty from Meralco EEs, expressly prohibited under company
rules. It is reasonable that its commission is classified as a severe
act of dishonesty, punishable by dismissal even on its first
commission, given the nature and gravity of the offense and the
fact that it is a grave wrong directed against their ER.
The dismissal is also justified as the act imputed upon the petitioner
qualifies as fraud or willful breach by the EE of the trust reposed in
him by his ER or duly authorized representative under Article 282
(c) of the Labor Code. While the petitioner contests this ground by
denying that his position is one of trust and confidence, it is
undisputed that at the time of his dismissal, he was holding a
supervisory position after he rose from the ranks since
commencement of his employment with Meralco. As a supervisor
with duty and power that included testing of service meters and
investigation of violations of contract of customers, his position can
be treated as one of trust and confidence, requiring a high degree
of honesty as compared with ordinary rank-and-file EEs.
We emphasize that dismissal of a dishonest EE is to the best
interest not only of the management but also of labor. As a measure
of self-protection against acts inimical to its interest, a company has
the right to dismiss its erring EEs. An ER cannot be compelled to
continue employing an EE guilty of acts inimical to the ERs interest,
justifying loss of confidence in him. (YABUT vs. MERALCO)
The Bank should be reminded that for a dismissal based on loss of
trust and confidence to be valid, the breach of trust must be willful,
meaning it must be done intentionally, knowingly, and purposely,
without justifiable excuse. Loss of trust and confidence stems from
a breach of trust founded on dishonest, deceitful or fraudulent act.
This is obviously not the case here. (PRUDENTIAL BANK vs.
MAURICIO)
e quantum of proof required in determining the legality of an EEs
dismissal is only substantial evidence or such relevant evidence as
a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise.Now, petitioners terminated his
employment on the ground of loss of trust and confidence for
supposedly committing acts inimical to the companys interests.
However, in termination cases, the burden of proof rests upon the
ER to show that the dismissal is for a just and valid cause and
failure to do so would necessarily mean that the dismissal was

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J.SUAREZ II, 2ND SEM,SY 12-13
illegal. The ERs case succeeds or fails on the strength of its
evidence and not on the weakness of the EEs defense. If doubt
exists between the evidence presented by the ER and the EE, the
scales of justice must be tilted in favor of the latter. Moreover, the
quantum of proof required in determining the legality of an EEs
dismissal is only substantial evidence or such relevant evidence as
a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise. Thus, it is incumbent upon petitioners
to prove by substantial evidence that valid grounds exist for
terminating respondents employment on the ground of loss of trust
and confidence. However, our review of the records of this case
reveals that the CA correctly held that petitioners failed to
discharge this burden.
To our mind, the failure to reach the monthly sales quota cannot be
considered an intentional and unjustified act of respondent
amounting to a willful breach of trust on his part that would call for
his termination based on loss of confidence. This is simply not the
willful breach of trust and confidence contemplated in Article 282(c)
of the Labor Code. Indeed, the low sales performance could be
attributed to several factors which are beyond respondents control.
To be a valid ground for an EEs dismissal, loss of trust and
confidence must be based on a willful breach. To repeat, a breach is
willful if it is done intentionally, knowingly and purposely, without
justifiable excuse. Petitioners having failed to establish by
substantial evidence any valid ground for terminating respondents
services, we uphold the finding of the Labor Arbiter and the CA that
respondent was illegally dismissed.(NORKIS DISTRIBUTOR vs.
DESCALLAR)
We hold that petitioner Sy was validly dismissed on the ground of
fraud and willful breach of trust under Article 282 of the Labor
Code. Records show that as bank manager, he authorized kiting
or drawing of checks against uncollected funds in wanton violation
of the banks policies. It was sufficient basis for the bank to lose
trust in him. Unlike a rank-and-file worker, where breach of trust as
a ground for valid dismissal requires proof of involvement in the
alleged anomaly and where mere uncorroborated accusation by the
ER will not suffice, the sheer existence of a basis for believing that
the ERs trust has been breached is enough for the dismissal of a
managerial EE.
Under the Labor Code, only unjustly dismissed EEs are entitled to
retirement benefits and other privileges including reinstatement
and backwages. Since petitioners dismissal was for a just cause, he
is not entitled to any retirement benefit. To hold otherwise would be
to reward acts of willful breach of trust by the EE. It would also open
the floodgate to potential anomalous banking transactions by bank
EEs whose employments have been extended. Since a banks
operation is essentially imbued with public interest, it owes great
fidelity to the public it deals with. In turn, it cannot be compelled to
continue in its employ a person in whom it has lost trust and
confidence and whose continued employment would patently be
inimical to the banks interest. While the scale of justice is tilted in
favor of workers, the law does not authorize blind submission to the
claim of labor regardless of merit. (SY vs. METROBANK)
1.5. COMMISSION OF A CRIME (ART.282D)
1.6.ANALOGOUS CASES (ART.282E)
In this case, petitioner dismissed respondent based on the NBIs
finding that the latter stole and used Yusecos credit cards. But
since the theft was not committed against petitioner itself but
against one of its EEs, respondents misconduct was not workrelated and therefore, she could not be dismissed for serious
misconduct. Nonetheless, Article 282(e) of the Labor Code talks of
other analogous causes or those which are susceptible of
comparison to another in general or in specific detail. For an EE to
be validly dismissed for a cause analogous to those enumerated in
Article 282, the cause must involve a voluntary and/or willful act or
omission of the EE.
A cause analogous to serious misconduct is a voluntary and/or
willful act or omission attesting to an EEs moral depravity. Theft
committed by an EE against a person other than his ER, if proven
by substantial evidence, is a cause analogous to serious
misconduct. (JOHN HANCOCK LIFE INSURANCE vs. DAVIS)
A reading of the weight standards of PAL would lead to no other
conclusion than that they constitute a continuing qualification of an
EE in order to keep the job. Tersely put, an EE may be dismissed the
moment he is unable to comply with his ideal weight as prescribed
by the weight standards. The dismissal of the EE would thus fall
under Article 282(e) of the Labor Code. As explained by the CA: x x
x [T]he standards violated in this case were not mere orders of
the ER; they were the prescribed weights that a cabin crew must
maintain in order to qualify for and keep his or her position in the
company. In other words, they were standards that establish
continuing qualifications for an EEs position. By its nature, these
qualifying standards are norms that apply prior to and after an EE
is hired. They apply prior to employment because these are the
standards a job applicant must initially meet in order to be hired.
They apply after hiring because an EE must continue to meet these
standards while on the job in order to keep his job. Under this
perspective, a violation is not one of the faults for which an EE can
be dismissed pursuant to pars. (a) to (d) of Article 282; the EE can
be dismissed simply because he no longer qualifies for his job
irrespective of whether or not the failure to qualify was willful or
intentional. x x x
In fine, We hold that the obesity of petitioner, when placed in the
context of his work as flight attendant, becomes an analogous
cause under Article 282(e) of the Labor Code that justifies his
dismissal from the service. His obesity may not be unintended, but

is nonetheless voluntary. As the CA correctly puts it,

[v]oluntariness basically means that the just cause is solely
attributable to the EE without any external force influencing or
controlling his actions. This element runs through all just causes
under Article 282, whether they be in the nature of a wrongful
action or omission. Gross and habitual neglect, a recognized just
cause, is considered voluntary although it lacks the element of
intent found in Article 282(a), (c), and (d).
Employment in particular jobs may not be limited to persons of a
particular sex, religion, or national origin unless the ER can show
that sex, religion, or national origin is an actual qualification for
performing the job. The qualification is called a bona
fideoccupational qualification (BFOQ). In the United States, there
are a few federal and many state job discrimination laws that
contain an exception allowing an ER to engage in an otherwise
unlawful form of prohibited discrimination when the action is based
on a BFOQ necessary to the normal operation of a business or
enterprise.
Bona Fide Occupational Qualification (BFOQ) is valid provided it
reflects an inherent quality reasonably necessary for satisfactory
job performance; Under the Meiorin Test, (1) the ER must show
that it adopted the standard for a purpose rationally connected to
the performance of the job, (2) the ER must establish that the
standard is reasonably necessary to the accomplishment of that
work-related purpose, and, (3) the ER must establish that the
standard is reasonably necessary in order to accomplish the
legitimate work-related purpose. this Court held that in order to
justify a BFOQ, the 470 ER must prove that (1) the employment
qualification is reasonably related to the essential operation of the
job involved; and (2) that there is factual basis for believing that all
or substantially all persons meeting the qualification would be
unable to properly perform the duties of the job. In short, the test of
reasonableness of the company policy is used because it is parallel
to BFOQ. BFOQ is valid provided it reflects an inherent quality
reasonably necessary for satisfactory job performance.
There is no merit to the argument that BFOQ cannot be applied if it
has no supporting statute. Too, the Labor Arbiter, NLRC, and CA are
one in holding that the weight standards of PAL are reasonable. A
common carrier, from the nature of its business and for reasons of
public policy, is bound to observe extraordinary diligence for the
safety of the passengers it transports. It is bound to carry its
passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due
regard for all the circumstances. The law leaves no room for
mistake or oversight on the part of a common carrier. Thus, it is
only logical to hold that the weight standards of PAL show its effort
to comply with the exacting obligations imposed upon it by law by
virtue of being a common carrier.
The business of PAL is air transportation.As such, it has committed
itself to safely transport its passengers. In order to achieve this, it
must necessarily rely on its EEs, most particularly the cabin flight
deck crew who are on board the aircraft. The weight standards of
PAL should be viewed as imposing strict norms of discipline upon its
EEs. In other words, the primary objective of PAL in the imposition
of the weight standards for cabin crew is flight safety. It cannot be
gainsaid that cabin attendants must maintain agility at all times in
order to inspire passenger confidence on their ability to care for the
passengers when something goes wrong. It is not farfetched to say
that airline companies, just like all common carriers, thrive due to
public confidence on their safety records. People, especially the
riding public, expect no less than that airline companies transport
their passengers to their respective destinations safely and soundly.
A lesser performance is unacceptable.
The task of a cabin crew or flight attendant is not limited to serving
meals or attending to the whims and caprices of the passengers.
The most important activity of the cabin crew is to care for the
safety of passengers and the evacuation of the aircraft when an
emergency occurs. Passenger safety goes to the core of the job of a
cabin attendant. Truly, airlines need cabin attendants who have the
necessary strength to open emergency doors, the agility to attend
to passengers in cramped working conditions, and the stamina to
withstand grueling flight schedules. On board an aircraft, the body
weight and size of a cabin attendant are important factors to
consider in case of emergency. Aircrafts have constricted cabin
space, and narrow aisles and exit doors. Thus, the arguments of
respondent that [w]hether the airlines flight attendants are
overweight or not has no direct relation to its mission of
transporting passengers to their destination; and that the weight
standards has nothing to do with airworthiness of respondents
airlines, must fail.
There is no need to individually evaluate their ability to perform
their task. That an obese cabin attendant occupies more space than
a slim one is an unquestionable fact which courts can judicially
recognize without introduction of evidence. It would also be absurd
to require airline companies to reconfigure the aircraft in order to
widen the aisles and exit doors just to accommodate overweight
cabin attendants like petitioner. The biggest problem with an
overweight cabin attendant is the possibility of impeding
passengers from evacuating the aircraft, should the occasion call
for it. The job of a cabin attendant during emergencies is to
speedily get the passengers out of the aircraft safely. Being
overweight necessarily impedes mobility. Indeed,in an emergency
situation, seconds are what cabin attendants are dealing with, not
minutes. Three lost seconds can translate into three lost lives.
Evacuation might slow down just because a wide-bodied cabin
attendant is blocking the narrow aisles. These possibilities are not
remote.

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J.SUAREZ II, 2ND SEM,SY 12-13
Petitioner is also in estoppel. He does not dispute that the weight
standards of PAL were made known to him prior to his employment.
He is presumed to know the weight limit that he must maintain at
all times. In fact, never did he question the authority of PAL when
he was repeatedly asked to trim down his weight. Bona fides exigit
ut quod convenit fiat. Good faith demands that what is agreed upon
shall be done. Kung ang tao ay tapat kanyang tutuparin ang
napagkasunduan. (YRASUEGI vs. PAL)
1.7.ABANDONMENT
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 ER-EE relationship,
with the second element as the more determinative factor and
being manifested by some overt acts. Mere absence is not
sufficient. The ER has the burden of proof to show a deliberate and
unjustified refusal of the EE to resume his employment without any
intention of returning. (RCBC CABLE MASTER SYSTEM vs. BALUYOT)
Mere absence or failure to work, even after notice to return, is not
tantamount to abandonment. The records are bereft of proof that
petitioners even furnished respondent such notice. Furthermore, it
is a settled doctrine that the filing of a complaint for illegal
dismissal is inconsistent with abandonment of employment. An EE
who takes steps to protest his dismissal cannot logically be said to
have abandoned his work. The filing of such complaint is proof
enough of his desire to return to work, thus negating any
suggestion of abandonment. (GSP MANUFACTURING vs. CABANBAN)
(SHIE JIE CORP. vs. NFL)
To constitute abandonment, there must be concurrence of the
intention to abandon and some overt acts from which it may be
inferred that the EE concerned has no more interest in working. In
other words, there must be a clear, deliberate and unjustified
refusal to resume employment and a clear intention to sever the
ER-EE relationship on the part of the EE.
Where the findings of the National Labor Relations Commission
contradict those of the labor arbiter, the Supreme Court, in the
exercise of its equity jurisdiction, may look into the records of the
case and reexamine the questioned findings
The rule that abandonment of work is inconsistent with the filing of
a complaint for illegal dismissal is not applicable in this case. Such
rule applies where the complainant seeks reinstatement as a relief.
Corollarily, it has no application where the complainant does not
pray for reinstatement and just asks for separation pay instead as
in the present case. It goes without saying that the prayer for
separation pay, being the alternative remedy to reinstatement,
contradicts private respondents stance. That he was illegally
dismissed is belied by his own pleadings as well as
contemporaneous conduct. (JO vs. NLRC)
1.8.TOTALITY OF CIRCUMSTANCE
The totality of the circumstances obtaining in the case convinces us
that Gala could not but have knowledge of the pilferage of company
electrical supplies on May 25, 2006; he was complicit in its
commission, if not by direct participation, certainly, by his inaction
while it was being perpetrated and by not reporting the incident to
company authorities. Thus, we find substantial evidence to support
the conclusion that Gala does not deserve to remain in Meralcos
employ as a regular EE. He violated his probationary employment
agreement, especially the requirement for him to observe at all
times the highest degree of transparency, selflessness and integrity
in the performance of their duties and responsibilities[.] He failed
to qualify as a regular EE.(MERALCO vs. GALA)
1.9 PREVENTIVE SUSPENSION
We, however, find no merit in the challenge made by Arlene and
Joseph against the legality of the preventive suspension imposed by
Blue Sky upon them pending the investigation of the alleged theft.
In Mandapat v. Add Force Personnel Services, Inc., 624 SCRA 155
(2010), we explained that preventive suspension may be legally
imposed on an EE whose alleged violation is the subject of an
investigation. The purpose of the suspension is to prevent an EE
from causing harm or injury to his colleagues and to the ER. The
maximum period of suspension is 30 days, beyond which the EE
should either be reinstated or be paid wages and benefits due to
him. (BLUE SKY TRADING CO. vs. BLAS)
2.TERMINATION OF A PROBATIONARY EE
In International Catholic Migration Commission v. NLRC, 169 SCRA
606 (1989), the Court explained that a probationary EE, as
understood under Article 281 of the Labor Code, is one who is on
trial by an ER, during which, the latter determines whether or not
he is qualified for permanent employment. A probationary
appointment gives the ER an opportunity to observe the fitness of a
probationer while at work, and to ascertain whether he would be a
proper and efficient EE. Dalangin was barely a month on the job
when the company terminated his employment. He was found
wanting in qualities that would make him a proper and efficient
EE or, as the company put it, he was unfit and unqualified to
continue as its Immigration and Legal Manager.
The essence of a probationary period of employment fundamentally
lies in the purpose or objective of both the ER and the EE during the
period. While the ER observes the fitness, propriety and efficiency
of a probationer to ascertain whether he is qualified for permanent
employment, the latter seeks to prove to the former that he has the
qualifications to meet the reasonable standards for permanent
employment. The trial period or the length of time the
probationary EE remains on probation depends on the parties
agreement, but it shall not exceed six (6) months under Article 281

of the Labor Code, unless it is covered by an apprenticeship

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

2.AUTHORIZED CAUSE (ARTS.283-284)

ART. 283. Closure of establishment and reduction of personnel. The ER may also terminate the employment of any EE due to the
installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose
of circumventing the provisions of this Title, by serving a written
notice on the workers and the Ministry of Labor and Employment at
least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay OR
to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month
pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months
shall be considered one (1) whole year.
2.1.RETRENCHEMENT TO PREVENT LOSSES (ART.283)
a.DEFINITION, REQUISITES, RELOCATION OF BUSINESS
Broadly speaking, there appears no complete dissolution of
petitioners business undertaking but the relocation of petitioners
plant to Batangas, in our view, amounts to cessation of petitioners
business operations in Makati. It must be stressed that the phrase
closure or cessation of operation of an establishment or
undertaking not due to serious business losses or reverses under
Article 283 of the Labor Code includes both the complete cessation
of all business operations and the cessation of only part of a
companys business. In Philippine Tobacco Flue-Curing & Redrying
Corp. vs. NLRC, a company transferred its tobacco processing plant
in Balintawak, Quezon City to Candon, Ilocos Sur. The company
therein did not actually close its entire business but merely
relocated its tobacco processing and redrying operations to another
place. Yet, this Court considered the transfer as closure not due to
serious business losses for which the workers are entitled to
separation pay.
There is no doubt that petitioner has legitimate reason to relocate
its plant because of the expiration of the lease contract on the
premises it occupied. That is its prerogative. But even though the
transfer was due to a reason beyond its control, petitioner has to
accord its EEs some relief in the form of severance pay. Thus, inE.
Razon, Inc. vs. Secretary of Labor and Employment, petitioner
therein provides arrastre services in all piers in South Harbor,
Manila, under a management contract with the Philippine Ports
Authority. Before the expiration of the term of the contract, the PPA
cancelled the said contract resulting in the termination of
employment of workers engaged by petitioner. Obviously, the
cancellation was not sought, much less desired by petitioner.
Nevertheless, this Court required petitioner therein to pay its
workers separation pay in view of the cessation of its arrastre
operations.
Petitioners contention that private respondents resigned from their
jobs, does not appear convincing. As public respondent observed,
the subsequent transfer of petitioner to another place hardly
accessible to its workers resulted in the latters untimely separation
from the service not to their own liking, hence, not construable as
resignation. Resignation must be voluntary and made with the
intention of relinquishing the office, accompanied with an act of
relinquishment. Indeed, it would have been illogical for private
respondents herein to resign and then file a complaint for illegal
dismissal. Resignation is inconsistent with the filing of the said
complaint. (CHENIVER vs. NLRC)
Redundancy and retrenchment are not synonymous but distinct
and separate grounds for termination of employment. Redundancy
exists where the services of an EE are in excess of what is
reasonably demanded by the actual requirements of the enterprise.
A position is redundant where it is superfluous, and superfluity of a
position or positions may be the outcome of a number of factors,
such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the
term lay-off. It is the termination of employment initiated by the
ER through no fault of the EEs and without prejudice to the latter,
resorted to by management during periods of business recession,
industrial depression, or seasonal fluctuations, or during lulls
occasioned by lack of orders, shortage of materials, conversion of
the plant for a new production program or the introduction of new
methods or more efficient machinery, or of automation. Simply put,
it is an act of the ER of dismissing EEs because of losses in the
operation of a business, lack of work, and considerable reduction on
the volume of his business, a right consistently recognized and
affirmed by this Court.

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J.SUAREZ II, 2ND SEM,SY 12-13
Under the aforequoted Article 283 of the Labor Code, there are
three basic requisites for a valid retrenchment: (1) the
retrenchment is necessary to prevent losses and such losses are
proven; (2) written notice to the EEs and to the Department of
Labor and Employment at least one month prior to the intended
date of retrenchment; and (3) payment of separation pay
equivalent to one month pay or at least 1/2 month pay for every
year of service, whichever is higher
As for the first requisite, whether or not an ER would imminently
suffer serious or substantial losses for economic reasons is
essentially a question of fact for the Labor Arbiter and the NLRC to
determine. Here, both the Labor Arbiter and the NLRC found that
the private respondent was suffering and would continue to suffer
serious losses, thereby justifying the retrenchment of some of its
EEs, including the petitioners. We are not prepared to disregard this
finding of fact. It is settled that findings of quasi-judicial agencies
which have acquired expertise in the matters entrusted to their
jurisdiction are accorded by this Court not only with respect but
with finality if they are supported by substantial evidence. The
latter means that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion.
Notice to both the EEs concerned and the Department of Labor and
Employment is mandatory and must be written and given at least
one month before the intended date of retrenchmentand the fact
that the EEs were already on temporary lay-off at the time notice
should have been given to them is not an excuse to forego the onemonth written notice.The requirement of notice to both the EEs
concerned and the Department of Labor and Employment (DOLE) is
mandatory and must be written and given at least one month
before the intended date of retrenchment. In this case, it is
undisputed that the petitioners were given notice of the temporary
lay-off. There is, however, no evidence that any written notice to
permanently retrench them was given at least one month prior to
the date of the intended retrenchment. The NLRC found that GTI
conveyed to the petitioners the impossibility of recalling them due
to the continued unavailability of work. But what the law requires is
a written notice to the EEs concerned and that requirement is
mandatory. The notice must also be given at least one month in
advance of the intended date of retrenchment to enable the EEs to
look for other means of employment and therefore to ease the
impact of the loss of their jobs and the corresponding income. That
they were already on temporary lay-off at the time notice should
have been given to them is not an excuse to forego the one-month
written notice because by this time, their lay-off is to become
permanent and they were definitely losing their employment.
The lack of written notice to the petitioners and to the DOLE does
not, however, make the petitioners retrenchment illegal such that
they are entitled to the payment of back wages and separation pay
in lieu of reinstatement as they contend. Their retrenchment, for
not having been effected with the required notices, is merely
defective. In those cases where we found the retrenchment to be
illegal and ordered the EEs reinstatement and the payment of back
wages, the validity of the cause for retrenchment, that is the
existence of imminent or actual serious or substantial losses, was
not proven. But here, such a cause is present as found by both the
Labor Arbiter and the NLRC. There is only a violation by GTI of the
procedure prescribed in Article 283 of the Labor Code in effecting
the retrenchment of the petitioners.
Where the dismissal of an EE is in fact for a just and valid cause but
he is not accorded his right to due process, the dismissal shall be
upheld but the ER must be sanctionedin the nature of
indemnification or penaltyfor noncompliance with the
requirements of or for failure to observe due process.It is now
settled that where the dismissal of an EE is in fact for a just and
valid cause and is so proven to be but he is not accorded his right
to due process, i.e., he was not furnished the twin requirements of
notice and the opportunity to be heard, the dismissal shall be
upheld but the ER must be sanctioned for non-compliance with the
requirements of or for failure to observe due process. The sanction,
in the nature of indemnification or penalty, depends on the facts of
each case and the gravity of the omission committed by the ER.
Accordingly, we affirm the deletion by the NLRC of the award of
back wages. But because the required notices of the petitioners
retrenchment were not served upon the petitioners and the DOLE,
GTI must be sanctioned for such failure and thereby required to
indemnify each of the petitioners the sum of P2,000.00 which we
find to be just and reasonable under the circumstances of this case.
(SEBUGUERO vs. NLRC)
b.PROOF REQUIRED
Under the first requisite, it is imperative and incumbent on the part
of the ER to sufficiently and convincingly establish business
reverses of the kind or in the amount that would justify
retrenchment. To justify retrenchment, the ER must prove serious
business losses, as not all business losses suffered by an ER would
justify retrenchment under the aforesaid Article 283. The loss
referred to in the said provision cannot be of just any kind or
amount, otherwise, a company could easily feign excuses to suit its
whims and prejudices or to rid itself of unwanted EEs. As
consistently held by this Court, to guard against abuse, any claim of
actual or potential business losses must satisfy the following
established standards, to wit: (a) the losses incurred are substantial
and not de minimis; (b) the losses are actual or reasonably
imminent; (c) the retrenchment is reasonably necessary and is
likely to be effective in preventing the expected losses; and (d) the
alleged losses, if already incurred, or the expected imminent losses
sought to be forestalled are proven by sufficient and convincing
evidence. The Court has previously ruled that financial statements
audited by independent external auditors constitute the normal
method of proof of the profit and loss performance of a company.
(PT&T vs. NLRC)

c.STANDARDS TO BE OBSERVED
The rule is well-settled that labor laws discourage interference with
an ERs judgment in the conduct of his business. Even as the law is
solicitous of the welfare of EEs, it must also protect the right of an
ER to exercise what are clearly management prerogatives. As long
as the companys exercise of the same is in good faith to advance
its interest and not for the purpose of defeating or circumventing
the rights of EEs under the laws or valid agreements, such exercise
will be upheld.
It is not disputed that the LIFO rule applies to termination of
employment in the line of work. Verily, what is contemplated in the
LIFO rule is that when there are two or more EEs occupying the
same position in the company affected by the retrenchment
program, the last one employed will necessarily be the first to go.
(MAYA FARMS EES ORG. vs. NLRC)
We have laid down the principle that in selecting the EEs to be
dismissed, a fair and reasonable criteria must be used, such as but
not limited to: (a) less preferred status (e.g., temporary EE), (b)
efficiency, and (c) seniority. The records disclose that no criterion
whatsoever was adopted by petitioners in dismissing Rivera and
Macaspac. Another procedural lapse committed by petitioners is the
lack of written notice to the DOLE required under Art. 283 of the
Labor Code. The purpose of such notice is to ascertain the verity of
the cause of termination of employment. (GOLDEN THREADS vs.
NLRC)
d.SUBSTANTIAL LOSS
There should, in other words, be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with serious
consequences for the livelihood of the EEs retired or otherwise laidoff. Because of the consequential nature of retrenchment, it must,
thirdly, be reasonably necessary and likely to effectively prevent
the expected losses. The ER should have taken other measures
prior or parallel to retrenchment to forestall losses, i.e., cut other
costs than labor costs. An ER who, for instance,lays off substantial
numbers of workers while continuing to dispense fat executive
bonuses and perquisites or so-called golden parachutes, can
scarcely claim to be retrenching in good faith to avoid losses. To
impart operational meaning to the constitutional policy of providing
full protection to labor, the ERs prerogative to bring down labor
costs by retrenching must be exercised essentially as a measure of
last resort, after less drastic meanse.g., reduction of both
management and rank-and-file bonuses and salaries, going on
reduced time, improving manufacturing efficiencies, trimming of
marketing and advertising costs, etc.have been tried and found
wanting.
Lastly, but certainly not the least important, alleged losses if
already realized, and the expected imminent losses sought to be
forestalled, must be proved by sufficient and convincing evidence.
The reason for requiring this quantum of proof is readily apparent:
any less exacting standard of proof would render too easy the
abuse of this ground for termination of services of EEs.(LOPEZ
SUGAR CORP. vs. FEDERATION OF FREE WORKERS)
The law speaks of serious business losses or financial reverses.
Sliding incomes or decreasing gross revenues are not necessarily
losses, much less serious business losses within the meaning of the
law. The fact that an ER may have sustained a net loss, such loss,
per se, absent any other evidence on its impact on the business,
nor on expected losses that would have been incurred had
operations been continued, may not amount to serious business
losses mentioned in the law. The ER must show that its losses
increased through a period of time and that the condition of the
company will not likely improve in the near future, or that it
expected no abatement of its losses in the coming years. Put
simply,not every loss incurred or expected to be incurred by a
company will justify retrenchment.
The ER must also exhaust all other means to avoid further losses
without retrenching its EEs. Retrenchment is a means of last resort;
it is justified only when all other less drastic means have been tried
and found insufficient. Even assuming that the ER has actually
incurred losses by reason of the Asian economic crisis, the
retrenchment is not completely justified if there is no showing that
the retrenchment was the last recourse resorted to. Where the only
less drastic measure that the ERundertook was the rotation work
scheme, or the three-day-work-per-EE-per-week schedule, and it did
not endeavor at other measures, such as cost reduction, lesser
investment on raw materials, adjustment of the work routine to
avoid scheduled power failure, reduction of the bonuses and
salaries of both management and rank-and-file, improvement of
manufacturing efficiency, and trimming of marketing and
advertising costs, the claim that retrenchment was done in good
faith to avoid losses is belied. Alleged losses if already realized, and
the expected imminent losses sought to be forestalled, must be
proved by sufficient and convincing evidence. The reason for
requiring this is readily apparent: any less exacting standard of
proof would render too easy the abuse of this ground for
termination of services of EEs; scheming ERs might be merely
feigning business losses or reverses in order to ease out EEs.
It was grave error for the Labor Arbiter, the NLRC and the Court of
Appeals, to have simply assumed that PAL was in grievous financial
state, without requiring the latter to substantiate such claim. It
bears stressing that in retrenchment cases, the presentation of
proof of financial difficulties through the required documents,
preferably audited financial statements prepared by independent
auditors, may not summarily be done away with.
Applying this caveat, it is therefore incumbent for the ER, before
putting into effect any retrenchment process on its work force, to

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J.SUAREZ II, 2ND SEM,SY 12-13
show by convincing evidence that it was being wrecked by serious
financial problems. Simply declaring its state of insolvency or its
impending doom will not be sufficient. To do so would render the
security of tenure of workers and EEs illusory. Any ER desirous of
ridding itself of its EEs could then easily do so without need to
adduce proof in support of its action. We can not countenance this.
Security of tenure is a right guaranteed to EEs and workers by the
Constitution and should not be denied on the basis of mere
speculation. On the requirement that the prerogative to retrench
must be exercised in good faith, we have ruled that the hiring of
new EEs and subsequent rehiring of retrenched EEs constitute
bad faith; that the failure of the ER to resort to other less drastic
measures than retrenchment seriously belies its claim that
retrenchment was done in good faith to avoid losses; and that the
demonstrated arbitrariness in the selection of which of its EEs to
retrench is further proof of the illegality of the ERs retrenchment
program, not to mention its bad faith.
This Court has repeatedly enjoined ERs to adopt and observe fair
and reasonable standards to effect retrenchment. This is of
paramount importance because an ERs retrenchment program
could be easily justi-fied considering the subjective nature of this
requirement. The adoption and implementation of unfair and
unreasonable criteria could not easily be detected especially in the
retrenchment of large numbers of EEs, and in this aspect, abuse is
a very distinct and real possibility. This is where labor tribunals
should exercise more diligence; this aspect is where they should
concentrate when placed in a position of having to judge an ERs
retrenchment program.
By discarding the cabin crew personnels previous years of service
and taking into consideration only one years worth of job
performance for evaluation, Philippine Airlines (PAL) virtually did
away with the concept of seniority, loyalty and past efficiency, and
treated all cabin attendants as if they were on equal footing, with
no one more senior than the other.In assessing the overall
performance of each cabin crew personnel, PAL only considered the
year 1997. This makes the evaluation of each cabin attendants
efficiency rating capricious and prejudicial to PAL EEs covered by it.
By discarding the cabin crew personnels previous years of service
and taking into consideration only one years worth of job
performance for evaluation, PAL virtually did away with the concept
of seniority, loyalty and past efficiency, and treated all cabin
attendants as if they were on equal footing,with no one more senior
than the other. (FLIGHT ATTENDANT AND STEWARD ASSOC OF THE
PHIL. vs. PAL)
e.RETRENCHMENT OF AN OFW
Philippine Law recognizes retrenchment as a valid cause for the
dismissal of a migrant or overseas Filipino worker under Article 283
of the Labor Code, which provides: Closure of establishment and
reduction of personnel. (INTL MANAGEMENT vs. LOGARTA)
2.2.CLOSURE OF BUSINESS (ART.283)
As already stated, Art. 283 of the Labor Code does not obligate an
ER to pay separation benefits when the closure is due to losses. In
the case before us, the basis for the claim of the additional
separation benefit of 17.5 days is alleged discrimination, i.e.,
unequal treatment of EEs, which is proscribed as an unfair labor
practice by Art. 248 (e) of said Code. Under the facts and
circumstances of the present case, the grant of a lesser amount of
separation pay to private respondent was done, not by reason of
discrimination, but rather, out of sheer financial bankruptcya fact
that is not controlled by management prerogatives. Stated
differently, the total cessation of operation due to mind-boggling
losses was a supervening fact that prevented the company from
continuing to grant the more generous amount of separation pay.
The fact that North Davao at the point of its forced closure
voluntarily paid any separation benefits at allalthough not
required by lawand 12.5 days worth at that, should have elicited
admiration instead of condemnation. But to require it to continue
being generous when it is no longer in a position to do so would
certainly be unduly oppressive, unfair and most revolting to the
conscience. (NORTH DAVAO MINING vs. NLRC)
a.CESSATION OF BUSINESS OPERATIONS
In fact, even granting arguendo that respondent was not
experiencing losses, it is still authorized by Article 283 of the Labor
Code to cease its business operations. Explicit in the said provision
is that closure or cessation of business operations is allowed even if
the business is not undergoing economic losses. The owner, for any
bona fide reason, can lawfully close shop anyone. Just as no law
forces anyone to go into business, no law can compel anybody to
continue in it. It would indeed be stretching the intent and spirit of
the law if we were to unjustly interfere with the managements
prerogative to close or cease its business operations, just because
said business operations are not suffering any loss or simply to
provide the workers continued employment.

held prior to the termination of his services, does not show that his
position had not become redundant. Indeed, in any well-organized
business enterprise, it would be surprising to find duplication of
work and two (2) or more people doing the work of one person. We
believe that redundancy, for purposes of our Labor Code, exists
where the services of an EE are in excess of what is reasonably
demanded by the actual requirements of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity
of a position or positions may be the outcome of a number of
factors, such as overhiring of workers, decreased volume of
.business, or dropping of a particular produet line or service activity
previously manufactured or undertaken by the enterprise. The ER
has no legal obligation to keep in its payroll more EEs than are
necessary for the operation of its business.
It is of no legal moment that the financial troubles of the company
were not of private respondents making. Private respondent cannot
insist on the retention of his position upon the ground that he had
not contributed to the financial problems of Wiltshire. The
characterization of private respondents services as no longer
necessary or sustainable, and therefore properly terminable, was an
exercise of business judgment on the part of petitioner company.
The wisdom or soundness of such characterization or decision was
not subject to discretionary review on the part of the Labor Arbiter
nor of the NLRC so long, of course, as violation of law or merely
arbitrary and malicious action is not shown. It should also be noted
that the position held by private respondent, Sales Manager, was
clearly managerial in character.
Where, as in the instant case, the ground for dismissal or
termination of services does not relate to a blameworthy act or
omission on the part of the EE, there appears to us no need for an
investigation and hearing to be conducted by the ER who does not,
to begin with, allege any malfeasance or non-feasance on the part
of the EE. In such case, there are no allegations which the EE should
refute and defend himself from. Thus, to require petitioner Wiltshire
to hold a hearing, at which private respondent would have had the
right to be present, on the business and financial circumstances
compelling retrenchment and resulting in redundancy, would be to
impose upon the ER an unnecessary and inutile hearing as a
condition for legality of termination.
This is not to say that the EE may not contest the reality or good
faith character of the retrenchment or redundancy asserted as
grounds for termination of services. The appropriate forum for such
controversion would, however, be the Department of Labor and
Employment and not an investigation or hearing to be held by the
ER itself. It is precisely for this reason that an ER seeking to
terminate services of an EE or EEs because of closure of
establishment and reduction of personnel, is legally required to
give a written notice not only to the EE but also to the Department
of Labor and Employment at least one month before effectivity date
of the termination. In the instant case, private respondent did
controvert before the appropriate labor authorities the grounds for
termination of services set out in petitioners letter to him dated 17
June 1985. (WILTSHIRE FILE CO. vs. NLRC)(ESCAREAL vs. NLRC)(DE
OCAMPO vs. NLRC)
2.4.TEMPORARY CLOSURE
ART. 286. When employment not deemed terminated. - The
bona-fide suspension of the operation of a business or
undertaking for a period not exceeding six (6) months, or the
fulfillment by the EE of a military or civic duty shall not terminate
employment. In all such cases, the ER shall reinstate the EE to his
former position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from the
resumption of operations of his ER or from his relief from the
military or civic duty.
2.5.DISEASE (ART.284)
ART. 284. Disease as ground for termination. - An ER may terminate
the services of an EE who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-EEs:
Provided, That he is paid separation pay equivalent to at least one
(1) month salary or to one-half (1/2) month salary for every year of
service, whichever is greater, a fraction of at least six (6) months
being considered as one (1) whole year.
s this Court stated in Triple Eight Integrated Services, Inc. vs.
NLRC,the requirement for a medical certificate under Article 284 of
the Labor Code cannot be dispensed with; otherwise, it would
sanction the unilateral and arbitrary determination by the ER of the
gravity or extent of the EEs illness and thus defeat the public policy
in the protection of labor. (SY vs. CA)

titioners proposition that she was not a union member and,

therefore, not legally bound by the terms of the Collective
Bargaining Agreement, is irrelevant in the instant controversy. Nonmembership in a union does not exempt an EE from the application
of Article 283 of the Labor Code which enumerates the au-thorized
causes for terminating employment. In this case, petitioner was
terminated pursuant to the retrenchment program implemented by
respondent. As discussed above, the respondent complied with the
legal requirements for a valid retrenchment. Therefore, petitioners
separation from employment was legal and valid. (MANATAD vs.
PT&T)

A plain reading of the abovequoted provision clearly presupposes

that it is the ER who terminates the services of the EE found to be
suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well as to the
health of his co-EEs. It does not contemplate a situation where it is
the EE who severs his or her employment ties. This is precisely the
reason why Section 8, Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code, directs that an ER shall not
terminate the services of the EE unless there is a certification by a
competent public health authority that the disease is of such nature
or at such a stage that it cannot be cured within a period of six (6)
months even with proper medical treatment.(VILLARUEL vs. YEO
HAN GUAN)

2.3.REDUNDANCY (ART.283)
We do not believe that redundancy in an ERs personnel force
necessarily or even ordinarily refers to duplication of work. That no
other person was holding the same position that private respondent

It bears stressing that respondent was not an ordinary rank-and-file

EE. With the nature of his position, he was reposed with managerial
duties to oversee petitioners business in his assigned area. As a
managerial EE, respondent was tasked to perform important and

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J.SUAREZ II, 2ND SEM,SY 12-13
crucial functions and, thus, bound by more exacting work ethic. He
should have realized that such sensitive position required the full
trust and confidence of his ER in every exercise of managerial
discretion insofar as the conduct of the latters business is
concerned. The power to dismiss an EE is a recognized prerogative
inherent in the ERs right to freely manage and regulate his
business. The law, in protecting the rights of the laborers,
authorizes neither oppression nor self-destruction of the ER. The
workers right to security of tenure is not an absolute right, for the
law provides that he may be dismissed for cause. As a general rule,
ERs are allowed wide latitude of discretion in terminating the
employment of managerial personnel. The mere existence of a
basis for believing that such EE has breached the trust and
confidence of his ER would suffice for his dismissal. Needless to
say, an irresponsible EE like respondent does not deserve a place in
the workplace, and it is petitioners management prerogative to
terminate his employment. To be sure, an ER cannot be compelled
to continue with the employment of workers when continued
employment will prove inimical to the ERs interest.(WUERTH PHIL.
vs. YNSON)
2.6.REORGANIZATION/ABOLITION
(HANTEX TRADING CO. vs. CA)

b.PROCEDURAL DUE PROCESS

1.TWIN-NOTICE REQUIREMENT
To stress, if the dismissal is based on a just cause under Article 282
of the Labor Code, the ER must give the EE (1) two written notices
and (2) a hearing (or at least, an opportunity to be heard). The first
notice is intended to inform the EE of the ERs intent to dismiss and
the particular acts or omissions for which the dismissal is sought.
The second notice is intended to inform the EE of the ERsdecision
to dismiss. This decision, however, must come only after the EE has
been given a reasonable period, from receipt of the first notice,
within which to answer the charge; and ample opportunity to be
heard with the assistance of counsel, if the EE so desires.
Neither Section 2 of Book V of Rule XXIII nor Section 2(d) of Rule 1
of Book VI of the Implementing Rules require strict literal
compliance with the stated procedure; only substantial compliance
is needed. On this basis, the Memoranda sent to respondents may
be deemed to have sufficiently conformed to the first notice
required under the Implementing Rules. The Memoranda served the
purpose of informing them of the pending matters beclouding their
employment and of extending to them an opportunity to clear the
air. In fact, not only were respondents duly informed of the
particular acts for which their dismissal was sought; they were, in
truth and in fact, able to defend themselves and to respond to the
charges with the assistance of a counsel of their own choosing.
(GLAXO WELLCOME vs. NAGKAKAISANG EMPLEYADO NG
WELLCOME)
The first written notice to be served on the EEs should contain the
specific causes or grounds for termination against them, and a
directive that the EEs are given the opportunity to submit their
written explanation within a reasonable period. Reasonable
opportunity under the Omnibus Rules means every kind of
assistance that management must accord to the EEs to enable
them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt
of the notice to give the EEs an opportunity to study the accusation
against them, consult a union official or lawyer, gather data and
evidence, and decide on the defenses they will raise against the
complaint. Moreover, in order to enable the EEs to intelligently
prepare their explanation and defenses, the notice should contain a
detailed narration of the facts and circumstances that will serve as
basis for the charge against the EEs. A general description of the
charge will not suffice. Lastly, the notice should specifically mention
which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the EEs.
In the instant case, KKTI admits that it had failed to provide
respondent with a charge sheet. However, it maintains that it had
substantially complied with the rules, claiming that respondent
would not have issued a written explanation had he not been
informed of the charges against him. We are not convinced. First,
respondent was not issued a written notice charging him of
committing an infraction. The law is clear on the matter. A verbal
appraisal of the charges against an EE does not comply with the
first notice requirement. In Pepsi Cola Bottling Co. v. NLRC, 210
SCRA 277 (1992), the Court held that consultations or conferences
are not a substitute for the actual observance of notice and
hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano, 408 SCRA
478 (2003), the Court, sanctioning the ER for disregarding the due
process requirements, held that the EEs written explanation did not
excuse the fact that there was a complete absence of the first
notice. (KING OF KINGS vs. MAMAC)
1.1.CONTENTS OF A VALID NOTICE
1.2.FAILURE TO COMPLY
Therefore statutory due process should be differentiated from
failure to comply with constitutional due process.Constitutional due
process protects the individual from the government and assures
him of his rights in criminal, civil or administrative proceedings;
while statutory due process found in the Labor Code and
Implementing Rules protects EEs from being unjustly terminated
without just cause after notice and hearing.
The violation of the petitioners right to statutory due process by
the private respondent warrants the payment of indemnity in the
form of nominal damages. The amount of such damages is

addressed to the sound discretion of the court, taking into account

the
relevant
circumstances.
Considering
the
prevailing
circumstances in the case at bar, we deem it proper to fix it at
P30,000.00. We believe this form of damages would serve to deter
ERs from future violations of the statutory due process rights of
EEs. At the very least, it provides a vindication or recognition of this
fundamental right granted to the latter under the Labor Code and
its Implementing Rules. (AGABON vs. NLRC)
It is, therefore, established that there was ground for respondents
dismissal, i.e., retrenchment, which is one of the authorized causes
enumerated under Article 283 of the Labor Code. Likewise, it is
established that JAKA failed to comply with the notice requirement
under the same Article. Considering the factual circumstances in
the instant case and the above ratiocination, we, therefore, deem it
proper to fix the indemnity at P50,000.00. (JAKA FOOD vs. PACOT)
2.AMPLE OPPORTUNITY TO BE HEARD; HEARING
Thus, the opportunity to be heard afforded by law to the EE is
qualified by the word ample which ordinarily means considerably
more than adequate or sufficient. In this regard, the phrase ample
opportunity to be heard can be reasonably interpreted as
extensive enough to cover actual hearing or confer-ence. To this
extent, Section 2(d), Rule I of the Implementing Rules of Book VI of
the Labor Code is in conformity with Article 277(b).
Section 2(d), Rule I of the Implementing Rules of Book VI of the
Labor Code should not be taken to mean that holding an actual
hearing or conference is a conditionsine qua non for compliance
with the due process requirement in termination of employment.
The test for the fair procedure guaranteed under Article 277(b)
cannot be whether there has been a formal pretermination
confrontation between the ER and the EE. The ample opportunity
to be heard standard is neither synonymous nor similar to a formal
hearing. To confine the EEs right to be heard to a solitary form
narrows down that right. It deprives him of other equally effective
forms of adducing evidence in his defense. Certainly, such an
exclusivist and absolutist interpretation is overly restrictive. The
very nature of due process negates any concept of inflexible
procedures universally applicable to every imaginable situation.
Section 2(d), Rule I of the Implementing Rules of Book VI of the
Labor Code itself provides that the so-called standards of due
process outlined therein shall be observed substantially, not
strictly. This is a recognition that while a formal hearing or
conference is ideal, it is not an absolute, mandatory or exclusive
avenue of due process.
A hearing means that a party should be given a chance to adduce
his evidence to support his side of the case and that the evidence
should be taken into account in the adjudication of the controversy.
To be heard does not mean verbal argumentation alone inasmuch
as one may be heard just as effectively through written
explanations, submissions or pleadings. Therefore, while the phrase
ample opportunity to be heard may in fact include an actual
hearing, it is not limited to a formal hearing only. In other words, the
existence of an actual, formal trial-type hearing, although
preferred, is not absolutely necessary to satisfy the EEs right to be
heard.
The following are the guiding principles in connection with the
hearing requirement in dismissal cases: (a) ample opportunity to
be heard means any meaningful opportunity (verbal or written)
given to the EE to answer the charges against him and submit
evidence in support of his defense, whether in a hearing,
conference or some other fair, just and reasonable way. (b) a formal
hearing or conference becomes mandatory only when requested by
the EE in writing or substantial evidentiary disputes exist or a
company rule or practice requires it, or when similar circumstances
justify it. (c) the ample opportunity to be heard standard in the
Labor Code prevails over the hearing or conference requirement
in the implementing rules and regulations. (PEREZ vs. PT&T)
That the workers involved in the incident were mustered or
convened thereafter by the captain is inconsequential. It is
insufficient compliance with the law which requires, as a vital
component of due process, observance of the twin requirements of
notice and hearing before dismissing an EE. As regards the notice
requirement, the Court has stated: On the issue of due
process . . ., the law requires the ER to furnish the worker whose
employment is sought to be terminated a written notice containing
a statement of the cause or causes for termination and shall afford
him ample opportunity to be heard and to defend himself with the
assistance of a representative. Specifically, the ER must furnish the
worker with two (2) written notices before termination of
employment can be legally effected: (a) notice which apprises the
EE of the particular acts or omissions for which his dismissal is
sought; and (b) the subsequent notice which informs the EE of the
ERs decision to dismiss him.
Neither is the ship captains having witnessed the altercation an
excuse for dispensing with the notice and hearing requirements.
Serving notice to private respondent under the circumstances
cannot be regarded as an absurdity and superfluity. (WALLEM
MARITIME SERVICES vs. NLRC)
The right to counsel and the assistance of one in investigations
involving termination cases is neither indis-pensable nor
mandatory, except when the EE himself requests for one or that he
manifests that he wants a formal hearing on the charges against
him. In petitioners case, there is no showing that he requested for
a formal hearing to be conducted or that he be assisted by counsel.
Verily, since he was furnished a second notice informing him of his
dismissal and the grounds therefor, the twin-notice requirement
had been complied with to call for a deletion of the appellate

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J.SUAREZ II, 2ND SEM,SY 12-13
courts award of nominal damages to petitioner. (LOPEZ vs.
ALTURAS)
c.TERMINATING A PROBATIONARY EE
Within the limited legal six-month probationary period, probationary
EEs are still entitled to security of tenure. It is expressly provided in
the afore-quoted Article 281 that a probationary EE may be
terminated only on two grounds: (a) for just cause, or (b) when he
fails to qualify as a regular EE in accordance with reasonable
standards made known by the ER to the EE at the time of his
engagement. (PHIL.DAILY INQUIRER vs. MAGTIBAY)
4.FAILURE TO COMPLY WITH THE REQUIREMENT OF DUE
PROCESS
a.SUBSTANTIVE
1.REINSTATEMENT, DOCTRINE OF STRAINED RELATIONS
It must be emphasized that the rules of dismissal for managerial
EEs are different from those governing ordinary EEs for it would be
unjust and inequitable to compel an ER to continue with the
employment of a person who occupies a managerial and sensitive
position despite loss of trust and confidence. At the very least, the
relationship must be considered seriously strained, foreclosing the
remedy of reinstatement. We find that the allegations of
irregularities were sufficiently substantiated thus justifying
petitioners separation.
his is not a case of dismissal. The situation is that of a corporate
office having been declared vacant, and of TANs not having been
elected thereafter. The matter of whom to elect is a prerogative
that belongs to the Board, and involves the exercise of deliberate
choice and the faculty of discriminative selection. Generally
speaking, the relationship of a person to a corporation, whether as
officer or agent or EE, is not determined by the nature of the
services performed, but by the incidents of the relationship as they
actually exist. (AURELIO vs. NLRC)
Under the law and prevailing jurisprudence, an illegally dismissed
EE is entitled to reinstatement as a matter of right. However, if
reinstatement would only exacerbate the tension and strained
relations between the parties, or where the relationship between
the ER and the EE has been unduly strained by reason of their
irreconcilable differences, particularly where the illegally dismissed
EE held a managerial or key position in the company, it would be
more prudent to order payment of separation pay instead of
reinstatement.
In such cases, it should be proved that the EE concerned occupies a
position where he enjoys the trust and confidence of his ER; and
that it is likely that if reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency
and productivity of the EE concerned.
The principle of strained relations cannot be applied
indiscriminately. Otherwise, reinstatement can never be possible
simply because some hostility is invariably engendered between
the parties as a result of litigation. That is human nature. Besides,
no strained relations should arise from a valid and legal act of
asserting ones right; otherwise, an EE who shall assert his right
could be easily separated from the service, by merely paying his
separation pay on the pretext that his relationship with his ER had
already become strained.
The doctrine of strained relations has been made applicable to
cases where the EE decides not to be reinstated and demands for
separation pay. The same, however, does not apply to herein
petition, as petitioner is asking for his reinstatement despite his
illegal dismissal. (CABIGTING vs. SAN MIGUEL FOODS, INC.)
However, if reinstatement would only exacerbate the tension and
strained relations between the parties, or where the relationship
between the ER and the EE has been unduly strained by reason of
their irreconcilable differences, particularly where the illegally
dismissed EE held a managerial or key position in the company, it
would be more prudent to order payment of separation pay instead
of reinstatement. Under the doctrine of strained relations, the
payment of separation pay is considered an acceptable alternative
to reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the EE from what
could be a highly oppressive work environment. On the other hand,
it releases the ER from the grossly unpalatable obligation of
maintaining in its employ a worker it could no longer trust. In such
cases, it should be proved that the EE concerned occupies a
position where he enjoys the trust and confidence of his ER; and
that it is likely that if reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency
and productivity of the EE concerned. (BANK OF LUBAO vs.
MANABAT)
2.BACKWAGES
2.1.BASIS/RATIONALE
n accordance with these provisions, backpay (the same as
backwages) could be awarded where, in the opinion of the Court of
Industrial Relations (CIR), such was necessary to effectuate the
policies of the Industrial Peace Act. Only in one case was backpay a
matter of right, and that was, when an ER had declared a lockout
without having first bargained collectively with his EEs in
accordance with the provisions of the Act.
As the CIR was given wide discretion to grant or disallow payment
of backpay (backwages) to an EE, it also had the implied power of
mitigating (reducing) the backpay where backpay was allowed.
Thus, in the exercise of its jurisdiction, the CIR increased or
diminished the award of backpay, depending on several
circumstances, among them, the good faith of the ER, the EE's
employment in other establishments during the period of illegal

dismissal, or the probability that the EE could have realized net

earnings from outside employment if he had exercised due
diligence to search for outside employment.
From this ruling came the burden of disposing of an illegal dismissal
case on its merits and of determining whether or not the
computation of the award of backwages is correct. In order not to
unduly delay the disposition of illegal dismissal cases, this Court
found occasion in the case of Mercury Drug Co., Inc., et al. v. CIR, et
al.to rule that a fixed amount of backwages without further
qualifications should be awarded to an illegally dismissed EE
(hereinafter the Mercury Drug rule). This ruling was grounded upon
considerations of expediency in the execution of the decision.
Under the abovequoted provision, it became mandatory to award
backwages to illegally dismissed regular EEs. The law specifically
declared that the award of backwages was to be computed from
the time compensation was withheld from the EE up to the time of
his reinstatement. This notwithstanding, the rule generally applied
by the Court after the promulgation of theMercury Drug case, and
during the effectivity of P.D. No. 442 was still the Mercury Drug rule.
A survey of cases from 1974 until 1989, when the amendatory law
to P.D. No. 442, namely, R.A. No. 6715 took effect, supports this
conclusion.
In an even later case (1987) the Court declared that the general
principle is that an EE is entitled to receive as backwages all the
amounts he may have received from the date of his dismissal up to
the time of his reinstatement. However, in compliance with the
jurisprudential policy of fixing the amount of backwages to a just
and reasonable level, the award of backwages equivalent to three
(3) years, without qualification or deduction, was nonetheless
followed in said case.
In a more direct approach to the rule on the award of backwages,
this Court declared in the 1990 case of Medado v. Court of Appeals
that "any decision or order-granting backwages in excess of three
(3) years is null and void as to the excess."
"full backwages" as meaning exactly that, i.e., without deducting
from back-wages the earnings derived elsewhere by the concerned
EE during the period of his illegal dismissal. In other words, the
provision calling for "full backwages" to illegally dismissed EEs is
clear, plain and free from ambiguity and, therefore, must be applied
without attempted or strained interpretation. Index animi sermo
est. (BUSTAMANTE vs. NLRC)
2.2.NOT AVAILING
Reinstatement and payment of backwages are distinct and
separate reliefs given to alleviate the economic setback brought
about by the EEs dismissal. The award of one does not bar the
other. Backwages may be awarded without reinstatement, and
reinstatement may be ordered without awarding backwages.
(PALTENG vs. UCPG)
2.3.PERIOD COVERED
The backwages that should be awarded to the respondent should
be modified. EEs who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their
monetary equivalent, computed from the time their actual
compensation was withheld from them up to the time of their actual
reinstatement. But if reinstatement is no longer possible, the
backwages shall be computed from the time of their illegal
termination up to the finality of the decision. Thus, when there is an
order of reinstatement, the computation of backwages shall be
reckoned from the time of illegal dismissal up to the time that the
EE is actually reinstated to his former position. (BANK OF LUBAO vs.
MANABAT)
3.SEPARATION PAY
3.1.BASIS OF COMPUTATION
Prescinding from the above, we hold that petitioner is liable for
illegal dismissal and should be responsible for the reinstatement of
the Lubat group and the payment of their back wages. However,
since reinstatement is no longer possible as peti-tioner has already
closed its Balintawak plant, respondent members of the said group
should instead be awarded normal separation pay (in lieu of
reinstatement) equivalent to at least one month pay, or one month
pay for every year of service, whichever is higher. It must be
stressed that the separation pay being awarded to the Lubat group
is due to illegal dismissal; hence, it is different from the amount of
separation pay provided for in Article 283 in case of retrenchment
to prevent losses or in case of closure or cessation of the ERs
business, in either of which the separation pay is equivalent to at
least one (1) month or one-half (1/2) month pay for every year of
service, whichever is higher.
The amount of separation pay is based on two factors: the amount
of monthly salary and the number of years of service. Although the
Labor Code provides different definitions as to what constitutes
one year of service, Book Six does not specifically de-fine one
year of service for purposes of computing separation pay.
However, Articles 283 and 284 both state in connection with
separation pay that a fraction of at least six months shall be
considered one whole year. Applying this to the case at bar, we hold
that the amount of separation pay which respondent members of
the Lubat and Luris groups should receive is one-half (1/2) their
respective average monthly pay during the last season they worked
multiplied by the number of years they actually rendered service,
provided that they worked for at least six months during a given
year.(PHIL. TOBACCO FLU CURING vs. NLRC)
3.2.WHO IS LIABLE
Under Article 283 of the Labor Code, separation pay is required
where the termination of employment relationship is occasioned by

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J.SUAREZ II, 2ND SEM,SY 12-13
the cessation of operations of an establishment. The said article,
therefore, puts the burden of paying separation pay on ERI/MPSI,
the ER for whom services had been rendered by the EEs who were
separated from employment in view of the cessation of its business
operations by the cancellation of its management contract with the
PPA. (E.RAZON, INC. vs. SEC. OF LABOR)
3.3.ER NOT LIABLE
It is clear that Article 283 of the Labor Code applies in cases of
closures of establishment and reduction of personnel. The peculiar
circumstances in the case at bar, however, involves neither the
closure of an establishment nor a reduction of personnel as
contemplated under the aforesaid article. When the Patalon
Coconut Estate was closed because a large portion of the estate
was acquired by DAR pursuant to CARP, the ownership of that large
portion of the estate was precisely transferred to PEARA and
ultimately to the petitioners as members thereof and as agrarian lot
beneficiaries. Hence, Article 283 of the Labor Code is not applicable
to the case at bench.
Since the closure was due to the act of the government to benefit
the petitioners, as members of the Patalon Estate Agrarian Reform
Association, by making them agrarian lot beneficiaries of said
estate, the petitioners are not entitled to separation pay. The
termination of their employment was not caused by the private
respondents. The blame, if any, for the termination of petitioners
employment can even be laid upon the petitioner-EEs themselves
inasmuch as they formed themselves into a cooperative, PEARA,
ultimately to take over, as agrarian lot beneficiaries, of private
respondents landed estate pursuant to RA 6657. The resulting
closure of the business establishment, Patalon Coconut Estate,
when it was placed under CARP, occurred through no fault of the
private respondents. (NATIONAL FEDERATION OF LABOR vs. NLRC)
5.CONSTRUCTIVE DISMISSAL
Dismissal connotes a permanent severance or complete separation
of the worker from the service on the initiative of the ER regardless
of the reasons therefore. A constructive discharge is defined as a
quitting because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving demotion in rank and
a diminution in pay. (JO CINEMA vs. ABELLANA)
Clearly, constructive dismissal had already set in when the
suspension went beyond the maximum period allowed by law.
Section 4, Rule XIV, Book V of the Omnibus Rules provides that
preventive suspension cannot be more than the maximum period of
30 days. Hence, we have ruled that after the 30-day period of
suspension, the EE must be reinstated to his former position
because suspension beyond this maximum period amounts to
constructive dismissal.
The strict adherence by the NLRC to the definition of constructive
dismissal is erroneous. Apparently, the NLRC ruled out constructive
dismissal in this case mainly because according to it constructive
dismissal consists in the act of quitting because continued
employment is rendered impossible, unreasonable or unlikely as in
the case of an offer involving demotion in rank and a diminution in
pay. Based on this definition, the NLRC concluded that since
respondent neither resigned nor abandoned his job and the fact
that respondent pursued his reinstatement negate constructive
dismissal. What makes this conclusion tenuous is the fact that
constructive dismissal does not always involve forthright dismissal
or diminution in rank, compensation, benefit and privileges. There
may be constructive dismissal if an act of clear discrimination,
insensibility, or disdain by an ER becomes so unbearable on the
part of the EE that it could foreclose any choice by him except to
forego his continued employment.(HYATT TAXI SERVICES INC. vs.
CATINOY)
A diminution of pay is prejudicial to the EE and amounts to
constructive dismissal. The gauge for constructive dismissal is
whether a reasonable person in the em-ployees position would feel
compelled to give up his employment under the prevailing
circumstances. Constructive dismissal is defined as quitting when
continued employment is rendered impossible, unreasonable or
unlikely as the offer of employment involves a demotion in rank or
diminution in pay. It exists when the resignation on the part of the
EE was involuntary due to the harsh, hostile and unfavorable
conditions set by the ER. It is brought about by the clear
discrimination, insensibility or disdain shown by an ER which
becomes unbearable to the EE. An EE who is forced to surrender his
position through the ERs unfair or unreasonable acts is deemed to
have been illegally terminated and such termination is deemed to
be involuntary.
Ordinarily, when there is constructive dismissal, which is a form of
illegal dismissal, the ER is liable for the full amount of backwages, if
reinstatement is no longer possible, and separation pay. In the case
at bar, we cannot hold Siemens Philippines liable for the monetary
obligations of Siemens Germany. The circumstances surrounding
this case necessitate a different treatment in the award of
backwages and separation pay, since the companies involved are
separate and distinct from each other. However, by Siemens
Philippines failure to work for the renewal of Domingos
consultancy contract with Siemens Germany, Siemens Philippines
may be held answerable in damages to Domingo.
An illegally or constructively dismissed EE is entitled to: (1) either
reinstatement, if viable, or separation pay if reinstatement is no
longer viable; and (2) backwages. These two reliefs are separate
and distinct from each other and are awarded conjunctively.
(SIEMENS PHIL. vs. DOMINGO)
A floating status requires the dire exigency of the ERs bona fide
suspension of operation of a business or undertaking. In security

services, this happens when the security agencys clients which do

not renew their contracts are more than those that do and the new
ones that the agency gets. Also, in instances when contracts for
security services stipulate that the client may request the agency
for the replacement of the guards assigned to it even for want of
cause, the replaced security guard may be placed on temporary
offdetail if there are no available posts under respondents
existing contracts. When a security guard is placed on a floating
status, he does not receive any salary or financial benefit provided
by law. Due to the grim economic consequences to the EE, the ER
should bear the burden of proving that there are no posts available
to which the EE temporarily out of work can be assigned. This,
respondent failed to discharge. (PIDO vs. NLRC)
Constructive dismissal exists where there is cessation of work
because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank or
a diminution in pay and other benefits. Aptly called a dismissal in
disguise or an act amounting to dismissal but made to appear as if
it were not, constructive dismissal may, likewise, exist if an act of
clear discrimination, insensibility, or disdain by an ER becomes so
unbearable on the part of the EE that it could foreclose any choice
by him except to forego his continued employment. In cases of a
transfer of an EE, the rule is settled that the ER is charged with the
burden of proving that its conduct and action are for valid and
legitimate grounds such as genuine business necessity and that the
transfer is not unreasonable, inconvenient or prejudicial to the EE. If
the ER cannot overcome this burden of proof, the EEs transfer shall
be tantamount to unlawful constructive dismissal. (MORALES vs.
HARBOUR CENTER)
3. RETIREMENT (ART.287)
Court imposed two (2) essential requisites in order that R.A. 7641
may be given retroactive effect: (1) the claimant for retirement
benefits was still in the employ of the ER at the time the statute
took effect; and (2) the claimant had complied with the
requirements for eligibility for such retirement benefits under the
statute.
Retirement is the result of a bilateral act of the parties, a voluntary
agreement between the ER and the EE whereby the latter, after
reaching a certain age, agrees to sever his or her employment with
the former. The age of retirement is primarily determined by the
existing agreement between the ER and the EEs. However, in the
absence of such agreement, the retirement age shall be fixed by
law. Under Art. 287 of the Labor Code as amended, the legally
mandated age for compulsory retirement is 65 years, while the set
minimum age for optional retirement is 60 years.
In this case, it may be stressed that the CBA does not per se
specifically provide for the compulsory retirement age nor does it
provide for an optional retirement plan. It merely provides that the
retirement benefits accorded to an EE shall be in accordance with
law. Thus, we must apply Art. 287 of the Labor Code which provides
for two types of retirement: (a) compulsory and (b) optional. The
first takes place at age 65, while the second is primarily determined
by the collective bargaining agreement or other employment
contract or ERs retirement plan. In the absence of any provision on
optional retirement in a collective bargaining agreement, other
employment contract, or ERs retirement plan, an EE may optionally
retire upon reaching the age of 60 years or more, but not beyond
65 years, provided he has served at least five years in the
establishment concerned. That prerogative is exclusively lodged in
the EE. (UNIVERSAL ROBINA SUGAR MILLING CO. vs. CABALLEDA)
Pursuant to the existing CBA, the School has the option to retire an
EE upon reaching the age limit of sixty (60) or after having
rendered at least twenty (20) years of service to the School, the last
three (3) years of which must be continuous. Retirement is a
different specie of termination of employment from dismissal for
just or authorized causes under Articles 282 and 283 of the Labor
Code. While in all three cases, the EE to be terminated may be
unwilling to part from service, there are eminently higher standards
to be met by the ER validly exercising the prerogative to dismiss for
just or authorized causes. In those two instances, it is indispensable
that the ER establish the existence of just or authorized causes for
dismissal as spelled out in the Labor Code. Retirement, on the other
hand, is the result of a bilateral act of the parties, a voluntary
agreement between the ER and the EE whereby the latter after
reaching a certain age agrees and/or consents to sever his
employment with the former.
By their acceptance of the CBA, the Union and its members are
obliged to abide by the commitments and limitations they had
agreed to cede to management. The questioned retirement
provisions cannot be deemed as an imposition foisted on the Union,
which very well had the right to have refused to agree to allowing
management to retire EEs with at least 20 years of service. It
should not be taken to mean that retirement provisions agreed
upon in the CBA are absolutely beyond the ambit of judicial review
and nullification. A CBA, as a labor contract, is not merely
contractual in nature but impressed with public interest. If the
retirement provisions in the CBA run contrary to law, public morals,
or public policy, such provisions may very well be voided. Certainly,
a CBA provision or employment contract that would allow
management to subvert security of tenure and allow it to
unilaterally retire EEs after one month of service cannot be
upheld. Neither will the Court sustain a retirement clause that
entitles the retiring EE to benefits less than what is guaranteed
under Article 287 of the Labor Code, pursuant to the provisions
express proviso thereto in the provision.
Yet the CBA in the case at bar contains no such infirmities which
must be stricken down. There is no essential difference between the
CBA provision in this case and those we affirmed in Pantranco and

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J.SUAREZ II, 2ND SEM,SY 12-13
Progressive. Twenty years is a more than ideal length of service an
EE can render to one ER. Under ordinary contemplation, a CBA
provision entitling an EE to retire after 20 years of service and
accordingly collect retirement benefits is reward for services
rendered since it enables an EE to reap the fruits of his labor
particularly retirement benefits, whether lump-sum or otherwiseat
an earlier age, when said EE, in presumably better physical and
mental condition, can enjoy them better and longer. We affirm the
continued validity of Pantranco and its kindred cases, and thus
reiterate that under Article 287 of the Labor Code, a CBA may
validly accord management the prerogative to optionally retire an
EE under the terms and conditions mutually agreed upon by
management and the bargaining union, even if such agreement
allows for retirement at an age lower than the optional retirement
age or the compulsory retirement age. The Court of Appeals gravely
erred in refusing to consider this case from the perspective of
Pantranco, or from the settled doctrine enunciated therein.
The exercise by management of its retirement prerogative is less
susceptible to dubitability as to the question whether an EE could
be validly retired. The only factual matter to consider then is
whether the EE concerned had attained the requisite age or number
of years in service pursuant to the CBA or employment agreement,
or if none, pursuant to Article 287 of the Labor Code. In fact, the
question of the amount of retirement benefits is more likely to be
questioned than the retirement itself. Evidently, it more clearly
emerges in the case of retirement that management would anyway
have the right to retire an EE, no matter the degree of involvement
of said EE in union activities
There is another point that militates against the Union. A ruling in
its favor is tantamount to a concession that a validly drawn
management prerogative to retire its EEs can be judicially
interfered on a showing that the EE in question is highly valuable to
the union. Such a rule would be a source of mischief, even if
narrowly carved out by the Court, for it would imply that an active
union member or officer may be, by reason of his/her importance to
the union, somehow exempted from the normal standards of
retirement applicable to the other, perhaps less vital members of
the union. Indeed, our laws protection of the right to organize labor
does not translate into perpetual job security for union leaders by
reason of their leadership role alone. Should we entertain such a
notion, the detriment is ultimately to the union itself, promoting as
it would a stagnating entrenched leadership. We can thus can
comfortably uphold the principle, as reiterated in Philippine Airlines,
that the exercise by the ER of a valid and duly established
prerogative to retire an EE does not constitute unfair labor practice.
(CAINTA CATHOLIC SCHOOL vs. CAINTA CATHOLIC SCHOOL EES
UNION)
Republic Act No. 7641 which was enacted on December 9,
1992amended Article 287 of the Labor Code by providing for
retirement pay to qualified private sector EEs in the absence of any
retirement plan in the establishment. The pertinent provision of
said law reads: x x x Admittedly, petitioner worked for 14 years for
the bus company which did not adopt any retirement scheme. Even
if petitioner as bus conductor was paid on commission basis then,
he falls within the coverage of R.A. 7641 and its implementing
rules. As thus correctly ruled by the Labor Arbiter, petitioners
retirement pay should include the cash equivalent of the 5-day SIL
and 1/12 of the 13th month pay. (SERRANO vs. SEVERINO SANTOS
TRANSIT)

CASE DIGESTS
ARCO METAL PRODUCTS, CO., INC., and Mrs. Salvador Uy, VS.
SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL-NAFLU
(SAMARM-NAFLU)
G.R. No. 170734, May 14, 2008
TINGA, J,:
FACTS: Petitioner is a company engaged in the manufacture of
metal products, whereas respondent is the labor union of
petitioners rank and file EEs. Sometime in December 2003,
petitioner paid the 13th month pay, bonus, and leave encashment
of three union members in amounts proportional to the service they
actually rendered in a year, which is less than a full twelve (12)
months. The EEs were:
1.
Rante Lamadrid Sickness 27 August 2003 to 27 February
2004
2.
Alberto Gamban Suspension 10 June 2003 to 1 July 2003
3.
Rodelio Collantes Sickness August 2003 to February
2004
Respondent protested the prorated scheme, claiming that on
several occasions petitioner did not prorate the payment of the
same benefits to 7 EEs who had not served for the full 12 months.
The payments were made in 1992-1994, 1996, 1999, and 20032004. According to respondent, the prorated payment violates the
rule against diminution of benefits under Article 100 of the Labor
Code. Thus, they filed a complaint before the National Conciliation
and Mediation Board (NCMB). The parties submitted the case for
voluntary arbitration.
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of
petitioner and found that the giving of the contested benefits in full,
irrespective of the actual service rendered within one year has not
ripened into a practice. He noted the affidavit of Joselito Baingan,
manufacturing group head of petitioner, which states that the
giving in full of the benefit was a mere error. He also interpreted the
phrase for each year of service found in the pertinent CBA
provisions to mean that an EE must have rendered one year of
service in order to be entitled to the full benefits provided in the
CBA.[5]

Unsatisfied, respondent filed a Petition for Review[6] under Rule 43

before the CA, imputing serious error to Mangabats conclusion. The
CA ruled that the CBA did not intend to foreclose the application of
prorated payments of leave benefits to covered EEs. The appellate
court found that petitioner, however, had an existing voluntary
practice of paying the aforesaid benefits in full to its EEs, thereby
rejecting the claim that petitioner erred in paying full benefits to its
seven EEs. The appellate court noted that aside from the affidavit
of petitioners officer, it has not presented any evidence in
support of its position that it has no voluntary practice of granting
the contested benefits in full and without regard to the service
actually rendered within the year. It also questioned why it took
petitioner eleven (11) years before it was able to discover the
alleged error.
ISSUE/S:
1)whether the intent of the CBA provisions is to grant full benefits
regardless of service actually rendered by an EE to the company.
2) Whether Any benefit and supplement being enjoyed by EEs
cannot be reduced, diminished, discontinued or eliminated by the
ER
HELD: 1)There is no doubt that in order to be entitled to the full
monetization of sixteen (16) days of vacation and sick leave, one
must have rendered at least one year of service. The clear wording
of the provisions does not allow any other interpretation. Anent the
13th month pay and bonus, we agree with the findings of Mangabat
that the CBA provisions did not give any meaning different from
that given by the law, thus it should be computed at 1/12 of the
total compensation which an EE receives for the whole calendar
year. The bonus is also equivalent to the amount of the 13thmonth
pay given, or in proportion to the actual service rendered by an EE
within the year.
2) yes .Any benefit and supplement being enjoyed by EEs cannot be
reduced, diminished, discontinued or eliminated by the ER.[14] The
principle of non-diminution of benefits is founded on the
Constitutional mandate to "protect the rights of workers and
promote their welfare,[15] and to afford labor full
protection.[16] Said mandate in turn is the basis of Article 4 of
the Labor Code which states that all doubts in the
implementation and interpretation of this Code, including its
implementing rules and regulations shall be rendered in favor of
labor. Jurisprudence is replete with cases which recognize the
right of EEs to benefits which were voluntarily given by the ER and
which ripened into company practice.
We held that the ER cannot unilaterally withdraw the existing
privilege of commutation or conversion to cash given to said
workers, and as also noted that the ER had in fact granted and paid
said cash equivalent of the unenjoyed portion of the sick leave
benefits to some intermittent workers.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner
had adopted a policy of freely, voluntarily and consistently granting
full benefits to its EEs regardless of the length of service rendered.
True, there were only a total of seven EEs who benefited from such
a practice, but it was an established practice nonetheless.
Jurisprudence has not laid down any rule specifying a minimum
number of years within which a company practice must be
exercised in order to constitute voluntary company practice.[20]
Thus, it can be six (6) years,[21] three (3) years,[22] or even as
short as two (2) years.[23] Petitioner cannot shirk away from its
responsibility by merely claiming that it was a mistake or an error,
supported only by an affidavit of its manufacturing group head.
Indeed, if petitioner wants to prove that it merely erred in giving full
benefits, it could have easily presented other proofs, such as the
names of other EEs who did not fully serve for one year and thus
were given prorated benefits. Experientially, a perfect attendance
in the workplace is always the goal but it is seldom achieved. There
must have been other EEs who had reported for work less than a
full year and who, as a consequence received only prorated
benefits. This could have easily bolstered petitioners theory of
mistake/error, but sadly, no evidence to that effect was presented.
PLDT COMPANY vs. NLRC and Marlyn Bucay
G.R. No. L-80609 August 23, 1988
CRUZ, J.:
FACTS: Marilyn Abucay, a traffic operator of the PLDT Company,
was accused by two complainants of having demanded and
received from them the total amount of P3,800.00 in consideration
of her promise to facilitate approval of their applications for
telephone installation. Investigated and heard, she was found guilty
as charged and accordingly separated from the service. She went
to the Ministry of Labor and Employment claiming she had been
illegally removed. After consideration of the evidence and
arguments of the parties, the company was sustained and the
complaint was dismissed for lack of merit. Nevertheless, the
dispositive portion of labor arbiters decision declared: Considering
that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not
totally blameless in the light of the fact that the deal happened
outside the premises of respondent company and that their act of
giving P3,800.00 without any receipt is tantamount to corruption of
public officers, complainant must be given one month pay for every
year of service as financial assistance.
Both the petitioner and the private respondent appealed to the
NLRC Board, which upheld the said decision in toto and dismissed
the appeals. The private respondent took no further action, thereby
impliedly accepting the validity of her dismissal. The petitioner,
however, is now before us to question the affirmance of the abovequoted award as having been made with grave abuse of discretion.
In its challenged resolution of September 22, 1987, the NLRC said:

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J.SUAREZ II, 2ND SEM,SY 12-13
Anent the award of separation pay as financial assistance in
complainants favor, We find the same to be equitable, taking into
consideration her long years of service to the company whereby
she had undoubtedly contributed to the success of respondent.
While we do not in any way approve of complainants (private
respondent) malfeasance, for which she is to suffer the penalty of
dismissal, it is for reasons of equity and compassion that we resolve
to uphold the award of financial assistance in her favor.
ISSUE: WON the award of financial assistance to an EE who had
been dismissed for cause as found by the public respondent is
legal.
HELD: The rule embodied in the Labor Code is that a person
dismissed for cause as defined therein is not entitled to separation
pay. We hold that henceforth separation pay shall be allowed as a
measure of social justice only in those instances where the EE is
validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid
dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a
fellow worker, the ER may not be required to give the dismissed EE
separation pay, or financial assistance, or whatever other name it-is
called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the
effect, of rewarding rather than punishing the erring EE for his
offense. And we do not agree that the punishment is his dismissal
only and that the separation pay has nothing to do with the wrong
he has committed. Of course it has. Indeed, if the EE who steals
from the company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar offense in
his next employment because he thinks he can expect a like
leniency if he is again found out. This
The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the underprivileged.
At best it may mitigate the penalty but it certainly will not condone
the offense. Social justice cannot be permitted to be refuge of
scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so
only if their hands are clean and their motives blameless and not
simply because they happen to be poor.
Applying the above considerations, we hold that the grant of
separation pay in the case at bar is unjustified. The private
respondent has been dismissed for dishonesty, as found by the
labor arbiter and affirmed by the NLRC and as she herself has
impliedly admitted. The fact that she has worked with the PLDT for
more than a decade, if it is to be considered at all, should be taken
against her as it reflects a regrettable lack of loyalty that she should
have strengthened instead of betraying during all of her 10 years of
service with the company. If regarded as a justification for
moderating the penalty of dismissal, it will actually become a prize
for disloyalty, perverting the meaning of social justice and
undermining the efforts of labor to cleanse its ranks of all
undesirables.
TOYOTA
MOTOR
PHILS.
CORP. WORKERS
ASSOC.
(TMPCWA),Ed Cubelo, et al. vs. NLRC COM.(2ND Division), TOYOTA
MOTOR PHILS. CORP. et al.
G. R. CASE NOS. 158786 & 158789
x - - -- - - - - - - - - - - - - - - - - - - - - - - - x
TOYOTA MOTOR PHIL. CORP., vs, ), ED CUBELO, et al. vs. NLRC
COM.(2ND Division), TOYOTA MOTOR PHILS
G.R. CASE NOS. 158798-99
URGENT PLEA/REQUEST FOR THE HON. SUPREME COURT EN BANC
TO TAKE JURISDICTION OF THE MOTION FOR RECONSIDERATION ON
COMPELLING AND URGENT REASONS
1) The petitioners filed a MR from the October 19, 2007 novel but
strange decision of the Hon. Supreme Courts (2nd Division) finding
Petitioners February 22 & 23 2001 rally at the Bureau of Labor
Relations an illegal strike,
shrouded as an exercise of freedom of expression and
consequently dismissed 227 ordinary union members
and officers for mere participation and suspended from
work some 62 other union members.
2) The October 19, 2007 decision dismissing 218 ordinary union
members who participated in the rally later declared as an illegal
strike
is a reversal, substantial modification or alteration of
prevailing jurisprudence that ordinary union members or
EEs cannot be dismissed for mere participation in an
illegal strike. This is a well settled rule in this jurisdiction
in the string of cases.
3) The primacy of freedom of expression over the right to profit in
the hierarchy of constitutional rights as enshrined in the case of
Philippine Blooming Mills EEs Organization et.al. versus Philippine
Blooming Mills, et.al. 51 SCRA 189, 205 was overturned. The
October 19, 2007 decision reverse the prevailing doctrine by giving
primacy to the right to profit over freedom of expression in
declaring
we rule that the protest actions undertaken by the
Union officials and members on February 21 to 23, 2001
are not valid and proper exercise of their right to
assemble and ask government for redress of their
complaints, but are illegal strikes in breach of the Labor
Code. The Unions position is weakened by the lack of
permit from the City of Manila to hold rallies. Shrouded
as demonstrations, they were in reality temporary
stoppages of work perpetrated through the concerted

action of the EEs who deliberately failed to report for

work on the convenient excuse that they will hold a rally
at the BLR and DOLE offices in Intramuros, Manila
4) Similarly, the ruling that the Secretary of Labors assumption of
jurisdiction or certification to compulsory arbitration enjoins the
exercise of freedom of expression by some 60 dismissed EEs who
are no longer working and did not disrupt production, and declaring
their May 23 And 28 2001 picket in front of Toyota (more than a
month after their strike on March 28 to April 12, 2001) - as illegal
strike for violation of the directive that:
the Union and its members shall refrain from engaging
in any activity that might exacerbate the tense labor
situation in Toyota to preserve Toyotas right to
profit. is sheer violation of the constitutional right to
freedom of expression and the principles of
constitutional hierarchy of values.
5) The October 19, 2007 decision turns upside down the prevailing
thought on how the constitutional right to strike is judicially viewed
and applied as enunciated in the case of Bisig ng Manggagawa sa
Concrete Aggregates, Inc. (BIMCAI) et.al..versus National Labor
Relations Commission, et.al.G.R. NO. 105090, September 16, 1993
(This Division) as eloquently penned by no less than the Chief
Justice, (then Justice) the Hon. Reynato Puno and is quoted
extensively: The restoration of the right to strike is the most
valuable gain of labor after the EDSA Revolution. It is the EEs sole
weapon which can effectively protect their basic rights especially in
a society where the levers of powers are nearly monopolized by the
propertied few or their franchises. In recognition of its importance,
our constitution has accorded the right to strike a distinct status
while our laws have assured that its rightful exercise will not be
negated by the issuance of unnecessary inunctions.
- with due respect, the prevailing thought is replaced,
modified or altered by the thought applied by the Hon.
Court to rationalize its October 19, 2007 decision, in
page 48, that : Even though strikes and lockouts
have been recognized as effective bargaining tools, it is
an antiquated notion that they are truly beneficial, as
they only provide short-term solutions by forcing
concessions from one party; but staging such strikes
would damage the working relationship between ERs
and EEs, thus endangering the business that they both
want to succeed. The more progressive and truly
effective means of dispute resolution, lies in mediation,
conciliation, and arbitration, which do not increase
tension but instead provide relief from them. In the end,
an atmosphere of trust and understanding has much
more to offer a business relationship than the traditional
enmity that has long divided the ER and the EE,
6) It is respectfully submitted that the October 19, 2007 decision of
the Second Division in the instant case, is unconstitutional as it
infringes on the constitutional provision that no doctrines or
principle of law laid down by the Court in a decision rendered en
banc or division maybe modified or reversed by the Court except
sitting en banc
7) For compelling reasons and considering the constitutional issues
raised, it is respectfully submitted that the Hon. Supreme Court En
Banc must with utmost urgency take jurisdiction over the Motion for
Reconsideration and resolved it with finality.
RENO FOODS, INC., and/or Vicente Khu vs. NAGKAKAISANG
LAKAS NG MANGGAGAW(NLM)
G.R. No. 164016 March 15, 2010
DEL CASTILLO, J.:
FACTS: Reno Foods is a manufacturer of canned meat products of
which Vicente Khu is the president and is being sued in that
capacity. Respondent Nenita Capor (Capor) was an EE of Reno
Foods until her dismissal.
It is a standard operating procedure of RENO to subject all its EEs to
reasonable search of their belongings upon leaving the company
premises. On October 19, 1998, the guard on duty found 6 Reno
canned goods wrapped in nylon leggings inside Capors fabric
clutch bag. The only other contents of the bag were money bills
and a small plastic medicine container.
RENO accorded Capor several opportunities to explain her side,
often with the assistance of the union officers of NLMKatipunan. In
fact, after RENO sent a Notice of Termination to Capor, she was
given yet another opportunity for reconsideration through a labormanagement grievance conference. Unfortunately, RENO did not
find reason to change its earlier decision to terminate Capors
employment with the company. Thus, filed a complaint-affidavit
against Capor for qualified theft in the Office of the City Prosecutor,
Malabon-Navotas Substation. a Resolution was issued finding
probable cause for the crime charged.
Consequently, an
Information was filed against Capor.
Meanwhile, NLMKatipunan filed on behalf of Capor a complaint[4]
for illegal dismissal and money claims against RENO with the Head
Arbitration Office of the NLRC for the National Capital Region. The
complaint prayed that Capor be paid her full backwages as well as
moral and exemplary damages.
Ruling of the Labor Arbiter: finding Capor guilty of serious
misconduct which is a just cause for termination. In this case, the
Labor Arbiter found that theft of company property is tantamount to
serious misconduct; as such, Capor is not entitled to reinstatement
and backwages, as well as moral and exemplary damages under
Art. 232 of LC.
Ruling of the NLRC: WHEREFORE, premises considered, the decision
under review is hereby MODIFIED by granting an award of financial

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J.SUAREZ II, 2ND SEM,SY 12-13
assistance in the form of separation pay equivalent to one-half
month pay for every year of service. In all other respects the
decision stands affirmed. All other claims of the complainant are
dismissed for lack of merit.[8]
Both parties moved for a reconsideration of the NLRC Decision.
Petitioners asked that the award of financial assistance be deleted,
while Capor asked for a finding of illegal dismissal and for
reinstatement with full backwages. the NLRC issued its Resolution
denying both motions for reconsideration for lack of merit.

Private Schools, only full-time teachers who have rendered three (3)
years of consecutive service shall be considered permanent.
Respondents then filed with this Court a petition for certiorari the
same was dismissed for lack of merit. Their MR was denied with
finality by this Court on July 19, 2000.

Ruling of the Court of Appeals: affirmed the NLRCs award of

financial assistance to Capor. It stressed that the laborers welfare
should be the primordial and paramount consideration when
carrying out and interpreting provisions of the Labor Code. It
explained that the mandate laid down in PLDT vs. NLRC was not
absolute, but merely directory.

petitioners filed with the Labor Arbiter a motion for execution of his
Decision as modified by the CA.
In an Order dated January 8, 2001, the Labor Arbiter computed the
petitioners monetary awards reckoned from the time of their illegal
dismissal in June 1994 up to October 29, 1999, pursuant to the
Decision of the CA. Respondents interposed an appeal to the NLRC
contending that the computation should only be up to June 20,
1995. Thus, the NLRC modified the Labor Arbiters computation and
ruled that the monetary awards due to petitioners should be
computed from June 1994 up to June 20, 1995.

ISSUE: whether the NLRC committed grave abuse of discretion

amounting to lack or excess of jurisdiction in granting financial
assistance to an EE who was validly dismissed for theft of company
property.

Petitioners then filed a petition for certiorari with the CA, raffled off
to the Seventh Division. However, in its Resolution the petition was
dismissed outright for their failure to attach to their petition copies
of the pleadings filed with the Labor Arbiter.

HELD: Conviction in a criminal case is not necessary to find just

cause for termination of employment. Criminal cases require proof
beyond reasonable doubt while labor disputes require
only
substantial evidence, which means such relevant evidence as
a reasonable mind might accept as adequate to justify a conclusion.
[20]

Petitioners filed a MR, but they erroneously indicated therein the

case number. Their error was compounded by stating that the
petition was with the Special Sixteenth Division, instead of the
Seventh Division. On realizing their mistake, petitioners then filed
with the Seventh Division a Motion to Transfer The Case to it.

We find no justification for the award of separation pay to Capor.

This award is a deviation from established law and jurisprudence.
The law is clear. Separation pay is only warranted when the cause
for termination is not attributable to the EEs fault, such as those
provided in Articles 283 and 284 of the Labor Code, as well as in
cases of illegal dismissal in which reinstatement is no longer
feasible.[22] It is not allowed when an EE is dismissed for just
cause,[23] such as serious misconduct. Jurisprudence has classified
theft of company property as a serious misconduct and denied the
award of separation pay to the erring EE.
It is true that there have been instances when the Court awarded
financial assistance to EEs who were terminated for just causes, on
grounds of equity and social justice. When the EE commits an act
of dishonesty, depravity, or iniquity, the grant of financial
assistance is misplaced compassion. It is tantamount not only to
condoning a patently illegal or dishonest act, but an endorsement
thereof. It will be an insult to all the laborers who, despite their
economic difficulties, strive to maintain good values and moral
conduct.
The fact that private respondent served petitioner for more than
twenty years with no negative record prior to his dismissal, in our
view of this case, does not call for such award of benefits, since his
violation reflects a regrettable lack of loyalty and worse, betrayal of
the company. If an EEs length of service is to be regarded as
justification for moderating the penalty of dismissal, such gesture
will actually become a prize for disloyalty, distorting the meaning of
social justice and undermining the efforts of labor to clean its ranks
of undesirables. His length of service even aggravates his offense.
He should have been more loyal to petitioner company from which
he derived his family bread and butter for seventeen years.
Azucena MAGALLANES, Evelyn Bacolod, and Heirs of Judith
Cotecson vs. SUN YAT SEN ELEMENTARY SCHOOL, Paz Go,
Elena Cubillan,Willy Gan Teng, Benito Ang, and Teotimo Tan
G.R. No. 160876, January 18, 2008]
SANDOVAL-GUTIERREZ, J.:
FACTS: Petitioners were all employed as teachers in SYSES in
Surigao City. Respondent Paz Go and Elena Cubillan are principals of
the said school, Willy Ang Gan Teng and Benito Ang are its directors,
while Teotimo Tan is the school treasurer.
respondents terminated the services of petitioners. Thus, they filed
with the Sub-Regional Arbitration Branch of NLRC, Butuan City,
complaints against respondents for illegal dismissal, underpayment
of wages, payment of backwages, 13th month pay, ECOLA,
separation pay, moral damages, and attorneys fees. Likewise,
petitioner Cotecson filed a separate complaint praying for the same
reliefs.
Labor Arbiter Rogelio P. Legaspi rendered a Decision declaring that
petitioners were illegally dismissed from the service and ordering
respondents to reinstate them to their former or equivalent
positions without loss of seniority rights, and to pay them their
backwages, salary differential, 13th month pay differential, and
service incentive leave benefits. Respondents were likewise
directed to pay petitioners moral and exemplary damages.
On appeal by respondents, the NLRC reversed the Arbiters
judgment, holding that petitioners are contractual EEs and that
respondents merely allowed their contracts to lapse.

In a Resolution promulgated on May 8, 2003, the Seventh Division

denied petitioners Motion To Transfer The Case on the ground,
among others, that the motion is non-existent since it does not bear
the correct case number, hence, could not be attached to the
records.
ISSUE/S:
1) whether the CA 7TH Division erred in holding that affixing a wrong
docket number on a motion renders it non-existent;
2) whether the issuance by the NLRC of the Order amending the
amounts of separation pay and backwages, awarded by the CA 7 TH
Division to petitioners and computed by the Labor Arbiter, is
tantamount to grave abuse of discretion amounting to lack or
excess of jurisdiction.
HELD: the CA is correct when it ruled that petitioners MR is nonexistent when Petitioners counsel placed a wrong case number in
their motion.
In Mega Land Resources and Development
Corporation v. C-E Construction Corporation which involves a wrong
docket number in a motion, we ruled that the duty to correct the
mistake falls solely on the party litigant whose fault caused the
anomaly. To hold otherwise would be to impose upon appellate
courts the burden of being nannies to appellants, ensuring the
absence of pitfalls that hinder the perfection of petitions and
appeals. Strictly speaking, it is a dogma that the mistake or
negligence of counsel binds the clients[4] and appellate courts
have no share in that burden.
However, we opt for liberality in the application of the rules to the
instant case in light of the following considerations. First, the rule
that negligence of counsel binds the client may be relaxed where
adherence thereto would result in outright deprivation of the
clients liberty or property or where the interests of justice so
require.[5]Second, this Court is not a slave of technical rules, shorn
of judicial discretion in rendering justice, it is guided by the
norm that on the balance, technicalities take a backseat against
substantive rights. Thus, if the application of the rules would tend
to frustrate rather than promote justice, it is always within this
Courts power to suspend the rules or except a particular case from
its application.[6]
2)It does not escape our attention that upon respondents
appeal from the Labor Arbiters Order computing the benefits
due to petitioners, the NLRC modified the final and executory
Decision of the CA (Special Sixteenth Division) when it decreed that
the monetary award due to petitioners should be computed up to
June 20, 1995 only (not October 28, 1999), thus, amounting to a
lesser amount of P147,673.16.
We sustain petitioners contention that the NLRC, in modifying
the award of the CA, committed grave abuse of discretion
amounting to lack or excess of jurisdiction. Quasi-judicial agencies
have neither business nor power to modify or amend the final and
executory Decisions of the appellate courts. Under the principle of
immutability of judgments, any alteration or amendment which
substantially affects a final and executory judgment is void for lack
of jurisdiction.[8]We thus rule that the Order dated March 30, 2001
of the NLRC directing that the monetary award should be computed
from June 1994, the date petitioners were dismissed from the
service, up to June 20, 1995 only, is void.
TELEVISION AND PRODUCTION EXPONENTS, INC. and/or
Antonio P. Tuviera vs. ROBERTO C. SERVA
G.R. No. 167648 January 28, 2008
TINGA, J,:

Petitioners timely filed a MR, but it was denied by the NLRC.

Petitioners then filed with the CA a petition for certiorari and ruled
that Cotecson, Bacolod, and Magallanes shall be entitled to
separation pay equivalent to one month salary and backwages
computed from the time of their illegal dismissal up to the time of
the promulgation of its Decision.

FACTS: TAPE is a domestic corporation engaged in the production

of television programs, such as the long-running variety program,
Eat Bulaga. Its president is Antonio P. Tuviera (Tuviera). SERVA
Roberto C. Serva had served as a security guard for TAPE.

With respect to Bella Gonzales and Grace Gonzales, the CA found

that that they have not acquired the status of regular EEs having
rendered only two years of service. Consequently, their dismissal
from the service is valid. Under the Manual of Regulations for

SERVA filed a complaint for illegal dismissal and nonpayment of

benefits against TAPE. He alleged that he was first connected with
Agro-Commercial Security Agency but was later on absorbed by
TAPE as a regular company guard. He was detailed at Broadway
Centrum in QC where Eat Bulaga regularly staged its productions.
SERVA received a memorandum informing him of his impending

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J.SUAREZ II, 2ND SEM,SY 12-13
dismissal on account of TAPEs decision to contract the services of a
professional security agency. At the time of his termination, SERVA
was receiving a monthly salary of P6,000.00. He claimed that the
holiday pay, unpaid vacation and sick leave benefits and other
monetary considerations were withheld from him. He further
contended that his dismissal was undertaken without due process
and violative of existing labor laws, aggravated by nonpayment of
separation pay.[3]
In a motion to dismiss which was treated as its position paper, TAPE
countered that the labor arbiter had no jurisdiction over the case in
the absence of an EE Relationshipbetween the parties. TAPE made
the following assertions: (1) that SERVA was initially employed as a
security guard for RPN9; (2) that he was tasked to assist TAPE
during its live productions, specifically, to control the crowd; (3)
that when RPN-9 severed its relationship with the security agency,
TAPE engaged SERVAs services, as part of the support group and
thus a talent, to provide security service to production staff, stars
and guests of Eat Bulaga as well as to control the audience during
the one-and-a-half hour noontime program; (4) that it was agreed
that complainant would render his services until such time that
SERVA company shall have engaged the services of a professional
security agency; (5) that in 1995, when his contract with RPN-9
expired, SERVA was retained as a talent and a member of the
support group, until such time that TAPE shall have engaged the
services of a professional security agency; (6) that SERVA was not
prevented from seeking other employment, whether or not related
to security services, before or after attending to his Eat Bulaga
functions; (7) that sometime in late 1999, TAPE started negotiations
for the engagement of a professional security agency, the Sun
Shield Security Agency; and (8) that on 2 March 2000, TAPE issued
memoranda to all talents, whose functions would be rendered
redundant by the engagement of the security agency, informing
them of the managements decision to terminate their services.
(9)TAPE averred that SERVA was an independent contractor falling
under the talent group category and was working under a special
arrangement which is recognized in the industry.[5]
SERVA for his part insisted that he was a regular EE having been
engaged to perform an activity that is necessary and desirable to
TAPEs business for thirteen (13) years.[6]
Labor Arbiter Daisy G. Cauton-Barcelona declared SERVA to be a
regular EE of TAPE. The Labor Arbiter also ruled that the termination
was valid on the ground of redundancy, and ordered the payment
of SERVAs separation pay equivalent to 1-month pay for every year
of service.
SERVA filed a MR but it was denied. SERVA filed a petition for
certiorari with the CA contending that the NLRC acted with grave
abuse of discretion amounting to lack or excess of jurisdiction when
it reversed the decision of the Labor Arbiter. SERVA asserted that he
was a regular EE considering the nature and length of service
rendered. Thus, Reversing the decision of the NLRC, the CA found
SERVA to be a regular EE.
TAPE filed the instant petition for review raising substantially the
same grounds as those in its petition for certiorari before the CA.
ISSUE:
SERVA.

whether an EE Relationship exists between TAPE and

HELD: At the outset, it bears emphasis that the existence of EE

Relationshipis ultimately a question of fact. Generally, only
questions of law are entertained in appeals by certiorari to the
Supreme Court. This rule, however, is not absolute. Among the
several recognized exceptions is when the findings of the CA and
Labor Arbiters, on one hand, and that of the NLRC, on the other, are
conflicting,[15] as obtaining in the case at bar.
The position of TAPE is untenable.. When the security agencys
contract with RPN-9 expired SERVA was retained as talent. Clearly,
SERVA was hired by TAPE. SERVA presented his identification
card[21] to prove that he is indeed an EE of TAPE. It has been in
held that in a business establishment, an identification card is
usually provided not just as a security measure but to mainly
identify the holder thereof as a bona fideEE of the firm who issues
it.[22]
Wages, as defined in the Labor Code, are remuneration or earnings,
however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece or
commission basis, or other method of calculating the same, which
is payable by an ER to an EE under a written or unwritten contract
of employment for work done or to be done, or for service rendered
or to be rendered. It is beyond dispute that SERVA received a fixed
amount as monthly compensation for the services he rendered to
TAPE.
The Memorandum informing SERVA of the discontinuance of his
service proves that TAPE had the power to dismiss SERVA.
Control is manifested in the bundy cards submitted by SERVA in
evidence. He was required to report daily and observe definite work
hours. TAPE failed to establish that SERVA is an independent
contractor.
theory of private SERVAs that petitioner is an independent
contractor runs counter to their very own allegation that petitioner
is a talent or a program EE. An independent contractor is not an EE
of the ER, while a talent or program EE is an EE. The only difference
between a talent or program EE and a regular EE is the fact that a
regular EE is entitled to all the benefits that are being prayed for.
This is the reason why private SERVAs try to seek refuge under the
concept of an independent contractor theory. For if petitioner were

indeed an independent contractor, private SERVAs will not be liable

to pay the benefits prayed for in petitioners complaint.
Regardless of whether or not SERVA had been performing work that
is necessary or desirable to the usual business of TAPE, SERVA is
still considered a regular EE under Article 280 of the Labor Code. An
employment shall be deemed to be casual if it is not covered by
Art. 280. Provided, that, any EE who has rendered at least one year
of service, whether such service is continuous or broken, shall be
considered a regular EE with respect to the activity in which he is
employed and his employment shall continue while such activity
exists.
As a regular EE, SERVA cannot be terminated except for just cause
or when authorized by law.[29] It is clear from the tenor of the 2
March 2000 Memorandum that SERVAs termination was due to
redundancy.
COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA,
Manager, vs. DR. DEAN N. CLIMACO
G.R. No. 146881
February 5, 2007
AZCUNA, J.:
FACTS: Respondent Dr. Dean N. Climaco is a medical doctor who
was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a
Retainer Agreement
The Retainer Agreement, which began on January 1, 1988, was
renewed annually. The last one expired on December 31, 1993.
Despite the non-renewal of the Retainer Agreement, respondent
continued to perform his functions as company doctor to Coca-Cola
until he received a letter4 dated March 9, 1995 from petitioner
company concluding their retainership agreement effective 30 days
from receipt thereof.
It is noted that as early as September 1992, petitioner was already
making inquiries regarding his status with petitioner company. First,
he wrote a letter addressed to Dr. Willie Sy, the Acting President
and Chairperson of the Committee on Membership, Philippine
College of Occupational Medicine. In response, Dr. Sy wrote a
letter5 to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod
City, stating that respondent should be considered as a regular
part-time physician, having served the company continuously for
four (4) years. He likewise stated that respondent must receive all
the benefits and privileges of an EE under Article 157 (b)6 of the
Labor Code.
Petitioner company, however, did not take any action. Hence,
respondent made another inquiry directed to the Assistant Regional
Director, Bacolod City District Office of the Department of Labor and
Employment (DOLE), who referred the inquiry to the Legal Service
of the DOLE, Manila. In his letter7 dated May 18, 1993, Director
Dennis P. Ancheta, Legal Service, DOLE, stated that he believed
that an ER-EE relationship existed between petitioner and
respondent based on the Retainer Agreement and the
Comprehensive Medical Plan, and the application of the "four-fold"
test. However, Director Ancheta emphasized that the existence of
ER-EE relationship is a question of fact. Hence, termination disputes
or money claims arising from ER-EE relations exceeding P5,000 may
be filed with the National Labor Relations Commission (NLRC). He
stated that their opinion is strictly advisory.
An inquiry was likewise addressed to the Social Security System
(SSS). Thereafter, Mr. Romeo R. Tupas, OIC-FID of SSS-Bacolod City,
wrote a letter8 to the Personnel Officer of Coca-Cola Bottlers Phils.,
Inc. informing the latter that the legal staff of his office was of the
opinion that the services of respondent partake of the nature of
work of a regular company doctor and that he was, therefore,
subject to social security coverage.
Respondent inquired from the management of petitioner company
whether it was agreeable to recognizing him as a regular EE. The
management refused to do so. respondent filed a Complaint9
before the NLRC, Bacolod City, seeking recognition as a regular EE
of petitioner company and prayed for the payment of all benefits of
a regular EE, including 13th Month Pay, Cost of Living Allowance,
Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus.
While the complaint was pending before the Labor Arbiter,
respondent received a letter dated March 9, 1995 from petitioner
company concluding their retainership agreement effective thirty
(30) days from receipt thereof. This prompted respondent to file a
complaint for illegal dismissal against petitioner company with the
NLRC, Bacolod City.
LA: DISMISSED THE CASE on illegal dismissal and found that
petitioner company lacked the power of control over respondents
performance of his duties, and recognized as valid the Retainer
Agreement between the parties. NLRC dismissed the appeal in
both cases for lack of merit. CA ruled that an ER-EE relationship
existed between petitioner company and respondent after applying
the four-fold test.
ISSUES:1) whether or not there exists an ER-EE relationship
between the parties;2)whether the termination of respondents
employment is illegal.
HELD: The Court agrees with the finding of the Labor Arbiter and
the NLRC that the circumstances of this case show that no ER-EE
relationship exists between the parties. The Labor Arbiter and the
NLRC correctly found that petitioner company lacked the power of
control over the performance by respondent of his duties. The Labor
Arbiter reasoned that the Comprehensive Medical Plan, which
contains the respondents objectives, duties and obligations, does
not tell respondent "how to conduct his physical examination, how
to immunize, or how to diagnose and treat his patients, EEs of
[petitioner] company, in each case." In effect, the Labor Arbiter
held that petitioner company, through the Comprehensive Medical
Plan, provided guidelines merely to ensure that the end result was

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J.SUAREZ II, 2ND SEM,SY 12-13
achieved, but did not control the means and methods by which
respondent performed his assigned tasks.

the complaint filed by private respondent

Corporation, et al. for constructive dismissal.

The NLRC affirmed the findings of the Labor Arbiter and stated that
it is precisely because the company lacks the power of control that
the contract provides that respondent shall be directly responsible
to the EE concerned and their dependents for any injury, harm or
damage caused through professional negligence, incompetence or
other valid causes of action.

ISSUE/S:
(1) whether there was an ER-EE relationship between FRANCISCO
and private respondent Kasei Corporation; and if in the affirmative,
(2) whether FRANCISCO was illegally dismissed.

allegation of complainant that since he is on call at anytime of the

day and night makes him a regular EE is off-tangent. Complainant
does not dispute the fact that outside of the two (2) hours that he is
required to be at respondent companys premises, he is not at all
further required to just sit around in the premises and wait for an
emergency to occur so as to enable him from using such hours for
his own benefit and advantage. In fact, complainant maintains his
own private clinic attending to his private practice in the city, where
he services his patients, bills them accordingly -- and if it is an EE of
respondent company who is attended to by him for special
treatment that needs hospitalization or operation, this is subject to
a special billing. More often than not, an EE is required to stay in
the ERs workplace or proximately close thereto that he cannot
utilize his time effectively and gainfully for his own purpose. Such is
not the prevailing situation here.
In addition, the Court finds that the schedule of work and the
requirement to be on call for emergency cases do not amount to
such control, but are necessary incidents to the Retainership
Agreement. The Court also notes that the Retainership Agreement
granted to both parties the power to terminate their relationship
upon giving a 30-day notice. Hence, petitioner company did not
wield the sole power of dismissal or termination.
The Court agrees with the Labor Arbiter and the NLRC that there is
nothing wrong with the employment of respondent as a retained
physician of petitioner company and upholds the validity of the
Retainership Agreement which clearly stated that no ER-EE
relationship existed between the parties. The Agreement also
stated that it was only for a period of 1 year beginning January 1,
1988 to December 31, 1998, but it was renewed on a yearly basis.
Considering that there is no ER-EE relationship between the parties,
the termination of the Retainership Agreement, which is in
accordance with the provisions of the Agreement, does not
constitute illegal dismissal of respondent. Consequently, there is no
basis for the moral and exemplary damages granted by the Court of
Appeals to respondent due to his alleged illegal dismissal.
ANGELINA FRANCISCO
vs. NLRC, Kasei Corp., Seiichiro
Takahashi, Timoteo Acedo, Delfin Liza, Irene Ballesteros, Trinidad
Liza and Ramon Escueta
G.R. No. 170087August 31, 2006
YNARES-SANTIAGO, J.:
FACTS: FRANCISCO was hired by Kasei Corporation during its
incorporation stage. She was designated as Accountant and
Corporate Secretary and was assigned to handle all the accounting
needs of the company. She was also designated as Liaison Officer
to the City of Makati to secure business permits, construction
permits and other licenses for the initial operation of the company.
Although she was designated as Corporate Secretary, she was not
entrusted with the corporate documents; neither did she attend any
board meeting nor required to do so. She never prepared any legal
document and never represented the company as its Corporate
Secretary. However, on some occasions, she was prevailed upon to
sign documentation for the company.[6]
Later on, FRANCISCO was designated Acting Manager.
The
corporation also hired Gerry Nino as accountant in lieu of
FRANCISCO. As Acting Manager, FRANCISCO was assigned to handle
recruitment of all EEs and perform management administration
functions; represent the company in all dealings with government
agencies, especially with the BIR, SSS and in the city government of
Makati; and to administer all other matters pertaining to the
operation of Kasei Restaurant which is owned and operated by
Kasei Corporation.[7]
For 5 years, FRANCISCO performed the duties of Acting Manager.
As of December 31, 2000 her salary was P27,500.00 plus P3,000.00
housing allowance and a 10% share in the profit of Kasei
Corporation. Subsequently, FRANCISCO was replaced by Liza R.
Fuentes as Manager. FRANCISCO alleged that she was required to
sign a prepared resolution for her replacement but she was assured
that she would still be connected with Kasei Corporation. Timoteo
Acedo, the designated Treasurer, convened a meeting of all EEs of
KC and announced that nothing had changed and that FRANCISCO
was still connected with KCas Technical Assistant to Seiji Kamura
and in charge of all BIR matters.[9]
Thereafter, KC reduced her salary by P2,500.00 a month beginning
January up to September 2001 for a total reduction of P22,500.00
as of September 2001. FRANCISCO was not paid her mid-year
bonus allegedly because the company was not earning well.
Thereafter, FRANCISCO did not receive her salary from the
company. She made repeated follow-ups with the company cashier
but she was advised that the company was not earning well.
FRANCISCO asked for her salary from Acedo and the rest of the
officers but she was informed that she is no longer connected with
the company. Since she was no longer paid her salary, FRANCISCO
did not report for work and filed an action for constructive dismissal
before the labor arbiter.
The Labor Arbiter found that FRANCISCO was illegally dismissed,
the NLRC affirmed with modification the Decision of the Labor
Arbiter. On appeal, the CA reversed the NLRC decision, dismissing

against

Kasei

HELD: 1)By applying the control test, there is no doubt that

FRANCISCO is an EE of KCbecause she was under the direct control
and supervision of Seiji Kamura, the corporations Technical
Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant,
Acting Manager and Corporate Secretary, with substantially the
same job functions, that is, rendering accounting and tax services
to the company and performing functions necessary and desirable
for the proper operation of the corporation such as securing
business permits and other licenses over an indefinite period of
engagement.
Under the broader economic reality test, the FRANCISCO can
likewise be said to be an EE of respondent corporation because she
had served the company for 6 years before her dismissal, receiving
check vouchers indicating her salaries/wages, benefits, 13th month
pay, bonuses and allowances, as well as deductions and SSS
contributions from August 1, 1999 to December 18, 2000.[26]
When FRANCISCO was designated General Manager, respondent
corporation made a report to the SSS signed by Irene Ballesteros.
FRANCISCOs membership in the SSS as manifested by a copy of
the SSS specimen signature card which was signed by the President
of KC and the inclusion of her name in the on-line inquiry system of
the SSS evinces the existence of an ER-EE relationship between
FRANCISCO and respondent corporation. It is therefore apparent
that FRANCISCO is economically dependent on respondent
corporation for her continued employment in the latters line of
business.
2)A diminution of pay is prejudicial to the EE and amounts to
constructive dismissal. Constructive dismissal is an involuntary
resignation resulting in cessation of work resorted to when
continued employment becomes impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution in pay; or
when a clear discrimination, insensibility or disdain by an ER
becomes unbearable to an EE.[35] In Globe Telecom, Inc. v.
Florendo-Flores,[36] we ruled that where an EE ceases to work due
to a demotion of rank or a diminution of pay, an unreasonable
situation arises which creates an adverse working environment
rendering it impossible for such EE to continue working for her ER.
Hence, her severance from the company was not of her own
making and therefore amounted to an illegal termination of
employment.
PEOPLES BROADCASTING (BOMBO RADYO PHILS., INC.), vs.
SEC. OF DOLE
G.R. No. 179652 March 6, 2012
PEOPLES BROADCASTING (BOMBO RADYO PHILS., INC.), vs.
SEC. OF DOLE
G.R. No. 179652 May 8, 2009
TINGA, J.:
FACTS: a complaint filed by JUEZA against BOMBO for illegal
deduction, non-payment of service incentive leave, 13th month
pay, premium pay for holiday and rest day and illegal diminution of
benefits, delayed payment of wages and non-coverage of SSS, PAGIBIG and Philhealth before the DOLE Regional Office No. VII, Cebu
City.[2] On the basis of the complaint, the DOLE conducted a plant
level inspection. In the Inspection Report Form,[3] the Labor
Inspector wrote under the heading Findings/Recommendations
non-diminution of benefits and Note: Respondent deny ER-EE
relationship with the complainant- see Notice of Inspection results.
In the Notice of Inspection Results the Labor Inspector made the
following notations:
Management representative informed that complainant is a drama
talent hired on a per drama participation basis hence no EREEship [sic] existed between them. As proof of this, management
presented photocopies of cash vouchers, billing statement,
employments of specific undertaking (a contract between the talent
director & the complainant), summary of billing of drama
production etc. BOMBO had not control of the talent if he ventures
into another contract w/ other broadcasting industries.
On the other hand, complainant Juezans alleged violation of nondiminution of benefits is computed as follows: P 2,000/15 days +
1.5 mos = P 6,000.
Petitioner was required to rectify/restitute the violations within five
(5) days from receipt. No rectification was effected by petitioner;
thus, summary investigations were conducted, with the parties
eventually ordered to submit their respective position papers.[6]
DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director)
ruled that respondent is an EE of petitioner, and that the former is
entitled to his money claims amounting to P203,726.30. Petitioner
sought reconsideration of the Order, claiming that the Regional
Director gave credence to the documents offered by respondent
without examining the originals, but at the same time he missed or
failed to consider petitioners evidence. Petitioners motion for
reconsideration was denied. the Acting DOLE Secretary dismissed
the appeal on the ground that petitioner did not post a cash or
surety bond and instead submitted a Deed of Assignment of Bank
Deposit.[9]
Petitioner elevated the case to the CA, claiming that it was denied
due process when the DOLE Secretary disregarded the evidence it
presented and failed to give it the opportunity to refute the claims

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J.SUAREZ II, 2ND SEM,SY 12-13
of respondent. Petitioner maintained that there is no ER-EE
relationship had ever existed between it and respondent because it
was the drama directors and producers who paid, supervised and
disciplined respondent. It also added that the case was beyond the
jurisdiction of the DOLE and should have been considered by the
labor arbiter because respondents claim exceeded P5,000.00.
The Court of Appeals held that petitioner was not deprived of
due process.It further ruled that the latter had the power to order
and enforce compliance with labor standard laws irrespective of the
amount of individual claims because the limitation imposed by
Article 29 of the Labor Code had been repealed by Republic Act No.
7730.[10] Petitioner sought reconsideration of the decision but its
motion was denied.[11]
ISSUE: does the Secretary of Labor have the power to determine
the existence of an ER-EE relationship?
HELD: To resolve this pivotal issue, one must look into the extent of
the visitorial and enforcement power of the DOLE found in Article
128 (b) of the Labor Code, as amended by Republic Act 7730. The
provision is quite explicit that the visitorial and enforcement power
of the DOLE comes into play only in cases when the relationship of
ER-EE still exists. It also underscores the avowed objective
underlying the grant of power to the DOLE which is to give effect
to the labor standard provision of this Code and other labor
legislation. Of course, a persons entitlement to labor standard
benefits under the labor laws presupposes the existence of ER-EE
relationship in the first place. The clause in cases where the
relationship of ER-EE still exists signifies that the
ER-EE
relationship must have existed even before the emergence of the
controversy. Necessarily, the DOLEs power does not apply in two
instances, namely: (a) where the ER-EE relationship has ceased;
and (b) where no such relationship has ever existed.
In the first situation, the claim has to be referred to the NLRC
because it is the NLRC which has jurisdiction in view of the
termination of the ER-EE relationship. The same procedure has to
be followed in the second situation since it is the NLRC that has
jurisdiction in view of the absence of ER-EE relationship between
the evidentiary parties from the start.
In the second situation especially, the existence of an ER-EE
relationship is a matter which is not easily determinable from an
ordinary inspection, necessarily so, because the elements of such a
relationship are not verifiable from a mere ocular examination. The
intricacies and implications of an ER-EE relationship demand that
the level of scrutiny should be far above the cursory and the
mechanical.
It can be assumed that the DOLE in the exercise of its visitorial and
enforcement power somehow has to make a determination of the
existence of an ER-EE relationship.
Such prerogatival
determination, however, cannot be coextensive with the visitorial
and enforcement power itself. Indeed, such determination is merely
preliminary, incidental and collateral to the DOLEs primary function
of enforcing labor standards provisions. The determination of the
existence of ER-EE relationship is still primarily lodged with the
NLRC. This is the meaning of the clause in cases where the
relationship of ER-EE still exists in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Article 128,
two important questions must be resolved: (1) Does the ER-EE
relationship still exist, or alternatively, was there ever an ER-EE
relationship to speak of; and (2) Are there violations of the Labor
Code or of any labor law? The existence of an ER-EE relationship is
a statutory prerequisite to and a limitation on the power of the
Secretary of Labor, one which the legislative branch is entitled to
impose. The rationale underlying this limitation is to eliminate the
prospect of competing conclusions of the Secretary of Labor and
the NLRC, on a matter fraught with questions of fact and law, which
is best resolved by the quasi-judicial body, which is the NRLC,
rather than an administrative official of the executive branch of the
government.
If the Secretary of Labor proceeds to exercise his
visitorial and enforcement powers absent the first requisite, as the
dissent proposes, his office confers jurisdiction on itself which it
cannot otherwise acquire.
SAN MIGUEL CORPORATION and Geribern Abella vs. NLRC, Labor
Arbiter Pedro Ramos and Ernesto Ibias
G.R. Nos. 146121-22, April 16, 2008
TINGA, J,:
FACTS: Ernesto M. Ibias (respondent) was employed by petitioner
SMC on 24 December 1978 initially as a CRO operator in its Metal
Closure and Lithography Plant. Respondent continuously worked
therein until he advanced as Zamatic operator. He was also an
active and militant member of a labor organization called Ilaw
Buklod Manggagawa (IBM)-SMC Chapter.
It appears that per company records, respondent was AWOP for
several occasions. respondent was alleged to have falsified his
medical consultation card by stating therein that he was granted
sick leave by the plant clinic on said dates when in truth he was
not. He was given Notice to Explain through telegrams and was
required to state in writing why he should not be subject to
disciplinary action for falsifying his medical consultation card.
Respondent did not comply with these notices. Subsequently,
respondent submitted a handwritten explanation to the charges, to
wit: "Tungkol po sa ibinibintang po ninyong [sic] sa akin na
falsification of medical consultation card ito po hindi ko magagawa
at sa mga araw na hindi ko po ipinasok ito po ay may kaukulang
supporting paper[s]."
During the investigation, respondent admitted that he was absent
on several dates and had not sought sick leave permission for those

dates, and also denied falsifying or having had anything to do with

the falsification of his medical consultation card. However, upon
verification with the plant clinic, Siwa found that respondent was
not granted sick leaves on those dates. When Siwa confronted
respondent about the falsification, respondent allegedly replied that
he resorted to falsification to cover up his AWOPs which he was
forced to incur because of personal problems.
After the completion of the investigation, SMC concluded that
respondent committed the offenses of excessive AWOPs and
falsification of company records or documents, and accordingly
dismissed him. respondent filed a complaint for illegal dismissal
against SMC and Geribern Abella.
ISSUE: whether the CA erred in sustaining the findings of the labor
arbiter and the NLRC and in dismissing SMC's claims that
respondent was terminated from service with just cause.
HELD: The settled rule in administrative and quasi-judicial
proceedings is that proof beyond reasonable doubt is not required
in determining the legality of an ER's dismissal of an EE, and not
even a preponderance of evidence is necessary as substantial
evidence is considered sufficient.
while there may be no denying that respondent's medical card had
falsified entries in it, SMC was unable to prove, by substantial
evidence, that it was respondent who made the unauthorized
entries. Besides, SMC's (Your) Guide on EE Conduct[25] punishes
the act of falsification of company records or documents; it does not
punish mere possession of a falsified document.
while respondent has admitted these absences, before the Court,
he also seeks to belittle the plain by countering that SMC has not
been too rigid in its application of company rules pertaining to
leave availments. These medical certifications, however, cannot
work to erase his AWOPs; respondent had never submitted these
documents to SMC and it is only when the case was pending before
the Labor Arbiter that he produced the same.
even if he was not punished for his subsequent AWOPs, the same
remained on record. He was aware of the number of AWOPs he
incurred and should have known that these were punishable under
company rules. The fact that he was spared from suspension
cannot be used as a reason to incur further AWOPs and be absolved
from the penalty therefor.
The Court of Appeals, NLRC, and the labor arbiter found that
respondent incurred unauthorized absences, but concluded that the
penalty of discharge or determination was disproportionate to
respondent's absences in view of SMC's inconsistent and lax
implementation of its policy on EEs attendance. The Court
disagrees. Respondent's dismissal was well within the purview of
SMC's management prerogative.
What the lower tribunals perceived as laxity, we consider as
leniency. SMC's tendency to excuse justified absences actually
redounded to the benefit of respondent since the imposition of the
corresponding penalty would have been deleterious to him. In a
world where "no work-no pay" is the rule of thumb, several days of
suspension would be difficult for an ordinary working man like
respondent. He should be thankful that SMC did not exact from him
almost 70 days suspension before he was finally dismissed from
work.
In any case, when SMC imposed the penalty of dismissal for the
12th and 13thAWOPs, it was acting well within its rights as an ER.
An ER has the prerogative to prescribe reasonable rules and
regulations necessary for the proper conduct of its business, to
provide certain disciplinary measures in order to implement said
rules and to assure that the same would be complied with.[35] An
ER enjoys a wide latitude of discretion in the promulgation of
policies, rules and regulations on work-related activities of the EEs.
[36]
It is axiomatic that appropriate disciplinary sanction is within the
purview of management imposition.[37] Thus, in the
implementation of its rules and policies, the ER has the choice to do
so strictly or not, since this is inherent in its right to control and
manage its business effectively. Consequently, management has
the prerogative to impose sanctions lighter than those specifically
prescribed by its rules, or to condone completely the violations of
its erring EEs. Of course, this prerogative must be exercised free of
grave abuse of discretion, bearing in mind the requirements of
justice and fair play. Indeed, we have previously stated:
Management also has its own rights, which, as such, are entitled to
respect and enforcement in the interest of simple fair play. Out of
its concern for those with [fewer] privileges in life, the Supreme
Court has inclined more often than not toward the worker and
upheld his cause in his conflicts with the ER. Such favoritism,
however, has not blinded the Court to rule that justice is in every
case for the deserving, to be dispensed in the light of the
established facts and applicable law and doctrine.[38]
All told, we find that SMC acted well within its rights when it
dismissed respondent for his numerous absences. Respondent was
afforded due process and was validly dismissed for cause.
JIMMY ARENO, JR. vs. SKYCABLE PCC-BAGUIO
G.R. No. 180302 February 5, 2010
DEL CASTILLO, J.:
FACTS: petitioner was employed as a cable technician by
respondent Skycable PCC-Baguio. an accounting clerk of
respondent, Hyacinth Soriano (Soriano), sent to the human resource
manager a letter-complaint[5]against petitioner alleging that on
two separate occasions, the latter spread false rumors about her.

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J.SUAREZ II, 2ND SEM,SY 12-13
she was again insulted by petitioner when the latter approached
her and said that she was seen going out with Aldrin Estrada, their
field service supervisor, at Central Park, Baguio City. During that
incident, petitioner uttered, Ikaw lang ang nakakaalam ng totoo
with malicious intent and in a provocative manner. Soriano averred
that petitioners unscrupulous behavior constituted serious and
grave offense in violation of the companys Code of Discipline.

FACTS: Respondent, a corporation engaged in the manufacture,

sale and distribution of industrial paper and tissue products,
employed petitioner as a utility man on March 15, 1987. Petitioner
was eventually assigned at respondents Paper Mill No. 4, the
section which manufactures the companys industrial paper
products, as a back tender in charge of the proper operation of the
sections machineries.

On the same day, respondent issued a Memorandum[6] requiring

petitioner to submit an explanation within 76 hours from notice
thereof. Petitioner submitted his written explanation[7] dated
January 23, 2002 denying all the allegations in Sorianos lettercomplaint and further denying having uttered the statement
imputed on him. An administrative investigation was accordingly
conducted. In a Memo[9] dated February 6, 2002, the investigating
committee found petitioner guilty of having made malicious
statements
against
Soriano
during
the
January
7,
2002conversation, which is categorized as an offense under the
Company Code of Discipline.
Consequently, petitioner was
suspended for three days without pay. The Memo was allegedly
served on February 7, 2002 but petitioner refused to sign it.

In a Notice of Transfer dated March 27, 1999,respondent informed

petitioner of its reorganization plan and offered him a position at
Paper Mill No. 5 under the same terms and conditions of
employment in anticipation of the eventual closure and permanent
shutdown of Paper Mill No. 4 effective May 5, 1999. The closure
and concomitant reorganization is in line with respondents decision
to streamline and phase out the companys industrial paper
manufacturing operations due to financial difficulties brought about
by the low volume of sales and orders for industrial paper products.

Notwithstanding the suspension order, however, petitioner still

reported for work. By reason thereof, respondent sent petitioner a
letter denominated as 1st Notice of Termination[10] requiring him
to explain in writing why he should not be terminated for
insubordination. petitioner inquired from respondent whether he is
already dismissed or merely suspended since he was refused entry
into the company premises. Respondent replied that petitioner was
merely suspended and gave him additional time to tender his
written explanation to the 1st Notice of Termination.
petitioner again wrote to respondent, this time requesting for
further investigation on his alleged act of spreading rumors against
Soriano in order for him to confront his accuser and present his
witnesses with the assistance of counsel. Respondent denied the
request reiterating that there has been substantial compliance with
due process and that a reinvestigation is moot because the
suspension was already served.
Anent the new charge of insubordination, petitioner submitted to
respondent his written explanation[12] averring that he still
reported for work on the first day of his suspension because the
accusation of Soriano is baseless and her testimony is hearsay.
Besides, according to petitioner, he did not defy any order related
to his duties, no representative of the management prevented him
from working and that reporting to work without being paid for the
service he rendered on that day did not in any way affect the
companys productivity. an investigation on the insubordination
case was conducted which was attended by the parties and their
respective counsels.
Through a Final Notice of Termination
petitioner was dismissed from service on the ground of
insubordination or willful disobedience in complying with the
suspension order.
ISSUE: whether or not petitioner were validly dismissed.
HELD: The NLRC initially ruled that Sorianos testimony during the
investigation on the alleged act of petitioner in spreading rumors is
hearsay. Nevertheless, it reversed itself by holding that while
Soriano stated that her allegation with regard to the first two
instances that petitioner was spreading false information about her
is based on what she heard from other people, her narration of the
third instance relating to what has transpired during their January 7,
2002 conversation is not hearsay. The NLRC ruled quoting in part
the relevant testimony of Soriano as recorded in the transcript of
the investigation:
evidence on record repudiates petitioners pretension. His
insistence that he had no notice of his suspension is belied by
evidence as it shows that the suspension order was served on
petitioner on February 7, 2002 by his immediate superior, Al
Luzano, but petitioner declined to sign it. No acceptable reason was
advanced for doing so except petitioners shallow excuse that it
should be sent to him by registered mail.
As a just cause for dismissal of an EE under Article 282[41] of the
Labor Code, willful disobedience of the ERs lawful orders requires
the concurrence of two elements: (1) the EEs assailed conduct
must have been willful, i.e.,characterized by a wrongful and
perverse attitude; and (2) the order violated must have been
reasonable, lawful, made known to the EE, and must pertain to the
duties which he had been engaged to discharge.[42]
Both
requisites are present in the instant case. It is noteworthy that upon
receipt of the notice of suspension, petitioner did not question such
order at the first instance. He immediately defied the order by
reporting on the first day of his suspension. Deliberate disregard or
disobedience of rules by the EE cannot be countenanced. It may
encourage him to do even worse and will render a mockery of the
rules of discipline that EEs are required to observe.[43]
Petitioner was served the first notice of termination and was given
time to submit his written explanation. A hearing was conducted
wherein both parties with their respective counsels were present.
After finding cause for petitioners termination, a final notice
apprising him of the decision to terminate his employment was
served.
All things considered, respondent validly dismissed
petitioner for cause after complying with the procedural
requirements of the law.
DANNIE M. PANTOJA vs.
CORPORATION
G.R. No. 163554 April 23, 2010
DEL CASTILLO, J.:

SCA

HYGIENE

PRODUCTS

However, petitioner rejected respondents offer for his transfer.

Thus, a notice of termination[6] of employment effectiveMay 5,
1999 was sent to petitioner as his position was declared redundant
by the closure of Paper Mill No. 4. He then received his separation
pay equivalent to two months pay for every year of service in the
amount of P356,335.20 and thereafter executed a release and
quitclaim[7] in favor of respondent.. respondent informed DOLE of
its reorganization and partial closure by submitting with the said
office an Establishment Termination Report[8] together with the list
of 31 terminated EEs.
petitioner filed a complaint for illegal dismissal against respondent
assailing his termination as without any valid cause. He averred
that the alleged redundancy never occurred as there was no
permanent shutdown of Paper Mill No. 4 due to its continuous
operation since his termination. A co-EE, Nestor Agtang, confirmed
this fact and further attested that several contractual workers were
employed to operate Paper Mill No. 4. Petitioner also presented in
evidence documents pertaining to the actual and continuous
operation of Paper Mill No. 4 such as the Paper Mill Personnel
Schedule for July 2-8, 2000[11] and 23-29, 2000[12] and Paper
Machine No. 4 Production Report and Operating Data dated April
28, 2000 and May 18, 2000.
In its defense, respondent refuted petitioners claim of illegal
dismissal. It argued that petitioner has voluntarily separated
himself from service by opting to avail of the separation benefits of
the company instead of accepting reassignment/transfer to another
position of equal rank and pay. According to respondent,
petitioners discussion on the alleged resumption of operation of
Paper Mill No. 4 is rendered moot by the fact of petitioners
voluntary separation.
ISSUE: whether or not respondent is guilty of illegal dismissal.
HELD: the abolishment of Paper Mill No. 4 was undoubtedly a
business judgment arrived at in the face of the low demand for the
production of industrial paper at the time. Despite an apparent
reason to implement a retrenchment program as a cost-cutting
measure, respondent, however, did not outrightly dismiss the
workers affected by the closure of Paper Mill No. 4 but gave them
an option to be transferred to posts of equal rank and pay. As can
be seen, retrenchment was utilized by respondent only as an
available option in case the affected EE would not want to be
transferred. Respondent did not proceed directly to retrench. This,
to our mind, is an indication of good faith on respondents part as it
exhausted other possible measures other than retrenchment.
Besides, the ERs prerogative to bring down labor costs by
retrenching must be exercised essentially as a measure of last
resort, after less drastic means have been tried and found wanting.
Giving the workers an option to be transferred without any
diminution in rank and pay specifically belie petitioners allegation
that the alleged streamlining scheme was implemented as a ploy to
ease out EEs, thus, the absence of bad faith. Apparently,
respondent implemented its streamlining or reorganization plan
with good faith, not in an arbitrary manner and without prejudicing
the tenurial rights of its EEs.
Petitioner harps on the fact that there was no actual shutdown of
Paper Mill No. 4 but that it continued to be operational. No
evidence, however, was presented to prove that there was
continuous operation after the shutdown in the year 1999. What
the records reveal is that Paper Mill No. 4 resumed its operation in
2000 due to a more favorable business climate. The resumption of
its industrial paper manufacturing operations does not, however,
make respondents streamlining/reorganization plan illegal because,
again, the abolishment of Paper Mill No. 4 in 1999 was a business
judgment arrived at to prevent a possible financial drain at that
time. As long as no arbitrary or malicious action on the part of an
ER is shown, the wisdom of a business judgment to implement a
cost saving device is beyond this courts determination. After all,
the free will of management to conduct its own business affairs to
achieve its purpose cannot be denied.[20]
We held that work reassignment of an EE as a genuine business
necessity is a valid management prerogative.[21] After being given
an option to be transferred, petitioner rejected the offer for
reassignment to Paper Mill No. 5 even though such transfer would
not involve any diminution of rank and pay. Instead, he opted and
preferred to be separated by executing a release and quitclaim in
consideration of which he received separation pay in the amount of
P356,335.20 equal to two months pay for every year of service plus
other accrued benefits. Clearly, petitioner freely and voluntarily
consented to the execution of the release and quitclaim. Having
done so apart from the fact that the consideration for the quitclaim
is credible and reasonable, the waiver represents a valid and
binding undertaking.[22] As aptly concluded by the CA, the

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LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
quitclaim was not executed under force or duress and that
petitioner was given a separation pay more than what the law
requires from respondent.
YMBONG vs. ABS-CBN
G.R. No.184885, March 7, 2012
TINIO vs. CA
G.R. No.171764, June 8, 2007
Julies Bakeshop and/or Edgar Reyes v. HENRY ARNAIZ,
EDGAR NAPAL,and JONATHAN TOLORES,
G.R. No. 173882, February 15, 2012
DEL CASTILLO, J.:
FACTS: Reyes hired respondents as chief bakers in his 3 franchise
branches of Julies Bakeshop in Sibalom and San Jose, Antique.
respondents filed separate complaints against petitioners for
underpayment of wages, payment of premium pay for holiday and
rest day, service incentive leave pay, 13th month pay, cost of living
allowance (COLA) and attorneys fees. These complaints were later
on consolidated.
Subsequently, in a memorandum Reyes reassigned respondents as
utility/security personnel tasked to clean the outside vicinity of his
bakeshops and to maintain peace and order in the area. Upon
service of the memo, respondents, however, refused to sign the
same and likewise refused to perform their new assignments by not
reporting for work.
In a letter-memorandum directed respondents to report back for
work and to explain why they failed to assume their duties as
utility/security personnel. A second letter-memorandum of the
same tenor was also sent to respondents. Respondents did not
heed both memoranda.
Proceedings before the Labor Arbiter
Meanwhile, in the preliminary conference before the LA,
respondents with their counsel, Atty. Delicana, on one hand, and
Reyes on the other, appeared before the LA to explore the
possibility of an amicable settlement. It was agreed that the parties
would enter into a compromise agreement. However, respondents,
who were then represented by a different counsel, Atty. Pefianco,
amended their complaints by including in their causes of action
illegal dismissal and a claim for reinstatement and backwages.
The supposed signing of the compromise agreement (which could
have culminated in respondents receiving the total amount of
P54,126.00 as payment for their 13th month pay and separation
pay) was reset because of respondents non-appearance in the
hearing . Atty. Pefianco failed to appear despite due notice. On the
next hearing scheduled on, both Atty. Delicana and Atty. Pefianco
appeared but the latter verbally manifested his withdrawal as
counsel for respondents.
Thus, respondents, through Atty.
Delicana, and Reyes, continued to explore the possibility of settling
the case amicably. Manifesting that they need to sleep on the
proposed settlement, respondents requested for continuance of the
hearing. Come said date, however, respondents did not appear.
Realizing the futility of further resetting the case to give way to a
possible settlement, the Labor Arbiter ordered the parties to file
their respective position papers.
Despite his earlier withdrawal as counsel, Atty. Pefianco filed a Joint
Position Paper [5] on behalf of respondents alleging that they were
dismissed from employment without valid cause. As for petitioners,
they stated in their position paper [6] that respondents were never
dismissed but that they abandoned their jobs after filing their
complaints. Petitioners denied that Reyes is the ER of Arnaiz and
Napal but admitted such fact insofar as Tolores is concerned.
LA: dismissed without prejudice. NLRC: overruled the Decision of
the LA. NLRC: MR has merit, previous Decision is VACATED. NLRC:
again reconsidered its own ruling and held that respondents were
not dismissed, either actually or constructively, but instead willfully
disobeyed the return to work order of their ER.
CA:, found merit in the petition, ruling that respondents were
constructively dismissed since their designation from chief bakers
to utility/security personnel is undoubtedly a demotion in rank
which involved a drastic change in the nature of work resulting to
a demeaning and humiliating work condition.
ISSUES: 1.WON CA in disturbing the findings of facts of LA as well
as the NLRC committed GAD tantamount to lack of jurisdiction or
did CA manifestly overlook relevant facts not disputed by the
respondents, w/c if properly considered could justify a different
conclusion.
2.Was the transfer/reassignment of respondent to another position
w/o diminution in pay and other privileges tantamount to
constructive dismissal.
HELD:We find no merit in the petition.
1.The Court of Appeals is correct in reviewing the findings of the
National Labor Relations Commission. Indeed, factual findings of
labor officials who are deemed to have acquired expertise in
matters within their respective jurisdictions are generally accorded
not only respect, but even finality. [25] It is a well-entrenched rule
that findings of facts of the NLRC, affirming those of the Labor
Arbiter, are accorded respect and due consideration when
supported by substantial evidence. [26] We, however, find that the
doctrine of great respect and finality has no application to the case
at bar. As stated, the Labor Arbiter dismissed respondents
complaints on mere technicality. The NLRC, upon appeal, then
came up with three divergent rulings. At first, it remanded the case
to the Labor Arbiter. However, in a subsequent resolution, it
decided to resolve the case on the merits by ruling that

respondents were constructively dismissed. But later on, it again

reversed itself in its third and final resolution of the case and ruled
in petitioners favor. Therefore, contrary to Reyess claim, the NLRC
did not, on any occasion, affirm any factual findings of the Labor
Arbiter. The CA is thus correct in reviewing the entire records of the
case to determine which findings of the NLRC is sound and in
accordance with law. Besides, the CA, at any rate, may still resolve
factual issues by express mandate of the law despite the respect
given to administrative findings of fact. [27]
2.The
transfer/reassignment
of
respondents
constitutes
constructive dismissal. We have held that management is free to
regulate, according to its own discretion and judgment, all aspects
of employment, including hiring, work assignments, working
methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of
EEs, work supervision, lay off of workers and discipline, dismissal
and recall of workers. The exercise of management prerogative,
however, is not absolute as it must be exercised in good faith and
with due regard to the rights of labor. [28]
In constructive dismissal cases, the ER has the burden of proving
that the transfer of an EE is for just or valid ground, such as
genuine business necessity. The ER must demonstrate that the
transfer is not unreasonable, inconvenient, or prejudicial to the EE
and that the transfer does not involve a demotion in rank or a
diminution in salary and other benefits. If the ER fails to overcome
this burden of proof, the EEs transfer is tantamount to unlawful
constructive dismissal. [29]
In the case at bench, respondent Reyes failed to justify petitioners
transfer from the position of chief bakers to utility/security
personnel. We find that the threat being alluded to by respondent
Reyes that the petitioners might introduce harmful foreign
substances in baking bread is imaginary and not real. We recall
that what triggered the petitioners reassignment was the filing of
their complaints against private respondents in the NLRC. The
petitioners were not even given an opportunity to refute the reason
for the transfer. The drastic change in petitioners nature of work
unquestionably resulted in, as rightly perceived by them, a
demeaning and humiliating work condition. The transfer was a
demotion in rank, beyond doubt. There is demotion when an EE is
transferred from a position of dignity to a servile or menial job. One
does not need to stretch the imagination to distinguish the work of
a chief baker to that of a security cum utility man. [31]
[D]emotion involves a situation in which an EE is relegated to a
subordinate or less important position constituting a reduction to a
lower grade or rank, with a corresponding decrease in duties and
responsibilities, and usually accompanied by a decrease in salary.
[32] When there is a demotion in rank and/or a diminution in pay;
when a clear discrimination, insensibility or disdain by an ER
becomes unbearable to the EE; or when continued employment is
rendered impossible, unreasonable or unlikely, the transfer of an EE
may constitute constructive dismissal. [33]
We agree with the CA in ruling that the transfer of respondents
amounted to a demotion. Although there was no diminution in pay,
there was undoubtedly a demotion in titular rank. One cannot deny
the disparity between the duties and functions of a chief baker to
that of a utility/security personnel tasked to clean and manage the
orderliness of the outside premises of the bakeshop. Respondents
were even prohibited from entering the bakeshop. The change in
the nature of their work undeniably resulted to a demeaning and
humiliating work condition.
ROLANDO C. RIVERA vs. SOLIDBANK CORPORATION,
G.R. No. 163269 April 19, 2006
CALLEJO, SR., J.:
FACTS: Petitioner had been working for Solidbank Corporation since
July 1, 1977.[3] He was initially employed as an Audit Clerk, then
as Credit Investigator, Senior Clerk, Assistant Accountant, and
Assistant Manager. Prior to his retirement, he became the Manager
of the Credit Investigation and Appraisal Division of the Consumers
Banking Group. In the meantime, Rivera and his brother-in-law put
up a poultry business in Cavite.
In December 1994, Solidbank offered two retirement programs to
its EEs: (a) the Ordinary Retirement Program (ORP), under which an
EE would receive 85% of his monthly basic salary multiplied by the
number of years in service; and (b) the Special Retirement Program
(SRP), under which a retiring EE would receive 250% of the gross
monthly salary multiplied by the number of years in service.[4]
Since Rivera was only 45 years old, he was not qualified for
retirement under the ORP. Under the SRP, he was entitled to
receive P1,045,258.95 by way of benefits.[5]
Deciding to devote his time and attention to his poultry business in
Cavite, Rivera applied for retirement under the SRP. Solidbank
approved the application and Rivera was entitled to receive the net
amount of P963,619.28. This amount included his performance
incentive award (PIA), and his unearned medical, dental and optical
allowances in the amount of P1,666.67, minus his total
accountabilities to Solidbank amounting to P106,973.00.[6] Rivera
received the amount and confirmed his separation from Solidbank
on February 25, 1995.[7]
Subsequently, Solidbank required Rivera to sign an undated
Release, Waiver and Quitclaim, which was notarized on March 1,
1995.[8] Rivera acknowledged receipt of the net proceeds of his
separation and retirement benefits and promised that [he] would
not, at any time, in any manner whatsoever, directly or indirectly
engage in any unlawful activity prejudicial to the interest of
Solidbank, its parent, affiliate or subsidiary companies, their
stockholders, officers, directors, agents or EEs, and their

Page 38 of 125

LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
successors-in-interest and will not disclose any information
concerning the business of Solidbank, its manner or operation, its
plans, processes, or data of any kind.[9]
Aside from acknowledging that he had no cause of action against
Solidbank or its affiliate companies, Rivera agreed that the bank
may bring any action to seek an award for damages resulting from
his breach of the Release, Waiver and Quitclaim, and that such
award would include the return of whatever sums paid to him by
virtue of his retirement under the SRP.[10] Rivera was likewise
required to sign an undated Undertaking as a supplement to the
Release, Waiver and Quitclaim in favor of Solidbank in which he
declared that he received in full his entitlement under the law
(salaries, benefits, bonuses and other emoluments), including his
separation pay in accordance with the SRP. In this Undertaking, he
promised that [he] will not seek employment with a competitor
bank or financial institution within one (1) year from February 28,
1995, and that any breach of the Undertaking or the provisions of
the Release, Waiver and Quitclaim would entitle Solidbank to a
cause of action against him before the appropriate courts of law.
[11] Unlike the Release, Waiver and Quitclaim, the Undertaking
was not notarized.
On May 1, 1995, the Equitable Banking Corporation (Equitable)
employed Rivera as Manager of its Credit Investigation and
Appraisal Division of its Consumers Banking Group.[12] Upon
discovering this, Solidbank First Vice-President for Human
Resources Division (HRD) Celia J.L. Villarosa wrote a letter dated
May 18, 1995, informing Rivera that he had violated the
Undertaking. She likewise demanded the return of all the monetary
benefits he received in consideration of the SRP within five (5) days
from receipt; otherwise, appropriate legal action would be taken
against him.[13]
When Rivera refused to return the amount demanded within the
given period, Solidbank filed a complaint for Sum of Money with
Prayer for Writ of Preliminary Attachment[14] before the RTC of
Manila on June 26, 1995. Solidbank, as plaintiff, alleged therein
that in accepting employment with a competitor bank for the same
position he held in Solidbank before his retirement, Rivera violated
his Undertaking under the SRP. Considering that Rivera accepted
employment with Equitable barely three months after executing the
Undertaking, it was clear that he had no intention of honoring his
commitment under said deed. Solidbank prayed that Rivera be
ordered to return the net amount of P963,619.28 plus interests
therein, and attorneys fees.
In an Order dated July 6, 1995, the trial court issued a Writ of
Preliminary Attachment[17] ordering Deputy Sheriff Eduardo
Centeno to attach all of Riveras properties not exempt from
execution. Thus, the Sheriff levied on a parcel of land owned by
Rivera.
ISSUE/S:
(1) whether the parties raised a genuine issue in their pleadings,
affidavits, and documents, that is, whether the employment ban
incorporated in the Undertaking which petitioner executed upon his
retirement is unreasonable, oppressive, hence, contrary to public
policy;
(2) whether petitioner is liable to respondent for the restitution of
P963,619.28 representing his retirement benefits, and interest
thereon at 12% per annum as of May 23, 1995 until payment of the
full amount.
HELD: (1) There is no factual basis for the trial courts ruling, for the
simple reason that it rendered summary judgment and thereby
foreclosed the presentation of evidence by the parties to prove
whether the restrictive covenant is reasonable or not. Moreover, on
the face of the Undertaking, the post-retirement competitive
employment ban is unreasonable because it has no geographical
limits;respondent is barred from accepting any kind of employment
in any competitive bank within the proscribed period. Although the
period of one year may appear reasonable, the matter of whether
the restriction is reasonable or unreasonable cannot be ascertained
with finality solely from the terms and conditions of the
Undertaking, or even in tandem with the Release, Waiver and
Quitclaim.
Undeniably, petitioner retired under the SRP and received
P963,619.28 from respondent.
However, petitioner is not
proscribed, by waiver or estoppel, from assailing the postretirement competitive employment ban since under Article 1409 of
the New Civil Code, those contracts whose cause, object or purpose
is contrary to law, morals, good customs, public order or public
policy are inexistent or void from the beginning. Estoppel cannot
give validity to an act that is prohibited by law or one that is against
public policy.[51]
in determining whether the contract is reasonable or not, the trial
court should consider the following factors: (a) whether the
covenant protects a legitimate business interest of the ER; (b)
whether the covenant creates an undue burden on the EE; (c)
whether the covenant is injurious to the public welfare; (d) whether
the time and territorial limitations contained in the covenant are
reasonable; and (e) whether the restraint is reasonable from the
standpoint of public policy.[62]
A restriction in the contract which does not preclude the EE from
engaging in competitive activity, but simply provides for the loss of
rights or privileges if he does so is not in restraint of trade.
(emphasis added)[65]
(2)On the assumption that the competitive employment ban in the
Undertaking is valid, petitioner is not automatically entitled to
return the P963,619.28 he received from respondent. To reiterate,

the terms of the Undertaking clearly state that any breach by

petitioner of his promise would entitle respondent to a cause of
action for protection in the courts of law; as such, restitution of
theP963,619.28 will not follow as a matter of course. Respondent is
still burdened to prove its entitlement to the aforesaid amount by
producing the best evidence of which its case is susceptible.
UNITED KIMBERLY-CLARK EES UNION PHILIPPINE
TRANSPORT GENERAL WORKERS ORGANIZATION (UKCEUPTGWO), vs.
KIMBERLY CLARK PHILIPPINES, INC.,
G.R. No. 162957
March 6, 2006
CALLEJO, SR., J.:
FACTS:UKCEU, a local chapter affiliate of the PTGWO, is the
certified collective bargaining agent of all rank-and-file EEs of the
San Pedro milling plant of KCPI, a multinational corporation engaged
in the manufacture of bathroom and facial tissues, paper napkins,
feminine care products, disposable diapers and absorbent cotton.
Way back in 1980, KCPI and the UKCEU executed a CBA. Article XX,
Section 1 of the CBA reads:
Section 1. The Company agrees to employ, regardless of sex, the
immediate member of the family of an EE provided qualified, upon
the EE's resignation, retirement, disability or death. In case of
resignation, however, employment of an immediate member of the
family of an EE may be allowed provided the EE has rendered a
service of ten (10) years and above and the resignation is not a
forced resignation. For the purpose of this section, the phrase
"immediate member of the family of an EE" shall refer to the EE's
legitimate children and in default thereof to the EE's collateral
relative within the third civil degree. The recommendee of the
retired/resigned EE shall, if qualified, be hired on probationary
status. (Emphasis added)3
However, KCPI did not set any other employment qualifying
standards for the recommendees of retired, resigned, deceased or
disabled EEs and agreed to hire such recommendees who were high
school graduates as an act of liberality and generosity. The
provision remained unchanged.4 Through the years, several UKCEU
members who resigned or were disabled availed of the said benefits
and recommended their successors. Although such recommendees
were merely high school graduates, KCPI nonetheless employed
them.
KCPI rejected Guerreros recommendation because his nephew was
not a member of his (Guerreros) immediate family. The matter was
brought to Voluntary Arbitrator Danilo Lorredo who ruled that
Guerreros nephew should be employed as his replacement in
accordance with the CBA. KCPI brought the matter to the Court w/c
Affirmed the ruling of the VA in Kimberly Clark Philippines v.
Lorredo,5 where it was held that:the phrase "in default thereof" has
not been intended or contemplated by the parties as having a
preclusive effect within the group. It simply sets a priority on who
can possibly be recommendees for employment. The EE, in fine,
need not be childless at all for him to be allowed to nominate a
third degree collateral relative; otherwise, his ability to designate
such relative is all but suddenly lost by the birth of an only child
and regained by the latter's demise. This situation could not have
been intended.6
However, the Court also ruled that KCPI was not obliged to
unconditionally accept the recommendee since the latter must still
meet the required employment standard theretofore set by it. Even
a qualified recommendee would be hired only on a "probationary
status." As such, KCPI was not left without its own safeguards under
the agreement.
KCPI issued Guidelines on the Hiring of Replacements of
Retired/Resigned EEs8 for the effective implementation of Article
XX, Section 1 of the existing CBA, to take effect on January 1, 1996.
The Guidelines require, among others, that: (a) such
recommendees must be at least 18 years of age but not more than
30 years old at the time of the hiring, and (b) have completed, after
graduating
from
high
school,
at
least
a
two-year
technical/vocational course or a third year level of college
education. Moreover, where both husband and wife are EEs of the
company, they shall be treated as one family; hence, only one of
the spouses would be allowed to avail of the benefit.
UKCEU, through its President, Reynaldo B. Hermoso, requested for a
grievance meeting, UKCEU specifically requested the deferment of
the implementation of the Guidelines until January 1, 1997, after
the next CBA negotiations in 1997 during which the matter will be
taken up. KCPI agreed to postpone the implementation of the
Guidelines until January 1, 1997 but only with respect to the
educational qualification.
During the negotiation for the 1997 CBA, UKCEU proposed the
amendment of Article XX, Section 1 of the existing CBA. After the
negotiation, KCPI and UKCEU executed a CBA to cover the period
from July 1, 1997 to June 30, 1999. The educational qualifications
contained in the Guidelines prepared and issued by KCPI were not
incorporated in the CBA. Neither were the proposed amendment of
UKCEU. Article XX, Section 1 of the preceding CBA was retained
without any modification.KCPI continued to hire EEs pursuant to the
CBA up to 1998. It had employed 44 EEs from 1995 to 1998.
However, in the second half of 1998, KCPI started to suspend the
implementation of the CBA. This was partly due to the depressed
economic conditions then prevailing in the Philippines, and in
compliance with the freeze hiring policy of its Asia-Pacific
headquarters. It refused to hire, as regular EEs, 80 recommendees
of retiring EEs.KCPI and UKCEU failed to settle the matter through
the existing grievance machinery.

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J.SUAREZ II, 2ND SEM,SY 12-13
the parties filed before the NCMB, a Submission Agreement
referring to arbitration the issue of whether KCPI violated Article XX,
Section 1 of the CBA. The parties agreed not to appeal any
resolution/decision of the VA.
Meantime, in August 1999, KCPI and UKCEU executed a new CBA.
Article XX, Section 1 of the preceding CBA was incorporated in the
new CBA, governing the relation of the parties up to June 30, 2002.
HELD: We rule against petitioner.
As a general proposition, an arbitrator is confined to the
interpretation and application of the collective bargaining
agreement. He does not sit to dispense his own brand of industrial
justice: his award is legitimate only in so far as it draws its essence
from the CBA,i.e., when there is a rational nexus between the award
and the CBA under consideration. It is said that an arbitral award
does not draw its essence from the CBA; hence, there is an
unauthorized amendment or alteration thereof, if:
1. It is so unfounded in reason and fact;
2. It is so unconnected with the working and purpose of the
agreement;
3. It is without factual support in view of its language, its context,
and any other indicia of the parties' intention;
4. It ignores or abandons the plain language of the contract;
5. It is mistakenly based on a crucial assumption which concededly
is a nonfact;
6. It is unlawful, arbitrary or capricious; and
7. It is contrary to public policy.
A CBA is more than a contract; it is a generalized code to govern a
myriad of cases which the draftsmen cannot wholly anticipate. It
covers the whole employment relationship and prescribes the rights
and duties of the parties. It is a system of industrial selfgovernment with the grievance machinery at the very heart of the
system. The parties solve their problems by molding a system of
private law for all the problems which may arise and to provide for
their solution in a way which will generally accord with the variant
needs and desires of the parties.
If the terms of a CBA are clear and have no doubt upon the
intention of the contracting parties, the literal meaning of its
stipulation shall prevail. However, if, in a CBA, the parties stipulate
that the hirees must be presumed of employment qualification
standards but fail to state such qualification standards in said CBA,
the VA may resort to evidence extrinsic of the CBA to determine the
full agreement intended by the parties. When a CBA may be
expected to speak on a matter, but does not, its sentence imports
ambiguity on that subject. The VA is not merely to rely on the cold
and cryptic words on the face of the CBA but is mandated to
discover the intention of the parties. Recognizing the inability of the
parties to anticipate or address all future problems, gaps may be
left to be filled in by reference to the practices of the industry, and
the step which is equally a part of the CBA although not expressed
in it. In order to ascertain the intention of the contracting parties,
their contemporaneous and subsequent acts shall be principally
considered. The VA may also consider and rely upon negotiating
and contractual history of the parties, evidence of past practices
interpreting ambiguous provisions. The VA has to examine such
practices to determine the scope of their agreement, as where the
provision of the CBA has been loosely formulated. Moreover, the
CBA must be construed liberally rather than narrowly and
technically and the Court must place a practical and realistic
construction upon it.
In the present case, the parties are in agreement that, on its face,
Article XX, Section 1 of their 1997 CBA does not contain any
provision relative to the employment qualification standards of
recommendees of retired/resigned, deceased or disabled EEs of
respondent who are members of petitioner. However, in
determining the employment qualification standards for said
recommendees, the VA should have relied on the November 7,
1995 Guidelines issued by respondent, which reads:
D. Definition of the phrase "immediate member of the family of an
EE"
1. The phrase "immediate member of the family of an EE" shall
refer to the EEs legitimate children and in default thereof to the
EEs collateral relatives within the third civil degree.
2. A resigned/retired EE may be allowed to recommend a collateral
relative within the third civil degree (e.g., brother, sister, nephew or
niece) as his/her replacement only in the following cases:
a. Where the retired/resigned EE is single or if married has no
legitimate children.
b. Where the retired/resigned EEs children are still minors (below
18 years old) at the time of his/her separation from the company.
E. General Provisions
1. The privilege to recommend a replacement can be exercised by
the EE concerned only once. Thus, in the following cases, a
recommendee who has been hired on probationary status can no
longer be substituted with another recommendee.
a. where the recommendee fails to pass in his performance
evaluation.
b. where the recommendee resigns without completing his
probationary period.
c. where the recommendee is dismissed for cause.
d. where the recommendee dies during his probationary period.48
Respondent issued said Guidelines in light of the ruling of this Court
in Kimberly Clark Philippines v. Lorredo. Respondent saw it
imperative to do away with its practice of accommodating
recommendees who were mere high school graduates, and to
require higher employment standards for them.
By agreement of the parties, the implementation of the Guidelines
was deferred until January 1, 1997, unless revoked or amended by

the 1997 CBA. Petitioner proposed that the practice of hiring

recommendees of retired/resigned, deceased or disabled EEs who
were union members, who were at least high school graduates, be
included in their CBA, but respondent did not agree. Hence, Article
XX, Section 1 of the 1997 CBA of the parties remained intact. There
was thus no more legal bar for respondent to implement the
November 7, 1995 Guidelines. By executing the 1997 CBA, in its
present form, petitioner is bound by the terms and conditions
therein set forth.
The VA, however, ignored the plain language of the 1997 CBA of the
parties, as well as the Guidelines issued by respondent. He
capriciously based his resolution on the respondents practice of
hiring which, however, by agreement of petitioner and respondent,
was discontinued.
The Court has recognized in numerous instances the undoubted
right of the ER to regulate, according to his own discretion and best
judgment, all aspects of employment, including but not limited to,
work assignments and supervision, working methods and
regulations, time, place and manner of work, processes to be
followed, and hiring, supervision, transfer, discipline, lay off,
dismissal and recall of workers. Encompassing though it could be,
the exercise of this right is not absolute. Management prerogative
must be exercised in good faith for the advancement of the ERs
interest and not for the purpose of defeating or circumventing the
rights of the EEs under special laws, valid agreements such as the
individual contract of employment and the collective bargaining
agreement, and general principles of justice and fair play. In this
case, the Court finds that respondent acted in accord with the CBA
and the November 7, 1995 Guidelines, which, by agreement of the
parties, may be implemented by respondent after January 1, 1997.
STAR PAPER CORPORATION et al. vs. RONALDO D. SIMBOL et
al.
G.R. No. 164774
April 12, 2006
PUNO, J.:
FACTS: Petitioner Star Paper Corporation (the company) is a
corporation engaged in trading principally of paper products.
Josephine Ongsitco is its Manager of the Personnel and
Administration Department while Sebastian Chua is its Managing
Director.
The evidence for the petitioners show that respondents Ronaldo D.
Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella
(Estrella) were all regular EEs of the company. Simbol was
employed by the company on October 27, 1993. He met Alma
Dayrit, also an EE of the company, whom he married on June 27,
1998. Prior to the marriage, Ongsitco advised the couple that
should they decide to get married, one of them should resign
pursuant to a company policy promulgated in 1995. Simbol
resigned on June 20, 1998 pursuant to the company policy.4
Comia was hired by the company on February 5, 1997. She met
Howard Comia, a co-EE, whom she married on June 1, 2000.
Ongsitco likewise reminded them that pursuant to company policy,
one must resign should they decide to get married. Comia resigned
on June 30, 2000.5
Estrella was hired on July 29, 1994. She met Luisito Zuiga
(Zuiga), also a co-worker. Petitioners stated that Zuiga, a married
man, got Estrella pregnant. The company allegedly could have
terminated her services due to immorality but she opted to resign
on December 21, 1999.6
The respondents each signed a Release and Confirmation
Agreement. They stated therein that they have no money and
property accountabilities in the company and that they release the
latter of any claim or demand of whatever nature.7
Respondents offer a different version of their dismissal. Simbol and
Comia allege that they did not resign voluntarily; they were
compelled to resign in view of an illegal company policy. As to
respondent Estrella, she alleges that she had a relationship with coworker Zuiga who misrepresented himself as a married but
separated man. After he got her pregnant, she discovered that he
was not separated. Thus, she severed her relationship with him to
avoid dismissal due to the company policy. On November 30, 1999,
she met an accident and was advised by the doctor at the
Orthopedic Hospital to recuperate for 21 days. She returned to work
on December 21, 1999 but she found out that her name was onhold at the gate. She was denied entry. She was directed to proceed
to the personnel office where one of the staff handed her a
memorandum. The memorandum stated that she was being
dismissed for immoral conduct. She refused to sign the
memorandum because she was on leave for twenty-one (21) days
and has not been given a chance to explain. The management
asked her to write an explanation. However, after submission of the
explanation, she was nonetheless dismissed by the company. Due
to her urgent need for money, she later submitted a letter of
resignation in exchange for her thirteenth month pay.8
Respondents later filed a complaint for unfair labor practice,
constructive dismissal, separation pay and attorneys fees. They
averred that the aforementioned company policy is illegal and
contravenes Article 136 of the Labor Code. They also contended
that they were dismissed due to their union membership.
LA- dismissed the complaint for lack of merit, that the policy was
pursuant to management prerogative.
NLRC-affirmed LAs decision and denied the subsequent MR.
CA-reversed,declaring illegal dismissal and ordering to reinstate
petitioners without loss of seniority rights with full backwages from
the time of their dismissal until actual reinstatement plus ordering
respondents to pay petitioner attorney;s fees.

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J.SUAREZ II, 2ND SEM,SY 12-13
Petitioners appeal: policy/regulation is violative of the
constitutional rights towards marriage and the family of EEs and of
Article 136 of the Labor Code; and respondents resignations were
far from voluntary.14
ISSUE: whether the policy of the ER banning spouses from working
in the same company violates the rights of the EE under the
Constitution and the Labor Code or is a valid exercise of
management prerogative
HELD: The courts that have broadly26 construed the term "marital
status" rule that it encompassed the identity, occupation and
employment of one's spouse. They strike down the no-spouse
employment policies based on the broad legislative intent of the
state statute. They reason that the no-spouse employment policy
violate the marital status provision because it arbitrarily
discriminates against all spouses of present EEs without regard to
the actual effect on the individual's qualifications or work
performance.27 These courts also find the no-spouse employment
policy invalid for failure of the ER to present any evidence of
business necessity other than the general perception that spouses
in the same workplace might adversely affect the business.28 They
hold that the absence of such a bona fide occupational
qualification29 invalidates a rule denying employment to one
spouse due to the current employment of the other spouse in the
same office.30 Thus, they rule that unless the ER can prove that the
reasonable demands of the business require a distinction based on
marital status and there is no better available or acceptable policy
which would better accomplish the business purpose, an ER may
not discriminate against an EE based on the identity of the EEs
spouse.31 This is known as the bona fide occupational qualification
exception.
We note that since the finding of a bona fide occupational
qualification justifies an ERs no-spouse rule, the exception is
interpreted strictly and narrowly by these state courts. There must
be a compelling business necessity for which no alternative exists
other than the discriminatory practice.32 To justify a bona fide
occupational qualification, the ER must prove two factors: (1) that
the employment qualification is reasonably related to the essential
operation of the job involved; and, (2) that there is a factual basis
for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the
job.33
The concept of a bona fide occupational qualification is not foreign
in our jurisdiction. We employ the standard of reasonableness of the
company policy which is parallel to the bona fide occupational
qualification requirement. We do not find a reasonable business
necessity in the case at bar.
It is significant to note that in the case at bar, respondents were
hired after they were found fit for the job, but were asked to resign
when they married a co-EE. Petitioners failed to show how the
marriage of Simbol, then a Sheeting Machine Operator, to Alma
Dayrit, then an EE of the Repacking Section, could be detrimental to
its business operations. Neither did petitioners explain how this
detriment will happen in the case of Wilfreda Comia, then a
Production Helper in the Selecting Department, who married
Howard Comia, then a helper in the cutter-machine. The policy is
premised on the mere fear that EEs married to each other will be
less efficient. If we uphold the questioned rule without valid
justification, the ER can create policies based on an unproven
presumption of a perceived danger at the expense of an EEs right
to security of tenure.
The questioned policy may not facially violate Article 136 of the
Labor Code but it creates a disproportionate effect and under the
disparate impact theory, the only way it could pass judicial scrutiny
is a showing that it is reasonable despite the discriminatory, albeit
disproportionate, effect. The failure of petitioners to prove a
legitimate business concern in imposing the questioned policy
cannot prejudice the EEs right to be free from arbitrary
discrimination based upon stereotypes of married persons working
together in one company.40
DUNCAN ASSOCIATION OF DETAILMAN-OTGWO vs. GLAXO
WELLCOME
G.R.No. 162994, September 17, 2004
PEPSI COLA PRODUCTS PHILIPPINES, INC. and Ernesto F.
Gochuico vs. EMMANUEL V. SANTOS
[G.R. No. 165968, April 14, 2008]
QUISUMBING, J.:
FACTS: Respondent Emmanuel V. Santos was employed by
petitioner Pepsi Cola Products Phils., Inc. sometime in July 1989. In
March 1996, he was promoted as Acting Regional Sales Manager at
the Libis Sales Office.
On February 14, 1997, respondent received from petitioner Ernesto
F. Gochuico a memorandum[4] charging him with violation of
company rules and regulations and Article 282(a)[5] of the Labor
Code, as follows: Falsifying company records or documents or
knowingly using falsified records or documents/ Breach of trust and
confidence/ Engaging in fictitious transactions, fake invoicing, deals
padding and other sales malpractices/ Misappropriation or
embezzlement of company funds or property and other acts of
dishonesty. Article 282 (a) Serious misconduct or willful
disobedience to the lawful orders of his ER.[6]
The charges arose out of alleged artificial sales by the sales
personnel of the Libis Sales Office in March 1996 allegedly upon the
instruction of respondent. The alleged artificial sales resulted in
damage to petitioners amounting to P795,454.54. The
memorandum also apprised respondent of his preventive

suspension and the scheduled hearings of the administrative

investigation. After the termination of the hearings, petitioners
found respondent guilty of the aforesaid charges with the exception
of falsifying company records. As a result, respondent was
dismissed on June 27, 1997.
Respondent filed a case for illegal dismissal which the Labor Arbiter
dismissed on April 30, 1998.[8] On appeal, the NLRC remanded the
case to the Labor Arbiter for further proceedings. Which it decided
that, In addition, as his suspension and dismissal is illegal, and
apparently tainted with malice and bad faith, an award of
P100,000.00 as moral damages and P50,000.00 as exemplary
damages is hereby granted.
Petitioners appealed to the NLRC which affirmed the Labor Arbiter's
finding of illegal dismissal. It observed that after the case was
remanded, the Labor Arbiter immediately conducted hearings.
Moreover, in the hearing dated September 7, 1999,[11] petitioners
agreed to submit the case for resolution based on the additional
pleadings submitted by the parties. Nevertheless, the NLRC deleted
the award of moral and exemplary damages in the absence of
evidence that respondent's suspension and eventual dismissal were
tainted with bad faith and malice.
ISSUE/S: (1) whether respondent was validly dismissed; (2)
whether a trial on the merits was necessary; and (3) whether the
award of attorney's fees was proper.
HELD: 1)In any event, we have carefully reviewed the records of
this case and found no compelling reason to disturb the uniform
findings and conclusions of the Labor Arbiter, the NLRC, and the
Court of Appeals. In an illegal dismissal case, the onus
probandirests on the ER to prove that its dismissal of an EE is for a
valid cause.[16] In the instant case, petitioners failed to present
evidence to justify respondent's dismissal. Save for the notice of
termination, we could not find any evidence which would clearly
and convincingly show that respondent was guilty of the charges
imputed against him. There appears to be no compelling reason
why petitioners would rather present their witnesses on direct
testimony rather than reduce their testimonies into affidavits. The
submission of these affidavits appears to be the more prudent
course of action particularly when the Labor Arbiter informed the
parties that no further trial will be conducted in the case.
2) we reiterate that it is not legally objectionable, for being
violative of due process, for the Labor Arbiter to resolve a case
based solely on the position papers, affidavits or documentary
evidence submitted by the parties.[17] The holding of a formal
hearing or trial is discretionary with the Labor Arbiter and is
something that the parties cannot demand as a matter of right. The
requirements of due process are satisfied when the parties are
given the opportunity to submit position papers wherein they are
supposed to attach all the documents that would prove their claim
in case it be decided that no hearing should be conducted or was
necessary.[18]
3) we have ruled that attorney's fees may be awarded only when
the EE is illegally dismissed in bad faith and is compelled to litigate
or incur expenses to protect his rights by reason of the unjustified
acts of his ER.[19]In this case, the NLRC deleted the award of moral
and exemplary damages precisely because of the absence of
evidence that respondent's suspension and eventual dismissal were
tainted with bad faith and malice.
We note that although the Labor Arbiter awarded attorney's fees,
the basis for the same was not discussed in the decision nor borne
out by the records of this case. There must always be a factual
basis for the award of attorney's fees. This is consistent with the
policy that no premium should be placed on the right to litigate. For
these reasons, we believe and so rule that the award of attorney's
fees should be deleted.[20]
EDI-STAFFBUILDERS INTERNATIONAL, INC.,vs.. NLRC and
Eleazar S. Gran
[G.R. No. 145587, October 26, 2007]
VELASCO JR., J.:
FACTS: Petitioner EDI is a corporation engaged in recruitment and
placement of Overseas Filipino Workers (OFWs).[5] ESI is another
recruitment agency which collaborated with EDI to process the
documentation and deployment of private respondent to Saudi
Arabia.
Private respondent Gran was an OFW recruited by EDI, and
deployed by ESI to work for OAB, in Riyadh, Kingdom of Saudi
Arabia.[6]
It appears that OAB asked EDI through its October 3, 1993 letter for
curricula vitae of qualified applicants for the position of
Computer Specialist.[7] In a facsimile transmission dated
November 29, 1993, OAB informed EDI that, from the applicants
curricula vitae submitted to it for evaluation, it selected Gran for
the position of Computer Specialist. The faxed letter also
stated that if Gran agrees to the terms and conditions of
employment contained in it, one of which was a monthly salary of
SR (Saudi Riyal) 2,250.00 (USD 600.00), EDI may arrange for Grans
immediate dispatch.[8]
After accepting OABs offer of employment, Gran signed an
employment contract[9] that granted him a monthly salary of USD
850.00 for a period of two years. Gran was then deployed to
Riyadh, Kingdom of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his
monthly salary his employment contract stated USD 850.00; while
his Philippine Overseas Employment Agency (POEA) Information

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J.SUAREZ II, 2ND SEM,SY 12-13
Sheet indicated USD 600.00 only. However, through the assistance
of the EDI office in Riyadh, OAB agreed to pay Gran USD 850.00 a
month.[10]
After Gran had been working for about five months for OAB, his
employment was terminated through OABs July 9, 1994 letter,[11]
on the following grounds: Non-compliance to contract requirements
by the recruitment agency primarily on your salary and contract
duration/ Non-compliance to pre-qualification requirements by the
recruitment agency/ Insubordination or disobedience to Top
Management Order and/or instructions (non-submittal of daily
activity reports despite several instructions).
On July 11, 1994, Gran received from OAB the total amount of SR
2,948.00 representing his final pay, and on the same day, he
executed a Declaration[13] releasing OAB from any financial
obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted a complaint, on
July 21, 1994, against ESI/EDI, OAB, Country Bankers Insurance
Corporation, and Western Guaranty Corporation with the NLRC-NCRQC, for underpayment of wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter that there was neither
underpayment nor illegal dismissal. Thus, the NLRC reversed the
Labor Arbiters Decision and rendered a new one
ISSUE/S:
1) whether the failure of gran to furnish a copy of his appeal memorandum to petitioner EDI would constitute a
jurisdiction defect and a deprivation of petitioner EDIs right to due process as would justify the dismissal of grans
appeal.
2) whether petitioner EDI has established by way of substantial evidence that grans termination was justifiable by
reason of incompetence corollary hereto, whether the Prieto vs. NLRC as applied by CA is applicable.
3) whether petitioner has established by way of substantial evidence that grans termination was justified by reason
of insubordination and disobedience.
4) whether gran was afforded due process prior to termination.
5) whether gran is entitled to backwages for the unexpired portion of his contract.

HELD: The petition lacks merit except with respect to Grans failure
to furnish EDI with his Appeal Memorandum filed with the NLRC.
1) In a catena of cases, it was ruled that failure of appellant to
furnish a copy of the appeal to the adverse party is not fatal to the
appeal.
Thus, the doctrine that evolved from several cases is that failure to
furnish the adverse party with a copy of the appeal is treated only
as a formal lapse, an excusable neglect, and hence, not a
jurisdictional defect. Accordingly, in such a situation, the appeal
should not be dismissed; however, it should not be given due
course either. the duty that is imposed on the NLRC, in such a case,
is to require the appellant to comply with the rule that the opposing
party should be provided with a copy of the appeal memorandum.
The glaring failure of NLRC to ensure that Gran should have
furnished petitioner EDI a copy of the Appeal Memorandum before
rendering judgment reversing the dismissal of Grans complaint
constitutes an evasion of the pertinent NLRC Rules and established
jurisprudence. Worse, this failure deprived EDI of procedural due
process guaranteed by the Constitution which can serve as basis for
the nullification of proceedings in the appeal before the NLRC. One
can only surmise the shock and dismay that OAB, EDI, and ESI
experienced when they thought that the dismissal of Grans
complaint became final, only to receive a copy of Grans Motion for
Execution of Judgment which also informed them that Gran had
obtained a favorable NLRC Decision. This is not level playing field
and absolutely unfair and discriminatory against the ER and the job
recruiters. The rights of the ERs to procedural due process cannot
be cavalierly disregarded for they too have rights assured under the
Constitution.
2) In the present case, the employment contract signed by Gran
specifically states that Saudi Labor Laws will govern matters not
provided for in the contract (e.g. specific causes for termination,
termination procedures, etc.). Being the law intended by the parties
(lex loci intentiones) to apply to the contract, Saudi Labor Laws
should govern all matters relating to the termination of the
employment of Gran.
In international law, the party who wants to have a foreign law
applied to a dispute or case has the burden of proving the foreign
law. The foreign law is treated as a question of fact to be properly
pleaded and proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to know only
domestic or forum law. Unfortunately for petitioner, it did not prove
the pertinent Saudi laws on the matter; thus, the International Law
doctrine of presumed-identity approach or processual presumption
comes into play.Where a foreign law is not pleaded or, even if
pleaded, is not proved, the presumption is that foreign law is the
same as ours.[37] Thus, we apply Philippine labor laws in
determining the issues presented before us.
In illegal dismissal cases, it has been established by Philippine law
and jurisprudence that the ER should prove that the dismissal of
EEs or personnel is legal and just. In the instant case, petitioner
claims that private respondent Gran was validly dismissed for just
cause, due to incompetence and insubordination or disobedience.
To prove its allegations, EDI submitted two letters as evidence.
Petitioner claims that Gran was incompetent for the Computer
Specialist position because he had insufficient knowledge in
programming and zero knowledge of [the] ACAD system.[45]
Petitioner also claims that Gran was justifiably dismissed due to
insubordination or disobedience because he continually failed to
submit the required Daily Activity Reports[46] However, other than
the abovementioned letters, no other evidence was presented to
show how and why Gran was considered incompetent,

insubordinate, or disobedient. Petitioner EDI had clearly failed to

overcome the burden of proving that Gran was validly dismissed.
Petitioners imputation of incompetence on private respondent due
to his insufficient knowledge in programming and zero knowledge
of the ACAD system based only on the above mentioned letters,
without any other evidence, cannot be given credence. An
allegation of incompetence should have a factual foundation.
Incompetence may be shown by weighing it against a standard,
benchmark, or criterion. However, EDI failed to establish any such
bases to show how petitioner found Gran incompetent.
3)the elements that must concur for the charge of insubordination
or willful disobedience to prosper were not present. the following
twin elements must concur: (1) the EE's assailed conduct must
have been willful, that is, characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable,
lawful, made known to the EE and must pertain to the duties which
he had been engaged to discharge. In the case at bar, petitioner
failed to show that the order of the company which was
violatedthe submission of Daily Activity Reportswas part of
Grans duties as a Computer Specialist. Before the Labor Arbiter,
EDI should have provided a copy of the company policy, Grans job
description, or any other document that would show that the Daily
Activity Reports were required for submission by the EEs, more
particularly by a Computer Specialist. The burden devolves not only
upon the foreign-based ER but also on the employment or
recruitment agency for the latter is not only an agent of the former,
but is also solidarily liable with the foreign principal for any claims
or liabilities arising from the dismissal of the worker.[48]
The CA is correct in applying Prieto. The purpose of the required
trade test is to weed out incompetent applicants from the pool of
available workers. It is supposed to reveal applicants with false
educational backgrounds, and expose bogus qualifications. Since
EDI deployed Gran to Riyadh, it can be presumed that Gran had
passed the required trade test and that Gran is qualified for the job.
Even if there was no objective trade test done by EDI, it was still
EDIs responsibility to subject Gran to a trade test; and its failure to
do so only weakened its position but should not in any way
prejudice Gran. In any case, the issue is rendered moot and
academic because Grans incompetency is unproved.
4)Under the twin notice requirement, the EEs must be given two (2)
notices before their employment could be terminated: (1) a first
notice to apprise the EEs of their fault, and (2) a second notice to
communicate to the EEs that their employment is being terminated.
In between the first and second notice, the EEs should be given a
hearing or opportunity to defend themselves personally or by
counsel of their choice.[55]
A careful examination of the records revealed that, indeed, OABs
manner of dismissing Gran fell short of the two notice requirement.
While it furnished Gran the written notice informing him of his
dismissal, it failed to furnish Gran the written notice apprising him
of the charges against him, as prescribed by the Labor Code.[56]
Consequently, he was denied the opportunity to respond to said
notice. In addition, OAB did not schedule a hearing or conference
with Gran to defend himself and adduce evidence in support of his
defenses. Moreover, the July 9, 1994 termination letter was
effective on the same day. This shows that OAB had already
condemned Gran to dismissal, even before Gran was furnished the
termination letter. It should also be pointed out that OAB failed to
give Gran the chance to be heard and to defend himself with the
assistance of a representative in accordance with Article 277 of the
Labor Code. Clearly, there was no intention to provide Gran with
due process. Summing up, Gran was notified and his employment
arbitrarily terminated on the same day, through the same letter,
and for unjustified grounds. Obviously, Gran was not afforded due
process.
5) We reiterate the rule that with regard to EEs hired for a fixed
period of employment, in cases arising before the effectivity of R.A.
No. 8042 [58] (Migrant Workers and Overseas Filipinos Act) on
August 25, 1995, that when the contract is for a fixed term and the
EEs are dismissed without just cause, they are entitled to the
payment of their salaries corresponding to the unexpired portion of
their contract.[59] On the other hand, for cases arising after the
effectivity of R.A. No. 8042, when the termination of employment is
without just, valid or authorized cause as defined by law or
contract, the worker shall be entitled to the full reimbursement of
his placement fee with interest of twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired
term whichever is less.[60]
In the present case, the employment contract provides that the
employment contract shall be valid for a period of two (2) years
from the date the EE starts to work with the ER.[61] Gran arrived in
Riyadh, Saudi Arabia and started to work on February 7, 1994;[62]
hence, his employment contract is until February 7, 1996. Since he
was illegally dismissed on July 9, 1994, before the effectivity of R.A.
No. 8042, he is therefore entitled to backwages corresponding to
the unexpired portion of his contract, which was equivalent to USD
16,150.
It is made clear that the foregoing rules on quitclaim or waiver shall
apply only to labor contracts of OFWs in the absence of proof of the
laws of the foreign country agreed upon to govern said contracts.
Otherwise, the foreign laws shall apply.
AUJERO vs. PHILCOMSAT
G.R. No. 193484, JaNUARY 18, 2012
LAND AND HOUSING DEVT CO. vs. ESQUILLO
G.R. No. 152012
AL ARELLANO et al. vs. POWERTECH CORPORATION, Wille
Cabobos and CA

Page 42 of 125

LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
[G.R. No. 150861, January 22, 2008]
REYES, R.T., J.:
FACTS: The case stems from a complaint for illegal dismissal and
other money claims filed by the Nagkakaisang Manggagawa Ng
Powertech Corporation in behalf of its 52 individual members and
non-union members against their ER, Powertech. The case was
dismissed as to twenty-seven (27) EEs by virtue of duly executed
affidavits of repudiation and quitclaim. The case proceeded with
respect to the remaining twenty-five (25) EEs, petitioners in this
case.
Labor Arbiter Renell Joseph R.
Dela Cruz rendered a
Decision[3]declaring illegal the termination of twenty (20) of
petitioners and granting their monetary claims in the total amount
of P2,538,728.84.
Powertech appealed to the NLRC. During its pendency, Carlos
Gestiada, for himself and on behalf of other petitioners, executed a
quitclaim, release and waiver[4] in favor of Powertech in
consideration of the amount of P150K Earlier, Gestiada was
appointed by his co-petitioners as their attorney-in-fact. The
appointment was evidenced by a SPA. The compromise amount was
paid to Gestiada by check.
Relying on the quitclaim and release, Powertech filed a motion for
the withdrawal of the appeal and cash bond. The NLRC granted[6]
the motion, dismissed the appeal and ordered the release of the
cash bond. The P150K check, however, bounced due to a stop
payment order of Powertech.[7]
Aggrieved, petitioners moved to nullify the release and quitclaim for
lack of consideration. the NLRC declared the quitclaim, release and
waiver void for lack of consideration, reinstated the appeal and
ordered Powertech to post a cash or surety bond for the monetary
judgment less the amount it had previously posted.[8]
Gestiada terminated the services of their counsel, Atty. Evangelista
and, instead, retained Atty. Manuel Luis Felipe of the PAO. A day
later, Powertech paid P150K
to Gestiada purportedly as
compromise amount for all of petitioners. That same day, Gestiada,
through Atty. Felipe, and Powertech filed a joint motion to
dismiss[10] with the NLRC based on the compromise agreement.
Atty.
Evangelista opposed[11] the motion, alleging that the
compromise agreement is unconscionable, that he was illegally
terminated as counsel for the other petitioners without their
consent, and that the P150K was received by Gestiada as payment
solely for his backwages and other monetary claims.
In denying the joint motion to dismiss, the NLRC held that the
P150Kreceived by Gestiada did not cover the monetary claim of
petitioners against Powertech. Evidence show that there was no
voluntary severance of attorney-client relationship between
Gestiada representing the other complainants and Atty.
Evangelista. The other complainants in this case have never
indicated any objection to the continued appearance of Atty.
Evangelista. Hence, it must be presumed that Atty. Evangelistas
appearance is with the consent of all the complainants herein.
ISSUE: whether the compromise agreement between powertech
and gestiada is valid.
HELD: The P150K was paid to Gestiada solely as payment for his
backwages,not those of petitioners; there is evident collusion
between Powertech and Gestiada, hence, the compromise
agreement is void.
First, the P150Kcompromise is rather measly when taken in light of
the more than P2.5 million judgment on appeal to the NLRC.
Petitioners already won on the arbiter level P2.5 million pesos. It is
highly improbable that they would suddenly agree to accept
P150Kas compromise for the P2.5 million. That translates to a
paltry sum of P6,000.00 each for petitioners. From this amount will
still be deducted attorneys fees and other litigation expenses. In
effect, petitioners agreed to waive more than 94% of what they
expect to receive from Powertech. We note that the compromise is
a mere 6% of the contingent sum that may be received by
petitioners.
This minuscule amount is certainly questionable
because, to Our mind, it does not represent a true and fair amount
which a reasonable agent may bargain for his principal.
We contrast the monetary judgment to the P150Kreceived by
Gestiada, which appears to be his share in the P2.5 million based
on the calculation of the NLRC.[25]We find no plausible reason to
disbelieve his claim that the sum represents payment solely of his
backwages.
Second, even granting for the mere sake of argument that the
P150Kwas a fair and reasonable compromise for all, petitioners
failed to receive a single centavo from the compromise.
This
conclusively indicates that Gestiada received the P150Kin payment
of his backwages and no other.
Third, We give credence to the admission of Gestiada that he
received the P150Kas payment for his own backwages. In his letter
to Atty. Evangelista, Gestiada said that he was pressured by
Powertech to sign the waiver and quitclaim for petitioners in order
to receive his share in the P2.5 million judgment. Having no stable
job after his dismissal, Gestiada had no other choice but to breach
his fiduciary obligation to petitioners. He succumbed to the
pressure of Powertech in signing the waiver, release and quitclaim
in exchange for the P150K. In short, he colluded with Powertech to
the detriment of petitioners. Powertech knew that Gestiada had
plenary authority to act for petitioners in the labor case. It had
prior dealings with him. It also knew that Gestiada was authorized

to negotiate for any amount he may deem just and reasonable and
to sign waivers and quitclaims on behalf of petitioners. Powertech
obviously used that knowledge, capitalized on the vulnerable
position of Gestiada in entering into the agreement and took
advantage of the situation to the disadvantage of petitioners.
Fourth, the events that led to the execution of the compromise
agreement show that Powertech was negotiating in bad faith. More
importantly, they show that Powertech colluded with Gestiada to
defraud petitioners of their share of the P2.5 million Labor Arbiter
judgment.
Evidently, Powertech never intended to pay the P150Kcompromise
agreement. It was minded to do so only after the NLRC declared
the compromise void and reinstated the P2.5 million judgment of
the Labor Arbiter. It cannot escape Our notice that Powertech even
ordered a stop payment for the P150Kcheck issued to Gestiada
without any sufficient reason. Worse, it was recalcitrant in making
good the check despite due demand.
To Our mind, what prompted Powertech to agree to pay the
P150Kwas the NLRC order voiding the compromise agreement and
reinstating the Labor Arbiter P2.5 million judgment. By then,
Powertech was faced with the possibility of paying P2.5 million to
petitioners. It was also required by law to post a surety bond for
the same amount in order to perfect its appeal with the NLRC.
Armed with the NLRC order, petitioners were bent on pursuing their
appeal. Powertech panicked. It negotiated with Gestiada offering
him P150Kin exchange for a waiver and quitclaim for himself and
for petitioners. Powertech knew that Gestiada was authorized by
petitioners to negotiate for any sum he may deem just and
reasonable and to sign quitclaims and waivers for them. Jobless
and having no regular income, Gestiada succumbed to the
pressure. He connived with Powertech and agreed to receive the
P150Kfor himself in exchange for signing a quitclaim and waiver in
the name of petitioners.
To give effect to the collusion, Gestiada had to get rid of Atty.
Evangelista, who had previously succeeded in nullifying the
compromise agreement. He fired Atty. Evangelista without cause
basing his dismissal on his plenary authority as agent of petitioners.
He then procured the services of another lawyer, Atty. Felipe. We
find it striking that Gestiada was not authorized under the SPAto
terminate or retain another counsel for petitioners in the labor
dispute. The SPAmerely authorized Gestiada to negotiate with
Powertech, nothing more.
All these circumstances indicate that the P150Kwas received by
Gestiada solely as payment for his backwages and not a whit of a
settlement for the monetary claim of petitioners.
In line with Our conclusion that Powertech colluded with Gestiada,
the CA gravely erred in upholding the compromise agreement. The
appellate court decision was premised on the compromise
agreement being entered into by Powertech and Gestiada in good
faith. It is now clear that there is ample evidence indicating that
Powertech was negotiating in bad faith and, worse, it colluded with
Gestiada in shortchanging, nay, fraudulently depriving petitioners
of their just share in the award.
MARIA BUENA OBRA, vs. SOCIAL SECURITY SYSTEM
G.R. No. 147745. April 9, 2003
J. Puno
FACTS: Juanito Buena Obra, husband of petitioner, worked as a
driver for twenty-four (24) years and five (5) months. His first and
second ERs were logging companies. Thereafter, he was employed
at Jollar Industrial Sales and Services Inc. as a dump truck driver
from January 1980 to June 1988. He was assigned to the following
projects:[4]
1. January 1980 to December 1981 F.F. Cruz Project, Nabua,
Camarines Sur hauling/delivery of filling materials from quarry to
job site
2. January 1982 to December 1983 F.F. Cruz, 300 MW Coal Fire
Thermal Plant, Calaca, Bacungan and Makban Geothermal Plant,
Los Baos, Laguna hauling/delivery of filling materials from quarry
to job site
3. January 1984 to December 1985 Dizon Copper Silver Mines, Pili,
San Marcelino, Zambales hauling/delivery filling materials from
quarry to job site
4. January 1986 to June 1988 Metro Manila Hauling Project
On 27 June 1988, Juanito suffered a heart attack while
driving a dump truck inside the work compound, and died shortly
thereafter. In the Report of Death [5] submitted by his ER to the
Social Security System (SSS), Juanito expired at the Worker's
Quarters at 10:30 a.m., of Myocardial Infarction.
Petitioner Maria M. Buenaobra immediately filed her claim for
death benefits under the SSS law. She started receiving her
pension in November 1988. Petitioner was, however, unaware of
the other compensation benefits due her under Presidential Decree
No. 626, as amended, or the Law on EEs Compensation. In
September 1998, or more than ten (10) years after the death of her
husband, that she learned of the benefits under P.D. No. 626
through the television program of then broadcaster Ted Failon who
informed that one may claim for EEs Compensation Commission
(ECC) benefits if the spouse died while working for the
company. Petitioner prepared the documents to support her claim
for ECC benefits. On 23 April 1999, she filed with the SSS her claim
for funeral benefits under P.D. No. 626, as amended, which was
docketed as SSS # 04-0089326-0.[6]
On 28 July 1999, the SSS denied the claim of petitioner for
funeral benefits ruling that the cause of death of Juanito was not
work-connected, absent a causal relationship between the illness

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LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
and the job. Caridad R. Borja, Assistant Vice-President National
Capital Region (AVP NCR) Central of the SSS Member Assistance
Center in Quezon City wrote:
Please be informed that funeral claim under the EEs Compensation
is hereby denied. Per medical evaluation, cause of death of subject
members (sic) cannot be considered work connected since there is
no causal relationship between the illness and the job.
On 8 October 1999, petitioner wrote to Atty. Teofilo E.
Hebron, Executive Director of the ECC, appealing the denial of her
claim. On 11 November 1999, Atty. Hebron ordered Dr. Simeon Z.
Gonzales, Assistant Vice-President (AVP) of the Medical Services
Group of the SSS to review the claim of petitioner.
On 23 November 1999, the Medical Services Group through
Dr. Perla A. Taday, AVP for Medical Operations, concluded its reevaluation and affirmed the denial of petitioners claim. It
reiterated that there is no causal relationship between the cause
of
death/illness
and
members
job
as
dump
truck
driver.[7] Pursuant to Section 5, Rule XVIII of the Implementing
Rules of PD 626, the records of the deceased Juanito were elevated
to the Commission.
On 13 April 2000, the Commission rendered a decision,
dismissing the appeal.[8] It ruled that petitioner failed to show by
substantial evidence that her husbands cause of death was due to,
or the risk of contracting his ailment was increased by his
occupation and working conditions, as per Section 1(b), Rule III of
P.D. No. 626, as amended. In addition, the Commission declared
that petitioners claim has prescribed, citing ECC Resolution No. 9308-0068.
Petitioner appealed to the Court of Appeals. She alleged that
her cause of action had not prescribed because the filing of her
claim for SSS benefits shortly after Juanitos death suspended the
running of the prescriptive period for filing EC claims, as per Item
No. III of ECC Resolution No. 90-03-0022 dated 23 March 1990. The
appellate court dismissed the petition. It ruled that petitioner's
filing of her claim for SSS benefits shortly after Juanitos death did
not suspend the running of the prescriptive period for filing EC
claims. It interpreted the aforementioned ECC Resolutions to mean
that a claimant must indicate the kind of claim filed before the
running of the prescriptive period for filing EC claims may be
interrupted. In the case at bar, petitioner indeed filed a claim with
SSS. In fact, she has been receiving her pension since November
1988. However, she failed to specify whether the basis of her claim
was any contingency which may be held compensable under the EC
Program.[9]
In addition, the Court of Appeals cited P.D. No. 626 which
states that a contingency may be held compensable if listed in
Annex "A" of the Rules Implementing EEs' Compensation as an
occupational disease, and satisfying all conditions set forth therein;
or if not listed as an occupational disease, or listed but has not
satisfied the conditions set forth therein, it must be proven by
substantial evidence that the risk of contracting the disease which
caused the death of the member, was increased by the member's
working conditions.[10]
The appellate court likewise held that the three-year
prescriptive period does not apply in the instant case. Instead, it
applied Art. 1142(2) of the Civil Code which reads:
Art. 1144. The following actions must be brought within ten (10)
years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment. [Emphasis supplied.]
The appellate court then held that the petitioner's cause of
action has prescribed. Petitioner's husband died on 27 June
1988. She filed her claim for funeral benefits under P.D. No. 626 or
the Law on EEs' Compensation only on 23 April 1999, or more than
ten (10) years from his death.
Lastly, the appellate court ruled that even assuming
petitioner's cause of action has not prescribed, her claim for EEs'
Compensation benefits cannot prosper because of her failure to
prove by substantial evidence that her husband's working
conditions increased the risk of contracting the myocardial
infarction that caused his death.
Petitioners Motion for Reconsideration dated 27 September
2000 was denied by the appellate court in a Resolution
promulgated on 6 March 2001.
ISSUES

1.
2.

WHETHER, INDEED, THE CLAIM OF PETITIONER, HAD

PRESCRIBED.
WHETHER OR NOT THE ILLNESS OF PETITIONERS
HUSBAND, MYOCARDIAL INFARCTION, IS WORKRELATED.

HELD

1.

The claim of petitioner for funeral benefits under P.D.

No. 626, as amended, has not yet prescribed.
The issue of prescription in the case at bar is governed
by P.D. No. 626, or the Law on EEs' Compensation. Art.
201 of P.D. No. 626 and Sec. 6, Rule VII of the 1987
Amended Rules on EEs' Compensation both read as
follows:
No claim for compensation shall be given due course
unless said claim is filed with the System within three
years from the time the cause of action accrued.
We agree with the petitioner that her claim for death
benefits under the SSS law should be considered as the
EEs Compensation claim itself. This is but logical and
reasonable because the claim for death benefits which
petitioner filed with the SSS is of the same nature as her
claim before the ECC. Furthermore, the SSS is the same
agency with which EEs Compensation claims are
filed. As correctly contended by the petitioner, when

she filed her claim for death benefits with the SSS under
the SSS law, she had already notified the SSS of her EEs
compensation claim, because the SSS is the very same
agency
where
claims
for
payment
of
sickness/disability/death benefits under P.D. No. 626 are
filed.
Section 4(b)(2), Rule 3 of the ECC Rules of Procedure for
the Filing and Disposition of the EEs Compensation
Claims, quoted above, also provides for the conditions
when EC claims filed beyond the three-year prescriptive
period may still be given due course. Section 4(b)(2)
states the condition for private sector EEs, requiring that
a claim for Medicare, sickness, burial, disability or death
should be filed within three (3) years from the
occurrence of the contingency. In the instant case, the
petitioner was able to file her claim for death
benefits under the SSS law within the three-year
prescriptive period. In fact, she has been receiving her
pension under the SSS law since November 1988.

2.

Myocardial infarction is also known as heart attack. It

results in permanent heart damage or death. A heart
attack is called myocardial infarction because part of
the heart muscle (myocardium) may literally die
(infarction). This occurs when a blood clot blocks one of
the coronary arteries (the blood vessels that bring blood
and oxygen to the heart muscle). When the heart
muscle does not obtain the oxygen-rich blood that it
needs, it will begin to die. The severity of a heart attack
usually depends on how much of the heart muscle is
injured or dies during the heart attack. Heart attack
accounts for 1 out of every 5 deaths. It is a major cause
of sudden death in adults. Heavy exertion or emotional
stresscan trigger a heart attack.[16]
In the case at bar, the petitioners husbands heart
disease falls under the second condition of ECC
Resolution No. 432 dated July 20, 1977 which states that
the strain of work that brought about the acute attack
must be of sufficient severity and must be followed
within 24 hours by the clinical signs of a cardiac insult to
constitute causal relationship. Petitioners husband was
driving a dump truck within the company premises
where they were stacking gravel and sand when he
suffered the heart attack. He had to be taken down
from the truck and brought to the workers quarters
where he expired at 10:30 a.m., just a few minutes after
the heart attack, which is much less than the 24 hours
required by ECC Resolution No. 432. This is a clear
indication that severe strain of work brought about the
acute attack that caused his death.
Professional drivers, especially truck drivers like the
decedent in the instant case, carry the burden of being
more exposed and subjected to the stress and strain of
everyday traffic, and the greater physical exertion
brought about by driving a large and heavy vehicle. In
addition, according to the petitioner, her husband was
under a lot of stress in the workplace. He was a model
worker and his ER highly depended on him. He became
the object of envy of his co-workers which caused him
much emotional stress. Add to this the fact that he has
been a truck driver for more than twenty-four (24)
years. Due to the combination of emotional stress and
vigorous physical exertion, it was easy for him to
succumb to the heart ailment. We hold that the illness
of the decedent which caused his death is workconnected, and thus compensable by virtue of ECC
Resolution No. 432 dated 20 July 1977.
As a final note, we find it necessary to reiterate that P.D.
No. 626, as amended, is a social legislation whose
primordial purpose is to provide meaningful protection
to the working class against the hazards of disability,
illness and other contingencies resulting in the loss of
income.
PETITION GRANTED.
SEAFDEC v NLRC
G.R. No. 86773 February 14, 1992
NOCON, J.:
FACTS: SEAFDEC-AQD is a department of an international
organization, the Southeast Asian Fisheries Development Center,
organized through an agreement entered into in Bangkok, Thailand
on December 28, 1967 by the governments of Malaysia, Singapore,
Thailand, Vietnam, Indonesia and the Philippines with Japan as the
sponsoring country.
private respondent Juvenal Lazaga was employed as a Research
Associate an a probationary basis by the SEAFDEC-AQD and was
appointed Senior External Affairs Officer on January 5, 1983 with a
monthly basic salary of P8,000.00 and a monthly allowance of
P4,000.00. Thereafter, he was appointed to the position of
Professional III and designated as Head of External Affairs Office
with the same pay and benefits.
petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a
notice of termination to private respondent informing him that due
to the financial constraints being experienced by the department,
his services shall be terminated at the close of office hours on May
15, 1986 and that he is entitled to separation benefits equivalent to
one (1) month of his basic salary for every year of service plus
other benefits.
Upon petitioner SEAFDEC-AQD's failure to pay private respondent
his separation pay, the latter filed on March 18, 1987 a complaint
against petitioners for non-payment of separation benefits plus

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LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
moral damages and attorney's fees with the Arbitration Branch of
the NLRC.
Petitioners in their answer with counterclaim alleged that the NLRC
has no jurisdiction over the case inasmuch as the SEAFDEC-AQD is
an international organization and that private respondent must first
secure clearances from the proper departments for property or
money accountability before any claim for separation pay will be
paid, and which clearances had not yet been obtained by the
private respondent.
A formal hearing was conducted whereby private respondent
alleged that the non-issuance of the clearances by the petitioners
was politically motivated and in bad faith. On the other hand,
petitioners alleged that private respondent has property
accountability and an outstanding obligation to SEAFDEC-AQD in
the amount of P27,532.11. Furthermore, private respondent is not
entitled to accrued sick leave benefits amounting to P44,000.00
due to his failure to avail of the same during his employment with
the SEAFDEC-AQD.
ISSUE: whether NLRC has no jurisdiction to hear and decide
respondent Lazaga's complaint since SEAFDEC-AQD is immune from
suit owing to its international character and the complaint is in
effect a suit against the State which cannot be maintained without
its consent.
The petition is impressed with merit.
HELD: Petitioner SEAFDEC-AQD is an international agency beyond
the jurisdiction of public respondent NLRC. The RP became a
signatory to the Agreement establishing SEAFDEC. The purpose of
the Center is to contribute to the promotion of the fisheries
development in Southeast Asia by mutual co-operation among the
member governments. The Council shall be the supreme organ of
the Center and all powers of the Center shall be vested in the
Council.
Being an intergovernmental organization, SEAFDEC including its
Departments (AQD), enjoys functional independence and freedom
from control of the state in whose territory its office is located.
Pursuant to its being a signatory to the Agreement, It expressly
waived the application of the Philippine laws on the disbursement
of funds of petitioner SEAFDEC-AQD.
Respondent Lazaga's invocation of estoppel with respect to the
issue of jurisdiction is unavailing because estoppel does not apply
to confer jurisdiction to a tribunal that has none over a cause of
action. Jurisdiction is conferred by law. Where there is none, no
agreement of the parties can provide one. Settled is the rule that
the decision of a tribunal not vested with appropriate jurisdiction is
null and void.
WHEREFORE, finding SEAFDEC-AQD to be an international agency
beyond the jurisdiction of the courts or local agency of the
Philippine government.
LIGHT RAIL TRANSIT AUTHORITY vs. PERFECTO H. VENUS
etc.
G.R. No. 163782
March 24, 2006
METRO TRANSIT ORGANIZATION, INC. vs. COURT OF APPEALS,
PERFECTO H. VENUS,
G.R. No. 163881
March 24, 2006
PUNO, J.:
FACTS: Petitioner LRTA is a GOCCS created by EO603 to construct
and maintain a light rail transit system and provide the commuting
public with an efficient, economical, dependable and safe
transportation. Petitioner METRO, formerly Meralco Transit
Organization, Inc., was a qualified transportation corporation duly
organized in accordance with the provisions of the Corporation
Code, registered with the SEC and existing under Philippine laws.
petitioner LRTA constructed a light rail transit system from
Monumento in Kalookan City to Baclaran in Paraaque, Metro
Manila. To provide the commuting public with an efficient and
dependable light rail transit system, petitioner LRTA, after a bidding
process, entered into a 10year Agreement for the Management
and Operation of the Metro Manila Light Rail Transit System with
petitioner METRO.The Agreement provided, METRO shall be free to
employ such EEs and officers as it shall deem necessary in order to
carry out the requirements of the Agreement. Such EEs and officers
shall be the EEs of METRO and not of the LRTA. METRO shall prepare
a compensation schedule and the corresponding salaries and fringe
benefits of its personnel in consultation with the LRTA. Pursuant to
the above Agreement, petitioner METRO hired its own EEs,
including herein private respondents. Petitioner METRO thereafter
entered into a CBA with Pinag-isang Lakas ng Manggagawa sa
METRO, Inc. National Federation of Labor, otherwise known as
PIGLAS-METRO, INC. NFL KMU (Union), the certified exclusive
collective bargaining representative of the rank-and-file EEs of
petitioner METRO.
Meanwhile,petitioners LRTA and METRO executed a Deed of Sale
where petitioner LRTA purchased the shares of stocks in
petitioner METRO. However, petitioners LRTA and METRO
continued with their distinct and separate juridical
personalities. Hence, when the above 10)-year Agreement expired
on June 8, 1994, they renewed the same, initially on a yearly basis,
and subsequently on a monthly basis.
On July 25, 2000, the Union filed a Notice of Strike with the National
Conciliation and Mediation Board(NCMB) against petitioner METRO
on account of a deadlock in the collective bargaining negotiation.
On the same day, the Union struck The power supply switches in
the different light rail transit substations were turned off. The

members of the Union picketed the various substations. They

completely paralyzed the operations of the entire light rail transit
system. As the strike adversely affected the mobility of the
commuting public, then Secretary of Labor Bienvenido E. Laguesma
issued on that same day an assumption of jurisdiction order
directing all the striking EEs "to return to work immediately upon
receipt of this Order and for the Company to accept them back
under the same terms and conditions of employment prevailing
prior to the strike."
In their memorandum,DOLE Sheriffs reported to Sec. Laguesma
that they tried to personally serve the Order of assumption of
jurisdiction to the Union through its officials and members, but the
latter refused to receive the same. The sheriffs thus posted the
Order in the different stations/terminals of the light rail transit
system. Further, the Order of assumption of jurisdiction was
published in Philippine Daily Inquirer6and the Philippine Star.
Despite such,the Union officers and members, including herein
private respondent workers, failed to return to work. Thus, they
were considered dismissed from employment.
In the meantime, on July 31, 2000, the Agreement for the
Management and Operation of the Metro Manila Light Rail Transit
System between petitioners LRTA and METRO expired. The Board of
Directors of petitioner LRTA decided not to renew the contract with
petitioner METRO and directed the LRTA management instead to
immediately take over the management and operation of the light
rail transit system to avert the mass transportation crisis.
private respondents Venus, Jr., Santos, Jr., and Roy filed a complaint
for illegal dismissal before the NLRC and impleaded both petitioners
LRTA and METRO. LA rendered a consolidated judgment in favor of
the private respondent workers.
NLRC found that the striking workers failed to heed the return to
work order and reversed and set aside the decision of the LA. The
suit against LRTA was dismissed since "LRTA is a GOCCS with an
original charter" and "it had no participation whatsoever with the
termination of complainants employment. In fine, the cases against
the LRTA and METRO were dismissed, respectively, for lack of
jurisdiction and for lack of merit. NLRC denied the workers Motion
for Reconsideration "[t]here being no showing that the Commission
committed, (and that) the Motion for Reconsideration was based on,
palpable or patent errors, and the fact that (the) said motion is not
under oath."
CA reversed the NLRC and reinstated the Decision rendered by the
Labor Arbiter. Public respondent appellate court declared the
workers dismissal as illegal, pierced the veil of separate corporate
personality and held the LRTA and METRO as jointly liable for back
wages.
HELD:We believe that METRO EEs are not covered by the
prohibition against strikes applicable to EEs embraced in the Civil
Service. It is not disputed, but in fact conceded, that METRO EEs are
not covered by the Civil Service. This being so, METRO EEs are not
covered by the Civil Service law, rules and regulations but are
covered by the Labor Code and, therefore, the rights and
prerogatives granted to private EEs there under, including the right
to strike, are available to them.
Moreover, as noted by Secretary Benjamin E. Diokno, of the
Department of Budget and Management, in his letter, the EEs of
METRO are not entitled to the government amelioration assistance
authorized by the President pursuant to AO37 for government EEs,
because the EEs of METRO are not government EEs since Metro,
Inc. "could not be considered as GOCCS as defined under Section 3
(b) of EO518.
The labor dispute only arose in 2000, after a deadlock occurred
during the collective bargaining between petitioner METRO and the
workers union. This alone is not a justification to pierce the
corporate veil of petitioner METRO and make petitioner LRTA liable
to private respondent workers. There are no badges of fraud or any
wrongdoing to pierce the corporate veil of petitioner METRO. the
test in determining the applicability of the doctrine of piercing the
veil of corporate fiction is as follows:
"1. Control, not mere majority or complete stock control, but
complete domination, not only of finances but of policy and
business practice in respect to the transaction attacked so that the
corporate entity as to this transaction had at the time no separate
mind, will or existence of its own;
2. Such control must have been used by the defendant to commit
fraud or wrong, to perpetuate the violation of a statutory or other
positive legal duty, or dishonest and unjust act in contravention of
plaintiffs legal rights; and
3. The aforesaid control and breach of duty must proximately cause
the injury or unjust loss complained of.
The absence of any one of these elements prevents piercing the
corporate veil. Here, the records do not show that control was used
to commit a fraud or wrong. In fact, it appears that piercing the
corporate veil for the purpose of delivery of public service, would
lead to a confusing situation since the outcome would be that Metro
will be treated as a mere alter ego of LRTA, not having a separate
corporate personality from LRTA, when dealing with the issue of
strike, and a separate juridical entity not covered by the Civil
Service when it comes to other matters. Under the Constitution, a
government corporation is either one with original charter or one
without original charter, but never both.
In sum, petitioner LRTA cannot be held liable to the EEs of petitioner
METRO. The contention of the petitioner that the private
respondents abandoned their position is also not acceptable. An EE
who forthwith takes steps to protest his lay-off cannot by any logic

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J.SUAREZ II, 2ND SEM,SY 12-13
be said to have abandoned his work. For abandonment to constitute
a valid cause for termination of employment, there must be a
deliberate, unjustified refusal of the EE to resume his employment.
This refusal must be clearly established. As we stressed in a recent
case, mere absence is not sufficient; it must be accompanied by
overt acts unerringly pointing to the fact that the EE simply does
not want to work anymore. In the instant case, private respondent
workers could not have defied the return-to-work order of the
Secretary of Labor simply because they were dismissed
immediately, even before they could obey the said order.
Paloma v. PAL
[G.R. No. 148415, July 14, 2008]
-------------------------------------------------PAL v. Paloma
G.R. NO. 156764
VELASCO JR., J.:
FACTS: Paloma worked with PAL from September 1957, rising from
the ranks to retire, after 35 years of continuous service, as senior
vice president for finance. In March 1992, or some nine (9) months
before Paloma retired on November 30, 1992, PAL was privatized.
By way of post-employment benefits, PAL paid Paloma the total
amount
of
PhP
5,163,325.64
which
represented
his
separation/retirement gratuity and accrued vacation leave pay. For
the benefits thus received, Paloma signed a document denominated
Release and Quitclaim[3] but inscribed the following reservation
therein: "Without prejudice to my claim for further leave benefits
embodied in my aide memoire transmitted to Mr. Roberto Anonas
covered by my 27 Nov. 1992 letter
The leave benefits Paloma claimed being entitled to refer to his
450-day accrued sick leave credits which PAL allegedly only paid
the equivalent of 18 days. He anchored his entitlement on EO 1077
dated January 9, 1986, and his having accumulated a certain
number of days of sick leave credits, as acknowledged in a letter of
Alvia R. Leao, then an administrative assistant in PAL. Leas
letter dated November 12, 1992 pertinently reads: At your request,
we are pleased to confirm herewith the balance of your sick leave
credits as they appear in our records: 230 days. According to our
existing policy, an EE is entitled to accumulate sick leave with pay
only up to a maximum of 230 days.
Had there been no ceiling as mandated by Company policy, your
sick leave credits would have totaled 450 days to date. Answering
Paloma's written demands for conversion to cash of his accrued sick
leave credits, PAL asserted having paid all of Paloma's commutable
sick leave credits due him pursuant to company policy made
applicable to PAL officers starting 1990.
The company leave policy adverted to grants PAL's regular ground
personnel a graduated sick leave benefits, those having rendered at
least 25 years of service being entitled to 20 days of sick leave for
every year of service. An EE, under the policy, may accumulate sick
leaves with pay up to 230 days. Subject to defined qualifications,
sick leave credits in excess of 230 days shall be commutable to
cash at the EE's option and shall be paid in lump sum on or before
May 31st of the following year they were earned.[6] Per PAL's
records, Paloma appears to have, for the period from 1990 to 1992,
commuted 58 days of his sick leave credits, broken down as
follows: 20 days each in 1990 and 1991 and 18 days in 1992.
Subsequently, Paloma filed before the Arbitration Branch of the
NLRC Complaint[7] for Commutation of Accrued Sick Leaves
Totaling 392 days. In the complaint, docketed as NLRC-NCR-Case
No. 00-08-05792-94, Paloma alleged having accrued sick leave
credits of 450 days commutable upon his retirement pursuant to EO
1077 which allows retiring government EEs to commute, without
limit, all his accrued vacation and sick leave credits. And of the 450day credit, Paloma added, he had commuted only 58 days, leaving
him a balance of 392 days of accrued sick leave credits for
commutation.
ISSUE: whether or not EO 1077 applies only to government EEs
subject to civil service law which, as early as 1960 until its
privatization, had been considered as a government-controlled
corporation--is covered by and subject to the limitations peculiar
under the civil service system.
HELD: PAL never ceased to be operated as a private corporation,
and was not subjected to the Civil Service Law. The Court can allow
that PAL, during the period material, was a government-controlled
corporation in the sense that the GSIS owned a controlling interest
over its stocks. One stubborn fact, however, remains: Through the
years, PAL functioned as a private corporation and managed as
such for profit. Their personnel were never considered government
EEs. It may perhaps not be amiss for the Court to take judicial
notice of the fact that the civil service law and rules and regulations
have not actually been made to apply to PAL and its EEs. Of
governing application to them was the Labor Code.
Paloma not entitled to the benefits granted in EO 1077; existing
company policy on the matter applies which took effect in 1990. In
our view, the only meaning and import of said rule and regulation is
that if an EE does not choose to enjoy his yearly sick leave of thirty
days, he may accumulate such sick leave up to a maximum of six
months and enjoy this six months sick leave at the end of the sixth
year but may not commute it to cash.
In fine, absent any provision in the applicable company policy
authorizing the commutation of the 230 days accrued sick leave
credits existing upon retirement, Paloma may not, as a matter of
enforceable right, insist on the commutation of his sick leave
credits to cash. As PAL's senior vice-president for finance upon his
retirement, Paloma knew or at least ought to have known the

company policy on accrued sick leave credits and how it was being
implemented. Had he acted on that knowledge in utmost good
faith, these proceedings would have not come to pass.
PP vs.HON. DOMINGO PANIS
G.R. Nos. L-58674-77 July 11, 1990
CRUZ, J:
FACTS: Four informations were filed in the CFI of Zambales and
Olongapo City alleging that Serapio Abug, private respondent
herein, "without first securing a license from the Ministry of Labor
as a holder of authority to operate a fee-charging employment
agency, did then and there wilfully, unlawfully and criminally
operate a private fee charging employment agency by charging
fees and expenses (from) and promising employment in Saudi
Arabia" to four separate individuals named therein, in violation of
Article 16 in relation to Article 39 of the Labor Code.
RESPONDENTS CONTENTION: Abug filed a M2Q on the ground that
the informations did not charge an offense because he was accused
of illegally recruiting only one person in each of the four
informations. Under the proviso in Article 13(b), he claimed, there
would be illegal recruitment only "whenever two or more persons
are in any manner promised or offered any employment for a fee. "
Denied at first, the motion was reconsidered and finally granted.
PETITIONERS CONTENTION1: is that the private respondent is
being prosecuted under Article 39 in relation to Article 16 of the
Labor Code; hence, Article 13(b) is not applicable. However, as the
first two cited articles penalize acts of recruitment and placement
without proper authority, which is the charge embodied in the
informations, application of the definition of recruitment and
placement in Article 13(b) is unavoidable.
PETITIONERS CONTENTION2: that the requirement of two or more
persons is imposed only where the recruitment and placement
consists of an offer or promise of employment to such persons and
always in consideration of a fee. The other acts mentioned in the
body of the article may involve even only one person and are not
necessarily for profit.
ISSUE: WON the interpretation of both parties of Article 13(b) of
P.D. 442 were correct.
HELD: Neither interpretation is acceptable. We fail to see why the
proviso should speak only of an offer or promise of employment if
the purpose was to apply the requirement of two or more persons
to all the acts mentioned in the basic rule. For its part, the
petitioner does not explain why dealings with two or more persons
are needed where the recruitment and placement consists of an
offer or promise of employment but not when it is done through
"canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers.
As we see it, the proviso was intended neither to impose a
condition on the basic rule nor to provide an exception thereto but
merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement
whenever he or it is dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of employment is made
in the course of the "canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring (of) workers. "
The number of persons dealt with is not an essential ingredient of
the act of recruitment and placement of workers. Any of the acts
mentioned in the basic rule in Article 13(b) will constitute
recruitment and placement even if only one prospective worker is
involved. The proviso merely lays down a rule of evidence that
where a fee is collected in consideration of a promise or offer of
employment to two or more prospective workers, the individual or
entity dealing with them shall be deemed to be engaged in the act
of recruitment and placement. The words "shall be deemed" create
that presumption.
the word "shall be deemed" should by the same token be given the
force of a disputable presumption or of prima facie evidence of
engaging in recruitment and placement.
At any rate, the interpretation here adopted should give more force
to the campaign against illegal recruitment and placement, which
has victimized many Filipino workers seeking a better life in a
foreign land, and investing hard- earned savings or even borrowed
funds in pursuit of their dream, only to be awakened to the reality
of a cynical deception at the hands of theirown countrymen.
PP vs.RODOLFO GALLO y GADOT et al.
G.R. No. 187730
June 29, 2010
VELASCO, JR., J.:
FACTS: Originally, accused-appellant Gallo and accused Pacardo
and Manta, together with Mardeolyn Mardeolyn and 9 others, were
charged with syndicated illegal recruitment and 18 counts of estafa
committed against 18 complainants, including Dela Caza, Guantero
and Sare. the present appeal concerns solely accused-appellants
conviction for syndicated illegal recruitment in Criminal Case No.
02-206293 and for estafa in Criminal Case No. 02-206297.
On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to
accused-appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu
Mendanes, Yeo Sin Ung and another Korean national at the office of
MPM Agency located in Malate, Manila. He was told that
Mardeolyn was the President of MPM Agency, while Nelmar Martir
was one of the incorporators. Also, that Marcelino Martir, Norman
Martir, Nelson Martir and Ma. Cecilia Ramos were its board
members. Lulu Mendanes acted as the cashier and accountant,
while Pacardo acted as the agencys EE who was in charge of the

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J.SUAREZ II, 2ND SEM,SY 12-13
records of the applicants. Manta, on the other hand, was also an EE
who was tasked to deliver documents to the Korean embassy.
Accused-appellant Gallo then introduced himself as a relative of
Mardeolyn and informed Dela Caza that the agency was able to
send many workers abroad. Together with Pacardo and Manta, he
also told Dela Caza about the placement fee PhP 150,000 with a
down payment of PhP 45,000 and the balance to be paid through
salary deduction. Dela Caza, together with the other applicants,
were briefed by Mardeolyn about the processing of their application
papers for job placement in Korea as a factory worker and their
possible salary. Accused Yeo Sin Ung also gave a briefing about the
business and what to expect from the company and the salary. Dela
Casa paid PhP 45,000 to MPM Agency through accused-appellant
Gallo who, while in the presence of Pacardo, Manta and Mardeolyn,
issued and signed OR41.
Two (2) weeks after paying MPM Agency, Dela Caza went back to
the agencys office in Malate, Manila only to discover that the office
had moved to a new location at Batangas Street, Brgy. San Isidro,
Makati. He proceeded to the new address and found out that the
agency was renamed to New Filipino. At the new office, he talked to
Pacardo, Manta, Mardeolyn, Lulu Mendanes and accused-appellant
Gallo. He was informed that the transfer was done for easy
accessibility to clients and for the purpose of changing the name of
the agency.
Dela Caza decided to withdraw his application and recover the
amount he paid but Mardeolyn, Pacardo, Manta and Lulu Mendanes
talked him out from pursuing his decision. On the other hand,
accused-appellant Gallo even denied any knowledge about the
money. After 2 more months of waiting in vain to be deployed, Dela
Caza and the other applicants decided to take action. The first
attempt was unsuccessful because the agency again moved to
another place. However, with the help of the Office of Ambassador
Seeres and the Western Police District, they were able to locate
the new address at 500 Prudential Building, Carriedo, Manila. The
agency explained that it had to move in order to separate those
who are applying as entertainers from those applying as factory
workers. Accused-appellant Gallo, together with Pacardo and Manta,
were then arrested.
The testimony of prosecution witness Armando Albines Roa, a POEA
EE, was dispensed with after the prosecution and defense
stipulated and admitted to the existence of the following
documents:
1. Certification issued by Felicitas Q. Bay, Director II, Licensing
Branch of the POEA to the effect that "New Filipino Manpower
Development & Services, Inc., with office address at 1256 Batangas
St., Brgy. San Isidro, Makati City, was a licensedlandbased agency
whose license expired on December 10, 2001 and was delisted from
the roster of licensed agencies on December 14, 2001." It further
certified that "Fides J. Pacardo was the agencys Recruitment
Officer";
2. Certification issued by Felicitas Q. Bay of the POEA to the effect
that MPM International Recruitment and Promotion is not licensed
by the POEA to recruit workers for overseas employment;
For his defense, accused-appellant denied having any part in the
recruitment of Dela Caza. In fact, he testified that he also applied
with MPM Agency for deployment to Korea as a factory worker.
According to him, he gave his application directly with Mardeolyn
because she was his town mate and he was allowed to pay only PhP
10,000 as processing fee. Further, in order to facilitate the
processing of his papers, he agreed to perform some tasks for the
agency, such as taking photographs of the visa and passport of
applicants, running errands and performing such other tasks
assigned to him, without salary except for some allowance. He said
that he only saw Dela Caza one or twice at the agencys office
when he applied for work abroad. Lastly, that he was also promised
deployment abroad but it never materialized.
RTC rendered its Decision convicting the accused of syndicated
illegal recruitment and estafa. CA: Decision of the RTC of Manila is
AFFIRMED with the MODIFICATION.The CA held the totality of the
prosecutions evidence showed that the accused-appellant,
together with others, engaged in the recruitment of Dela Caza. His
actions and representations to Dela Caza can hardly be construed
as the actions of a mere errand boy. As determined by the appellate
court, the offense is considered economic sabotage having been
committed by more than three (3) persons, namely, accusedappellant Gallo, Mardeolyn, Eleonor Panuncio and Yeo Sin Ung. More
importantly, a personal found guilty of illegal recruitment may also
be convicted of estafa.7 The same evidence proving accusedappellants commission of the crime of illegal recruitment in large
scale also establishes his liability for estafa under paragragh 2(a) of
Article 315 of the Revised Penal Code (RPC).
ISSUES:The court a quo gravely erred in finding the accusedappellant guilty of 1) illegal recruitment committed by a syndicate
despite the failure of the prosecution to prove the same beyond
reasonable doubt AND 2)estafa despite the failure of the
prosecution to prove the same beyond reasonable doubt.
HELD: 1.The appeal has no merit. Evidence supports conviction of
the crime of Syndicated Illegal Recruitment To commit syndicated
illegal recruitment, three elements must be established: (1) the
offender undertakes either any activity within the meaning of
"recruitment and placement" defined under Article 13(b), or any of
the prohibited practices enumerated under Art. 34 of the Labor
Code; (2) he has no valid license or authority required by law to
enable one to lawfully engage in recruitment and placement of
workers;8 and (3) the illegal recruitment is committed by a group of
3 or more persons conspiring or confederating with one another.9
When illegal recruitment is committed by a syndicate or in large

scale, i.e., if it is committed against 3 or more persons individually

or as a group, it is considered an offense involving economic
sabotage.
After a thorough review of the records, we believe that the
prosecution was able to establish the elements of the offense
sufficiently. The evidence readily reveals that MPM Agency was
never licensed by the POEA to recruit workers for overseas
employment. Even with a license, however, illegal recruitment
could still be committed under Section 6 of Republic Act No. 8042
("R.A. 8042"), otherwise known as the Migrants and Overseas
Filipinos Act of 1995. In the instant case, accused-appellant
committed the acts enumerated in Sec. 6 of R.A. 8042. Testimonial
evidence presented by the prosecution clearly shows that, in
consideration of a promise of foreign employment, accusedappellant received the amount of Php 45,000.00 from Dela Caza.
When accused-appellant made misrepresentations concerning the
agencys purported power and authority to recruit for overseas
employment, and in the process, collected money in the guise of
placement fees, the former clearly committed acts constitutive of
illegal recruitment.
Additionally, accused-appellant cannot argue that the trial court
erred in finding that he was indeed an EE of the recruitment agency.
On the contrary, his active participation in the illegal recruitment is
unmistakable. The fact that he was the one who issued and signed
the official receipt belies his profession of innocence. This Court
likewise finds the existence of a conspiracy between the accusedappellant and the other persons in the agency who are currently at
large, resulting in the commission of the crime of syndicated illegal
recruitment. Without a doubt, the nature and extent of the actions
of accused-appellant, as well as with the other persons in MPM
Agency clearly show unity of action towards a common
undertaking. Hence, conspiracy is evidently present.
To reiterate, in establishing conspiracy, it is not essential that there
be actual proof that all the conspirators took a direct part in every
act. It is sufficient that they acted in concert pursuant to the same
objective.14
2.The prosecution likewise established that accused-appellant is
guilty of the crime of estafa as defined under Article 315 paragraph
2(a) of the Revised Penal Code. The elements of estafa in general
are: (1) that the accused defrauded another (a) by abuse of
confidence, or (b) by means of deceit; and (2) that damage or
prejudice capable of pecuniary estimation is caused to the offended
party or third person.15 Deceit is the false representation of a
matter of fact, whether by words or conduct, by false or misleading
allegations, or by concealment of that which should have been
disclosed; and which deceives or is intended to deceive another so
that he shall act upon it, to his legal injury.
All these elements are present in the instant case: the accusedappellant, together with the other accused at large, deceived the
complainants into believing that the agency had the power and
capability to send them abroad for employment; that there were
available jobs for them in Korea as factory workers; that by reason
or on the strength of such assurance, the complainants parted with
their money in payment of the placement fees; that after receiving
the money, accused-appellant and his co-accused went into hiding
by changing their office locations without informing complainants;
and that complainants were never deployed abroad. As all these
representations of the accused-appellant proved false, paragraph
2(a), Article 315 of the Revised Penal Code is thus
applicable.1avvphi1
PP vs. DOLORES OCDEN
G.R. No. 173198, June 1, 2011
LEONARDO-DE CASTRO, J.:
FACTS:All seven cases against Ocden were consolidated on July 31,
2000 and were tried jointly after Ocden pleaded not guilty.The
prosecution presented three witnesses namely: Mana-a and Ferrer),
complainants; Golidan), mother of complainants Jeffries and Howard
Golidan.
(1) Ocden informed Mana-a, Ferrer, and Golidan about the job
opportunity in Italy and the list of necessary requirements for
application;
(2) Ocden required Mana-a, Ferrer, and Golidans sons, Jeffries
and Howard, to attend the seminar conducted by Ramos at
Ocdens house in Baguio City;
(3) Ocden received the job applications, pictures, bio-data,
passports, and the certificates of previous employment (which
was also issued by Ocden upon payment of P500.00), of Mana-a,
Ferrer, and Golidans sons, Jeffries and Howard;
(4) Ocden personally accompanied Mana-a, Ferrer, and Golidans
sons, Jeffries and Howard, for their medical examinations in
Manila;
(5) Ocden received money paid as placement fees by Mana-a,
Ferrer, and Golidans sons, Jeffries and Howard, and even issued
receipts for the same; and
(6) Ocden assured Mana-a, Ferrer, and Golidans sons, Jeffries
and Howard, that they would be deployed to Italy.The defense
presented the testimony of Ocden herself.
Ocden denied recruiting private complainants and claimed that she
was also an applicant for an overseas job in Italy, just like them.
Ocden identified Ramos as the recruiter.
Ocden recounted that she met Ramos at a seminar held in St.
Theresas Compound, Navy Base, Baguio City, sometime in June
1998. The seminar was arranged by Comila, Ramoss sub-agent.
The seminar was attended by about 60 applicants, including
Golidan. Ramos explained how one could apply as worker in a stuff
toys factory in Italy. After the seminar, Comila introduced Ocden to
Ramos. Ocden decided to apply for the overseas job, so she gave

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J.SUAREZ II, 2ND SEM,SY 12-13
her passport and pictures to Ramos. Ocden also underwent medical
examination at Zamora Medical Clinic in Manila, and completely
submitted the required documents to Ramos in September 1998.
After the seminar, many people went to Ocdens house to inquire
about the jobs available in Italy. Since most of these people did not
attend the seminar, Ocden asked Ramos to conduct a seminar at
Ocdens house. Two seminars were held at Ocdens house, one in
September and another in December 1998. After said seminars,
Ramos designated Ocden as leader of the applicants. As such,
Ocden received her co-applicants applications and documents;
accompanied her co-applicants to Manila for medical examination
because she knew the location of Zamora Medical Clinic; and
accepted placement fees from Mana-a and Ferrer and from Golidan.
Ramos instructed Ocden that the applicants should each pay
P250,000.00 and if the applicants could not pay the full amount,
they would have to pay the balance through salary deductions once
they start working in Italy. Ocden herself paid Ramos P50,000.00 as
placement fee and executed a promissory note in Ramoss favor for
the balance, just like any other applicant who failed to pay the full
amount. Ocden went to Malaysia with Ramoss male friend but she
failed to get her visa for Italy.
Ocden denied deceiving Mana-a and Ferrer. Ocden alleged that she
turned over to Ramos the money Mana-a and Ferrer gave her,
although she did not indicate in the receipts she issued that she
received the money for and on behalf of Ramos.
Ocden pointed out that she and some of her co-applicants already
filed a complaint against Ramos before the NBI offices in
Zamboanga City and Manila.13
RTC rendered a Decision finding Ocden guilty beyond reasonable
doubt of the crimes of illegal recruitment in large scale and three
counts of estafa.Aggrieved by the above decision, Ocden filed with
the RTC a Notice of Appeal on August 15, 2001.15 The RTC
erroneously sent the records of the cases to the Court of Appeals,
which, in turn, correctly forwarded the said records to us.In our
Resolution16 dated May 6, 2002, we accepted the appeal and
required the parties to file their respective briefs. In the same
resolution, we directed the Superintendent of the Correctional
Institute for Women to confirm Ocdens detention thereat. the
appellate court promulgated its Decision, affirming Ocdens
conviction but modifying the penalties imposed upon her for the
three counts of estafa.
ISSUES: THE TRIAL COURT ERRED IN CONVICTING ACCUSEDAPPELLANT OF 1)ILLEGAL RECRUITMENT COMMITTED IN LARGE
SCALE ALTHOUGH THE CRIME WAS NOT PROVEN BEYOND
REASONABLE DOUBT and 2) ESTAFA.
HELD: 1.Ocdens aforementioned contentions are without merit. It
is well-settled that to prove illegal recruitment, it must be shown
that appellant gave complainants the distinct impression that he
had the power or ability to send complainants abroad for work such
that the latter were convinced to part with their money in order to
be employed.
It is not necessary for the prosecution to present a certification that
Ocden is a non-licensee or non-holder of authority to lawfully
engage in the recruitment and placement of workers. Section 6 of
Republic Act No. 8042 enumerates particular acts which would
constitute illegal recruitment "whether committed by any person,
whether a non-licensee, non-holder, licensee or holder of authority."
Among such acts, under Section 6(m) of Republic Act No. 8042, is
the "[f]ailure to reimburse expenses incurred by the worker in
connection with his documentation and processing for purposes of
deployment, in cases where the deployment does not actually take
place without the workers fault."
Since illegal recruitment under Section 6(m) can be committed by
any person, even by a licensed recruiter, a certification on whether
Ocden had a license to recruit or not, is inconsequential. Ocden
committed illegal recruitment as described in said provision by
receiving placement fees from Mana-a, Ferrer, and Golidans two
sons, Jeffries and Howard, evidenced by receipts Ocden herself
issued; and failing to reimburse/refund to Mana-a, Ferrer, and
Golidans two sons the amounts they had paid when they were not
able to leave for Italy, through no fault of their own.
Contrary to Ocdens claims, Golidan had personal knowledge of
Ocdens illegal recruitment activities, which she could competently
testify to. Golidan herself had personal dealings with Ocden as
Golidan assisted her sons, Jeffries and Howard, in completing the
requirements for their overseas job applications, and later on, in
getting back home from Zamboanga where Jeffries and Howard
were stranded, and in demanding a refund from Ocden of the
placement fees paid. That Golidan is seeking a reimbursement of
the placement fees paid for the failed deployment of her sons
Jeffries and Howard strengthens, rather than weakens, the
prosecutions case. Going back to illegal recruitment under Section
6(m) of Republic Act No. 8042, failure to reimburse the expenses
incurred by the worker when deployment does not actually take
place, without the workers fault, is illegal recruitment.
The affidavit of desistance purportedly executed by Jeffries and
Howard does not exonerate Ocden from criminal liability when the
prosecution had successfully proved her guilt beyond reasonable
doubt. Generally, the Court attaches no persuasive value to
affidavits of desistance, especially when it is executed as an
afterthought. It would be a dangerous rule for courts to reject
testimonies solemnly taken before the courts of justice simply
because the witnesses who had given them, later on, changed their
mind for one reason or another, for such rule would make solemn
trial a mockery and place the investigation of truth at the mercy of
unscrupulous witness. It is relevant to note that "the right of

prosecution and punishment for a crime is one of the attributes that

by a natural law belongs to the sovereign power instinctly charged
by the common will of the members of society to look after, guard
and defend the interests of the community, the individual and
social rights and the liberties of every citizen and the guaranty of
the exercise of his rights." This cardinal principle which states that
to the State belongs the power to prosecute and punish crimes
should not be overlooked since a criminal offense is an outrage to
the sovereign State.
In her bid to exculpate herself, Ocden asserts that she was also just
an applicant for overseas employment; and that she was receiving
her co-applicants job applications and other requirements, and
accepting her co-applicants payments of placement fees, because
she was designated as the applicants leader by Ramos, the real
recruiter.
Ocdens testimony is self-serving and uncorroborated. Ocdens
denial of any illegal recruitment activity cannot stand against the
prosecution witnesses positive identification of her in court as the
person who induced them to part with their money upon the
misrepresentation and false promise of deployment to Italy as
factory workers. Besides, despite several opportunities given to
Ocden by the RTC, she failed to present Ramos, who Ocden alleged
to be the real recruiter and to whom she turned over the placement
fees paid by her co-applicants.
Between the categorical statements of the prosecution witnesses,
on the one hand, and the bare denial of Ocden, on the other, the
former must perforce prevail. An affirmative testimony is far
stronger than a negative testimony especially when the former
comes from the mouth of a credible witness. Denial, same as an
alibi, if not substantiated by clear and convincing evidence, is
negative and self-serving evidence undeserving of weight in law. It
is considered with suspicion and always received with caution, not
only because it is inherently weak and unreliable but also because
it is easily fabricated and concocted.25
conviction for large scale illegal recruitment must be based on a
finding in each case of illegal recruitment of three or more persons,
whether individually or as a group. While it is true that the law does
not require that at least three victims testify at the trial,
nevertheless, it is necessary that there is sufficient evidence
proving that the offense was committed against three or more
persons. In this case, there is conclusive evidence that Ocden
recruited Mana-a, Ferrer, and Golidans sons, Jeffries and Howard,
for purported employment as factory workers in Italy.
And even though only Ferrer and Golidan testified as to Ocdens
failure to reimburse the placements fees paid when the deployment
did not take place, their testimonies already established the fact of
non-reimbursement as to three persons, namely, Ferrer and
Golidans two sons, Jeffries and Howard.
2.We are likewise affirming the conviction of Ocden for the crime of
estafa. The very same evidence proving Ocdens liability for illegal
recruitment also established her liability for estafa.
In this jurisdiction, it is settled that a person who commits illegal
recruitment may be charged and convicted separately of illegal
recruitment under the Labor Code and estafa under par. 2(a) of Art.
315 of the Revised Penal Code. The offense of illegal recruitment is
malum prohibitum where the criminal intent of the accused is not
necessary for conviction, while estafa is malum in se where the
criminal intent of the accused is crucial for conviction. Conviction
for offenses under the Labor Code does not bar conviction for
offenses punishable by other laws. Conversely, conviction for estafa
under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a
conviction for illegal recruitment under the Labor Code. It follows
that ones acquittal of the crime of estafa will not necessarily result
in his acquittal of the crime of illegal recruitment in large scale, and
vice versa.31
The elements of estafa are present in this case. Both these
elements are present in the instant case. Ocden represented to
Ferrer, Golidan, and Golidans two sons, Jeffries and Howard, that
she could provide them with overseas jobs. Convinced by Ocden,
Ferrer, Golidan, and Golidans sons paid substantial amounts as
placement fees to her. Ferrer and Golidans sons were never able to
leave for Italy, instead, they ended up in Zamboanga, where, Ocden
claimed, it would be easier to have their visas to Italy processed.
Despite the fact that Golidans sons, Jeffries and Howard, were
stranded in Zamboanga for almost a month, Ocden still assured
them and their mother that they would be able to leave for Italy.
There is definitely deceit on the part of Ocden and damage on the
part of Ferrer and Golidans sons, thus, justifying Ocdens conviction
for estafa in Criminal Case Nos. 16316-R, 16318-R, and 16964-R.
Applying the Indeterminate Sentence Law, we take the minimum
term from the penalty next lower than the minimum prescribed by
law, or anywhere within prision correccional minimum and medium
(i.e., from 6 months and 1 day to 4 years and 2 months).33
Consequently, both the RTC and the Court of Appeals correctly fixed
the minimum term in Criminal Case Nos. 16316-R and 16318-R at 2
years, 11 months, and 10 days of prision correccional; and in
Criminal Case No. 16964-R at 4 years and 2 months of prision
correccional, since these are within the range of prision correccional
minimum and medium.1avvphi1
As for the maximum term under the Indeterminate Sentence Law,
we take the maximum period of the prescribed penalty, adding 1
year of imprisonment for every P10,000.00 in excess of P22,000.00,
provided that the total penalty shall not exceed 20 years. To
compute the maximum period of the prescribed penalty, the time
included in prision correccional maximum to prision mayor
minimum shall be divided into three equal portions, with each
portion forming a period. Following this computation, the maximum
period for prision correccional maximum to prision mayor minimum
is from 6 years, 8 months, and 21 days to 8 years. The incremental

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J.SUAREZ II, 2ND SEM,SY 12-13
penalty, when proper, shall thus be added to anywhere from 6
years, 8 months, and 21 days to 8 years, at the discretion of the
court.34
In computing the incremental penalty, the amount defrauded shall
be substracted by P22,000.00, and the difference shall be divided
by P10,000.00. Any fraction of a year shall be discarded as was
done starting with People v. Pabalan.35
There being no aggravating circumstance, we apply the lowest of
the maximum period, which is 6 years, 8 months, and 21 days.
Adding the one year incremental penalty, the maximum term of
Ocdens indeterminate sentence in these two cases is only 7 years,
8 months, and 21 days of prision mayor.
HORTENCIA SALAZAR vs. HON. TOMAS D. ACHACOSO
G.R. No. 81510 March 14, 1990

We reiterate that the Secretary of Labor, not being a judge, may no

longer issue search or arrest warrants. Hence, the authorities must
go through the judicial process. To that extent, we declare Article
38, paragraph (c), of the Labor Code, unconstitutional and
of no force and effect.
EXCEPTION TO THE RULE THAT ONLY A JUDGE COULD ISSUE
WARRANTS: the Morano v. Vivo case involved a deportation case,
governed by Section 69 of the defunct Revised Administrative Code
and by Section 37 of the Immigration Law. We have ruled that in
deportation cases, an arrest (of an undesirable alien) ordered by
the President or his duly authorized representatives, in order to
carry out a final decision of deportation is valid. It is valid, however,
because of the recognized supremacy of the Executive in matters
involving foreign affairs.

FACTS: On November 3, 1987, public respondent Atty. Ferdinand

Marquez to whom said complaint was assigned, sent to the
petitioner the following telegram: On the same day, having
ascertained that the petitioner had no license tooperate a
recruitment agency, public respondent Administrator Tomas D.
Achacoso issued his challenged CLOSURE AND SEIZURE ORDER NO.
1205.

Another factor which makes the search warrants under

consideration constitutionally objectionable is that they are in the
nature of general warrants.

On January 26, 1988 POEA Director on Licensing and Regulation

Atty. Estelita B. Espiritu issued an office order designating
respondents Atty. Marquez, Atty. Jovencio Abara and Atty. Ernesto
Vistro as members of a team tasked to implement Closure and
Seizure Order No. 1205. Doing so, the group assisted by
Mandaluyong policemen and mediamen Lito Castillo of the People's
Journal and Ernie Baluyot of News Today proceeded to the residence
of the petitioner at 615 R.O. Santos St., Mandaluyong, Metro Manila.
There it was found that petitioner was operatin Hannalie Dance
Studio. Before entering the place, the team served said Closure and
Seizure order on a certain Mrs. Flora Salazar who voluntarily
allowed them entry into the premises. Mrs. Flora Salazar informed
the team that Hannalie Dance Studio was accredited with Moreman
Development (Phil.). However, when required to show credentials,
she was unable to produce any. Inside the studio,the team chanced
upon twelve talent performers practicing a dance number and
saw about twenty more waiting outside, The team confiscated
assorted costumes which were duly receipted for by Mrs. Asuncion
Maguelan and witnessed by Mrs.Flora Salazar.

FACTS: Petitioner had been working as a seafarer for Smith Bell

Management, Inc. (respondent) for about five (5) years. 2 On 3
February 1998, petitioner signed a new contract of employment
with respondent, with the duration of nine (9) months. He was
assured of a monthly salary of US$515.00, overtime pay and other
benefits. The following day or on 4 February 1998, the contract was
approved by the Philippine Overseas Employment Administration
(POEA). Petitioner was to be deployed on board the "MSV
Seaspread" which was scheduled to leave the port of Manila for
Canada on 13 February 1998.

On January 28, 1988, petitioner filed with POEA a letter requesting

that the personal properties seized at her residence last January 26,
1988 be immediately returned on the ground that said seizure was
contrary to law and against the will of the owner thereof. Among
our reasons are the following: 1. Our client has not been given any
prior notice or hearing, hence the Closure and Seizure Order No.
1205 dated November 3, 1987 violates "due process of law"
guaranteed under Sec. 1, Art. III, of the Philippine Constitution; 2.
Your acts also violate Sec. 2, Art. III of the Philippine Constitution
which guarantees right of the people "to be secure in their persons,
houses, papers, and effects against unreasonable searches and
seizures of whatever nature and for any purpose."; 3. The premises
invaded by your Mr. Ferdi Marquez and five (5) others (including2
policemen) are the private residence of the Salazar family, and the
entry, search as well as the seizure of the personal properties
belonging to our client were without her consent and were done
with unreasonable force and intimidation, together with grave
abuse of the color of authority, and constitute robbery and violation
of domicile under Arts. 293 and 128 of the Revised Penal Code.
Unless said personal properties worth around TEN THOUSAND
PESOS (P10,000.00) in all (and which were already due for
shipment to Japan) are returned within twenty-four (24) hours from
your receipt hereof, we shall feel free to take all legal action, civil
and criminal, to protect our client's interests.
On February 2, 1988, before POEA could answer the letter,
petitioner filed the instant petition. POEA filed a criminal complaint
against her with the Pasig Provincial Fiscal. On February 2, 1988,
the petitioner filed this suit for prohibition.
ISSUE: May the Philippine Overseas Employment Administration (or
the Secretary of Labor) validly issue warrants of search and seizure
(or arrest) under Article 38 of the Labor Code?
HELD: Under the new Constitution, which states:" no search
warrant or warrant of arrest shall issue except upon probable cause
to be determined personally by the judge after examination under
oath or affirmation of the complainant and the witnesses he may
produce, and
particularly describing the place to be searched and the persons or
things to be seized. "
No longer does the mayor have at this time the power to conduct
preliminary investigations, much less issue orders of arrest. Section
143 of the LGC has been rendered functus officio by the 1987
Constitution.
We agree that the Presidential Anti-Dollar Salting Task Force
exercises, or was meant to exercise, prosecutorial powers, and on
that ground, it cannot be said to be a neutral and detached "judge"
to determine the existence of probable cause for purposes of arrest
or search. Unlike a magistrate, a prosecutor is naturally interested
in the success of his case. Although his office "is to see that justice
is done and not necessarily to secure the conviction of the person
accused," he stands, invariably, as the accused's adversary and his
accuser. To permit him to issue search warrants and indeed,
warrants of arrest, is to make him both judge and jury in his own
right, when he is neither. That makes, to our mind and to that
extent, Presidential Decree No. 1936 as amended by Presidential
Decree No. 2002, unconstitutional. 5

PAUL V. SANTIAGO vs. CF SHARP CREW MANAGEMENT, INC.

G.R. No. 162419
July 10, 2007
TINGA, J.:

A week before the scheduled date of departure, Capt. Pacifico

Fernandez, respondents Vice President, sent a facsimile message
to the captain of "MSV Seaspread," which reads: I received a phone
call today from the wife of Paul Santiago in Masbate asking me not
to send her husband to MSV Seaspread anymore. Other callers who
did not reveal their identity gave me some feedbacks that Paul
Santiago this time if allowed to depart will jump ship in Canada like
his brother Christopher Santiago, O/S who jumped ship from the
C.S. Nexus in Kita-kyushu, Japan last December, 1997.To this
message the captain of "MSV Seaspread" replied: Many thanks for
your advice concerning P. Santiago, A/B. Please cancel plans for him
to return to Seaspread.4
On 9 February 1998, petitioner was thus told that he would not be
leaving for Canada anymore, but he was reassured that he might be
considered for deployment at some future date.
Petitioner filed a complaint for illegal dismissal, damages, and
attorney's fees against respondent and its foreign principal, Cable
and Wireless (Marine) Ltd.5 The case was raffled to Labor Arbiter
TeresitaCastillon-Lora, who ruled that the employment contract
remained valid but had not commenced since petitioner was not
deployed. According to her, respondent violated the rules and
regulations governing overseas employment when it did not deploy
petitioner, causing petitioner to suffer actual damages representing
lost salary income for nine (9) months and fixed overtime fee, all
amounting to US$7, 209.00.
The labor arbiter held respondent liable. On appeal by respondent,
the National Labor Relations Commission (NLRC) ruled that there is
no ER-EE relationship between petitioner and respondent because
under the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean Going Vessels
(POEA Standard Contract), the employment contract shall
commence upon actual departure of the seafarer from the airport or
seaport at the point of hire and with a POEA-approved contract. In
the absence of an ER-EE relationship between the parties, the
claims for illegal dismissal, actual damages, and attorneys fees
should be dismissed.7 On the other hand, the NLRC found
respondents decision not to deploy petitioner to be a valid exercise
of its management prerogative.
Petitioner moved for the reconsideration of the NLRCs Decision but
his motion was denied for lack of merit. 10 He elevated the case to
the Court of Appeals through a petition for certiorari. the Court of
Appeals noted that there is an ambiguity in the NLRCs Decision
when it affirmed with modification the labor arbiters Decision,
because by the very modification introduced by the Commission
(vacating the award of actual damages and attorneys fees), there
is nothing more left in the labor arbiters Decision to
affirm.12According to the appellate court, petitioner is not entitled to
actual damages because damages are not recoverable by a worker
who was not deployed by his agency within the period prescribed in
the POEA Rules.13 It agreed with the NLRCs finding that petitioners
non-deployment was a valid exercise of respondents management
prerogative.14 It added that since petitioner had not departed from
the Port of Manila, no ER-EE relationship between the parties arose
and any claim for damages against the so-called ER could have no
leg to stand on.15
Petitioners subsequent motion for reconsideration was denied on
19 February 2004.16 Petitioner maintains that respondent violated
the Migrant Workers Act and the POEA Rules when it failed to
deploy him within thirty (30) calendar days without a valid reason.
In doing so, it had unilaterally and arbitrarily prevented the
consummation of the POEA- approved contract. Since it prevented
his deployment without valid basis, said deployment being a
condition to the consummation of the POEA contract, the contract is
deemed consummated, and therefore he should be awarded actual
damages, consisting of the stipulated salary and fixed overtime

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J.SUAREZ II, 2ND SEM,SY 12-13
pay.18 Petitioner adds that since the contract is deemed
consummated, he should be considered an EE for all intents and
purposes, and thus the labor arbiter and/or the NLRC has
jurisdiction to take cognizance of his claims. 19
Petitioner additionally claims that he should be considered a regular
EE, having worked for five (5) years on board the same vessel
owned by the same principal and manned by the same local agent.
He argues that respondents act of not deploying him was a scheme
designed to prevent him from attaining the status of a regular EE. 20
Petitioner submits that respondent had no valid and sufficient cause
to abandon the employment contract, as it merely relied upon
alleged phone calls from his wife and other unnamed callers in
arriving at the conclusion that he would jump ship like his brother.
He points out that his wife had executed an affidavit 21 strongly
denying having called respondent, and that the other alleged
callers did not even disclose their identities to respondent. 22 Thus, it
was error for the Court of Appeals to adopt the unfounded
conclusion of the NLRC, as the same was not based on substantial
evidence.23
On the other hand, respondent argues that the Labor Arbiter has no
jurisdiction to award petitioners monetary claims. His employment
with respondent did not commence because his deployment was
withheld for a valid reason. Consequently, the labor arbiter and/or
the NLRC cannot entertain adjudication of petitioners case much
less award damages to him. The controversy involves a breach of
contractual obligations and as such is cognizable by civil courts. 24
On another matter, respondent claims that the second issue posed
by petitioner involves a recalibration of facts which is outside the
jurisdiction of this Court.25
ISSUE: whether the seafarer, who was prevented from leaving the
port of Manila and refused deployment without valid reason but
whose POEA-approved employment contract provides that the EREE relationship shall commence only upon the seafarers actual
departure from the port in the point of hire, is entitled to relief?
HELD:There is no question that the parties entered into an
employment contract on 3 February 1998, whereby petitioner was
contracted by respondent to render services on board "MSV
Seaspread" for the consideration of US$515.00 per month for nine
(9) months, plus overtime pay. However, respondent failed to
deploy petitioner from the port of Manila to Canada. Considering
that petitioner was not able to depart from the airport or seaport in
the point of hire, the employment contract did not commence, and
no ER-EE relationship was created between the parties. 26
However, a distinction must be made between the perfection of the
employment contract and the commencement of the ER-EE
relationship. SAME with STOLT CASE.
Moreover, while the POEA Standard Contract must be recognized
and respected, neither the manning agent nor the ER can simply
prevent a seafarer from being deployed without a valid reason.
Respondents act of preventing petitioner from departing the port of
Manila and boarding "MSV Seaspread" constitutes a breach of
contract, giving rise to petitioners cause of action. Respondent
unilaterally and unreasonably reneged on its obligation to deploy
petitioner and must therefore answer for the actual damages he
suffered.
We take exception to the Court of Appeals conclusion that
damages are not recoverable by a worker who was not deployed by
his agency. The fact that the POEA Rules 27 are silent as to the
payment of damages to the affected seafarer does not mean that
the seafarer is precluded from claiming the same. The sanctions
provided for non-deployment do not end with the suspension or
cancellation of license or fine and the return of all documents at no
cost to the worker. They do not forfend a seafarer from instituting
an action for damages against the ER or agency which has failed to
deploy him.
The POEA Rules only provide sanctions which the POEA can impose
on erring agencies. It does not provide for damages and money
claims recoverable by aggrieved EEs because it is not the POEA, but
the NLRC, which has jurisdiction over such matters.
Despite the absence of an ER-EE relationship between petitioner
and respondent, the Court rules that the NLRC has jurisdiction over
petitioners complaint. The jurisdiction of labor arbiters is not
limited to claims arising from ER-EE relationships. Section 10 of R.A.
No. 8042 (Migrant Workers Act), provides that: Sec. 10.Money
Claims. Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC)
shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the complaint,
the claims arising out of an ER-EE relationship or by virtue of any
law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of
damages. x xx [Emphasis supplied]
The Court also holds that petitioner is entitled to attorneys fees in
the concept of damages and expenses of litigation. Attorney's fees
are recoverable when the defendant's act or omission has
compelled the plaintiff to incur expenses to protect his interest. 31
We note that respondents basis for not deploying petitioner is the
belief that he will jump ship just like his brother, a mere suspicion
that is based on alleged phone calls of several persons whose
identities were not even confirmed. Time and again, this Court has
upheld management prerogatives so long as they are exercised in
good faith for the advancement of the ERs interest and not for the

purpose of defeating or circumventing the rights of the EEs under

special laws or under valid agreements.32 Respondents failure to
deploy petitioner is unfounded and unreasonable, forcing petitioner
to institute the suit below. The award of attorneys fees is thus
warranted.
However, moral damages cannot be awarded in this case. While
respondents failure to deploy petitioner seems baseless and
unreasonable, we cannot qualify such action as being tainted with
bad faith, or done deliberately to defeat petitioners rights, as to
justify the award of moral damages. At most, respondent was being
overzealous in protecting its interest when it became too hasty in
making its conclusion that petitioner will jump ship like his brother.
We likewise do not see respondents failure to deploy petitioner as
an act designed to prevent the latter from attaining the status of a
regular EE. Even if petitioner was able to depart the port of Manila,
he still cannot be considered a regular EE, regardless of his previous
contracts of employment with respondent. In Millares v. National
Labor Relations Commission,33 the Court ruled that seafarers are
considered contractual EEs and cannot be considered as regular
EEs under the Labor Code. Their employment is governed by the
contracts they sign every time they are rehired and their
employment is terminated when the contract expires. The
exigencies of their work necessitates that they be employed on a
contractual basis.34
STOLT-NIELSEN TRANSPORTATION GROUP
MEDEQUILLO,JR.,
G.R. No. 177498
January 18, 2012
PEREZ, J.:

vs.

SULPECIO

FACTS: On 6 March 1995, Sulpecio Madequillo filed a complaint

before the Adjudication Office of the POEA against the petitioners
for illegal dismissal under a first contract and for failure to deploy
under a second contract. In his complaint-affidavit,4 respondent
alleged that:
1.On 6 November 1991(First Contract), he was hired by STOLT on
behalf of its principal Chung-Gai Ship Management of Panama as
Third Assistant Engineer on board the vessel "Stolt Aspiration"
for a period of nine (9) months;
2.He would be paid with a monthly basic salary of $808.00 and a
fixed overtime pay of $404.00 or a total of $1,212.00 per month
during the employment period commencing on 6 November
1991;
3.On 8 November 1991, he joined the vessel MV "Stolt
Aspiration";
4.On February 1992 or for nearly three (3) months of rendering
service and while the vessel was at Batangas, he was ordered by
the ships master to disembark the vessel and repatriated back
to Manila for no reason or explanation;
5.Upon his return to Manila, he immediately proceeded to the
petitioners office where he was transferred employment with
another vessel named MV "Stolt Pride" under the same terms
and conditions of the First Contract;
6.On 23 April 1992, the Second Contract was noted and
approved by the POEA;
7.The POEA, without knowledge that he was not deployed with
the vessel, certified the Second Employment Contract on 18
September 1992.
8.Despite the commencement of the Second Contract on 21 April
1992, petitioners failed to deploy him with the vessel MV "Stolt
Pride";
9.He made a follow-up with the petitioner but the same refused
to comply with the Second Employment Contract.
10.On 22 December 1994, he demanded for his passport,
seamans book and other employment documents. However, he
was only allowed to claim the said documents in exchange of his
signing a document;
11.He was constrained to sign the document involuntarily
because without these documents, he could not seek
employment from other agencies.
He prayed for actual, moral and exemplary damages as well as
attorneys fees for his illegal dismissal and in view of the
Petitioners bad faith in not complying with the Second Contract.
The case was transferred to the LA of the DOLE upon the effectivity
of the Migrant Workers and Overseas Filipinos Act of 1995.The
parties were required to submit their respective position papers
before the LA. However, petitioners failed to submit their respective
pleadings despite the opportunity given to them.5
LA rendered a judgment6 finding that the respondent was
constructively dismissed by the petitioners. LA found the first
contract entered into by and between the complainant and the
respondents to have been novated by the execution of the second
contract. In other words, respondents cannot be held liable for the
first contract but are clearly and definitely liable for the breach of
the second contract.8 However, he ruled that there was no
substantial evidence to grant the prayer for moral and exemplary
damages. NLRC affirmed with modification the Decision of the LA.
Before the NLRC, the petitioners assailed that they were not
properly notified of the hearings that were conducted before the LA.
They further alleged that after the suspension of proceedings
before the POEA, the only notice they received was a copy of the
decision of the LA.The NLRC ruled that records showed that
attempts to serve the various notices of hearing were made on
petitioners counsel on record but these failed on account of their
failure to furnish the Office of the LA a copy of any notice of change
of address. There was also no evidence that a service of notice of
change of address was served on the POEA.

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J.SUAREZ II, 2ND SEM,SY 12-13

The NLRC upheld the finding of unjustified termination of contract

for failure on the part of the petitioners to present evidence that
would justify their non-deployment of the respondent.14 It denied
the claim of the petitioners that the monetary award should be
limited only to three (3) months for every year of the unexpired
term of the contract. It ruled that the factual incidents material to
the case transpired within 1991-1992 or before the effectivity of
Republic Act No. 8042 or the Migrant Workers and Overseas
Filipinos Act of 1995 which provides for such limitation.15
ISSUE1:THE COURT A QUO ERRED IN FINDING THAT THE SECOND
CONTRACT NOVATED THE FIRST CONTRACT.
HELD: We concur with the finding that there was a novation of the
first employment contract. Novation is the extinguishment of an
obligation by the substitution or change of the obligation by a
subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or, by substituting
another in place of the debtor, or by subrogating a third person in
the rights of the creditor. In order for novation to take place, the
concurrence of the following requisites is indispensable: 1)There
must be a previous valid obligation; 2)There must be an agreement
of the parties concerned to a new contract; 3)There must be the
extinguishment of the old contract, and 4)There must be the
validity of the new contract.
We need not dwell on the issue of prescription. It was settled by the
Court of Appeals with its ruling that recovery of damages under the
first contract was already time-barred. Thus: Accordingly, the
prescriptive period of three (3) years within which Medequillo Jr.
may initiate money claims under the 1st contract commenced on
the date of his repatriation. xxx The start of the three (3) year
prescriptive period must therefore be reckoned on February 1992,
which by Medequillo Jr.s own admission was the date of his
repatriation to Manila. It was at this point in time that Medequillo
Jr.s cause of action already accrued under the first contract. He had
until February 1995 to pursue a case for illegal dismissal and
damages arising from the 1st contract. With the filing of his
Complaint-Affidavit on March 6, 1995, which was clearly beyond the
prescriptive period, the cause of action under the 1st contract was
already time-barred.
ISSUE2.THE COURT A QUO ERRED IN RULING THAT THERE WAS
CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT.
HELD:The petitioners argue that under the POEA Contract, actual
deployment of the seafarer is a suspensive condition for the
commencement of the employment. We agree with petitioners on
such point. However, even without actual deployment, the
perfected contract gives rise to obligations on the part of
petitioners.
The POEA Standard Employment Contract provides that
employment shall commence "upon the actual departure of the
seafarer from the airport or seaport in the port of hire."We adhere
to the terms and conditions of the contract so as to credit the valid
prior stipulations of the parties before the controversy started. Else,
the obligatory force of every contract will be useless. Parties are
bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their
nature, may be in keeping with good faith, usage and law.
Thus, even if by the standard contract employment commences
only "upon actual departure of the seafarer", this does not mean
that the seafarer has no remedy in case of non-deployment without
any valid reason. Parenthetically, the contention of the petitioners
of the alleged poor performance of respondent while on board the
first ship MV "Stolt Aspiration" cannot be sustained to justify the
non-deployment, for no evidence to prove the same was presented.
We rule that distinction must be made between the perfection of
the employment contract and the commencement of the ER-EE
relationship. The perfection of the contract, which in this case
coincided with the date of execution thereof, occurred when
petitioner and respondent agreed on the object and the cause, as
well as the rest of the terms and conditions therein. The
commencement of the ER-EE relationship, as earlier discussed,
would have taken place had petitioner been actually deployed from
the point of hire. Thus, even before the start of any ER-EE
relationship, contemporaneous with the perfection of the
employment contract was the birth of certain rights and obligations,
the breach of which may give rise to a cause of action against the
erring party. Thus, if the reverse had happened, that is the seafarer
failed or refused to be deployed as agreed upon, he would be liable
for damages.
ISSUE3:THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN
ASSUMING THERE WAS BASIS FOR HOLDING PETITIONER LIABLE
FOR "FAILURE TO DEPLOY" RESPONDENT, THE POEA RULES
PENALIZES SUCH OMISSION WITH A MERE "REPRIMAND."
HELD:The appellate court correctly ruled that the penalty of
reprimand provided under Rule IV, Part VI of the POEA Rules and
Regulations Governing the Recruitment and Employment of Landbased Overseas Workers is not applicable in this case. The breach
of contract happened on February 1992 and the law applicable at
that time was the 1991 POEA Rules and Regulations Governing
Overseas Employment. The penalty for non-deployment as
discussed is suspension or cancellation of license or fine.
ISSUE4. How will the seafarer be compensated by reason of the
unreasonable non-deployment of the petitioners?
HELD:The POEA Rules Governing the Recruitment and Employment
of Seafarers do not provide for the award of damages to be given in

favor of the EEs. The claim provided by the same law refers to a
valid contractual claim for compensation or benefits arising from
ER-EE relationship or for any personal injury, illness or death at
levels provided for within the terms and conditions of employment
of seafarers. However, the absence of the POEA Rules with regard
to the payment of damages to the affected seafarer does not mean
that the seafarer is precluded from claiming the same. The
sanctions provided for non-deployment do not end with the
suspension or cancellation of license or fine and the return of all
documents at no cost to the worker. As earlier discussed, they do
not forefend a seafarer from instituting an action for damages
against the ER or agency which has failed to deploy him.
We thus decree the application of Section 10 of RA8042 (Migrant
Workers Act) which provides for money claims by reason of a
contract involving Filipino workers for overseas deployment. The
law provides: Sec. 10. Money Claims. Notwithstanding any
provision of law to the contrary, the LAs of the National Labor
Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an ER-EE
relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages.
Following the law, the claim is still cognizable by the LAs of the
NLRC under the second phrase of the provision. Applying the rules
on actual damages, Article 2199 of the New Civil Code provides that
one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved. Respondent
is thus liable to pay petitioner actual damages in the form of the
loss of nine (9) months worth of salary as provided in the
contract.38 This is but proper because of the non-deployment of
respondent without just cause.
SERRANO vs. GALLANT MARITIME SERVICES,INC.
FACTS:Serrano was hired by Gallant Maritime Services, Inc. and
Marlow Navigation Co., Ltd. (respondents) under a POEA-approved
Contract of Employment with the following terms and conditions:
Duration of contract-12 months, Position Chief Officer, Basic SalaryUS$1,400.00,Hours of work-48 hours a week,Overtime-US$700.00
per month, Vacation leave with pay 7.00 days per month .
On March 19, 1998, the date of his departure, petitioner was
constrained to accept a downgraded employment contract for the
position of Second Officer with a monthly salary of US$1,000.00,
upon the assurance and representation of respondents that he
would be made Chief Officer by the end of April 1998. Respondents
did not deliver on their promise to make petitioner Chief Officer.
Hence, petitioner refused to stay on as Second Officer and was
repatriated to the Philippines. Petitioner's employment contract was
for a period of 12 months, but at the time of his repatriation, he had
served only two (2) months and seven (7) days of his contract,
leaving an unexpired portion of nine (9) months and twenty-three
(23) days.
Petitioner filed with the Labor Arbiter a Complaint against
respondents for constructive dismissal and for payment of his
money claims. Labor arbiter rendered decision in favor of Serrano,
however the LA based his computation on the salary period of three
months only rather than the entire unexpired portion of nine
months and 23 days of petitioner's employment contract. the LA
applied the salary rate of US$2,590.00, consisting of petitioner's
basic salary, US$1,400.00/month + US$700.00/month, fixed
overtime pay, + US$490.00/month, vacation leave pay =
US$2,590.00/compensation per month.
Petitioner appealed to the NLRC on the sole issue that the LA erred
in not applying that in case of illegal dismissal, OFWs are entitled to
their salaries for the unexpired portion of their contracts.
The NLRC corrected the LA's computation of the lump-sum salary
awarded to petitioner by reducing the applicable salary rate from
US$2,590.00 to US$1,400.00 because R.A. No. 8042 does not
provide for the award of overtime pay, which should be proven to
have been actually performed, and for vacation leave pay.
Serrano filed a Motion for Partial Reconsideration, but this time he
questioned the constitutionality of the last clause in the 5th
paragraph of Section 10 of RA 8042, which reads: Sec. 10. Money
Claims. x x x In case of termination of overseas employment
without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of
his placement fee with interest of twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired
term, whichever is less.
NLRC denied said petition. Petitioner filed a Petition for Certiorari
with the CA, reiterating the constitutional challenge against the
subject clause.CA affirmed the NLRC ruling on the reduction of the
applicable salary rate; however, the CA skirted the constitutional
issue raised by petitioner.
ISSUE/S: 1. WON the subject clause violates Section 10, Article III
of the Constitution on non-impairment of contracts; 2. WON the
subject clause violate Section 1, Article III of the Constitution, and
Section 18, Article II and Section 3, Article XIII on labor as a
protected sector; 3. WON The subject clause or for three months for
every year of the unexpired term, whichever is less in the 5th
paragraph of Section 10 of Republic Act No. 8042 constitutional.
HELD: 1) The answer is in the negative. Petitioners claim that the
subject clause unduly interferes with the stipulations in his contract

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J.SUAREZ II, 2ND SEM,SY 12-13
on the term of his employment and the fixed salary package he will
receive is not tenable.
The prohibition is aligned with the general principle that laws newly
enacted have only a prospective operation, and cannot affect acts
or contracts already perfected; however, as to laws already in
existence, their provisions are read into contracts and deemed a
part thereof. Thus, the non-impairment clause under Section 10,
Article II is limited in application to laws about to be enacted that
would in any way derogate from existing acts or contracts by
enlarging, abridging or in any manner changing the intention of the
parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in
1995 preceded the execution of the employment contract between
petitioner and respondents in 1998. Hence, it cannot be argued that
R.A. No. 8042, particularly the subject clause, impaired the
employment contract of the parties. Rather, when the parties
executed their 1998 employment contract, they were deemed to
have incorporated into it all the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject
clause may not be declared unconstitutional on the ground that it
impinges on the impairment clause, for the law was enacted in the
exercise of the police power of the State to regulate a business,
profession or calling, particularly the recruitment and deployment
of OFWs, with the noble end in view of ensuring respect for the
dignity and well-being of OFWs wherever they may be employed.
Police power legislations adopted by the State to promote the
health, morals, peace, education, good order, safety, and general
welfare of the people are generally applicable not only to future
contracts but even to those already in existence, for all private
contracts must yield to the superior and legitimate measures taken
by the State to promote public welfare.
2)The answer is in the affirmative. Section 1, Article III of the
Constitution guarantees: No person shall be deprived of life, liberty,
or property without due process of law nor shall any person be
denied the equal protection of the law.
Section 18, Article II and Section 3, Article XIII accord all members
of the labor sector, without distinction as to place of deployment,
full protection of their rights and welfare. To Filipino workers, the
rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits
should be equally enjoyed by workers of similar category, while all
monetary obligations should be borne by them in equal degree;
none should be denied the protection of the laws which is enjoyed
by, or spared the burden imposed on, others in like circumstances.
Such rights are not absolute but subject to the inherent power of
Congress to incorporate, when it sees fit, a system of classification
into its legislation; however, to be valid, the classification must
comply with these requirements: 1) it is based on substantial
distinctions; 2) it is germane to the purposes of the law; 3) it is not
limited to existing conditions only; and 4) it applies equally to all
members of the class.
There are three levels of scrutiny at which the Court reviews the
constitutionality of a classification embodied in a law: a) the
deferential or rational basis scrutiny in which the challenged
classification needs only be shown to be rationally related to
serving a legitimate state interest; b) the middle-tier or
intermediate scrutiny in which the government must show that the
challenged classification serves an important state interest and that
the classification is at least substantially related to serving that
interest; and c) strict judicial scrutiny in which a legislative
classification which impermissibly interferes with the exercise of a
fundamental right or operates to the peculiar disadvantage of a
suspect class is presumed unconstitutional, and the burden is upon
the government to prove that the classification is necessary to
achieve a compelling state interest and that it is the least
restrictive means to protect such interest.
Upon cursory reading, the subject clause appears facially neutral,
for it applies to all OFWs. However, a closer examination reveals
that the subject clause has a discriminatory intent against, and an
invidious impact on, OFWs at two levels: First, OFWs with
employment contracts of less than one year vis--vis OFWs with
employment contracts of one year or more; Second, among OFWs
with employment contracts of more than one year; and Third, OFWs
vis--vis local workers with fixed-period employment;
In sum, prior to R.A. No. 8042, OFWs and local workers with fixedterm employment who were illegally discharged were treated alike
in terms of the computation of their money claims: they were
uniformly entitled to their salaries for the entire unexpired portions
of their contracts. But with the enactment of R.A. No. 8042,
specifically the adoption of the subject clause, illegally dismissed
OFWs with an unexpired portion of one year or more in their
employment contract have since been differently treated in that
their money claims are subject to a 3-month cap, whereas no such
limitation is imposed on local workers with fixed-term employment.
3)The Court concludes that the subject clause contains a suspect
classification in that, in the computation of the monetary benefits of
fixed-term EEs who are illegally discharged, it imposes a 3-month
cap on the claim of OFWs with an unexpired portion of one year or
more in their contracts, but none on the claims of other OFWs or
local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar
disadvantage.

There being a suspect classification involving a vulnerable sector

protected by the Constitution, the Court now subjects the
classification to a strict judicial scrutiny, and determines whether it
serves a compelling state interest through the least restrictive
means. What constitutes compelling state interest is measured by
the scale of rights and powers arrayed in the Constitution and
calibrated by history. It is akin to the paramount interest of the
state for which some individual liberties must give way, such as the
public interest in safeguarding health or maintaining medical
standards, or in maintaining access to information on matters of
public concern.
In the present case, the Court dug deep into the records but found
no compelling state interest that the subject clause may possibly
serve.
In fine, the Government has failed to discharge its burden of
proving the existence of a compelling state interest that would
justify the perpetuation of the discrimination against OFWs under
the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject
clause is to protect the employment of OFWs by mitigating the
solidary liability of placement agencies, such callous and cavalier
rationale will have to be rejected. There can never be a justification
for any form of government action that alleviates the burden of one
sector, but imposes the same burden on another sector, especially
when the favored sector is composed of private businesses such as
placement agencies, while the disadvantaged sector is composed
of OFWs whose protection no less than the Constitution commands.
The idea that private business interest can be elevated to the level
of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the
solidary liability of placement agencies vis-a-vis their foreign
principals, there are mechanisms already in place that can be
employed to achieve that purpose without infringing on the
constitutional rights of OFWs.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A.
No. 8042 is violative of the right of petitioner and other OFWs to
equal protection. The subject clause or for three months for every
year of the unexpired term, whichever is less in the 5th paragraph
of Section 10 of Republic Act No. 8042 is DECLARED
UNCONSTITUTIONAL.
BECMEN SERVICE EXPORTER AND PROMOTIONS,INC., vs.
SPS. CUARESMA
FACTS:On January 6, 1997, Jasmin Cuaresma (Jasmin) was
deployed by Becmen Service Exporter and Promotion, Inc.
(Becmen) to serve as assistant nurse in Al-Birk Hospital in the
Kingdom of Saudi Arabia (KSA), for a contract duration of three
years, with a corresponding salary of US$247.00 per month. Over a
year later, she died allegedly of poisoning. Jessie Fajardo, a coworker of Jasmin, narrated that on June 21, 1998, Jasmin was found
dead by a female cleaner lying on the floor inside her dormitory
room with her mouth foaming and smelling of poison.
Based on the police report and the medical report of the examining
physician of the Al-Birk Hospital, who conducted an autopsy of
Jasmins body, the likely cause of her death was poisoning. Jasmins
body was repatriated to Manila on September 3, 1998. The
following day, the City Health Officer of Cabanatuan City conducted
an autopsy and the resulting medical report indicated that Jasmin
died under violent circumstances, and not poisoning as originally
found by the KSA examining physician. The toxicology report of the
NBI, however, tested negative for non-volatile, metallic poison and
insecticides.
Simplicio and Mila Cuaresma (the Cuaresmas), Jasmins parents and
her surviving heirs, received from the Overseas Workers Welfare
Administration (OWWA) the following amounts: P50,000.00 for
death benefits; P50,000.00 for loss of life; P20,000.00 for funeral
expenses; and P10,000.00 for medical reimbursement.
On November 22, 1999, the Cuaresmas filed a complaint against
Becmen and its principal in the KSA, Rajab & Silsilah Company
(Rajab), claiming death and insurance benefits, as well as moral
and exemplary damages for Jasmins death, Jasmins death was
work-related, having occurred at the ERs premises; that under
Jasmins contract with Becmen, she is entitled to iqama insurance
coverage; that Jasmin is entitled to compensatory damages in the
amount of US$103,740.00, which is the sum total of her monthly
salary of US$247.00 per month under her employment contract,
multiplied by 35 years (or the remaining years of her productive life
had death not supervened at age 25, assuming that she lived and
would have retired at age 60).
In their position paper, Becmen and Rajab insist that Jasmin
committed suicide, citing a prior unsuccessful suicide attempt
sometime in March or April 1998 and relying on the medical report
of the examining physician of the Al-Birk Hospital. They likewise
deny liability because the Cuaresmas already recovered death and
other benefits totaling P130,000.00 from the OWWA. They insist
that the Cuaresmas are not entitled to iqama insurance because
this refers to the issuance not insurance of iqama, or
residency/work permit required in the KSA. On the issue of moral
and exemplary damages, they claim that the Cuaresmas are not
entitled to the same because they have not acted with fraud, nor
have they been in bad faith in handling Jasmins case.
LA dismiss complaint for lack of merit. NLRC reversed the decision
of LA undeclared that, based on substantial evidence adduced,
Jasmin was the victim of compensable work-connected criminal
aggression.

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J.SUAREZ II, 2ND SEM,SY 12-13

CA affirmed NLRC decision,and later on amended its

decision,holding Petitioners are hereby adjudged jointly and
solidarily liable with the ER for the monetary awards with Becmen
Service Exporter and Promotions, Inc. having a right of
reimbursement from White Falcon Services, Inc.
While the case was pending, Becmen filed a manifestation and
motion for substitution alleging that Rajab terminated their agency
relationship and had appointed White Falcon Services, Inc. (White
Falcon) as its new recruitment agent in the Philippines. Thus, White
Falcon was impleaded as respondent as well, and it adopted and
reiterated Becmens arguments in the position paper it
subsequently filed.
ISSUES:1.) WON the Cuaresmas are entitled to monetary claims,
by way of benefits and damages, for the death of their daughter
Jasmin; 2.) WON Jasmins death be considered as work-connected
and thus compensable even while she was not on duty; 3.) WON
employment agencies may be held jointly and solidarily liable.
HELD:1) Article 19 of the Civil Code provides that every person
must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty
and good faith. Article 21 of the Code states that any person who
wilfully causes loss or injury to another in a manner that is contrary
to morals, good customs or public policy shall compensate the
latter for the damage. And, lastly, Article 24 requires that in all
contractual, property or other relations, when one of the parties is
at a disadvantage on account of his moral dependence, ignorance,
indigence, mental weakness, tender age or other handicap, the
courts must be vigilant for his protection.
Clearly, Rajab, Becmen and White Falcons acts and omissions are
against public policy because they undermine and subvert the
interest and general welfare of our OFWs abroad, who are entitled
to full protection under the law. They set an awful example of how
foreign ERs and recruitment agencies should treat and act with
respect to their distressed EEs and workers abroad. Their shabby
and callous treatment of Jasmins case; their uncaring attitude;
their unjustified failure and refusal to assist in the determination of
the true circumstances surrounding her mysterious death, and
instead finding satisfaction in the unreasonable insistence that she
committed suicide just so they can conveniently avoid pecuniary
liability; placing their own corporate interests above of the welfare
of their EEs all these are contrary to morals, good customs and
public policy, and constitute taking advantage of the poor EE and
her familys ignorance, helplessness, indigence and lack of power
and resources to seek the truth and obtain justice for the death of a
loved one.
Giving in handily to the idea that Jasmin committed suicide, and
adamantly insisting on it just to protect Rajab and Becmens
material interest despite evidence to the contrary is against the
moral law and runs contrary to the good custom of not denouncing
ones fellowmen for alleged grave wrongdoings that undermine
their good name and honor.
Whether employed locally or overseas, all Filipino workers enjoy the
protective mantle of Philippine labor and social legislation, contract
stipulations to the contrary notwithstanding. This pronouncement is
in keeping with the basic public policy of the State to afford
protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate the
relations between workers and ERs. This ruling is likewise rendered
imperative by Article 17 of the Civil Code which states that laws
which have for their object public order, public policy and good
customs shall not be rendered ineffective by laws or judgments
promulgated, or by determinations or conventions agreed upon in a
foreign country.
The relations between capital and labor are so impressed with
public interest,and neither shall act oppressively against the other,
or impair the interest or convenience of the public. In case of doubt,
all labor legislation and all labor contracts shall be construed in
favor of the safety and decent living for the laborer.
The grant of moral damages to the EE by reason of misconduct on
the part of the ER is sanctioned by Article 2219 (10) of the Civil
Code, which allows recovery of such damages in actions referred to
in Article 21. Thus, in view of the foregoing, the Court holds that the
Cuaresmas are entitled to moral damages, which Becmen and
White Falcon are jointly and solidarily liable to pay, together with
exemplary damages for wanton and oppressive behavior, and by
way of example for the public good.
2)evidence indicates that it is not. At the time of her death, she was
not on duty, or else evidence to the contrary would have been
adduced. Neither was she within hospital premises at the time.
Instead, she was at her dormitory room on personal time when she
died. Neither has it been shown, nor does the evidence suggest,
that at the time she died, Jasmin was performing an act reasonably
necessary or incidental to her employment as nurse, because she
was at her dormitory room. It is reasonable to suppose that all her
work is performed at the Al-birk Hospital, and not at her dormitory
room.While the ERs premises may be defined very broadly not
only to include premises owned by it, but also premises it leases,
hires, supplies or uses, we are not prepared to rule that the
dormitory wherein Jasmin stayed should constitute ERs premises as
would allow a finding that death or injury therein is considered to
have been incurred or sustained in the course of or arose out of her
employment. There are certainly exceptions, but they do not
appear to apply here. Moreover, a complete determination would
have to depend on the unique circumstances obtaining and the
overall factual environment of the case, which are here

lacking.Thus we categorically hold, based on the evidence; the

actual experiences of our OFWs; and the resilient and courageous
spirit of the Filipina that transcends the vilest desecration of her
physical self, that Jasmin did not commit suicide but a victim of
murderous aggression.
3)Under Republic Act No. 8042 (R.A. 8042), or the Migrant Workers
and Overseas Filipinos Act of 1995, the State shall, at all times,
uphold the dignity of its citizens whether in country or overseas, in
general, and Filipino migrant workers, in particular. The State shall
provide adequate and timely social, economic and legal services to
Filipino migrant workers. The rights and interest of distressed
overseas Filipinos, in general, and Filipino migrant workers, in
particular, documented or undocumented, are adequately protected
and safeguarded. chanroblesvirtuallawlibr
Becmen and White Falcon, as licensed local recruitment agencies,
miserably failed to abide by the provisions of R.A. 8042.
Recruitment agencies are expected to extend assistance to their
deployed OFWs, especially those in distress. Instead, they
abandoned Jasmins case and allowed it to remain unsolved to
further their interests and avoid anticipated liability which parents
or relatives of Jasmin would certainly exact from them. They
willfully refused to protect and tend to the welfare of the deceased
Jasmin, treating her case as just one of those unsolved crimes that
is not worth wasting their time and resources on. The evidence
does not even show that Becmen and Rajab lifted a finger to
provide legal representation and seek an investigation of Jasmins
case. Worst of all, they unnecessarily trampled upon the person and
dignity of Jasmin by standing pat on the argument that Jasmin
committed suicide, which is a grave accusation given its unChristian nature.
Private employment agencies are held jointly and severally liable
with the foreign-based ER for any violation of the recruitment
agreement or contract of employment. This joint and solidary
liability imposed by law against recruitment agencies and foreign
ERs is meant to assure the aggrieved worker of immediate and
sufficient payment of what is due him. If the recruitment/placement
agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the aforesaid
claims and damages.White Falcons assumption of Becmens liability
does not automatically result in Becmens freedom or release from
liability. This has been ruled in ABD Overseas Manpower
Corporation v. NLRC. Instead, both Becmen and White Falcon should
be held liable solidarily, without prejudice to each having the right
to be reimbursed under the provision of the Civil Code that whoever
pays for another may demand from the debtor what he has paid.
SUN ACE vs. NLRC
Doctrine of imputed knowledge
CENTURY CANNING CORPORATION vs. CA and GLORIA C.
PALAD
G.R. No. 152894
August 17, 2007
CARPIO, J.:
FACTS: On 15 July 1997, Century Canning Corporation (petitioner)
hired Gloria C. Palad (Palad) as "fish cleaner" at petitioners tuna
and sardines factory. Palad signed on 17 July 1997 an
apprenticeship agreement3 with petitioner. Palad received an
apprentice allowance of P138.75 daily. On 25 July 1997, petitioner
submitted its apprenticeship program for approval to the TESDA of
the. On 26 September 1997, the TESDA approved petitioners
apprenticeship program.
According to petitioner, a performance evaluation was conducted
on 15 November 1997, where petitioner gave Palad a rating of N.I.
or "needs improvement" since she scored only 27.75% based on a
100% performance indicator. Furthermore, according to the
performance evaluation, Palad incurred numerous tardiness and
absences. As a consequence, petitioner issued a termination
notice5 dated 22 November 1997 to Palad, informing her of her
termination effective at the close of business hours of 28 November
1997.
Palad then filed a complaint for illegal dismissal, underpayment of
wages, and non-payment of pro-rated 13th month pay for the year
1997.
LA dismissed the complaint for lack of merit but ordered petitioner
to pay Palad her last salary and her pro-rated 13th month pay. NLRC
affirmed with modification the Labor Arbiters decision.
CA: the questioned decision of the NLRC is hereby SET ASIDE. that
the apprenticeship agreement which Palad signed was not valid and
binding because it was executed more than two months before the
TESDA approved petitioners apprenticeship program.
prior
approval by the DOLE of the proposed apprenticeship program is a
condition sine qua non before an apprenticeship agreement can be
validly entered into. petitioner illegally dismissed Palad because it
failed to show that Palad was properly apprised of the required
standard of performance. The Court of Appeals likewise held that
Palad was not afforded due process because petitioner did not
comply with the twin requirements of notice and hearing.
ISSUES: 1. WHETHER THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN HOLDING THAT PRIVATE RESPONDENT WAS
NOT AN APPRENTICE; and 2. WHETHER THE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR IN HOLDING THAT PETITIONER
HAD NOT ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE
IN TERMINATING THE SERVICE OF PRIVATE RESPONDENT.

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HELD: 1.The petition is without merit. In the case at bench, the
apprenticeship agreement between petitioner and private
respondent was executed on May 28, 1990 allegedly employing the
latter as an apprentice in the trade of "care maker/molder." On the
same date, an apprenticeship program was prepared by petitioner
and submitted to the Department of Labor and Employment.
However, the apprenticeship agreement was filed only on June 7,
1990. Notwithstanding the absence of approval by the Department
of Labor and Employment, the apprenticeship agreement was
enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the
requirements of the law. It is mandated that apprenticeship
agreements entered into by the ER and apprentice shall be entered
only in accordance with the apprenticeship program duly approved
by the Minister of Labor and Employment.
Prior approval by the Department of Labor and Employment of the
proposed apprenticeship program is, therefore, a condition sine qua
non before an apprenticeship agreement can be validly entered
into.
The act of filing the proposed apprenticeship program with the
Department of Labor and Employment is a preliminary step towards
its final approval and does not instantaneously give rise to an ERapprentice relationship.
Hence, since the apprenticeship agreement between petitioner and
private respondent has no force and effect in the absence of a valid
apprenticeship program duly approved by the DOLE, private
respondents assertion that he was hired not as an apprentice but
as a delivery boy ("kargador" or "pahinante") deserves credence.
He should rightly be considered as a regular EE of petitioner as
defined by Article 280 of the Labor Code .
RA 7796 which created the TESDA, has transferred the authority
over apprenticeship programs from the Bureau of Local
Employment of the DOLE to the TESDA.16 RA 7796 emphasizes
TESDAs approval of the apprenticeship program as a pre-requisite
for the hiring of apprentices. Such intent is clear under Section 4 of
RA 7796:

proceedings, must at least have a modicum of authenticity. This,

respondents failed to comply with. As such, complainant is entitled
to the payment of her wages for the remaining two (2) months of
her apprenticeship agreement.27
Indeed, it appears that the Labor Arbiters conclusion that petitioner
validly terminated Palad was based mainly on the performance
evaluation allegedly conducted by petitioner. However, Palad
alleges that she had no knowledge of the performance evaluation
conducted and that she was not even informed of the result of the
alleged performance evaluation. Palad also claims she did not
receive a notice of dismissal, nor was she given the chance to
explain. According to petitioner, Palad did not receive the
termination notice because Palad allegedly stopped reporting for
work after being informed of the result of the evaluation.
Under Article 227 of the Labor Code, the ER has the burden of
proving that the termination was for a valid or authorized cause.28
Petitioner failed to substantiate its claim that Palad was terminated
for valid reasons. In fact, the NLRC found that petitioner failed to
prove the authenticity of the performance evaluation which
petitioner claims to have conducted on Palad, where Palad received
a performance rating of only 27.75%. Petitioner merely relies on the
performance evaluation to prove Palads inefficiency. It was likewise
not shown that petitioner ever apprised Palad of the performance
standards set by the company. When the alleged valid cause for the
termination of employment is not clearly proven, as in this case, the
law considers the matter a case of illegal dismissal.29
Furthermore, Palad was not accorded due process. Even if petitioner
did conduct a performance evaluation on Palad, petitioner failed to
warn Palad of her alleged poor performance. In fact, Palad denies
any knowledge of the performance evaluation conducted and of the
result thereof. Petitioner likewise admits that Palad did not receive
the notice of termination30 because Palad allegedly stopped
reporting for work. The records are bereft of evidence to show that
petitioner ever gave Palad the opportunity to explain and defend
herself. Clearly, the two requisites for a valid dismissal are lacking
in this case.
ATLANTA INDUSTRIES, INC. vs. APRILITO R. SEBOLINO
G.R. No. 187320
January 26, 2011
BRION, J.:

Since Palad is not considered an apprentice because the

apprenticeship agreement was enforced before the TESDAs
approval of petitioners apprenticeship program, Palad is deemed a
regular EE performing the job of a "fish cleaner." Clearly, the job of
a "fish cleaner" is necessary in petitioners business as a tuna and
sardines factory. Under Article 28021 of the Labor Code, an
employment is deemed regular where the EE has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the ER.

FACTS: complainants filed several complaints for illegal dismissal,

regularization, underpayment, nonpayment of wages and other
money claims, as well as claims for moral and exemplary damages
and attorneys fees against the petitioners Atlanta and its President
and Chief Operating Officer Robert Chan. Atlanta is a domestic
corporation engaged in the manufacture of steel pipes. The
complaints were consolidated and were raffled to Labor Arbiter
Daniel Cajilig, but were later transferred to Labor Arbiter Dominador
B. Medroso, Jr.

2. Under Article 27922 of the Labor Code, an ER may terminate the

services of an EE for just causes23 or for authorized causes.24
Furthermore, under Article 277(b)25 of the Labor Code, the ER must
send the EE who is about to be terminated, a written notice stating
the causes for termination and must give the EE the opportunity to
be heard and to defend himself. Thus, to constitute valid dismissal
from employment, two requisites must concur: (1) the dismissal
must be for a just or authorized cause; and (2) the EE must be
afforded an opportunity to be heard and to defend himself.

The complainants alleged that they had attained regular status as

they were allowed to work with Atlanta for more than 6 months
from the start of a purported apprenticeship agreement between
them and the company. They claimed that they were illegally
dismissed when the apprenticeship agreement expired.

In this case, the Labor Arbiter held that petitioner terminated Palad
for habitual absenteeism and poor efficiency of performance. Under
Section 25, Rule VI, Book II of the Implementing Rules of the Labor
Code, habitual absenteeism and poor efficiency of performance are
among the valid causes for which the ER may terminate the
apprenticeship agreement after the probationary period.
However, the NLRC reversed the finding of the Labor Arbiter on the
issue of the legality of Palads termination: As to the validity of
complainants dismissal in her status as an apprentice, suffice to
state that the findings of the Arbiter that complainant was
dismissed due to failure to meet the standards is nebulous. What
clearly appears is that complainant already passed the probationary
status of the apprenticeship agreement of 200 hours at the time
she was terminated on 28 November 1997 which was already the
fourth month of the apprenticeship period of 1000 hours. As such,
under the Code, she can only be dismissed for cause, in this case,
for poor efficiency of performance on the job or in the classroom for
a prolonged period despite warnings duly given to the apprentice.
We noted that no clear and sufficient evidence exist to warrant her
dismissal as an apprentice during the agreed period. Besides the
absence of any written warnings given to complainant reminding
her of "poor performance," respondents evidence in this respect
consisted of an indecipherable or unauthenticated xerox of the
performance evaluation allegedly conducted on complainant. This is
of doubtful authenticity and/or credibility, being not only incomplete
in the sense that appearing thereon is a signature (not that of
complainant) side by side with a date indicated as "1/16/98". From
the looks of it, this signature is close to and appertains to the
typewritten position of "Division/Department Head", which is below
the signature of complainants immediate superior who made the
evaluation indicated as "11-15-97."
The only conclusion We can infer is that this evaluation was made
belatedly, specifically, after the filing of the case and during the
progress thereof in the Arbitral level, as shown that nothing thereon
indicate that complainant was notified of the results. Its
authenticity therefor, is a big question mark, and hence lacks any
credibility. Evidence, to be admissible in administrative

In defense, Atlanta and Chan argued that the workers were not
entitled to regularization and to their money claims because they
were engaged as apprentices under a government-approved
apprenticeship program. The company offered to hire them as
regular EEs in the event vacancies for regular positions occur in the
section of the plant where they had trained. They also claimed that
their names did not appear in the master list of EEs prior to their
engagement as apprentices.
On May 24, 2005, dela Cruz, Magalang, Zao and Chiong executed
a Pagtalikod at Pagwawalang Saysay before Labor Arbiter Cajilig.
Labor Arbiter Medroso dismissed the complaint with respect to dela
Cruz, Magalang, Zao and Chiong, but found the termination of
service of the remaining nine to be illegal.6 Consequently, the
arbiter awarded the dismissed workers backwages, wage
differentials, holiday pay and service incentive leave pay.
Atlanta appealed to the NLRC. In the meantime Ramos, Alegria,
Villagomez, Costales and Almoite allegedly entered into a
compromise agreement with Atlanta.7 The agreement provided that
except for Ramos, Atlanta agreed to pay the workers a specified
amount as settlement, and to acknowledge them at the same time
as regular EEs.
NLRC rendered a decision (1) withdrawing the illegal dismissal
finding with respect to Sagun, Mabanag, Sebolino and Pedregoza;
(2) affirming the dismissal of the complaints of dela Cruz, Zao,
Magalang and Chiong; (3) approving the compromise agreement
entered into by Costales, Ramos, Villagomez, Almoite and Alegria,
and (4) denying all other claims.
Sebolino, Costales, Almoite and Sagun moved for the
reconsideration of the decision, but the NLRC denied the motion.
The four then sought relief from the CA through a petition for
certiorari under Rule 65 of the Rules of Court. They charged that the
NLRC committed grave abuse of discretion in: (1) failing to
recognize their prior employment with Atlanta; (2) declaring the
second apprenticeship agreement valid; (3) holding that the
dismissal of Sagun, Mabanag, Sebolino and Melvin Pedregoza is
legal; and (4) upholding the compromise agreement involving
Costales, Ramos, Villagomez, Almoite and Alegria.
The CA granted the petition based on the following findings:1. The
respondents were already EEs of the company before they entered
into the first and second apprenticeship agreements; 2. The first

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J.SUAREZ II, 2ND SEM,SY 12-13
and second apprenticeship agreements were defective as they were
executed in violation of the law and the rules.The agreements did
not indicate the trade or occupation in which the apprentice would
be trained; neither was the apprenticeship program approved by
the TESDA; 3. The positions occupied by the respondents machine
operator, extruder operator and scaleman are usually necessary
and desirable in the manufacture of plastic building materials, the
companys main business. Costales, Almoite, Sebolino and Sagun
were, therefore, regular EEs whose dismissals were illegal for lack
of a just or authorized cause and notice; 4. The compromise
agreement entered into by Costales and Almoite, together with
Ramos, Villagomez and Alegria, was not binding on Costales and
Almoite because they did not sign the agreement.The petitioners
themselves admitted that Costales and Almoite were initially
planned to be a part of the compromise agreement, but their
employment has been regularized as early as January 11, 2006;
hence, the company did not pursue their inclusion in the
compromise agreement.
The CA faulted the NLRC for failing to appreciate the evidence
regarding the respondents prior employment with Atlanta. The CA
noted that Atlanta failed to challenge the authenticity of the two
documents before it and the labor authorities.Atlanta and Chan
moved for reconsideration, but the CA denied the motion in a
resolution.
ISSUE1: whether or not the documents accompanying the petition
sufficiently supported the allegations therein.
HELD: The accompanying CA decision38 and resolution,39 as well
as those of the labor arbiter40 and the NLRC,41 referred to the
parties position papers and even to their replies and rejoinders.
Significantly, the CA decision narrates the factual antecedents,
defines the complainants cause of action, and cites the arguments,
including the evidence the parties adduced. If any, the defect in the
petition lies in the petitioners failure to provide legible copies of
some of the material documents mentioned, especially several
pages in the decisions of the labor arbiter and of the NLRC. This
defect, however, is not fatal as the challenged CA decision clearly
summarized the labor tribunals rulings. We, thus, find no
procedural obstacle in resolving the petition on the merits.
ISSUE2: WON Costales, Almoite, Sebolino and Sagun were illegally
dismissed and the apprenticeship agreements were invalid.
HELD: We find no merit in the petition. The CA committed no
reversible error in nullifying the NLRC decision42 and in affirming
the labor arbiters ruling,43 as it applies to Costales, Almoite,
Sebolino and Sagun. Specifically, the CA correctly ruled that the
four were illegally dismissed because (1) they were already EEs
when they were required to undergo apprenticeship and (2)
apprenticeship agreements were invalid.
First. Based on company operations at the time material to the
case, Costales, Almoite, Sebolino and Sagun were already rendering
service to the company as EEs before they were made to undergo
apprenticeship. The company itself recognized the respondents
status through relevant operational records Under the CPS
monthly report, Atlanta assigned Costales and Almoite to the first
shift 7am to 3pm of the Sections work. The Production and Work
Schedules, in addition to the one noted by the CA, showed that
Sebolino and Sagun were scheduled on different shifts vis--vis the
production and work of the companys PE/Spiral Section for the for
several periods
We stress that the CA correctly recognized the authenticity of the
operational documents, for the failure of Atlanta to raise a
challenge against these documents before the labor arbiter, the
NLRC and the CA itself. The appellate court, thus, found the said
documents sufficient to establish the employment of the
respondents before their engagement as apprentices.
Second. The Master List of EEs that the petitioners heavily rely upon
as proof of their position that the respondents were not Atlantas
EEs, at the time they were engaged as apprentices, is unreliable
and does not inspire belief.
The list, consisting of several pages, is hardly legible. It requires
extreme effort to sort out the names of the EEs listed, as well as the
other data contained in the list. For this reason alone, the list
deserves little or no consideration. As the respondents also pointed
out, the list itself contradicts a lot of Atlantas claims and
allegations, thus: it lists only the names of inactive EEs; even the
names of those the NLRC found to have been employed by Atlanta,
like Costales and Almoite, and those who even Atlanta claims
attained regular status do not appear in the list when it was
supposed to account for all EEs. the list contains no entries of EEs
who were hired or who resigned.
We cannot fault the CA for ignoring the Master List even if
Bernardo, its head office accountant, swore to its correctness and
authenticity.56 Its substantive unreliability gives it very minimal
probative value. Atlanta would have been better served, in terms of
reliable evidence, if true copies of the payroll (on which the list was
based, among others, as Bernardo claimed in her affidavit) were
presented instead.
Third. The fact that Costales, Almoite, Sebolino and Sagun were
already rendering service to the company when they were made to
undergo apprenticeship (as established by the evidence) renders
the apprenticeship agreements irrelevant as far as the four are
concerned. This reality is highlighted by the CA finding that the
respondents occupied positions such as machine operator,
scaleman and extruder operator - tasks that are usually necessary
and desirable in Atlantas usual business or trade as manufacturer
of plastic building materials. These tasks and their nature
characterized the four as regular EEs under Article 280 of the Labor

Code. Thus, when they were dismissed without just or authorized

cause, without notice, and without the opportunity to be heard,
their dismissal was illegal under the law.
Even if we recognize the companys need to train its EEs through
apprenticeship, we can only consider the first apprenticeship
agreement for the purpose. With the expiration of the first
agreement and the retention of the EEs, Atlanta had, to all intents
and purposes, recognized the completion of their training and their
acquisition of a regular EE status. To foist upon them the second
apprenticeship agreement for a second skill which was not even
mentioned in the agreement itself,is a violation of the Labor Codes
implementing rules60 and is an act manifestly unfair to the EEs, to
say the least. This we cannot allow.
Fourth. The compromise agreement allegedly entered into by
Costales and Almoite, together with Ramos, Villagomez and Alegria,
purportedly in settlement of the case before the NLRC, is not
binding on Costales and Almoite because they did not sign it. The
company itself admitted62 that while Costales and Almoite were
initially intended to be a part of the agreement, it did not pursue
their inclusion "due to their regularization.
MARITES BERNARDO et al. vs. NLRC and FAR EAST BANK
AND TRUST COMPANY
G.R. No. 122917 July 12, 1999
PANGANIBAN, J.:
FACTS: Complainants numbering 43 are deaf-mutes who were hired
on various periods from 1988 to 1993 by respondent FEBATCO as
Money Sorters and Counters through a uniformly worded
agreement called "Employment Contract for Handicapped Workers".
The EE shall perform among others, the following duties and
responsibilities: i. Sort out bills according to color;ii. Count each
denomination per hundred, either manually or with the aid of a
counting machine; iii. Wrap and label bills per hundred; iv. Put the
wrapped bills into bundles; and v. Submit bundled bills to the bank
teller for verification. The EE shall undergo a training period of one
(1) month, after which the BANK shall determine whether or not
he/she should be allowed to finish the remaining term of this
Contract. The EE shall be entitled to an initial compensation of
P118.00 per day, subject to adjustment in the sole judgment of the
BANK, payable every 15th and end of the month. The regular work
schedule of the EE shall be five (5) days per week, from Mondays
thru Fridays, at eight (8) hours a day. The EE may be required to
perform overtime work as circumstance may warrant, for which OT
work he/she [shall] be paid an additional compensation of 125% of
his daily rate if performed during ordinary days and 130% if
performed during Saturday or [a] rest day. The EE shall likewise be
entitled to the following benefits: i. Proportionate 13th month pay
based on his basic daily wage.ii, Five (5) days incentive leave, iii.
SSS premium payment. The Employment Contract shall be for a
period of six (6) months unless earlier terminated by the BANK for
any just or reasonable cause. Any continuation or extension of this
Contract shall be in writing and therefore this Contract will
automatically expire at the end of its terms unless renewed in
writing by the BANK.
Their employment[s] were renewed every six months such that by
the time this case arose, there were fifty-six (56) deaf-mutes who
were employed by respondent under the said employment
agreement.
NLRC: affirmed LAs decision. We agree that Art. 280 is not
controlling herein. We give due credence to the conclusion that
complainants were hired as an accommodation to [the]
recommendation
of
civic
oriented
personalities
whose
employment[s] were covered by Employment Contract[s] with
special provisions on duration of contract as specified under Art. 80.
Hence, as correctly held by the LA a quo, the terms of the contract
shall be the law between the parties. that the Magna Carta for
Disabled Persons was not applicable, "considering the prevailing
circumstances/milieu of the case."
ISSUES: The Honorable Commission committed grave abuse of
discretion in holding 1)that the petitioners were not regular EEs;
2)that the employment contracts signed and renewed by the
petitioners were valid; and 3)in not applying the provisions of the
Magna Carta for the Disabled on proscription against discrimination
against disabled persons. 11
HELD: The petition is meritorious. However, only the 27 EEs, who
worked for more than six months and whose contracts were
renewed are deemed regular. Hence, their dismissal from
employment was illegal. The facts, viewed in light of the Labor
Code and the Magna Carta for Disabled Persons, indubitably show
that the petitioners, except 16 of them, should be deemed regular
EEs. As such, they have acquired legal rights that this Court is dutybound to protect and uphold, not as a matter of compassion but as
a consequence of law and justice.
Respondent bank entered into the aforesaid contract with a total of
56 handicapped workers and renewed the contracts of 37 of them.
In fact, two of them worked from 1988 to 1993. Verily, the renewal
of the contracts of the handicapped workers and the hiring of
others lead to the conclusion that their tasks were beneficial and
necessary to the bank. More important, these facts show that they
were qualified to perform the responsibilities of their positions. In
other words, their disability did not render them unqualified or unfit
for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates No
disabled person shall be denied access to opportunities for suitable
employment. A qualified disabled EE shall be subject to the same
terms and conditions of employment and the same compensation,

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J.SUAREZ II, 2ND SEM,SY 12-13
privileges, benefits, fringe benefits, incentives or allowances as a
qualified able bodied person.
The fact that the EEs were qualified disabled persons necessarily
removes the employment contracts from the ambit of Article 80.
Since the Magna Carta accords them the rights of qualified ablebodied persons, they are thus covered by Article 280 of the Labor
Code, which provides that The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be regular where
the EE has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the ER,
except where the employment has been fixed for a specific project
or undertaking the completion or termination of which has been
determined at the time of the engagement of the EE or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, That, any EE who has rendered
at least one year of service, whether such service is continuous or
broken, shall be considered as regular EE with respect to the
activity in which he is employed and his employment shall continue
while such activity exists.
The test of whether an EE is regular was laid down in De Leon v.
NLRC: The primary standard, therefore, of determining regular
employment is the reasonable connection between the particular
activity performed by the EE in relation to the usual trade or
business of the ER. The test is whether the former is usually
necessary or desirable in the usual business or trade of the ER. The
connection can be determined by considering the nature of the
work performed and its relation to the scheme of the particular
business or trade in its entirety. Also if the EE has been performing
the job for at least one year, even if the performance is not
continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the
necessity if not indispensibility of that activity to the business.
Hence, the employment is considered regular, but only with respect
to such activity, and while such activity exist.
Without a doubt, the task of counting and sorting bills is necessary
and desirable to the business of respondent bank.
As held by the Court, "Articles 280 and 281 of the Labor Code put
an end to the pernicious practice of making permanent casuals of
our lowly EEs by the simple expedient of extending to them
probationary appointments, ad infinitum." 15 The contract signed
by petitioners is akin to a probationary employment, during which
the bank determined the EEs' fitness for the job. When the bank
renewed the contract after the lapse of the six-month probationary
period, the EEs thereby became regular EEs. 16 No ER is allowed to
determine indefinitely the fitness of its EEs.
As regular EEs, the twenty-seven petitioners are entitled to security
of tenure; that is, their services may be terminated only for a just or
authorized cause. Because respondent failed to show such cause,
17 these twenty-seven petitioners are deemed illegally dismissed
and therefore entitled to back wages and reinstatement without
loss of seniority rights and other privileges. 18 Considering the
allegation of respondent that the job of money sorting is no longer
available because it has been assigned back to the tellers to whom
it originally belonged, 18 petitioners are hereby awarded separation
pay in lieu of reinstatement. 20
Because the other sixteen worked only for six months, they are not
deemed regular EEs and hence not entitled to the same benefits.
it must be emphasized that a contract of employment is impressed
with public interest. Provisions of applicable statutes are deemed
written into the contract, and the "parties are not at liberty to
insulate themselves and their relationships from the impact of labor
laws and regulations by simply contracting with each other."
Clearly, the agreement of the parties regarding the period of
employment cannot prevail over the provisions of the Magna Carta
for Disabled Persons, which mandate that petitioners must be
treated as qualified able-bodied EEs.
Respondent's reason for terminating the employment of petitioners
is instructive. Because the Bangko Sentral ng Pilipinas (BSP)
required that cash in the bank be turned over to the BSP during
business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to
nighttime sorting and counting of money. Thus, it reasons that this
task "could not be done by deaf mutes because of their physical
limitations as it is very risky for them to travel at night." 24 We find
no basis for this argument. Travelling at night involves risks to
handicapped and able-bodied persons alike. This excuse cannot
justify the termination of their employment.
CLIENTLOGIC PHILPPINES, INC. (now known as SITEL) et al.
vs. BENEDICT CASTRO
G.R. No. 186070, April 11, 2011
NACHURA, J.:

requesting for the details of the agents alleged medical

consultation. His request was denied on the ground that medical
records of EEs are highly confidential and can only be disclosed in
cases involving health issues, and not to be used to build any
disciplinary case against them.
respondent received a notice requiring him to explain why he
should not be penalized for: (1) violating Green Dot Companys
Policy and Procedure for Direct Deposit Bank Info Request when he
accessed a customers online account and then gave the latters
routing and reference numbers for direct deposit; and (2) gravely
abusing his discretion when he requested for the medical records of
his team members. Respondent did not deny the infractions
imputed against him. He, however, justified his actuations by
explaining that the customer begged him to access the account
because she did not have a computer or an internet access and
that he merely requested for a patient tracker, not medical records.
a poster showing SITELs organizational chart was posted on the
companys bulletin board, but respondents name and picture were
conspicuously missing, and the name and photo of another EE
appeared in the position which respondent was supposedly
occupying.
On January 22, 2007, SITEL posted a notice of vacancy for
respondents position, and on February 12, 2007, he received a
Notice of Termination. These events prompted him to file a
complaint for illegal dismissal; non-payment of overtime pay, rest
day pay, holiday pay, service incentive leave pay; full backwages;
damages; and attorneys fees before the Labor Arbiter (LA) against
herein petitioners SITEL and its officers, Joseph Velasquez
(Velasquez), Irene Roa (Roa), and Rodney Spires (Spires). [5]
In their position paper, [petitioners averred that respondent was
dismissed on account of valid and justifiable causes. He committed
serious misconduct which breached the trust and confidence
reposed in him by the company. He was duly furnished the twin
notices required by the Labor Code. Further, he is not entitled to
overtime pay, rest day pay, night shift differential, holiday pay, and
service incentive leave pay because he was a supervisor, hence, a
member of the managerial staff.
In his Position Paper, (respondent) states that he worked from 8PM
to 10AM or 4PM to 12AM of the following day; he was also required
to work during his restdays and during holidays but he was not
paid; he was also not paid overtime pay; night shift differentials,
and service incentive leave. He was employed as call center agent
on 14 February 2005, then promoted as Mentor in August 2005,
and again promoted to Coach position in September 2005, which
was the position he had when he was terminated.
LA:illegally dismissed and ordering petitioners to pay his full
backwages and, in lieu of reinstatement, his separation pay. The LA
further awarded respondents money claims upon finding that he
was not occupying a managerial position.
NLRC, reversed and set aside the decision of the LA by dismissing
the complaint for lack of merit on the ground that respondents
employment was terminated for a just cause. The NLRC failed to
discuss the money claims.
CA affirmed the NLRCs finding that there was no illegal dismissal.
Anent the money claims, however, the CA concurred with the LAs
ruling.
ISSUE: whether the duties and responsibilities performed by
respondent qualify him as a member of petitioners managerial
staff.
HELD: This is clearly a question of fact, the determination of which
entails an evaluation of the evidence on record. The alleged errors
of the CA lengthily enumerated in the petition [13] are essentially
factual in nature and, therefore, outside the ambit of a petition for
review on certiorari under Rule 45 of the Rules of Civil Procedure.
Petitioners claim exception to the foregoing rule and assert that the
factual findings of the LA and the NLRC were conflicting. This is not
correct. The labor tribunals decisions were at odds only with
respect to the issue of illegal dismissal. Anent the money claims
issue, it cannot be said that their rulings were contradictory
because the NLRC, disappointingly, did not make any finding
thereon and it erroneously construed that the resolution of the
money claims was intertwined with the determination of the legality
of respondents dismissal. Nonetheless, the CA has already rectified
such lapse when it made a definitive review of the LAs factual
findings on respondents money claims.

FACTS: Respondent was employed by petitioner SITEL as a call

center agent for its Bell South Account. After 6 months, he was
promoted to the Mentor position, and thereafter to the Coach
position. A Coach is a team supervisor who is in charge of dealing
with customer complaints which cannot be resolved by call center
agents. In June 2006, he was transferred to the Dot Green Account.

EEs are considered occupying managerial positions if they meet

all of the following conditions, namely:
1) Their primary duty consists of management of the establishment
in which they are employed or of a department or subdivision
thereof;
2) They customarily and regularly direct the work of two or more
EEs therein;
3) They have the authority to hire or fire other EEs of lower rank; or
their suggestions and recommendations as to the hiring and firing
and as to the promotion or any other change of status of other EEs
are given particular weight.

During respondents stint at the Dot Green Account, respondent

noticed that some of the call center agents under him would often
make excuses to leave their work stations. Their most common
excuse was that they would visit the companys medical clinic. To
verify that they were not using the clinic as an alibi to cut their work
hours, respondent sent an e-mail to the clinics personnel

They are considered as officers or members of a managerial staff

if they perform the following duties and responsibilities:
1) The primary duty consists of the performance of work directly
related to management of policies of their ER;
2) Customarily and regularly exercise discretion and independent
judgment;

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J.SUAREZ II, 2ND SEM,SY 12-13
3) (i) Regularly and directly assist a proprietor or a managerial EE
whose primary duty consists of management of the establishment
in which he is employed or subdivision thereof; or (ii) execute under
general supervision work along specialized or technical lines
requiring special training, experience, or knowledge; or (iii) execute,
under general supervision, special assignment and tasks.
4)
Who do not devote more than 20 percent of their hours
worked in a workweek to activities which are not directly and
closely related to the performance of the work described in
paragraphs (1), (2), and (3) above
(Respondents) duties do not fall under any of the categories
enumerated above. His work is not directly related to management
policies. Even the circumstances shown by the instant case reveal
that (respondent) does not regularly exercise discretion and
independent judgment. (Petitioners) submitted a list of the
responsibilities of HR Manager/Supervisor and Division
Manager/Department Manager/Supervisors but these do not
pertain to (respondent) who does not have any of the said
positions. He was just a team Supervisor and not (an) HR or
Department Supervisor. [15]
We find no reversible error in the above ruling. The test of
supervisory or managerial status depends on whether a person
possesses authority to act in the interest of his ER and whether
such authority is not merely routinary or clerical in nature, but
requires the use of independent judgment. [16] The position held
by respondent and its concomitant duties failed to hurdle this test.
This job description does not indicate that respondent can exercise
the powers and prerogatives equivalent to managerial actions
which require the customary use of independent judgment. There is
no showing that he was actually conferred or was actually
exercising the following duties attributable to a member of the
managerial staff
According to petitioners, respondent also performed the following
duties, as shown in the companys Statement of Policy on
Discipline:
a. Know and understand in full the Policy on Discipline including
their underlying reasons.
b. Implement strictly and consistently the Policy on Discipline.
c. Ensure that the said Policy on Discipline is communicated to and
understood by all EEs.
d. Monitor compliance by EEs with the said Policy.
e. Advise HR Manager on the state of discipline in their respective
departments; problems, if any, and recommend solution(s) and
corrective action(s).
As correctly observed by the CA and the LA, these duties clearly
pertained
to
Division
Managers/Department
Managers/
Supervisors, which respondent was not, as he was merely a team
supervisor. Petitioners themselves described respondent as the
superior of a call center agent; he heads and guides a specific
number of agents, who form a team. From the foregoing,
respondent is thus entitled to his claims for holiday pay, service
incentive leave pay, overtime pay and rest day pay,
AUTOBUS vs. BAUTISTA
G.R. No. 156367May 16, 2005
FACTS:Antonio Bautista has been employed as driver-conductor he
was paid on commission basis, seven percent (7%) of the total
gross income per travel, on a twice a month basis. while driving
Autobus No. 114 along Sta. Fe, Nueva Vizcaya, his bus accidentally
bumped the rear portion of Autobus No. 124 because it suddenly
stopped w/o any warning sign
BAUTISTA: kasalan ng Autobus dahil pinilit akong magtrabaho
kahit wala akong tulog for 24hours dahil kadarating ko lang mula sa
Isabela he was not allowed to work until he fully paid the amount
of P75,551.50, representing thirty percent (30%) of the cost of
repair of the damaged buses. the management sent him a
termination letter. Thus, Bautista instituted a complaint for ILLEGAL
DISMISSAL with Money Claims for nonpayment of 13th month pay
and service incentive leave pay against Autobus
AUTOBUS: Bautistas employment was replete with offenses
involving reckless imprudence, gross negligence, and dishonesty. To
support its claim, petitioner presented copies of letters, memos,
irregularity reports, and warrants of arrest pertaining to several
incidents wherein he was involved. in the exercise of its
management
prerogative,
respondent's
employment
was
terminated only after the latter was provided with an opportunity to
explain his side regarding the accident on 03 January 2000. hindi
siya entitled sa service incentive pay kasi on commission basis siya
binabayaran
LA: no illegal dismissal but Autobus must pay Bautista his a. 13th
month pay & b. his service incentive leave pay
NLRC: affirmed the LA but deleted the award of 13th month pay
because Bautista is not covered by the provision on [T]he Rules and
Regulations Implementing Presidential Decree No. 851, particularly
Sec. 3: Section 3. ERs covered. ' The Decree shall apply to all ERs
except to: e) ERs of those who are paid on purely commission,
boundary, or task basis, performing a specific work, irrespective of
the time consumed in the performance thereof. xxx.
-Bautista admitted that he is paid on commission basis
CA: denied the MR
ISSUES: 1)Whether or not respondent is entitled to service
incentive leave; 2)WON the three (3)-year prescriptive period
provided under Article 291 of the Labor Code, as amended, is
applicable to respondent's claim of service incentive leave pay.

HELD: 1)Article 95 of the Labor Code vis--vis Section 1(D), Rule V,

Book III of the Implementing Rules and Regulations of the Labor
Code gives the conclusion that the grant of service incentive leave
has been delimited by the Implementing Rules and Regulations of
the Labor Code to apply only to those EEs not explicitly excluded by
Section 1 of Rule V. According to the Implementing Rules, Service
Incentive Leave shall not apply to EEs classified as 'field personnel.
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE: (a)Every EE who has
rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE: SECTION 1. Coverage. '
This rule shall apply to all EEs except: (d) Field personnel and other
EEs whose performance is unsupervised by the ER including those
who are engaged on task or contract basis, purely commission
basis, or those who are paid in a fixed amount for performing work
irrespective of the time consumed in the performance thereof; .
it serves as an amplification of the interpretation of the definition
of field personnel under the Labor Code as those 'whose actual
hours of work in the field cannot be determined with reasonable
certainty. EEs engaged on task or contract basis or paid on purely
commission basis are not automatically exempted from the grant of
service incentive leave, unless, they fall under the classification of
field personnel.
AUTOBUS contention that since he is paid on commission basis
exempts him from service incentive pay is MISPLACED. To ascertain
an EEs entitlement to service incentive pay is whether he is field
personnel.
Accdg. to the Bureau of Working Conditions (BWC), Advisory
Opinion to Philippine Technical-Clerical Commercial EEs
Association :
As a general rule, [field personnel] are those whose performance of
their job/service is not supervised by the ER or his representative,
the workplace being away from the principal office and whose hours
and days of work cannot be determined with reasonable certainty;
hence, they are paid specific amount for rendering specific service
or performing specific work. If required to be at specific places at
specific times, EEs including drivers cannot be said to be field
personnel despite the fact that they are performing work away from
the principal office of the EE.
it is not just about location but also with the fact that the EE's
performance is unsupervised by the ER& if actual hours of work in
the field can be determined with reasonable certainty by the ER. in
every terminal or stop there is a person who will check the bus,
punch the cards of the conductor. Thus, it shows control of Autobus
over the driver, hence, he his not a field EE but a REGULAR EE
2) Art. 291 of the LC provides the 3 year prescription period for
money claims arising out of an ER-EE relationship. cause of action
has three elements: (1) a right in favor of the plaintiff by whatever
means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to
violate such right; and (3) an act or omission on the part of such
defendant violative of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff. To properly
construe Article 291 of the Labor Code, it is essential to ascertain
the time when the third element of a cause of action transpired.
in cases of nonpayment of allowances and other monetary
benefits, if it is established that the benefits being claimed have
been withheld from the EE for a period longer than three (3) years,
the amount pertaining to the period beyond the three-year
prescriptive period is therefore barred by prescription.
IN THE CASE OF SERVICE INCENTIVE LEAVE, the EE may choose to
either use his leave credits or commute it to its monetary
equivalent if not exhausted at the end of the year. if the EE entitled
to service incentive leave does not use or commute the same, he is
entitled upon his resignation or separation from work to the
commutation of his accrued service incentive leave.
RECKONING POINT: from the time the ER refuses to pay its
monetary equivalent after demand of commutation or upon
termination of the EE's services, as the case may be.
BAUSTISTA: had not made use of his service incentive leave nor
demanded for its commutation until his employment was
terminated by AUTOBUS, he filed only after 1 month of his
termination. Thus, he filed within the prescriptive period.
MERCIDAR FISHING CORPORATION vs.NATIONAL LABOR
RELATIONS COMMISSION
G.R. No. 112574 October 8, 1998
MENDOZA, J.:
FACTS: Private respondent alleged that he had been sick and thus
allowed to go on leave without pay for one month from April 28,
1990 but that when he reported to work at the end of such period
with a health clearance, he was told to come back another time as
he could not be reinstated immediately. Thereafter, petitioner
refused to give him work. For this reason, private respondent asked
for a certificate of employment from petitioner on September 6,
1990. However, when he came back for the certificate on
September 10, petitioner refused to issue the certificate unless he
submitted his resignation. Since private respondent refused to
submit such letter unless he was given separation pay, petitioner
prevented him from entering the premises. 2
Petitioner, on the other hand, alleged that it was private respondent
who actually abandoned his work. It claimed that the latter failed to

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J.SUAREZ II, 2ND SEM,SY 12-13
report for work after his leave had expired and was, in fact, absent
without leave for three months until August 28, 1998. Petitioner
further claims that, nonetheless, it assigned private respondent to
another vessel, but the latter was left behind on September 1,
1990. Thereafter, private respondent asked for a certificate of
employment on September 6 on the pretext that he was applying to
another fishing company. On September 10, 1990, he refused to get
the certificate and resign unless he was given separation pay.
Petitioner argues essentially that since the work of private
respondent is performed away from its principal place of business,
it has no way of verifying his actual hours of work on the vessel. It
contends that private respondent and other fishermen in its employ
should be classified as "field personnel" who have no statutory right
to service incentive leave pay.
the petitioner nevertheless attempted to show that its affected
members are not covered by the abovementioned rule. The
petitioner asserts that the company's sales personnel are strictly
supervised as shown by the SOD (Supervisor of the Day) schedule
and the company circular. The petitioner maintains that the period
between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales
personnel's working hours which can be determined with
reasonable certainty.
LA:respondents are ordered to reinstate complainant with
backwages, pay him his 13th month pay and incentive leave pay
for 1990. All other claims are dismissed. NLRC: petitioners appeal
was dismissed for lack of merit. The NLRC dismissed petitioner's
claim that it cannot be held liable for service incentive leave pay by
fishermen in its employ as the latter supposedly are "field
personnel" and thus not entitled to such pay under the Labor Code.
ISSUES: 1)won the commission erred in ruling and sustaining that
fishing crew members like Agao, cannot be classified as field
personnel; 2)won commission acted with GAD amounting to Lack of
jurisdiction when it upheld the findings pf LA that petitioner had
cinstructively dismissed Agao.
HELD:2)The petition has no merit. Art. 82. Coverage. The
provisions of this Title [Working Conditions and Rest Periods] shall
apply to EEs in all establishments and undertakings whether for
profit or not, but not to government EEs, field personnel, members
of the family of the ER who are dependent on him for support,
domestic helpers, persons in the personal service of another, and
workers who are paid by results as determined by the Secretary of
Labor in appropriate regulations.
"Field personnel" shall refer to non-agricultural EEs who regularly
perform their duties away from the principal place of business or
branch office of the ER and whose actual hours of work in the field
cannot be determined with reasonable certainty.
the requirement that "actual hours of work in the field cannot be
determined with reasonable certainty" must be read in conjunction
with Rule IV, Book III Section 1e of the Implementing Rules which
provides that Field personnel and other EEs whose time and
performance is unsupervised by the ER.
the Court finds that the aforementioned rule did not add another
element to the Labor Code definition of field personnel. The clause
"whose time and performance is unsupervised by the ER" did not
amplify but merely interpreted and expounded the clause "whose
actual hours of work in the field cannot be determined with
reasonable certainty." The former clause is still within the scope and
purview of Article 82 which defines field personnel. Hence, in
deciding whether or not an EE's actual working hours in the field
can be determined with reasonable certainty, query must be made
as to whether or not such EE's time and performance is constantly
supervised by the ER. 6
in the case at bar, during the entire course of their fishing voyage,
fishermen employed by petitioner have no choice but to remain on
board its vessel. Although they perform non-agricultural work away
from petitioner's business offices, the fact remains that throughout
the duration of their work they are under the effective control and
supervision of petitioner through the vessel's patron or master as
the NLRC correctly held. 8
2)Neither did petitioner gravely abuse its discretion in ruling that
private respondent had constructively been dismissed by petitioner.
Such factual finding of both the NLRC and the Labor Arbiter is based
not only on the pleadings of the parties but also on a medical
certificate of fitness which, contrary to petitioner's claim private
respondent presented when he reported to work on May 28, 1990.
the respondent, in a nutshell, would like us to believe that the
Arbiter abused his discretion in giving credence to the factual
version of the complainant. But it is settled that "(W)hen confronted
with conflicting versions of factual matters," the Labor Arbiter has
the "discretion to determine which party deserves credence on the
basis of evidence received. And besides, it is settled in this
jurisdiction that "to constitute abandonment of position, there must
be concurrence of the intention to abandon and some overt acts
from which it may be inferred that the EE concerned has no more
interest in working" and that the filing of the complaint which asked
for reinstatement plus backwages is inconsistent with respondents'
defense of abandonment.
It is trite to say that the factual findings of quasi-judicial bodies are
generally binding as long as they are supported substantially by
evidence in the record of the case. This is especially so where, as
here, the agency and its subordinate who heard the case in the first
instance are in full agreement as to the facts.

As regards the labor arbiter's award which was affirmed by

respondent NLRC, there is no reason to apply the rule that
reinstatement may not be ordered if, as a result of the case
between the parties, their relation is strained. 13 Even at this late
stage of this dispute, petitioner continues to reiterate its offer to
reinstate private respondent.
REMINTON INDUSTRIAL SALES vs. CASTANEDA
G.R. No.169295-96, November 20, 2006
LAMBO vs. NLRC
G.R. no. 111042, October 26 1999
FACTS: Petitioners Avelino Lambo and Vicente Belocura were
employed as tailors by private respondents J.C. Tailor Shop and/or
Johnny Co on September 10, 1985 and March 3, 1985, respectively.
They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays
and holidays. As in the case of the other 100 EEs of private
respondents, petitioners were paid on a piece-work basis, according
to the style of suits they made. Regardless of the number of pieces
they finished in a day, they were each given a daily pay of at least
P64.00.
On January 17, 1989, petitioners filed a complaint against private
respondents for illegal dismissal and sought recovery of overtime
pay, holiday pay, premium pay on holiday and rest day, service
incentive leave pay, separation pay, 13th month pay, and
attorneys fees.
LA:found private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners claims.
NLRC: reversed the decision of the Labor Arbiter. It found that
petitioners had not been dismissed from employment but merely
threatened with a closure of the business if they insisted on their
demand for a straight payment of their minimum wage, after
petitioners, on January 17, 1989, walked out of a meeting with
private respondents and other EEs. According to the NLRC, during
that meeting, the EEs voted to maintain the company policy of
paying them according to the volume of work finished at the rate of
P18.00 per dozen of tailored clothing materials. Only petitioners
allegedly insisted that they be paid the minimum wage and other
benefits. The NLRC held petitioners guilty of abandonment of work
and accordingly dismissed their claims except that for 13th month
pay. The appealed decision is vacated and a new one entered
ordering respondents to pay each of the complainants their 13th
month pay. All other monetary awards are deleted.
Petitioners allege that they were dismissed by private respondents
as they were about to file a petition with the Department of Labor
and Employment (DOLE) for the payment of benefits such as Social
Security System (SSS) coverage, sick leave and vacation leave.
They deny that they abandoned their work.
ISSUE/S: 1.) WON petitioners are paid on the basis of time spent on
the job and not according to the quantity and the quality of work
produced;2.) WON petitioners abandoned their work;3.)WON the
compromise
agreement,between
petitioner
and
respondent,absolving private respondents from liability for many
claims or any other obligations is valid;4.) WON petitioners are
entitled to the monetary benefits as awarded by the labor arbiter.
HELD: 1)There is no dispute that petitioners were EEs of private
respondents although they were paid not on the basis of time spent
on the job but according to the quantity and the quality of work
produced by them. There are two categories of EEs paid by results:
(1) those whose time and performance are supervised by the ER.
(Here, there is an element of control and supervision over the
manner as to how the work is to be performed. A piece-rate worker
belongs to this category especially if he performs his work in the
company premises.); and (2) those whose time and performance
are unsupervised. (Here, the ERs control is over the result of the
work. Workers on pakyao and takay basis belong to this group.)
Both classes of workers are paid per unit accomplished. Piece-rate
payment is generally practiced in garment factories where work is
done in the company premises, while payment on pakyao and takay
basis is commonly observed in the agricultural industry, such as in
sugar plantations where the work is performed in bulk or in volumes
difficult to quantify. Petitioners belong to the first category, i.e.,
supervised EEs.
In determining the existence of an ER-EE relationship, the following
elements must be considered: (1) the selection and engagement of
the EE; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the EEs conduct. Of these elements, the
most important criterion is whether the ER controls or has reserved
the right to control the EE not only as to the result of the work but
also as to the means and methods by which the result is to be
accomplished.
In this case, private respondents exercised control over the work of
petitioners.
As tailors, petitioners worked in the companys
premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and
holidays. The mere fact that they were paid on a piece-rate basis
does not negate their status as regular EEs of private respondents.
The term wage is broadly defined in Art. 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or
commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations. Nor
does the fact that petitioners are not covered by the SSS affect the
ER-EE relationship.
Indeed, the following factors show that petitioners, although piecerate workers, were regular EEs of private respondents: (1) within
the contemplation of Art. 280 of the Labor Code, their work as
tailors was necessary or desirable in the usual business of private
respondents, which is engaged in the tailoring business; (2)

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J.SUAREZ II, 2ND SEM,SY 12-13
petitioners worked for private respondents throughout the year,
their employment not being dependent on a specific project or
season; and, (3) petitioners worked for private respondents for
more than one year.
2) To justify a finding of abandonment of work, there must be proof
of a deliberate and unjustified refusal on the part of an EE to
resume his employment. The burden of proof is on the ER to show
an unequivocal intent on the part of the EE to discontinue
employment. Mere absence is not sufficient.
It must be
accompanied by manifest acts unerringly pointing to the fact that
the EE simply does not want to work anymore.
Private respondents failed to discharge this burden. Other than the
self-serving declarations in the affidavits of their two EEs, private
respondents did not adduce proof of overt acts of petitioners
showing their intention to abandon their work. On the contrary, the
evidence shows that petitioners lost no time in filing the case for
illegal dismissal against private respondent. This fact negates any
intention on their part to sever their employment relationship.
Abandonment is a matter of intention; it cannot be inferred or
presumed from equivocal acts.
3)Private respondents invoke the compromise agreement, dated
March 2, 1993, between them and petitioner Avelino Lambo,
whereby in consideration of the sum of P10,000.00, petitioner
absolved private respondents from liability for money claims or any
other obligations.
To be sure, not all quitclaims are per se invalid or against public
policy. But those (1) where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person or (2) where the
terms of settlement are unconscionable on their face are invalid. In
these cases, the law will step in to annul the questionable
transaction. However, considering that the Labor Arbiter had given
petitioner Lambo a total award of P94,719.20, the amount of
P10,000.00 to cover any and all monetary claims is clearly
unconscionable. As we have held in another case, the subordinate
position of the individual EE vis-a-vis management renders him
especially vulnerable to its blandishments, importunings, and even
intimidations, and results in his improvidently waiving benefits to
which he is clearly entitled. Thus, quitclaims, waivers or releases
are looked upon with disfavor for being contrary to public policy and
are ineffective to bar claims for the full measure of the workers
legal rights. An EE who is merely constrained to accept the wages
paid to him is not precluded from recovering the difference between
the amount he actually received and that amount which he should
have received.
4) As petitioners were illegally dismissed, they are entitled to
reinstatement with backwages. Considering that petitioners were
dismissed from the service on January 17, 1989, i.e., prior to March
21, 1989, the Labor Arbiter correctly applied the rule in the Mercury
Drug case, according to which the recovery of backwages should be
limited to three years without qualifications or deductions. Any
award in excess of three years is null and void as to the excess.
The Labor Arbiter correctly ordered private respondents to give
separation pay. Considerable time has lapsed since petitioners
dismissal, so that reinstatement would now be impractical and
hardly in the best interest of the parties. In lieu of reinstatement,
separation pay should be awarded to petitioners at the rate of one
month salary for every year of service, with a fraction of at least six
(6) months of service being considered as one (1) year.
The awards for overtime pay, holiday pay and 13th month pay are
in accordance with our finding that petitioners are regular EEs,
although paid on a piece-rate basis.Except for the award of
attorneys fees in the amount based on the computation of the
labor arbiter is affirmed. The award of attorneys fees should be
disallowed, it appearing that petitioners were represented by the
Public Attorneys Office. With regard to petitioner Avelino Lambo,
the amount of P10,000.00 paid to him under the compromise
agreement should be deducted from the total award due to him.
The decision of the National Labor Relations Commission is SET
ASIDE and another one is RENDERED ordering private respondents
to pay petitioners the total amount of One Hundred Eighty-One
Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as
computed.
JAVIER vs. FLY ACE CO.
G.R. No. 192558
LUZON STEVEDORING CO., INC vs. LUZON MARINE
DEPARTMENT UNION
G.R. No. L-9265
April 29, 1957
FELIX, J.:
FACTS: UNION filed a petition with the Court of Industrial Relations
containing several demands against herein petitioner LSCI, among
which were the petition for full recognition of the right of
COLLECTIVE bargaining, close shop and check off. However, while
the case was still pending with the CIR, said labor union declared a
strike which was ruled down as illegal by this Coourt. In view of said
ruling, the Union filed a "Constancia" with the Court of Industrial
Relations praying that the remaining unresolved demands of the
Union presented in their original petition, be granted. Said
unresolved demands are the following:

a)

That the work performed in

excess of eight (8) hours he paid an overtime
pay of 50 per cent the regular rate of pay,
and that work performed on Sundays and
legal holidays be paid double the regular
rate of pay.

b)

That all officers, engineers and

crew members of motor tugboats who have

not received their pay corresponding to the

second half of December, 1941, be paid
accordingly.

c)

That Ciriaco Sarmiento, Chief

Mate, M/V Marlin, Rafael Santos, Port
Engineer, and Lorenzo de la Cruz, Chief
Engineer, M/V Shark who have been
suspended without justifiable cause and for
union activities, be reinstated with pay from
time of suspension.

d)

That all officers, engineers and

crew members of the motor tugboats
"Shark", "Hearing", "Pike" and "Ray", who
have been discharged without justifiable
cause and for union activities, be reinstate
with pay from time of discharge.
On the basis of these demands, the case was set for hearing and
the parties submitted their respective evidence, both oral and
documentary, from June 8,1951, to January 7, 1954. In one of the
hearings of the case, the original intervenor in Union de Obreros
Estibadores de Filipinas (UOEF), through counsel, moved for the
withdraw al of said Union from the case, which motion was granted
by the Court.
The EEs are only entitled to receive overtime pay for work rendered
in excess of 8 hours on ordinary days including Sundays and legal
holidays. However, the respondent company has proved to the
satisfaction of the Court that it has paid its EEs for such overtime
work as shown above. It is, therefore, only a matter of computation
whether such over time pay by the respondent for overtime
services rendered covers the actual overtime work performed by
the EEs concerned equivalent to 25 per cent which is the minimum
rate fixed by law in the absence of other proof to justify the
granting of more beyond said minimum rate.
Demands regarding the reinstatement to the service of the EEs
named therein were denied and respondent Company was only or
to pay the separation pay and overtime work rendered by Ciriaco
Sarmiento, Rafael Santos and Lorenzo de la Cruz, after making the
pronouncement that their separation or dismissal was not due to
union activities but for valid and legal grounds.
ISSUE- I: Is the definition for "hours of work" as presently
applied to dryland laborers equally applicable to seamen?
Section 1 of Commonwealth Act No. 444, known as the Eight-Hour
Labor Law, provides: The legal working day for any person
employed by another shall be of not more than eight hours daily.
When the work is not continuous, the time during which the laborer
is not working AND CAN LEAVE HIS WORKING PLACE and can rest
completely, shall not be counted.
For the purposes of this case, We do not need to set for seamen a
criterion different from that applied to laborers on land, for under
the provisions of the above quoted section, the only thing to be
done is to determine the meaning and scope of the term "working
place" used therein. As We understand this term, a laborer need not
leave the premises of the factory, shop or boat in order that his
period of rest shall not be counted, it being enough that he "cease
to work", may rest completely and leave or may leave at his will the
spot where he actually stays while working, to go somewhere else,
whether within or outside the premises of said factory, shop or
boat. If these requisites are complied with, the period of such rest
shall not be counted.
ISSUE- II: Should a person be penalized for following an
opinion issued by the Secretary of Justice in the absence of
any judicial pronouncement whatsoever?
The opinion has no bearing on the case at bar because it refers to
officers and crew on board interisland boats whose situation is
different from that of mariners or sailors working in small tugboats
that ply along bays and rivers and have no cabins or places for
persons that man the same. Moreover, We can not pass upon this
second issue because, aside from the fact that there appears
nothing on record that would support petitioner's assertion that in
its dealing with its EEs, it was guided by an opinion of the Secretary
of Justice, the issue involves a mere theoretical question.
ISSUE- III: When EEs with full knowledge of the law,
voluntarily agreed to work for so many hours in
consideration of a certain definite wage, and continue
working without any protest for a period of almost two
years, is said compensation as agreed upon legally deemed
and retroactively presumed to constitute full payment for
all services rendered, including whatever overtime wages
might be due? Especially so if such wages, though received
years before the enactment of the Minimum Wage Law,
were already set mostly above said minimum wage?
ISSUE- IV: The members set of respondent Union having
expressly manifested acquiescence over a period of almost
two years with reference to the sufficiency of their wages
and having made no protest whatsoever with reference to
said compensation does the legal and equitable principle of
estoppel operate to bar them from making a claim for, or
making any recovery of, back overtime compensation?
Section 6 of Commonwealth Act No. 444 provides: Any agreement
or contract between the ER and the laborer or EE contrary to the
provisions of this Act shall be null and void ab initio.
The principles of estoppel and laches cannot be, invoked against
EEs or laborers in an action for the recovery of compensation for

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J.SUAREZ II, 2ND SEM,SY 12-13
past overtime work. In the first place, it would be contrary to the
spirit of the Eight-Hour Labor Law, under which. as already seen,
the laborers cannot waive their right to extra compensation. In the
second place, the law principally obligates the ER to observe it, so
much so that it punishes the ER for its violation and leaves the EE
free and blameless. In the third place, the EE or laborer is in such a
disadvantageous position as to be naturally reluctant or even
apprehensive in asserting a claim which may cause the ER to
devise a way for exercising his right to terminate the employment.
There is no question that the right of the laborers to overtime pay
cannot be waived. But there may be cases in which the silence of
the EE or laborer who lets the time go by for quite a long period
without claiming or asserting his right to overtime compensation
may favor the inference that he has not worked any such overtime
or that his extra work has been duly compensated. But this is not so
in the case at bar. The complaining laborers have declared that long
before the filing of this case, they had informed Mr. Martinez, a sort
of overseer of the petitioner, that they had been working overtime
and claiming the corresponding compensation therefor, and there is
nothing on record to show that the claimants, at least the majority
of them, had received wages in excess of the minimum wage. On
the contrary, in the decision of the trial Judge, it appears that 34
out of the 58 claimants received salaries less than the minimum
wage authorized by said Minimum Wage Law.
ISSUE-V: Granting, without conceding, that any overtime
pay in arrears is due, what is the extent and rule of retroactivity with reference to overtime pay in arrears as set
forth and established by the precedents and policies of the
Court of Industrial Relations in past decisions duly affirmed
by the Honorable Supreme Court?
It is of common occurrence that a workingman has already
rendered services in excess of the statutory period of 8 hours for
some time before he can be led or he can muster enough courage
to confront his ER with a demand for payment thereof. Fear of
possible unemployment sometimes is a very strong factor that gags
the man from asserting his right under the law and it may take him
months or years before he could be made to present a claim
against his ER. To allow the workingman to be compensated only
from the date of the filing of the petition with the court would be to
penalize him for his acquiescence or silence which We have
declared in the case of the Manila Terminal Co. vs. CIR, supra, to be
beyond the intent of the law. It is not just and humane that he
should be deprived of what is lawfully his under the law, for the true
intendent of Commonwealth Act No. 444 is to compensate the
worker for services rendered beyond the statutory period and this
should be made to retroact to the date when such services were
actually performed.
ISSUE-VI: Is the grant of a sizeable amount as back overtime
wages by the Court of Industrial Relations in consonance
with the dictates of public policy and the avowed national
and government policy on economic recovery and financial
stability?
It is sufficient for Us to state here that Congress in enacting a
particular piece of legislation. It may be alleged, however, that the
delay in asserting the right to back overtime compensation may
cause an unreasonable or irreparable injury to the ER, because the
accumulation of such back overtime wages may become so great
that their payment might cause the bankruptcy or the closing of the
business of the ER who might not be in a position to defray the
same. Perhaps this situation may occur, but We shall not delve on it
this time because petitioner does not claim that the payment of the
back overtime wages it is ordered to pay to its claimant laborers
will cause the injury it foresees or force it to close its business, a
situation which it speaks of theoretically and in general.
ISSUE- VII: Should not a Court of Industrial Relations'
resolution, en banc, which is clearly unsupported in fact and
in law, patently arbitrary and capricious and absolutely
devoid of sustaining reason, be declared illegal? Especially
so, if the trial court's decision which the resolution en banc
reversed, is most detailed, exhaustive and comprehensive
in its findings as well as most reasonable and legal in its
conclusions?
The law also provides that after a judge of the Court of Industrial
Relations, duly designated by the Presiding Judge therein to hear a
particular case, had rendered a decision, any agrieved party may
request for reconsideration thereof and the judges of said Court
shall sit together, the concurrence of the 3 of them being necessary
for the pronouncement of a decision, order or award (See. 1, Com.
Act No. 103). It was in virtue of these rules and upon motions for
reconsideration presented by both parties that resolution subject of
the present petition was issued, the Court en banc finding it
necessary to modify a part of the decision of February 10, 1955,
which is clearly within its power to do.
On the other hand, the issue under consideration is predicated on a
situation which is not obtaining in the case at bar, for, it
presupposes that the resolutions en banc of the respondent Court
"are clearly unsupported in fact and in law, patently arbitrary and
capricious and absolutely devoid of any sustaining reason", which
does not seem to be the case as a matter of fact.
NATIONAL DEVELOPMENT COMPANY vs. COURT OF
INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS
UNION
G.R. No. L-15422, November 30, 1962
REGALA, J.:

At the National Development Co., a GOCC, there were four shifts of

work. One shift was from 8AM to 4PM., while the three other shifts
were from 6AM to 2PM; then from 2PM to 10PM. and, finally, from
10PM to 6AM. In each shift, there was a 1 hour mealtime period, to
wit: From (1) 11AM to 12 noon for those working between 6AM to
2PM and from 7PM to 8PM for those working between 2PM and
10PM.
The records disclose that although there was a 1-hour mealtime,
petitioner nevertheless credited the workers with 8 hours of work
for each shift and paid them for the same number of hours.
However, since 1953, whenever workers in 1 shift were required to
continue working until the next shift, petitioner instead of crediting
them with 8 hours of OT work, has been paying them for 6 hours
only, petitioner that the 2 hours corresponding to the mealtime
periods should not be included in computing compensation. On the
other hand, respondent National Textile Workers Union whose
members are employed at the NDC, maintained the opposite view
and asked the CIR to order the payment of additional OT pay
corresponding to the mealtime periods.
After hearing, the CIR issued an order, holding that mealtime should
be counted in the determination of OT work and accordingly
ordered petitioner to pay P101,407.96 by way of OT compensation.
Petitioner filed a MR but the same was dismissed by the CIR en
banc on the ground that petitioner failed to furnish the union a copy
of its motion.
Thereafter, petitioner appealed to this Court, contending, first, that
the CIR has no jurisdiction over claims for OT compensation and,
secondary that the CIR did not make "a correct appraisal of the
facts, in the light of the evidence" in holding that mealtime periods
should be included in overtime work because workers could not
leave their places of work and rest completely during those hours.
In support of its contention that the CIR lost its jurisdiction over
claims for OT pay upon the enactment of the Industrial Peace Act
(Republic Act No. 875), petitioner cites a number of decisions of this
Court. On May 23, 1960, however, We ruled in Price Stabilization
Corp. v. Court of Industrial Relations, et al., G.R. No. L-13206, that
ISSUE: won CIR has jurisdiction.
HELD:Analyzing these cases, the underlying principle, it will be
noted in all of them, though not stated in express terms, is that
where the ER-EE relationship is still existing or is sought to be
reestablished because of its wrongful severance, (as where the EE
seeks reinstatement) the CIR has jurisdiction over all claims arising
out of, or in connection with the employment, such as those related
to the Minimum Wage Law and the Eight-Hour Labor Law. After the
termination of their relationship and no reinstatement is sought,
such claims become mere money claims, and come within the
jurisdiction of the regular courts,
A more recent definition of the jurisdiction of the CIR is found in
Campos, et al. v. Manila Railroad Co., et al., G.R. No. L-17905, May
25, 1962, in which We held that, for such jurisdiction to come into
play, the following requisites must be complied with:
(a) there must exist between the parties an ER-EE relationship or
the claimant must seek his reinstatement; and
(b) the controversy must relate to a case certified by the President
to the CIR as one involving national interest, or must arise either
under the 8-Hour Labor Law, or under the Minimum Wage Law.
In default of any of these circumstances, the claim becomes a mere
money claim that comes under the jurisdiction of the regular courts.
Here, petitioner does not deny the existence of an ER-EE
relationship between it and the members of the union. Neither is
there any question that the claim is based on the Eight-Hour Labor
Law (Com. Act No. 444, as amended). We therefore rule in favor of
the jurisdiction of the CIR over the present claim.
ISSUE: whether or not, on the basis of the evidence, the mealtime
breaks should be considered working time under the following
provision of the law;
HELD: The legal working day for any person employed by another
shall be of not more than eight hours daily. When the work is not
continuous, the time during which the laborer is not working and
can leave his working place and can rest completely shall not be
counted. It will be noted that, under the law, the idle time that an
EE may spend for resting and during which he may leave the spot
or place of work though not the premises of his ER, is not counted
as working time only where the work is broken or is not continuous.
the CIR found: While it may be correct to say that it is well-high
impossible for an EE to work while he is eating, yet under Section 1
of Com. Act No. 444 such a time for eating can be segregated or
deducted from his work, if the same is continuous and the EE can
leave his working place rest completely. The time cards show that
the work was continuous and without interruption. There is also the
evidence adduced by the petitioner that the pertinent EEs can
freely leave their working place nor rest completely. There is
furthermore the aspect that during the period covered the
computation the work was on a 24-hour basis and previously stated
divided into shifts.
From these facts, the CIR correctly concluded that work in petitioner
company was continuous and therefore the mealtime breaks should
be counted as working time for purposes of overtime
compensation.
There is another reason why this appeal should dismissed and that
is that there is no decision by the CIR en banc from which petitioner
can appeal to this Court. As already indicated above, the records
show that petitioner's MR of the order of March 19, 1959 was

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J.SUAREZ II, 2ND SEM,SY 12-13
dismissed by the CIR en banc because of petitioner's failure to
serve a copy of the same on the union.
Section 15 of the rules of the CIR, in relation to Section 1 of
Commonwealth Act No. 103, states: The movant shall file the MR in
6 copies within 5 days from the date on which he receives notice of
the order or decision, object of the MR, the same to be verified
under oath with respect to the correctness of the allegations of fact,
and serving a copy thereof personally or by registered mail, on the
adverse party. The latter may file an answer, in six (6) copies, duly
verified under oath.
Petitioner's MR having been dismissed for its failure to serve a copy
of the same on the union, there is no decision of the CIR en banc
that petitioner can bring to this Court for review.
SIME DARBY PILIPINAS, INC. vs. NLRC and SIME DARBY
SALARIED EES ASSOCIATION (ALU-TUCP)
G.R. No. 119205 April 15, 1998
BELLOSILLO, J.:
ISSUE: Is the act of management in revising the work schedule of
its EEs and discarding their paid lunch break constitutive of unfair
labor practice?
FACTS: Sime Darby Pilipinas, Inc., petitioner, is engaged in the
manufacture of automotive tires, tubes and other rubber products.
ALU-TUCP, private respondent, is an association of monthly salaried
EEs of petitioner at its Marikina factory. Prior to the present
controversy, all company factory workers in Marikina including
members of private respondent union worked from 7:45AM to
3:45PM with a 30-minute paid "on call" lunch break.
On 14 August 1992 petitioner issued a memorandum to all factorybased EEs advising all its monthly salaried EEs in its Marikina Tire
Plant, except those in the Warehouse and Quality Assurance
Department working on shifts, a change in work schedule.
Since private respondent felt affected adversely by the change in
the work schedule and discontinuance of the 30-minute paid "on
call" lunch break, it filed on behalf of its members a complaint with
the LA for unfair labor practice, discrimination and evasion of
liability pursuant to the resolution of this Court in Sime Darby
International Tire Co., Inc. v. NLRC.
LA: dismissed the complaint on the ground that the change in the
work schedule and the elimination of the 30-minute paid lunch
break of the factory workers constituted a valid exercise of
management prerogative and that the new work schedule, break
time and 1-hour lunch break did not have the effect of diminishing
the benefits granted to factory workers as the working time did not
exceed 8 hours.
The factory workers would be unjustly enriched if they continued to
be paid during their lunch break even if they were no longer "on
call" or required to work during the break. He also ruled that the
decision in the earlier Sime Darby case was not applicable to the
instant case because the former involved discrimination of certain
EEs who were not paid for their 30-minute lunch break while the
rest of the factory workers were paid; hence, this Court ordered that
the discriminated EEs be similarly paid the additional compensation
for their lunch break.
NLRC: sustained the LA and dismissed the appeal. However, upon
MR by private respondent, it reversed its earlier decision as well as
the decision of the LA. The NLRC considered the decision of this
Court in the Sime Darby case of 1990 as the law of the case
wherein petitioner was ordered to pay "the money value of these
covered EEs deprived of lunch and/or working time breaks." The
public respondent declared that the new work schedule deprived
the EEs of the benefits of a time-honored company practice of
providing its EEs a 30-minute paid lunch break resulting in an unjust
diminution of company privileges prohibited by Art. 100 of the
Labor Code, as amended.
Hence, this petition alleging that public respondent committed GAD
amounting to lack or excess of jurisdiction: (a) in ruling that
petitioner committed unfair labor practice in the implementation of
the change in the work schedule of its EEs from 7:45AM 3:45PM
to 7:45AM 4:45PM with 1-hour lunch break from 12:00NN to
1:00PM.; (b) in holding that there was diminution of benefits when
the 30-minute paid lunch break was eliminated; (c) in failing to
consider that in the earlier Sime Darby case affirming the decision
of the NLRC, petitioner was authorized to discontinue the practice
of having a 30-minute paid lunch break should it decide to do so;
and, (d) in ignoring petitioner's inherent management prerogative
of determining and fixing the work schedule of its EEs which is
expressly recognized in the collective bargaining agreement
between petitioner and private respondent.
OSG: filed in a lieu of comment a manifestation and motion
recommending that the petitioner be granted, alleging that the 14
August 1992 memorandum which contained the new work schedule
was not discriminatory of the union members nor did it constitute
unfair labor practice on the part of petitioner.
ISSUE: whether the change of work schedule, which management
deems necessary to increase production, constitutes unfair labor
practice.
As shown by the records, the change effected by management with
regard to working time is made to apply to all factory EEs engaged
in the same line of work whether or not they are members of
private respondent union. Hence, it cannot be said that the new
scheme adopted by management prejudices the right of private
respondent to self-organization.

Every business enterprise endeavors to increase its profits. In the

process, it may devise means to attain that goal. Even as the law is
solicitous of the welfare of the EEs, it must also protect the right of
an ER to exercise what are clearly management prerogatives. 10
Thus, management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, time, place and
manner of work, processes to be followed, supervision of workers,
working regulations, transfer of EEs, work supervision, lay off of
workers and discipline, dismissal and recall of workers. Further,
management retains the prerogative, whenever exigencies of the
service so require, to change the working hours of its EEs. So long
as such prerogative is exercised in good faith for the advancement
of the ER's interest and not for the purpose of defeating or
circumventing the rights of the EEs under special laws or under
valid agreements, this Court will uphold such exercise. 12
While the Constitution is committed to the policy of social justice
and the protection of the working class, it should not be supposed
that every dispute will be automatically decided in favor of labor.
Management also has rights which, as such, are entitled to respect
and enforcement in the interest of simple fair play. Although this
Court has inclined more often than not toward the worker and has
upheld his cause in his conflicts with the ER, such favoritism has not
blinded the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and
the applicable law and doctrine.
TEOFILO ARICA, et al. vs. NLRC et al.
G.R. No. 78210 February 28, 1989
PARAS, J.:
FACTS: Petitioners contend that the preliminary activities as
workers of respondents STANFILCO in the assembly area is
compensable as working time (from 5:30AM to 6:00AM) since these
preliminary activities are necessarily and primarily for private
respondent's benefit. These preliminary activities of the workers are
as follows:
(a) First there is the roll call. This is followed by getting their
individual work assignments from the foreman.
(b) Thereafter, they are individually required to accomplish the
Laborer's Daily Accomplishment Report during which they are often
made to explain about their reported accomplishment the following
day.
(c) Then they go to the stockroom to get the working materials,
tools and equipment.
(d) Lastly, they travel to the field bringing with them their tools,
equipment and materials.
All these activities take 30 minutes to accomplish
Contrary to this contention, respondent avers that the instant
complaint is not new, the very same claim having been brought
against herein respondent by the same group of rank and file EEs in
the case of Associated Labor Union and Standard Fruit Corporation,
NLRC Case No. 26-LS-XI-76 which was filed way back April 27, 1976
when ALU was the bargaining agent of respondent's rank and file
workers.
Noteworthy is the decision of the Minister of Labor, on May 12,
1978 in the aforecited case (Associated Labor Union vs. Standard
(Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76 where
significant findings of facts and conclusions had already been made
on the matter.
The Minister of Labor held: The thirty (30)-minute assembly
time long practiced and institutionalized by mutual consent of the
parties under Article IV, Section 3, of the Collective Bargaining
Agreement cannot be considered as waiting time within the purview
of Section 5, Rule I, Book III of the Rules and Regulations
Implementing the Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted,
routinary practice of the EEs, and the proceedings attendant
thereto are not infected with complexities as to deprive the workers
the time to attend to other personal pursuits. They are not new EEs
as to require the company to deliver long briefings regarding their
respective work assignments. Their houses are situated right on the
area where the farm are located, such that after the roll call, which
does not necessarily require the personal presence, they can go
back to their houses to attend to some chores. In short, they are
not subject to the absolute control of the company during this
period, otherwise, their failure to report in the assembly time would
justify the company to impose disciplinary measures. The CBA does
not contain any provision to this effect; the record is also bare of
any proof on this point. This, therefore, demonstrates the
indubitable fact that the thirty (30)-minute assembly time was not
primarily intended for the interests of the ER, but ultimately for the
EEs to indicate their availability or non-availability for work during
every working day.
Accordingly, the issues are reduced to the sole question as to
whether public respondent National Labor Relations Commission
committed a grave abuse of discretion in its resolution of December
17, 1986. The facts on which this decision was predicated continue
to be the facts of the case in this questioned resolution of the
National Labor Relations Commission.
It is clear that herein petitioners are merely reiterating the very
same claim which they filed through the ALU and which records
show had already long been considered terminated and closed by
this Court in G.R. No. L-48510. Therefore, the NLRC can not be
faulted for ruling that petitioners' claim is already barred by resjudicata.

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J.SUAREZ II, 2ND SEM,SY 12-13
Be that as it may, petitioners' claim that there was a change in the
factual scenario which are "substantial changes in the facts" makes
respondent firm now liable for the same claim they earlier filed
against respondent which was dismissed. It is thus axiomatic that
the non-compensability of the claim having been earlier
established, constitute the controlling legal rule or decision
between the parties and remains to be the law of the case making
this petition without merit.
As aptly observed by the Solicitor General that this petition is
"clearly violative of the familiar principle of res judicata. There will
be no end to this controversy if the light of the Minister of Labor's
decision dated May 12, 1979 that had long acquired the character
of finality and which already resolved that petitioners' thirty (30)minute assembly time is not compensable, the same issue can be
re-litigated again." (Rollo, p. 183)
ISSUES: 1) Whether or not the 30-minute activity of the petitioners
before the scheduled working time is compensable under the Labor
Code.
2) Whether or not res judicata applies when the facts obtaining in
the prior case and in the case at bar are significantly different from
each other in that there is merit in the case at bar.
3) Whether or not there is finality in the decision of Secretary Ople
in view of the compromise agreement novating it and the
withdrawal of the appeal.
4) Whether or not estoppel and laches lie in decisions for the
enforcement of labor standards
HELD:In this connection account should be taken of the cognate
principle that res judicata operates to bar not only the relitigation in
a subsequent action of the issues squarely raised, passed upon and
adjudicated in the first suit, but also the ventilation in said
subsequent suit of any other issue which could have been raised in
the first but was not. The law provides that 'the judgment or order
is, with respect to the matter directly adjudged or as to any other
matter that could have been raised in relation thereto, conclusive
between the parties and their successors in interest by title
subsequent to the commencement of the action .. litigating for the
same thing and in the same capacity.' So, even if new causes of
action are asserted in the second action (e.g. fraud, deceit, undue
machinations in connection with their execution of the convenio de
transaccion), this would not preclude the operation of the doctrine
of res judicata. Those issues are also barred, even if not passed
upon in the first. They could have been, but were not, there raised.
Moreover, as a rule, the findings of facts of quasi-judicial agencies
which have acquired expertise because their jurisdiction is confined
to specific matters are accorded not only respect but at times even
finality if such findings are supported by substantial evidence
The records show that the Labor Arbiters' decision dated October 9,
1985 (Annex "E", Petition) pointed out in detail the basis of his
findings and conclusions, and no cogent reason can be found to
disturb these findings nor of those of the National Labor Relations
Commission which affirmed the same.
SARMIENTO, J., Dissenting:
It is my opinion that res judicata is not a bar.
The decision penned by then Minister Blas Ople in ALU v.
STANFILCO (NLRC Case No. 26-LS-XI-76) relied upon by the
respondents as basis for claims of res judicata, is not, to my mind, a
controlling precedent. In that case, it was held that the thirtyminute "waiting time" complained of was a mere "assembly time"
and not a waiting time as the term is known in law, and hence, a
compensable hour of work. Thus:
Precisely, it is the petitioners' contention that the assembly time in
question had since undergone dramatic changes, thus:
(a) First there is the roll call. This is followed by getting their
individual work assignments from the foreman.
(b) Thereafter,they are individually required to accomplish the
Laborer's Daily Accomplishment Report during which they are often
made to explain about their reported accomplishment the following
day.
(c) Then they go to the stockroom to get the working materials,
tools and equipment.
(d) Lastly, they travel to the field bringing with them their tools,
equipment and materials. (Supra, 4-5.)
The petitioners have vehemently maintained that in view thereof,
the instant case should be distinguished from the first case. And I
do not believe that the respondents have successfully rebutted
these allegations. The Solicitor General relies solely on the decision
of then Minister Ople, the decision the petitioners precisely reject in
view of the changes in the conditions of the parties. The private
respondent on the other hand insists that these practices were the
same practices taken into account in ALU v. STANFILCO. If this were
so, the Ople decision was silent thereon.
It is evident that the Ople decision was predicated on the absence
of any insinuation of obligatoriness in the course or after the
assembly activities on the part of the EEs.(" . . [T]hey are not
subject to the absolute control of the company during this period,
otherwise, their failure to report in the assembly time would justify
the company to impose disciplinary measures;" supra, 6.) As
indicated, however, by the petitioners, things had since changed,
and remarkably so, and the latter had since been placed under a
number of restrictions. My considered opinion is that the thirtyminute assembly time had become, in truth and fact, a "waiting
time" as contemplated by the Labor Code.
UNIVERSITY OF PANGASINAN FACULTY UNION vs. NLRC
G.R. Nos. 64821-23 January 29, 1993
ROMERO, J.:

The uncontroverted facts show that on various dates, petitioner

filed the following complaints against the University of Pangasinan
(University for brevity) before the Arbitration Branch of the NLRC in
Dagupan City:
1. October 14, 1980: for nonpayment of benefits under P.D. No.
1713 and emergency cost of living allowance (ecola) to part-time
teachers, and for prompt and accurate computation of benefits
under P.D. No. 451 and the payment of ecolas;
2. November 7, 1980: for nonpayment of all ecolas to instructors
from October 18-31, 1980;
3. November 20, 1980: for nonpayment of ecolas under P.D. Nos.
525, 1123, 1614, 1634, 1678 and 1713 for November 1-15, 1980,
and extra loads during typhoons "Nitang" and "Osang" on July 21
and 25, 1980, respectively;
4. April 13, 1981: for violation of P.D. No. 1751 and nonpayment of
extra loads on February 12-13, 1980 (Anniversary celebration);
5. April 27, 1981: for nonpayment of all ecolas for April 1-15, 1981
to faculty members who were also members of the union;
6. May 21, 1981: for violation of Wage Order No. 1 and delayed
payment of salaries; and
7. June 17, 1981: for nonpayment of salary differentials for summer
under P.D. No. 451. 1
The Regional Director in San Fernando, La Union certified six (6) of
these complaints to LA of the Dagupan City District Office of the
then Ministry of Labor and Employment for compulsory arbitration.
According to the petitioner, it was made to understand by
Fernandez that the 7TH complaint should also be discussed in its
position paper. Accordingly, petitioner filed a position paper
discussing the merits of all the seven complaints. On the other
hand, the University limited its discussion to only four: nos.4,5,6,
and 7. Petitioner was of the view that Executive LA adopted the
stand of the University on the four complaints and accordingly
dismissed them.
Observing that in its position paper, the petitioner included matters
which were "beyond the scope of the issues alleged in the
complaints," said LA discussed the four complaints individually. On
complain NO.4 , he ruled that because at the time P.D. No. 1123
took effect on May 1, 1977, the University had not increased its
tuition fees, there was of "nothing to integrate." 4 However, from
June 16, 1979 when the University increased its tuition fees, it was
obligated to cause the integration of the across-the-board increase
of P60.00 in emergency allowance into the basic pay as mandated
by P.D. Nos. 1123 and 1751.
On the alleged nonpayment of extra loads handled by the EEs on
February 12 and 13, 1981 when classes were suspended, LA stated
that Consuelo Abad, the petitioner's president, had no cause to
complain because her salary was fully paid and that, since there
were "no complainants for the alleged nonpayment of extra loads
for two days," the issue had become academic.
With respect to the complaint NO.5, LA said that since the salary
paid to Consuelo Abad and other faculty members for the April 115, 1981 period had been earned "as part of their salary for the 10month period," she was no longer entitled to an emergency cost of
living allowance. He added that "payment of emergency cost of
living allowance is based on actual work performed except when
they (EEs) are on leave with pay." Hence, because classes ended in
March 1981, the teachers who did not report for work could not be
considered on leave with pay and, therefore, they were not entitled
to an emergency cost of living allowance.
With regard to complaint NO.6 alleging violation of Wage Order No.
1, LA found that the University had actually implemented the
additional living allowance of P2.00 a day required therein. On the
alleged delay in the payment of salaries of the EEs, he rationalized
that delays could not be avoided but he reminded the University to
pay its EEs on time.
Complaint NO.7 was also resolved in favor of the University. Stating
that P.D. No. 451 which mandates salary increases is dependent on
enrollment and allowable deductions, LA ruled that, again, Consuelo
Abad had no cause to complain as she had been paid out of the
allowable 12.74% for distribution which was a "substantial
compliance with P.D. No. 451." 5 The dispositive portion of the
decision states: NLRC: affirmed the decision .
ISSUE: NLRC should have, in the exercise of its appellate
jurisdiction, resolved the issues raised in the first 3 complaints or, in
the alternative, ordered the LA to hear and decide the
aforementioned three (3) complaints, it having the power of
supervision over LAs.
HELD: As succinctly provided in this RULE65, SEC.3 OF ROC,,
anyone who wishes to avail of the remedy of mandamus must state
in a verified petition "the facts with certainty." On account of this
requirement, mandamus is never issued in doubtful cases and
showing of a clear and certain right on the part of the petitioner is
required. 7 Indeed, while the LA is duty bound to resolve all
complaints referred to him for arbitration and, therefore, he may be
compelled by mandamus to decide them (although not in any
particular way or in favor of anyone), 8 we find that the peculiar
circumstances in this case do not merit the issuance of the writ of
mandamus.
From these facts, one may infer that there must have been a
mishandling of the complaints and/or the records of the cases.
However, the petitioner failed to substantiate by evidence such
negligence on the part of the public respondents as to warrant the
issuance of a writ of mandamus. 10 Its officials even neglected the
simple act of verifying from the MOLE office in Dagupan City
whether the records of all the cases filed had been forwarded to the
proper official who should resolve them. 11 Infact, nowhere in its
pleadings 12 is there an allegation to that effect.

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J.SUAREZ II, 2ND SEM,SY 12-13

On the contrary, the petitioner took Fernandez' words seriously and

allowed the proceedings to reach its inevitable conclusion. When it
received a copy of the decision, the petitioner should have taken
note of Executive LA observation therein that it had discussed
matters "beyond the scope of the issues alleged in the complaints."
In its memorandum of appeal, it should have prayed for the
inclusion of the three complaints inasmuch as in labor cases, an
appeal may be treated as a motion for reconsideration or viceversa. 13 The fact that three complaints had been omitted did not
escape the attention of the NLRC which stated in its resolution that
"since those cases were not consolidated it is now too late to
consolidate them" with the four decided cases. 14 We agree with
the NLRC that the said complaints should proceed separately as
long as their resolution would not conflict with the resolved cases.
15 It should be added that under Art. 217(b) of the Labor Code, the
NLRC has "exclusive appellate jurisdiction over all cases decided by
the LAs." Needless to say, the NLRC could not have acted on
matters outside of the cases appealed to it.
Petitioner's contention that the cases filed by Consuelo Abad as its
president should affect, not only herself, but all the other union
members similarly situated as she was, is well taken. The
uncontroverted allegation of the petitioner is that it is the holder of
Registration Certificate No. 9865-C, having been registered with the
then Ministry of Labor and Employment on February 16, 1978. As
such, petitioner possessed the legal personality to sue and be sued
under its registered name. 16 Corollarily, its president, Consuelo
Abad, correctly filed the complaints even if some of them involved
rights and interest purely or exclusively appertaining to individual
EEs, it appearing that she signed the complaints "for and in behalf
of the University of Pangasinan Faculty Union." 17
The University's contention that petitioner had no legal personality
to institute and prosecute money claims must, therefore, fail. To
quote then Associate Justice Teehankee w]hat should be borne in
mind is that the interest of the individual worker can be better
protected on the whole by a strong union aware of its moral and
legal obligations to represent the rank and file faithfully and secure
for them the best wages and working terms and conditions. . . .
Although this was stated within the context of collective bargaining,
it applies equally well to cases, such as the present wherein the
union, through its president, presented its individual members'
grievances through proper proceedings. While the complaints might
not have disclosed the identities of the individual EEs claiming
monetary benefits, 19 such technical defect should not be taken
against the claimants, especially because the University appears to
have failed to demand a bill of particulars during the proceedings
before the LA.
ISSUE: won NLRC did abuse its discretion in resolving the appeal
from the decision of Executive LA.
HELD: the NLRC did not abuse its discretion in resolving the appeal
from the decision of Executive LA except for the disallowance of the
emergency cost of living allowance to members of the petitioner.
The Rules Implementing P.D. No. 1713 which took effect on August
18, 1980 provide:
Sec. 6. Allowances of full-time and part-time EEs. EEs shall be
paid in full the monthly allowance on the basis of the scales
provided in Section 3 hereof, regardless of the number of their
regular working days if they incur no absences during the month. If
they incur absences without pay, the amounts corresponding to the
absences may be deducted from the monthly allowance provided
that in determining the equivalent daily allowance of such
deduction, the applicable monthly allowance shall be divided by
thirty (30) days.
This Section, which is a virtual reproduction of Section 12 of the old
Rules Implementing P.D. No. 1123, has been interpreted by this
Court as requiring that the full amount of the cost of living
allowance mandated by law should be given monthly to each EE if
the latter has worked continuously for each month, regardless of
the number of the regular working days. But more apropos is the
ruling of this Court in University of Pangasinan Faculty Union v.
University of Pangasinan and NLRC, a case involving the same
parties as in the instant petition and dealing with a complaint filed
by the petitioner on December 18, 198. The Court held therein:
. . . The "No work, no pay" principle does not apply in the instant
case. The petitioner's members received their regular salaries
during this period. It is clear from the . . . law that it contemplates a
"no work" situation where the EEs voluntarily absent themselves.
Petitioners, in the case at bar, certainly do not, ad voluntatem
absent themselves during semestral breaks. Rather, they are
constrained to take mandatory leave from work. For this, they
cannot be faulted nor can they be begrudged that which is due
them under the law. To a certain extent, the private respondent can
specify dates when no classes would be held. Surely, it was not the
intention of the framers of the law to allow ERs to withhold EE
benefits by the simple expedient of unilaterally imposing "no work"
days and consequently avoiding compliance with the mandate of
the law for those days.
As interpreted and emphasized in the same case, the law granting
emergency cost of living allowances was designed to augment the
income of the EEs to enable them to cope with the rising cost of
living and inflation. Clearly, it was enacted in pursuance of the
State's duty to protect labor and to alleviate the plight of the
workers. To uphold private respondent's interpretation of the law
would be running counter to the intent of the law and the
Constitution.
PAL vs. NLRC
G.R. No. 132805 February 2, 1999
PUNO, J.:

FACTS: Private respondent was employed as flight surgeon at

petitioner company. He was assigned at the PAL Medical Clinic at
Nichols and was on duty from 4PM to12MN.
at around 7PM, private respondent left the clinic to have his dinner
at his residence, which was about five-minute drive away. A few
minutes later, the clinic received an emergency call from the PAL
Cargo Services. One of its EEs, Mr. Manuel Acosta, had suffered a
heart attack. The nurse on duty, Mr. Merlino Eusebio, called private
respondent at home to inform him of the emergency. The patient
arrived at the clinic at 7:50PM and Mr. Eusebio immediately rushed
him to the hospital. When private respondent reached the clinic at
around 7:51PM.Mr. Eusebio had already left with the patient. Mr.
Acosta died the following day.
Upon learning about the incident, PAL Medical Director ordered the
Chief Flight Surgeon to conduct an investigation. The Chief Flight
Surgeon, in turn, required private respondent to explain why no
disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled
to a 30-minute meal break; that he immediately left his residence
upon being informed by Mr. Eusebio about the emergency and he
arrived at the clinic a few minutes later; that Mr. Eusebio panicked
and brought the patient to the hospital without waiting for him.
Finding private respondent's explanation unacceptable, the
management charged private respondent with abandonment of
post while on duty. He was given 10 days to submit a written
answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his
previous explanation. He further denied that he abandoned his
post. He said that he only left the clinic to have his dinner at home.
In fact, he returned to the clinic at 7:51 in the evening upon being
informed of the emergency.
After evaluating the charge as well as the answer of private
respondent, petitioner company decided to suspend private
respondent for 3 months.
Private respondent filed a complaint for illegal suspension against
petitioner.
LA:declaring the suspension of private respondent illegal. It also
ordered petitioner to pay private respondent the amount equivalent
to all the benefits he should have received during his period of
suspension plus P500,000.00 moral damages.
NLRC: dismissed petitioners appeal after finding that the decision
of the LA is supported by the facts on record and the law on the
matter. 3 The NLRC likewise denied petitioner's MR.
ISSUES:1. The public respondents acted without or in excess of
their jurisdiction and with grave abuse of discretion in nullifying the
3-month suspension of private respondent despite the fact that the
private respondent has committed an offense that warranted the
imposition of disciplinary action; 2. The public respondents acted
without or in excess of their jurisdiction and with GAD in holding the
petitioner liable for moral damages:(a) Despite the fact that no
formal hearing whatsoever was conducted for complainant to
substantiate his claim;(b) Despite the absence of proof that the
petitioner acted in bad faith in imposing the 3-month suspension;
and (c) Despite the fact that the Labor Arbiter's award of moral
damages is highly irregular, considering that it was more than what
the private respondent prayed for.
HELD: 1)We find that public respondents did not err in nullifying the
3-month suspension of private respondent. They, however, erred in
awarding moral damages to private respondent. The facts do not
support petitioner's allegation that private respondent abandoned
his post. Private respondent left the clinic that night only to have
his dinner at his house, which was only a few minutes' drive away
from the clinic. His whereabouts were known to the nurse on duty
so that he could be easily reached in case of emergency. Upon
being informed of Mr. Acosta's condition, private respondent
immediately left his home and returned to the clinic. These facts
belie petitioner's claim of abandonment.
Petitioner argues that being a full-time EE, private respondent is
obliged to stay in the company premises for not less than eight (8)
hours. Hence, he may not leave the company premises during such
time, even to take his meals.
Art. 83. Normal hours of work. The normal hours of work of any
EE shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at
least one million (1,000,000) or in hospitals and clinics with a bed
capacity of at least one hundred (100) shall hold regular office
hours for eight (8) hours a day, for five (5) days a week, exclusive
of time for meals, except where the exigencies of the service
require that such personnel work for six (6) days or forty-eight (48)
hours, in which case they shall be entitled to an additional
compensation of at least thirty per cent (30%) of their regular wage
for work on the sixth day. For purposes of this Article, "health
personnel" shall include: resident physicians, nurses, nutritionists,
dieticians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and
all other hospital or clinic personnel. (emphasis supplied)
Art. 85. Meal periods. Subject to such regulations as the
Secretary of Labor may prescribe, it shall be the duty of every ER to
give his EEs not less than sixty (60) minutes time-off for their
regular meals.

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Sec. 7, Rule I, Book III of the Omnibus Rules Implementing the Labor
Code further states: Every ER shall give his EEs, regardless of sex,
not less than one (1) hour time-off for regular meals, except in the
following cases when a meal period of not less than twenty (20)
minutes may be given by the ER provided that such shorter meal
period is credited as compensable hours worked of the EE;
(a) Where the work is non-manual work in nature or does not
involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than
sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent
work to be performed on machineries, equipment or installations to
avoid serious loss which the ER would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of
perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20)
minutes shall be considered as compensable working time.
Thus, the 8-hour work period does not include the meal break.
Nowhere in the law may it be inferred that EEs must take their
meals within the company premises. EEs are not prohibited from
going out of the premises as long as they return to their posts on
time. Private respondent's act, therefore, of going home to take his
dinner does not constitute abandonment.
2)Not every EE who is illegally dismissed or suspended is entitled to
damages. As a rule, moral damages are recoverable only where the
dismissal or suspension of the EE was attended by bad faith or
fraud, or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy. 6 Bad
faith does not simply mean negligence or bad judgment. It involves
a state of mind dominated by ill will or motive. It implies a
conscious and intentional design to do a wrongful act for a
dishonest purpose or some moral obliquity. 7 The person claiming
moral damages must prove the existence of bad faith by clear and
convincing evidence for the law always presumes good faith. 8
In the case at bar, there is no showing that the management of
petitioner company was moved by some evil motive in suspending
private respondent. It suspended private respondent on an honest,
albeit erroneous, belief that private respondent's act of leaving the
company premises to take his meal at home constituted
abandonment of post which warrants the penalty of suspension.
Also, it is evident from the facts that petitioner gave private
respondent all the opportunity to refute the charge against him and
to defend himself. These negate the existence of bad faith on the
part of petitioner. Under the circumstances, we hold that private
respondent is not entitled to moral damages.
LETRAN CALAMBA FACULTY and EES ASSOCIATION vs. NLRC
[G.R. No. 156225, January 29, 2008]
AUSTRIA-MARTINEZ, J.:
FACTS: Letran Calamba Faculty and EEs Association filed with
Regional Arbitration Branch No. IV of the National Labor Relations
Commission (NLRC) a Complaint[3] against Colegio de San Juan de
Letran, Calamba, Inc. for collection of various monetary claims due
its members. Petitioner alleged in its Position Paper that:

a)
b)

c)
d)

e)

f)
g)
h)

[It] has filed this complaint in behalf of its members

whose names and positions appear in the list hereto
attached as Annex A
the computation of the thirteenth month pay of its
academic personnel, respondent does not include as
basis therefor their compensation for overloads. It only
takes into account the pay the faculty members receive
for their teaching loads not exceeding eighteen (18)
units. The teaching overloads are rendered within eight
(8) hours a day.
Respondent has not paid the wage increases required by
Wage Order No. 5 to its EEs who qualify thereunder.
Respondent has not followed the formula prescribed by
DECS Memorandum Circular No. 2 dated March 10, 1989
in the computation of the compensation per unit of
excess load or overload of faculty members. This has
resulted in the diminution of the compensation of faculty
members.
The salary increases due the non-academic personnel as
a result of job grading has not been given. Job grading
has been an annual practice of the school since 1980;
the same is done for the purpose of increasing the
salaries of non-academic personnel and as the
counterpart of the ranking systems of faculty members.
Respondent has not paid to its EEs the balances of
seventy (70%) percent of the tuition fee increases for
the years 1990, 1991 and 1992.
Respondent has not also paid its EEs the holiday pay for
the ten (10) regular holidays as provided for in Article 94
of the Labor Code.
Respondent has refused without justifiable reasons and
despite repeated demands to pay its obligations
mentioned in paragraphs 3 to 7 hereof.

respondent filed its Position Paper denying all the allegations of

petitioner. petitioner filed its Reply. Prior to the filing of the abovementioned complaint, petitioner filed a separate complaint against
the respondent for money claims with Regional Office of DOLE. On
the other hand, pending resolution of NLRC Case respondent filed
with Regional Arbitration of the NLRC a petition to declare as illegal

a strike staged by petitioner in January 1994. Subsequently, these

three cases were consolidated. The case for money claims originally
filed by petitioner with the DOLE, while the petition to declare the
subject strike illegal filed by respondent was docketed as NLRC
Case. On September 28, 1998, the Labor Arbiter (LA) handling the
consolidated cases rendered a Decision with the following
dispositive portion:
The money claims cases are hereby dismissed for lack of merit; The
petition to declare strike illegal is hereby dismissed, but the officers
of the Union, particularly its President, Mr. Edmundo F. Marifosque,
Sr., are hereby reprimanded and sternly warned that future conduct
similar to what was displayed in this case will warrant a more
severe sanction from this Office.
ISSUES: 1)The CA gravely erred in holding that the factual findings
of NLRC cannot be reviewed in certiorari proceedings; 2) whether or
not the pay of faculrty members for teaching overloads should be
included as basis in the computation of the 13 th month pay; 3) that
it gravely erred in holding that the decision of NLRC is supported by
substantial evidence in not granting petitioners monetary claims.
HELD: 1 and 3) the Court finds no error in the ruling of the CA that
since nowhere in the petition is there any acceptable demonstration
that the LA or the NLRC acted either with grave abuse of discretion
or without or in excess of its jurisdiction, the appellate court has no
reason to look into the correctness of the evaluation of evidence
which supports the labor tribunals' findings of fact.
Settled is the rule that the findings of the LA, when affirmed by the
NLRC and the CA, are binding on the Supreme Court, unless
patently erroneous.[16] It is not the function of the Supreme Court
to analyze or weigh all over again the evidence already considered
in the proceedings below.[17] In a petition for review on certiorari,
this Courts jurisdiction is limited to reviewing errors of law in
the absence of any showing that the factual findings complained of
are devoid of support in the records or are glaringly erroneous.[18]
Firm is the doctrine that this Court is not a trier of facts, and this
applies with greater force in labor cases.[19] Findings of fact of
administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only great respect but even
finality.[20] They are binding upon this Court unless there is a
showing of grave abuse of discretion or where it is clearly shown
that they were arrived at arbitrarily or in utter disregard of the
evidence on record.[21] We find none of these exceptions in the
present case.
2)Where a teacher is required to perform such overload within the
eight (8) hours normal working day, such overload compensation
shall be considered part of the basic pay for the purpose of
computing the teacher's 13th-month pay. Overload work is
sometimes misunderstood as synonymous to overtime work as
this term is used and understood in the Labor Code. These two
terms are not the same because overtime work is work rendered in
excess of normal working hours of eight in a day (Art. 87, Labor
Code). Considering that overload work may be performed either
within or outside eight hours in a day, overload work may or may
not be overtime work.
In the light of the foregoing discussions, it is the position of this
Department that all basic salary/wage representing payments
earned for actual work performed during or within the eight hours
in a day, including payments for overload work within eight hours,
form part of basic wage and therefore are to be included in the
computation of 13th-month pay mandated by PD 851, as amended.
On the other hand, the Legal Services Department of the DOLE
holds in its opinion of March 4, 1992 that remunerations for
teaching in excess of the regular load shall be excluded in the
computation of the 13th-month pay unless, by school policy, the
same are considered as part of the basic salary of the qualified
teachers.[25]
Under a later set of Supplementary Rules and Regulations
Implementing Presidential Decree 851 issued by the then Labor
Secretary Blas Ople, overtime pay, earnings and other
remunerations are excluded as part of the basic salary and in the
computation of the 13th-month pay.
The exclusion of cost-of-living allowances under Presidential Decree
525 and Letter of Instruction No. 174 and profit sharing payments
indicate the intention to strip basic salary of other payments which
are properly considered as fringe benefits. Likewise, the catch-all
exclusionary phrase all allowances and monetary benefits which are
not considered or integrated as part of the basic salary shows also
the intention to strip basic salary of any and all additions which
may be in the form of allowances or fringe benefits.
While doubt may have been created by the prior Rules and
Regulations Implementing Presidential Decree 851 which defines
basic salary to include all remunerations or earnings paid by an ER
to an EE, this cloud is dissipated in the later and more controlling
Supplementary Rules and Regulations which categorically, exclude
from the definition of basic salary earnings and other remunerations
paid by ER to an EE. A cursory perusal of the two sets of Rules
indicates that what has hitherto been the subject of a broad
inclusion is now a subject of broad exclusion. The Supplementary
Rules and Regulations cure the seeming tendency of the former
rules to include all remunerations and earnings within the definition
of basic salary.
The all-embracing phrase earnings and other remunerations
which are deemed not part of the basic salary includes within its
meaning payments for sick, vacation, or maternity leaves, premium

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J.SUAREZ II, 2ND SEM,SY 12-13
for works performed on rest days and special holidays, pay for
regular holidays and night differentials. As such they are deemed
not part of the basic salary and shall not be considered in the
computation of the 13th-month pay. If they were not so excluded, it
is hard to find any earnings and other remunerations
expressly excluded in the computation of the 13th-month pay. Then
the exclusionary provision would prove to be idle and with no
purpose.
It is likewise clear that premium for special holiday which is at least
30% of the regular wage is an additional compensation other than
and added to the regular wage or basic salary. For similar reason it
shall not be considered in the computation of the 13th -month pay.
[30]
In the same manner that payment for overtime work and work
performed during special holidays is considered as additional
compensation apart and distinct from an EE's regular wage or basic
salary, an overload pay, owing to its very nature and definition,
may not be considered as part of a teacher's regular or basic salary,
because it is being paid for additional work performed in excess of
the regular teaching load.
CALTEX REGULAR EES AT MANILA OFFICE vs. CALTEX
(PHILIPPINES) and NLRC
G.R. No. 111359 August 15, 1995
FELICIANO, J.:
FACTS: On 12 December 1985, petitioner Union and private
respondent Caltex (Philippines), Inc. ("Caltex") entered into a"1985
CBA" which was to be in effect until midnight of 31 December 1988.
The CBA included, among others, the following provision:
HOURS OF WORK
In conformity with Presidential Decree 442, otherwise known as the
Labor Code of the Philippines, as amended, the regular work week
shall consist of eight (8) hours per day, seven (7) days, Monday
through Sunday, during which regular rates of pay shall be paid in
accordance with Annex B and work on the EE's one "Day of Rest,"
shall be considered a special work day, during which "Day of Rest"
rates of pay shall be paid as provided in Annex B. Daily working
schedules shall be established by management in accordance with
the requirements of efficient operations on the basis of eight (8)
hours per day for any five (5) days. Provided, however EEs required
to work in excess of forty (40) hours in any week shall be
compensated in accordance with Annex B of this
Agreement. Annex "B" Computation of: Regular Day Pay, OT, NSD
Pay, Day Off Pay, Excess of 40 hours within a calendar week,
Sunday Premium Pay, Holiday Premium Pay, EE's Basic Hourly Wage
Rate:Monthly Base Pay
the Union called Caltex's attention to alleged violations by Caltex of
Annex "B" of the 1985 CBA, e.g. non-payment of night-shift
differential, non-payment of overtime pay and non-payment at "first
day-off rates" for work performed on a Saturday. Caltex's Industrial
Relations manager immediately evaluated petitioner's claims and
accordingly informed petitioner Union that differential payments
would be timely implemented. In the implementation of the recomputed claims, however, no differential payment was made with
respect to work performed on the first 2 1/2 hours on a Saturday.
the Union instituted a complaint for unfair labor practice against
Caltex alleging violation of the provisions of the 1985 CBA.
Petitioner Union charged Caltex with shortchanging its EEs when
Caltex compensated work performed on the first 2 1/2 hours of
Saturday, an EEs' day of rest, at regular rates, when it should be
paying at "day of rest" or "day off" rates.
Caltex denied the accusations of the Union. It averred that Saturday
was never designated as a day of rest, much less a "day-off". It
maintained that the 1985 CBA provided only 1 day of rest for EEs at
the Manila Office, as well as EEs similarly situated at the Legazpi
and Marinduque Bulk Depots. This day of rest, according to Caltex,
was Sunday.
LA: ruled in favor of petitioner Union, while finding at the same time
that private respondent Caltex was not guilty of any unfair labor
practice. interpreting Article III and Annex "B" of the 1985 CBA,
concluded that Caltex's EEs had been given two (2) days (instead of
one [1] day) of rest, with the result that work performed on the EE's
first day of rest, viz. Saturday, should be compensated at "First dayoff" rates.
NLRC set aside the decision of LA.. The NLRC found that the
conclusions of the Labor Arbiter were not supported by the
evidence on record. The NLRC, interpreting the provisions of the
1985 CBA, concluded that that CBA granted only one (1) day of
rest, e.g., Sunday.
ISSUE: WON LA correctly interpreted Article III in relation to Annex
"B" of the parties' 1985 CBA.
HELD: After carefully examining the language of Article III, in
relation to Annex "B" of the 1985 CBA, quoted in limine, as well as
relevant portions of earlier CBAs between the parties, we agree
with the NLRC that the intention of the parties to the 1985 CBA was
to provide the EEs with only one (1) day of rest. The plain and
ordinary meaning of the language of Article III is that Caltex and the
Union had agreed to pay "day of rest" rates for work performed on
"an EE's one day of rest". To the Court's mind, the use of the word
"one" describing the phrase "day of rest [of an EE]" emphasizes the

fact that the parties had agreed that only a single day of rest shall
be scheduled and shall be provided to the EE.
It is useful to note that the contract clauses governing hours of
work in previous CBAs executed between private respondent Caltex
and petitioner Union in 1973, 1976, 1979 and 1982 contained
provisions parallel if not identical to those set out in Article III of the
1985 CBA. In all these CBAs (1973, 1976, 1979, 1982), Article III
provide that only "work on an EE's one day of rest "shall be paid on
the basis of "day of rest rates". The relevant point here is that
petitioner Union had never suggested that more than 1 day of rest
had been agreed upon, and certainly Caltex had never treated
Article III or any other portion of the CBAs as providing two (2) days
of rest. It is well settled that the contemporaneous and subsequent
conduct of the parties may be taken into account by a court called
upon to interpret and apply a contract entered into by them.
We note that LA surmised that the intention he implied from the
contents of Annex "B" was in conflict with the intention expressed
in Article III (which, the Labor Arbiter admitted, stipulated only one
day of rest). According to the Labor Arbiter, when Annex "B"
referred to "First Day-off Rates" and "Second Day-off Rates", these
were meant to express an agreement that the parties intended to
provide EEs two (2) days of rest. He then declared that Annex "B"
should prevail over Article III because the former was a more
specific provision than the latter.
An annex expresses the idea of joining a smaller or subordinate
thing with another, larger or of higher importance. 8 An annex has a
subordinate role, without any independent significance separate
from that to which it is tacked on. Annex "B," in the case at bar, is
one such document. It is not a memorandum of amendments or a
codicil containing additional or new terms or stipulations. Annex "B"
cannot be construed as modifying or altering the terms expressed
in the body of the agreement contained in the 1985 CBA. It did not
confer any rights upon EEs represented by petitioner Union; neither
did it impose any obligations upon private respondent Caltex. In
fact, the contents of Annex "B" have no intelligible significance in
and of themselves when considered separately from the 1985 CBA.
Private respondent also points out that the mathematical formulae
contained in Annex "B" are not all applicable to all classes of EEs,
there being some formulae applicable only to particular groups or
classes of EEs. Thus, "First Day-off rates" and "Second Day-off
rates" are applicable only to EEs stationed at the refinery and
associated facilities like depots and terminals which must be in
constant twenty-four (24) hours a day, seven (7) days a week,
operation, hence necessitating the continuous presence of
operations personnel. The work of such operations personnel
required them to be on duty for six (6) consecutive days. Upon the
other hand, "First Day-off rates" and "Second Day-off rates" are not
applicable to personnel of the Manila Office which consisted of
other groups or categories of EEs (e.g., office clerks, librarians,
computer operators, secretaries, collectors, etc.), 9 since the nature
of their work did not require them to be on duty for six (6)
consecutive days.

We find, under the foregoing circumstances, that the purported

intention inferred from Annex "B" by the Labor Arbiter was based
merely on conjecture and speculation.
We also note that the Labor Arbiter merely suspected that the
parties agreed to provide two (2) days of rest on the ground that
they had so stipulated in their 1970 CBA. 10 A principal difficulty
with this view is that it disregards the fact that Article III of the 1985
CBA no longer contained a particular proviso found in the 1970
CBA. In fact, all the CBAs subsequent to 1970 (1973, 1976, 1979,
1982) had similarly deleted the proviso in the 1970 CBA providing
for two (2) days-off. To the Court's mind, such deletion means only
one thing that is the parties had agreed to remove such
stipulation. Accordingly, the proviso found in Article III of the 1970
CBA ceased to be a demandable obligation. Petitioner Union cannot
now unilaterally re-insert such a stipulation by strained inference
from Annex "B." Upon the foregoing circumstances, we must hold
that the Labor Arbiter's suspicion is without basis in the facts of
record.
ISSUE: won Caltex in the instant petition was violating the
statutory prohibition against off-setting undertime for overtime
work on another day. Union counsel attempted to establish this
charge by asserting that the EEs had been required to render
"overtime work" on a Saturday but compensated only at regular
rates of pay, because they had not completed the eight (8)-hour
work period daily from Monday thru Friday.
HELD: The Court finds petitioner's contention bereft of merit.
Overtime work consists of hours worked on a given day in excess of
the applicable work period, which here is eight (8) hours. 12 It is not
enough that the hours worked fall on disagreeable or inconvenient
hours. In order that work may be considered as overtime work, the
hours worked must be in excess of and in addition to the eight (8)
hours worked during the prescribed daily work period, or the forty
(40) hours worked during the regular work week Monday thru
Friday.
In the present case, under the 1985 CBA, hours worked on a
Saturday do not, by that fact alone, necessarily constitute overtime
work compensable at premium rates of pay, contrary to petitioner's
assertion. These are normal or regular work hours, compensable at
regular rates of pay, as provided in the 1985 CBA; under that CBA,

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LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
Saturday is not a rest day or a "day off". It is only when an EE has
been required on a Saturday to render work in excess of the forty
(40) hours which constitute the regular work week that such EE
may be considered as performing overtime work on that Saturday.
We consider that the statutory prohibition against offsetting
undertime one day with overtime another day has no application in
the case at bar. 13
Petitioner's counsel, in his final attempt to lay a basis for compelling
private respondent to pay premium rates of pay for all hours
worked on a Saturday, regardless of the number of hours actually
worked earlier during the week, i.e., on Monday to Friday, insists
that private respondent cannot require its EEs to complete the 40hour regular work week on a Saturday, after it has allowed its EEs
to render only 37-1/2 hours of work.
The company practice of allowing EEs to leave thirty (30) minutes
earlier than the scheduled off-time had been established primarily
for the convenience of the EEs most of whom have had to commute
from work place to home and in order that they may avoid the
heavy rush hour vehicular traffic. There is no allegation here by
petitioner Union that such practice was resorted to by Caltex in
order to escape its contractual obligations. This practice, while it
effectively reduced to 37-1/2 the number of hours actually worked
by EEs who had opted to leave ahead of off-time, is not be
construed as modifying the other terms of the 1985 CBA. As
correctly pointed out by private respondent, the shortened work
period did not result in likewise shortening the work required for
purposes of determining overtime pay, as well as for purposes of
determining premium pay for work beyond forty (40) hours within
the calendar week. It follows that an EE is entitled to be paid
premium rates, whether for work in excess of eight (8) hours on any
given day, or for work beyond the forty (40)-hour requirement for
the calendar week, only when the EE had, in fact already rendered
the requisite number of hours 8 or 40 prescribed in the 1985
CBA.
LEGAHI vs. NLRC
G.R. No. 122240, NOVEMBER 18, 1999
ABDULJUAHID R. PIGCAULAN,
CREDITINVESTIGATION, INC
G.R. No. 173648, January 16, 2012
DEL CASTILLO, J.:

vs.

SECURITY

and

FACTS: Canoy and Pigcaulan were both employed by SCII as

security guards and were assigned to SCIIs different clients.
Subsequently, however, Canoy and Pigcaulan filed with the LA
separate complaints[7] for underpayment of salaries and nonpayment of overtime, holiday, rest day, service incentive leave and
13th month pays. These complaints were later on consolidated as
they involved the same causes of action.
Canoy and Pigcaulan, in support of their claim, submitted their
respective daily time records reflecting the number of hours served
and their wages for the same. They likewise presented itemized
lists of their claims for the corresponding periods served.
Respondents, however, maintained that Canoy and Pigcaulan were
paid their just salaries and other benefits under the law; that the
salaries they received were above the statutory minimum wage and
the rates provided by the Philippine Association of Detective and
Protective Agency Operators (PADPAO) for security guards; that
their holiday pay were already included in the computation of their
monthly salaries; that they were paid additional premium of 30% in
addition to their basic salary whenever they were required to work
on Sundays and 200% of their salary for work done on holidays;
and, that Canoy and Pigcaulan were paid the corresponding 13th
month pay for the years 1998 and 1999. In support thereof, copies
of payroll listings[8] and lists of EEs who received their 13th month
pay for the periods December 1997 to November 1998 and
December 1998 to November 1999[9] were presented. In addition,
respondents contended that Canoys and Pigcaulans monetary
claims should only be limited to the past three years of
employment pursuant to the rule on prescription of claims.
LA: Asuncion awarded them their monetary claims in his
Decision[10] dated June 6, 2002. The LA held that the payroll
listings presented by the respondents did not prove that Canoy and
Pigcaulan were duly paid as same were not signed by the latter or
by any SCII officer. The 13th month payroll was, however,
acknowledged as sufficient proof of payment, for it bears Canoys
and Pigcaulans signatures. Thus, without indicating any detailed
computation of the judgment award, the LA ordered the payment of
overtime pay, holiday pay, service incentive leave pay and
proportionate 13th month pay for the year 2000 in favor of Canoy
and Pigcaulan, viz:

NLRC: dismissed respondents appeal and held that the evidence

show underpayment of salaries as well as non-payment of service
incentive leave benefit.
Accordingly, the LAs Decision was
sustained. The motion for reconsideration thereto was likewise
dismissed by the NLRC in a Resolution[15] dated June 14, 2004.
CA: set aside the rulings of both the LA and the NLRC after noting
that there were no factual and legal bases mentioned in the
questioned rulings to support the conclusions made.

ISSUE: The Honorable Court of Appeals erred when it [made]

complainants suffer the consequences of the alleged nonobservance by the LA and NLRC of the prescribed forms of decisions

considering that they have complied with all needful acts required
to support their claims.
HELD: We have examined the petition and find that same was filed
by Pigcaulan solely on his own behalf. This is very clear from the
petitions prefatory which is phrased as follows: COMES NOW
Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this Honorable
Court.
Also, under the heading Parties, only Pigcaulan is mentioned as
petitioner and consistent with this, the body of the petition refers
only to a petitioner and never in its plural form petitioners.
Aside from the fact that the Verification and Certification of NonForum Shopping attached to the petition was executed by Pigcaulan
alone, it was plainly and particularly indicated under the name of
the lawyer who prepared the same, Atty. Josefel P. Grageda, that he
is the Counsel for Petitioner Adbuljuahid Pigcaulan only. In view
of these, there is therefore, no doubt, that the petition was brought
only on behalf of Pigcaulan. Since no appeal from the CA Decision
was brought by Canoy, same has already become final and
executory as to him.
Canoy cannot now simply incorporate in his affidavit a verification
of the contents and allegations of the petition as he is not one of
the petitioners therein. Suffice it to state that it would have been
different had the said petition been filed in behalf of both Canoy
and Pigcaulan. In such a case, subsequent submission of a
verification may be allowed as non-compliance therewith or a
defect therein does not necessarily render the pleading, or the
petition as in this case, fatally defective.[24] The court may order
its submission or correction, or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be
dispensed with in order that the ends of justice may be served
thereby. Further, a verification is deemed substantially complied
with when one who has ample knowledge to swear to the truth of
the allegations in the complaint or petition signs the verification,
and when matters alleged in the petition have been made in good
faith or are true and correct.[25] However, even if it were so, we
note that Canoy still failed to submit or at least incorporate in his
affidavit a certificate of non-forum shopping.
, we held that in some cases, execution by only one of the
petitioners on behalf of the other petitioners constitutes substantial
compliance with the rule on the filing of a certificate of non-forum
shopping on the ground of common interest or common cause of
action or defense.[28] We, however, find that common interest is
not present in the instant petition.
To recall, Canoys and
Pigcaulans complaints were consolidated because they both sought
the same reliefs against the same respondents. This does not,
however, mean that they share a common interest or defense. The
evidence required to substantiate their claims may not be the
same. A particular evidence which could sustain Canoys action
may not effectively serve as sufficient to support Pigcaulans claim.
Besides, assuming that the petition is also filed on his behalf, Canoy
failed to show any reasonable cause for his failure to join Pigcaulan
to personally sign the Certification of Non-Forum Shopping. It is his
duty, as a litigant, to be prudent in pursuing his claims against SCII,
especially so, if he was indeed suffering from financial distress.
However, Canoy failed to advance any justifiable reason why he did
not inform anyone of his whereabouts when he knows that he has a
pending case against his former ER. Sadly, his lack of prudence
and diligence cannot merit the courts consideration or sympathy.
It must be emphasized at this point that procedural rules should not
be ignored simply because their non-observance may result in
prejudice to a partys substantial rights. The Rules of Court should
be followed except only for the most persuasive of reasons.[29]
Having declared the present petition as solely filed by Pigcaulan,
this Court shall consider the subsequent pleadings, although
apparently filed under his and Canoys name, as solely filed by the
former.
ISSUE: The Honorable Court of Appeals erred when it dismissed the
complaint allegedly due to absence of legal and factual [bases]
despite attendance of substantial evidence in the records.
HELD: There was no substantial evidence to support the grant of
overtime pay.
The LA ordered reimbursement of overtime pay, holiday pay,
service incentive leave pay and 13th month pay for the year 2000
in favor of Canoy and Pigcaulan. The LA relied heavily on the
itemized computations they submitted which he considered as
representative daily time records to substantiate the award of
salary differentials. The NLRC then sustained the award on the
ground that there was substantial evidence of underpayment of
salaries and benefits.
We find that both the LA and the NLRC erred in this regard. The
handwritten itemized computations are self-serving, unreliable and
unsubstantial evidence to sustain the grant of salary differentials,
particularly overtime pay. Unsigned and unauthenticated as they
are, there is no way of verifying the truth of the handwritten entries
stated therein. Written only in pieces of paper and solely prepared
by Canoy and Pigcaulan, these representative daily time records, as
termed by the LA, can hardly be considered as competent evidence
to be used as basis to prove that the two were underpaid of their
salaries. We find nothing in the records which could substantially
support Pigcaulans contention that he had rendered service
beyond eight hours to entitle him to overtime pay and during
Sundays to entitle him to restday pay. Hence, in the absence of any
concrete proof that additional service beyond the normal working

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J.SUAREZ II, 2ND SEM,SY 12-13
hours and days had indeed been rendered, we cannot affirm the
grant of overtime pay to Pigcaulan.

holidays have been excluded in the programming of the student

contact hours.

with respect to the award for holiday pay, service incentive leave
pay and 13th month pay, we affirm and rule that Pigcaulan is
entitled to these benefits.
Under the Labor Code, Pigcaulan is entitled to his regular rate on
holidays even if he does not work.[30] Likewise, express provision
of the law entitles him to service incentive leave benefit for he
rendered service for more than a year already. Furthermore, under
Presidential Decree No. 851,[31] he should be paid his 13th month
pay. As ER, SCII has the burden of proving that it has paid these
benefits to its EEs.[32]

On appeal, respondent National Labor Relations Commission,

modified the decision appealed from, in the sense that teaching
personnel paid by the hour are declared to be entitled to holiday
pay.

SCII presented payroll listings and transmittal letters to the bank to

show that Canoy and Pigcaulan received their salaries as well as
benefits which it claimed are already integrated in the EEs monthly
salaries. However, the documents presented do not prove SCIIs
allegation. SCII failed to show any other concrete proof by means
of records, pertinent files or similar documents reflecting that the
specific claims have been paid. With respect to 13th month pay,
SCII presented proof that this benefit was paid but only for the
years 1998 and 1999. To repeat, the burden of proving payment of
these monetary claims rests on SCII, being the ER. It is a rule that
one who pleads payment has the burden of proving it. Even when
the plaintiff alleges non-payment, still the general rule is that the
burden rests on the defendant to prove payment, rather than on
the plaintiff to prove non-payment.[33] Since SCII failed to provide
convincing proof that it has already settled the claims, Pigcaulan
should be paid his holiday pay, service incentive leave benefits and
proportionate 13th month pay for the year 2000.
It is not for an EE to prove non-payment of benefits to which he is
entitled by law. Rather, it is on the ER that the burden of proving
payment of these claims rests.
ISSUE: The CA erred in dismissing the claims instead of remanding
the case to the LA for a detailed computation of the judgment
award.
HELD: Indeed, the LA failed to provide sufficient basis for the
monetary awards granted. Such failure, however, should not result
in prejudice to the substantial rights of the party. While we disallow
the grant of overtime pay and restday pay in favor of Pigcaulan, he
is nevertheless entitled, as a matter of right, to his holiday pay,
service incentive leave pay and 13th month pay for year 2000.
Hence, the CA is not correct in dismissing Pigcaulans claims in its
entirety.
Consistent with the rule that all money claims arising from an ER-EE
relationship shall be filed within three years from the time the
cause of action accrued,[34] Pigcaulan can only demand the
amounts due him for the period within three years preceding the
filing of the complaint in 2000. Furthermore, since the records are
insufficient to use as bases to properly compute Pigcaulans claims,
the case should be remanded to the LA for a detailed computation
of the monetary benefits due to him.
ASSOC. OF INTERNATIONAL SHIPPING LINES, INC. vs.
UNITED HARBORS PILOT ASSOC.
G.R. No.172029, August 6,2008
DACUT vs. CA
G.R. No.169434, March 28, 2008
ASIAN TRANSMISSION CO. vs. CA
G.R. No.144644, March 15, 2004
JOSE RIZAL COLLEGE vs.NLRC and NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS
G.R. No. L-65482 December 1, 1987
PARAS, J.:
FACTS:Petitioner is a non-stock, non-profit educational institution
duly organized and existing under the laws of the Philippines. It has
three groups of EEs categorized as follows: (a) personnel on
monthly basis, who receive their monthly salary uniformly
throughout the year, irrespective of the actual number of working
days in a month without deduction for holidays; (b) personnel on
daily basis who are paid on actual days worked and they receive
unworked holiday pay and (c) collegiate faculty who are paid on the
basis of student contract hour. Before the start of the semester they
sign contracts with the college undertaking to meet their classes as
per schedule.
Unable to receive their corresponding holiday pay, as claimed, from
1975 to 1977, private respondent National Alliance of Teachers and
Office Workers (NATOW) in behalf of the faculty and personnel of
Jose Rizal College filed with the Ministry of Labor a complaint
against the college for said alleged non-payment of holiday pay.
Due to the failure of the parties to settle their differences on
conciliation, the case was certified for compulsory arbitration.
After the parties had submitted their respective position papers, the
Labor Arbiter rendered a decision: 1. The faculty and personnel of
the respondent Jose Rizal College who are paid their salary by the
month uniformly in a school year, irrespective of the number of
working days in a month, without deduction for holidays, are
presumed to be already paid the 10 paid legal holidays and are no
longer entitled to separate payment for the said regular holidays; 2.
The personnel of the respondent Jose Rizal College who are paid
their wages daily are entitled to be paid the 10 unworked regular
holidays according to the pertinent provisions of the Rules and
Regulations Implementing the Labor Code; 3. Collegiate faculty of
the respondent Jose Rizal College who by contract are paid
compensation per student contract hour are not entitled to
unworked regular holiday pay considering that these regular

ISSUE: whether or not the school faculty who according to their

contracts are paid per lecture hour are entitled to unworked holiday
pay.
HELD: LC--Art. 94. Right to holiday pay (a) Every worker shall be
paid his regular daily wage during regular holidays, except in retail
and service establishments regularly employing less than ten (10)
workers; xxx
LC Implementing Rules and Regulations---SEC. 8. Holiday pay of
certain EEs. (a) Private school teachers, including faculty
members of colleges and universities, may not be paid for the
regular holidays during semestral vacations. They shall, however,
be paid for the regular holidays during Christmas vacations.
Under the foregoing provisions, apparently, the petitioner, although
a non-profit institution is under obligation to give pay even on
unworked regular holidays to hourly paid faculty members subject
to the terms and conditions provided for therein.
We believe that the aforementioned implementing rule is not
justified by the provisions of the law which after all is silent with
respect to faculty members paid by the hour who because of their
teaching contracts are obliged to work and consent to be paid only
for work actually done (except when an emergency or a fortuitous
event or a national need calls for the declaration of special
holidays). REGULAR HOLIDAY specified as such by law are known to
both school and faculty members as no class days;" certainly the
latter do not expect payment for said unworked days, and this was
clearly in their minds when they entered into the teaching
contracts.
On the other hand, both the law and the Implementing Rules
governing holiday pay are silent as to payment on Special Public
Holidays.
faculty member, although forced to take a rest, does not earn what
he should earn on that day. Be it noted that when a SPECIAL PUBLIC
HOLIDAYis declared, the faculty member paid by the hour is
deprived of expected income, and it does not matter that the
school calendar is extended in view of the days or hours lost, for
their income that could be earned from other sources is lost during
the extended days. Similarly, when classes are called off or
shortened on account of typhoons, floods, rallies, and the like,
these faculty members must likewise be paid, whether or not
extensions are ordered.
There was no deprivation of due process as petitioner claims that
he was not given notice of appeal to the NLRC. The records show
petitioner JRC was amply heard and represented in the instant
proceedings. It submitted its position paper before the Labor Arbiter
and the NLRC and even filed a motion for reconsideration of the
decision of the latter, as well as an "Urgent Motion for Hearing En
Banc" (Rollo, p. 175). Thus, petitioner's claim of lack of due process
is unfounded.
SMC vs. CA
G.R. No.146775, January 30, 2002
WELLINGTON INVESTMENT vs. TRAJANO
G.R. No.114698, July 3, 1995
FERNANDEZ vs. NLRC
G.R. No.105892, January 28, 1998
JPL MARKETING PROMOTIONS vs. CA
G.R. No.151966, July 8, 2005
ACE NAVIGATION CO., INC. and/or CONNING SHIPPING LTD.,
vs. CA, NLRC and ORLANDO ALONSAGAY,
[G.R. No. 140364. August 15, 2000]
PUNO, J.:
FACTS: Ace Nav recruited private respondent Orlando Alonsagay to
work as a bartender on board the vessel M/V "Orient Express"
owned by its principal, Conning Shipping Ltd. (Conning). Under their
POEA approved contract of employment, Orlando shall receive a
monthly basic salary of U.S. $450.00, flat rate, including overtime
pay for 12 hours of work daily plus tips of U.S. $2.00 per passenger
per day. He, was also entitled to 2.5 days of vacation leave with pay
each month. The contract was to last for 1 year.
Petitioners alleged that on June 13, 1994, Orlando was deployed
and boarded M/V "Orient Express" at the seaport of Hong Kong.
After the expiration of the contract on June 13, 1995, Orlando
returned to the Philippines and demanded from Ace Nav his
vacation leave pay. Ace Nav did not pay him immediately. It told
him that he should have been paid prior to his disembarkation and
repatriation to the Philippines. Moreover, Conning did not remit any
amount for his vacation leave pay. Ace Nav, however, promised to
verify the matter and asked Orlando to return after a few days.
Orlando never returned.
Orlando filed a complaint[3] before the labor arbiter for vacation
leave pay of U.S. $450.00 and unpaid tips amounting to U.S.
$36,000.00. Labor Arbiter Felipe P. Pati ordered Ace Nav and
Conning to pay jointly and severally Orlando his vacation leave pay
of US$450.00. The claim for tips of Orlando was dismissed for lack
of merit.
Orlando appealed[6] to the NLRC. In a decision[7] promulgated on
November 26, 1997, the NLRC ordered Ace Nav and Conning to pay

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J.SUAREZ II, 2ND SEM,SY 12-13
the unpaid tips in addition to his vacation leave pay. Ace Nav and
Conning filed a motion for reconsideration on February 2, 1998
which was denied on May 20, 1999.
Ace Nav and Conning filed a petition for certiorari before the CA to
annul the decision of the NLRC. CA promulgated a three-page
resolution[9] dismissing the petition. Their motion for
reconsideration filed on September 8, 1999 was denied on October
8, 1999. Hence this appeal.
They also contend that the respondent court erred in ruling that
they are the ones liable to pay tips to Orlando. They point out that if
tips will be considered as part of the salary of Orlando, it will make
him the highest paid EE on M/V "Orient Express." It will create an
unfavorable precedent detrimental to the future recruitment, hiring
and deployment of Filipino overseas workers specially in service
oriented businesses. It will also be a case of double compensation
that will unjustly enrich Orlando at the expense of petitioners. They
also stress that Orlando never complained that they should pay him
the said tips.
ISSUE: whether petitioners are liable to pay the tips to Orlando.
HELD: A tip may range from pure gift out of benevolence or
friendship, to a compensation for a service measured by its
supposed value but not fixed by an agreement, although usually
the word is applied to what is paid to a servant in addition to the
regular compensation for his service in order to secure better
service or in recognition of it. Since a tip is considered a pure gift
out of benevolence or friendship, it can not be demanded from the
customer. Whether or not tips will be given is dependent on the will
and generosity of the giver. Although a customer may give a tip as
a consideration for services rendered, its value still depends on the
giver. They are given in addition to the compensation by the ER. A
gratuity given by an ER in order to inspire the EE to exert more
effort in his work is more appropriately called a bonus.
The contract of employment between petitioners and Orlando is
categorical that the monthly salary of Orlando is US$450.00 flat
rate. This already included his overtime pay which is integrated in
his 12 hours of work. The words "plus tips of US$2.00 per passenger
per day" were written at the line for overtime. Since payment for
overtime was included in the monthly salary of Orlando, the
supposed tips mentioned in the contract should be deemed
included thereat.
The actuations of Orlando during his employment also show that he
was aware his monthly salary is only US$450.00, no more no less.
He did not raise any complaint about the non-payment of his tips
during the entire duration of his employment. After the expiration of
his contract, he demanded payment only of his vacation leave pay.
He did not immediately seek the payment of tips. He only asked for
the payment of tips when he filed this case before the labor arbiter.
This shows that the alleged non-payment of tips was a mere
afterthought to bloat up his claim. The records of the case do not
show that Orlando was deprived of any monthly salary. It will now
be unjust to impose a burden on the ER who performed the contract
in good faith.
Furthermore, it is presumed that the parties were aware of the
plain, ordinary and common meaning of the word "tip." As a
bartender, Orlando can not feign ignorance on the practice of
tipping and that tips are normally paid by customers and not by the
ER.
It is also absurd that petitioners intended to give Orlando a salary
higher than that of the ship captain. However, Orlando should be
paid his vacation leave pay. Petitioners denied this liability by
raising the defense that the usual practice is that vacation leave
pay is given before repatriation. But as the labor arbiter correctly
observed, petitioners did not present any evidence to prove that
they already paid the amount. The burden of proving payment was
not discharged by the petitioners.
MARANAW HOTELS AND RESORT CORPORATION, (Owner of
Century Park Sheraton Manila) vs. NLRC
G.R. No. 123880 February 23, 1999
PURISIMA, J.:
FACTS: Eddie Damalerio (Damalerio), a room attendant of the
Century Park Sheraton Hotel, operated by Maranaw Hotel and
Resort Corporation, was seen by hotel guest Jamie Glaser (Glaser)
with left hand inside the latter's suitcase. Confronted with what he
was doing, Damalerio explained that he was trying to tidy up the
room. Not satisfied with the explanation of Damalerio, Glaser
lodged a written complaint before William D. Despuig, chief-incharge of security of the hotel. Glaser also reported that Damalerio
had previously asked from him souvenirs, cassettes, and other
giveaways. The complaint was later brought by Despuig to the
attention of Major Eddie Buluran, chief of Security of the hotel.
Damalerio was given a Disciplinary Action Notice (DAN). The next
day, an administrative hearing was conducted on the matter. Taking
the witness stand on his own behalf, Damalerio denied the
accusation against him, theorizing that when he found the room of
Glaser in disarray, and was about to make the bed, he noticed some
belongings, such as socks and T-shirts of the said hotel guest
scattered around, so much so that he thought of placing the some
in his luggage. While doing so, Glaser arrived. When asked by the
latter if something was wrong, he (Damalerio) said "I'm just
cleaning your room," and Glaser remarked, "Good work," and then,
the two of them chatted about Glaser's concert at the Araneta
Coliseum.
Damalerio received a memorandum 3 issued by Alfredo San
Gabriel, Sr., Floor Supervisor, bearing the approval of Nicolas R.

Kirit, Executive Housekeeper, stating that he (Damalerio) was found

to have committed qualified theft in violation of House Rule No. 1,
Section 3 of Hotel Rules and Regulations. The same memorandum
served as a notice of termination of his employment.Damalerio filed
with the Labor Arbiter a Complaint for illegal dismissal against the
petitioner.
LA: WHEREFORE, judgment is hereby rendered finding the dismissal
of complainant to be illegal and ordering the respondents to
reinstate him to his former or equivalent position without loss of
seniority rights and with backwages from April 15, 1992 when he
was preventively suspended up to actual reinstatement and other
benefits, including but not limited to his share in the charges and or
tips which he failed to receive, and all other CBA benefits that have
accrued since his dismissal.
NLRC: modified the appealed decision by giving petitioner the
option of paying Damalerio a separation pay equivalent to one (1)
month pay for every year of service, instead of reinstating him.
ISSUE: won NLR committed GAD amounting to lack of jurisdiction in
holding petitioner failed to adduce conclusive evidence in support
of its version of the incident, considering the fact that the evidence
on record ineluctably shows that private respondent was caught in
flagrante delicto; and in not reversing that portion of the decision of
LA ordering petitioner to pay private respondent his share in the
service charge which was collected during the time he was not
working in the hotel.
HELD: Records disclose petitioner's failure to substantiate such
imputation against him. During the investigation presided over by
the Labor LA, Damalerio narrated a plausible and satisfactory
explanation for his behavior complained of. Glaser did not bother to
testify as all his things were intact.
Although it was not completely proper for Damalerio to be touching
the things of a hotel guest while cleaning the hotel rooms, personal
belongings of hotel guests being off-limits to roomboys, under the
attendant facts and circumstances, we believe that the dismissal of
Damalerio was unwarranted. To be sure, the investigation held by
the hotel security people did not unearth enough evidence of
culpability. Unsubstantiated suspicions and baseless conclusions by
ERs are not legal justification for dismissing EEs. The burden of
proving the existence of a valid and authorized cause of termination
is on the ER. 5 Any doubt should be resolved in favor of the EE, in
keeping with the principle of social justice enshrined in the
Constitution.
As regards the share of Damalerio in the service charges collected
during the period of his preventive suspension, the same form part
of his earnings, and his dismissal having been adjudged to be
illegal, he is entitled not only to full backwages but also to other
benefits, including a just share in the service charges, to be
computed from the start of his preventive suspension until his
reinstatement.
However, mindful of the animosity and strained relations between
the parties, emanating from this litigation, we uphold the ruling a
quo that in lieu of reinstatement, separation pay may be given to
the private respondent, at the rate of one (1) month pay for every
year of service. Should petitioner opt in favor of separation pay, the
private respondent shall no longer be entitled to share in the
service charges collected during his preventive suspension.
HOUSE OF SARA LEE, vs. CYNTHIA F. REY,
G.R. No. 149013 August 31, 2006
AUSTRIA-MARTINEZ, J.:
FACTS: The House of Sara Lee is engaged in the direct selling of a
variety of product lines for men and women, including cosmetics,
intimate apparels, perfumes, ready to wear clothes and other
novelty items, through its various outlets nationwide. In the pursuit
of its business, the petitioner engages and contracts with dealers to
sell the aforementioned merchandise. These dealers, known either
as Independent Business Managers (IBMs) or Independent Group
Supervisors (IGSs), depending on whether they sell individually or
through their own group, would obtain at discounted rates the
merchandise from the petitioner on credit or then sell the same
products to their own customers at fixed prices also determined by
the petitioner.
In turn, the dealers are paid Services Fees, or sales commissions,
the amount of which depends on the volume and value of their
sales. Under existing company policy, the dealers must remit to
the petitioner the proceeds of their sales within a designated credit
period, which would either be 38 days for IGSs or 52 days for IBMs,
counted from the day the said dealers acquired the merchandise
from the petitioner. To discourage late remittances, the petitioner
imposes a Credit Administration Charge, or simply, a penalty
charge, on the value of the unremitted payment.
The dealers under this system earn income through a profit margin
between the discounted purchase price they pay on credit to the
petitioner and the fixed selling price their customers will have to
pay. On top of this margin, the dealer is given the Service Fee, a
sales commission, based on the volume of sales generated by him
or her. Due to the sheer volume of sales generated by all of its
outlets, the petitioner has found the need to strictly monitor the 38or 52-day rolling due date of each of its IBMs and IGSs through
the employment of Credit Administration Supervisors (CAS) for
each branch. The primary duty of the CAS is to strictly monitor
each of these deadlines, to supervise the credit and collection of
payments and outstanding accounts due to the petitioner from its
independent dealers and various customers, and to screen
prospective IBMs. To discharge these responsibilities, the CAS is
provided with a computer equipped with control systems through
which data is readily generated. Under this organizational setup,

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J.SUAREZ II, 2ND SEM,SY 12-13
the CAS is under the direct and immediate supervision of the
Branch Operations Manager (BOM).
Cynthia Rey at the time of her dismissal from employment, held the
position of Credit Administration Supervisor or CAS at the Cagayan
de Oro City branch of the petitioner. She was first employed by the
petitioner as an Accounts Receivable Clerk at its Caloocan City
branch. In November 1993, respondent was transferred to the
Cagayan de Oro City branch retaining the same position. In January
1994, respondent was elevated to the position of CAS. At that time,
the Branch Operations Manager or BOM of the Cagayan de Oro City
branch was a certain Mr. Jeremiah Villagracia. In March 1995,
respondent was temporarily assigned to the Butuan City branch.
Sometime in June 1995, while respondent was still working in
Butuan City, she allegedly instructed the Accounts Receivable Clerk
of the Cagayan de Oro outlet to change the credit term of one of
the IBMs of the petitioner who happens to be respondents sister-inlaw, from the 52-day limit to an unauthorized term of 60 days.
The respondent made the instruction just before the computer data
for the computation of the Service Fee accruing to Ms. Rey-Petilla
was about to be generated. Ms. Mendoza then reported this
allegedly unauthorized act of respondent to her Branch Operations
Manager, Mr. Villagracia. Acting on the report, as the petitioner
alleges, BOM Villagracia discreetly verified the records and
discovered that it was not only the 52-day credit term of IBM ReyPetilla that had been extended by the respondent, but there were
several other IBMs whose credit terms had been similarly extended
beyond the periods allowed by company policy. BOM Villagracia
then summoned the respondent and required her to explain the
unauthorized credit extensions.
ISSUE: WON the respondent is entitled to 13 th month pay.
HELD: The award of 13th month pay must be deleted. Respondent
is not a rank-and-file EE and is, therefore, not entitled to thirteenthmonth pay. However, the NLRC and the CA are correct in refusing to
award 14th and 15th month pay as well as the monthly salary
increase of 10 percent per year for two years based on her latest
salary rate. The respondent must show that these benefits are
due to her as a matter of right. Mere allegations by the respondent
do not suffice in the absence of proof supporting the same. With
respect to salary increases in particular, the respondent must
likewise show that she has a vested right to the same, such that her
salary increases can be made a component in the computation of
backwages. What is evident is that salary increases are a mere
expectancy.
They are by nature volatile and dependent on
numerous variables, including the companys fiscal situation, the
EEs future performance on the job, or the EEs continued stay in a
position. In short, absent any proof, there is no vested right to
salary increases.
PETROLEUM SHIPPING LIMITED(ESSO) vs. NLRC
G.R. No. 148130 June 16, 2006
CARPIO, J.:
FACTS: Esso International Shipping (Bahamas) Co., Ltd., (Esso)
through Trans-Global Maritime Agency, Inc. (Trans-Global) hired
Florello W. Tanchico (Tanchico) as First Assistant Engineer.
Tanchico became Chief Engineer. Tanchico returned to the
Philippines for a two-month vacation after completing his eightmonth deployment. Tanchico underwent the required standard
medical examination prior to boarding the vessel. The medical
examination revealed that Tanchico was suffering from Ischemic
Heart Disease, Hypertensive Cardio-Muscular Disease and Diabetes
Mellitus.
Tanchico took medications for two months and a
subsequent stress test showed a negative result. However, Esso no
longer deployed Tanchico. Instead, Esso offered to pay him benefits
under the Career Employment Incentive Plan. Tanchico accepted
the offer.
Tanchico filed a complaint against Esso, Trans-Global and Malayan
Insurance Co., Inc. (Malayan) before the POEA for illegal dismissal
with claims for backwages, separation pay, disability and medical
benefits and 13th month pay. In view of the enactment of RA 8042
transferring to theNLRC the jurisdiction over money claims of
overseas workers, the case was indorsed to the Arbitration Branch
of the National Capital Region.
LA: dismissed the complaint for lack of merit. NLRC: affirmed, MR
granted and ruled On the claim of illegal dismissal, the same is
unavailing as complainant had been declared as one with partial
permanent disability. Thus, he should be entitled to disability
benefit of 18 days for every year of credited service of fourteen (14)
years less the amount he already received under the Companys
Disability Plan.
On the claim of 13th month pay, the respondent Agency not falling
under the enumerated exempted ERs under P.D. 851 and in the
absence of any proof that respondent is already paying its EEs a
13th month pay or more in a calendar year, perforce, respondent
agency should pay complainant his monthly pay computed at [sic]
the actual month [sic] worked, which is 8 months. Since
complainant was forced to litigate his case, he is hereby awarded
10% of the total award as attorneys fees.
CA: affirmed. Then modified that The petitioners are ordered to pay
to the private respondent the following:(1) disability wages
equivalent to 18 days per year multiplied by 10 years less any
amount already received under the companys disability plan;
prorated 13th month pay corresponding to eight (8) months of
actual work; and attorneys fee equivalent to 10% of the total
award.
ISSUES:1. Whether Tanchico is a regular EE of petitioners; and 2.
Whether Tanchico is entitled to 13th month pay, disability benefits
and attorneys fees.

HELD: 1)The issue on whether seafarers are regular EEs is already

a settled matter. The Court squarely passed upon the issue in
Millares v. NLRC where one of the issues raised was whether
seafarers are regular or contractual EEs whose employment are
terminated everytime their contracts of employment expire. The
Court explained:
[I]t is clear that seafarers are considered contractual EEs. They can
not be considered as regular EEs under Article 280 of the Labor
Code. Their employment is governed by the contracts they sign
everytime they are rehired and their employment is terminated
when the contract expires. Their employment is contractually fixed
for a certain period of time. They fall under the exception of Article
280 whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been
determined at the time of engagement of the EE or where the work
or services to be performed is seasonal in nature and the
employment is for the duration of the season. We need not depart
from the rulings of the Court in the two aforementioned cases which
indeed constitute stare decisis with respect to the employment
status of seafarers.
Brent case has, however, held that there are certain forms of
employment which also require the performance of usual and
desirable functions and which exceed one year but do not
necessarily attain regular employment status under Article 280.
Overseas workers including seafarers fall under this type of
employment which are governed by the mutual agreements of the
parties.
The Standard Employment Contract governing the employment of
All Filipino Seamen on Board Ocean-Going Vessels of the POEA,
particularly in Part I, Sec. C specifically provides that the contract of
seamen shall be for a fixed period. And in no case should the
contract of seamen be longer than 12 months. It reads: Section C.
Duration of Contract:: The period of employment shall be for a
fixed period but in no case to exceed 12 months and shall be stated
in the Crew Contract. Any extension of the Contract period shall be
subject to the mutual consent of the parties. Moreover, it is an
accepted maritime industry practice that employment of seafarers
are for a fixed period only. Constrained by the nature of their
employment which is quite peculiar and unique in itself, it is for the
mutual interest of both the seafarer and the ER why the
employment status must be contractual only or for a certain period
of time.
Seafarers spend most of their time at sea and
understandably, they can not stay for a long and an indefinite
period of time at sea. Limited access to shore society during the
employment will have an adverse impact on the seafarer. The
national, cultural and lingual diversity among the crew during the
COE is a reality that necessitates the limitation of its period.
Undeniably, this circumstance of continuous re-hiring was dictated
by practical considerations that experienced crew members are
more preferred. Petitioners were only given priority or preference
because of their experience and qualifications but this does not
detract the fact that herein petitioners are contractual EEs. They
can not be considered regular EEs. Thus, in the present case, the
Court of Appeals erred in ruling that Tanchico was a regular EE of
Petroleum Shipping.
2. The coverage of the Contract includes Compensation, Overtime,
Sundays and Holidays, Vacations, Living Allowance, Sickness, Injury
and Death, Transportation and Travel Expense, Subsistence and
Living Quarters. It does not provide for the payment of 13th month
pay. The Contract of Employment,[22] which is the standard
employment contract of the POEA, likewise does not provide for the
payment of 13th month pay. Hence, in the absence of any provision
in his Contract governing the payment of 13th month pay, Tanchico
is not entitled to the benefit.
The duration of the Contract was for eight months. The Contract
also provides: Vacation days shall be earned at the rate of seven
and one-half days (7.5) days for each thirty (30) days of continuous
service, calculated from date of departure from Manila and until
date of return to Manila. Vacation begins on the day following
arrival in Manila.
Every effort will be made to grant earned vacations promptly after
eight (8) months of service; however, the COMPANY shall have the
right to advance or delay vacations to coincide with vessel repairs,
for operational reasons or due to personal requirements. SEAFARER
shall receive vacation compensation for each thirty (30) days of
continuous service in accordance with the rates listed in Addendum
No. 1, Column (12), to be paid in Manila. Amounts shall be prorated according to the ranks/ratings and period of time in which the
SEAFARER served. For period of less than thirty (30) days service,
vacations and compensation shall be reduced proportionately.
Time off for illness, injury, vacation, leave of absence or stand-by
shall not be considered service under the provisions of this Article.
It is the COMPANYs intention that each SEAFARER enjoy his full
vacation period. Because of urgent fleet needs, however, it
occasionally may be necessary to recall a SEAFARER early from
vacation.[24]
Since Tanchico received compensation during his vacation, the
Contract did not terminate on the day he returned to Manila. The
Contract remained in force during Tanchicos vacation period.
However, the Court of Appeals erred when it ruled that Tanchico is
entitled to disability benefits of 18 days for every year of service.
The Court of Appeals ruled that Tanchicos employment was
continuous and that his tenure with petitioners was for 14 years.
Again, the Court of Appeals assumed that Tanchico was a regular

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J.SUAREZ II, 2ND SEM,SY 12-13
EE. The Court of Appeals failed to consider that Tanchicos
employment terminated with the end of each contract.
Indications that Tanchico was suffering from ischemia were
detected on 8 December 1992 during Tanchicos vacation period.
Thus, petitioners paid him disability benefits for 18 days in
accordance with the Contract. Tanchico cannot claim that he only
acquired the illness during his last deployment since the Medical
Report[26] he submitted to the NLRC showed that he has been
hypertensive since 1983 and diabetic since 1987. In the absence
of concrete proof that Tanchico acquired his disability during
his last deployment and not during his vacation, he is only entitled
to disability benefits for 18 days.
Petitioners claim that they already paid Tanchico his disability
benefits for 18 days but he refused to sign the receipt.[27]
Tanchico alleged that he was only paid under the Career
Employment Incentive Plan.[28] This is a factual matter which this
Court cannot resolve. This matter has to be remanded to the Labor
Arbiter for resolution.
HONDA PHILS., INC., vs. SAMAHAN NG MALAYANG
MANGGAGAWA SA HONDA
[G.R. No. 145561. June 15, 2005]
YNARES-SANTIAGO, J.:
As found by the Court of Appeals, the case stems from the CBA
forged between petitioner Honda and respondent union Samahan
ng Malayang Manggagawa sa Honda (respondent union) which
contained the following provisions:
Section 3. 13th Month Pay: The COMPANY shall maintain the
present practice in the implementation [of] the 13th month pay.
Section 6. 14th Month Pay: The COMPANY shall grant a 14th Month
Pay, computed on the same basis as computation of 13th Month
Pay.
Section 7. The COMPANY agrees to continue the practice of
granting, in its discretion, financial assistance to covered EEs in
December of each year, of not less than 100% of basic pay.
This CBA is effective until year 2000. In the latter part of 1998, the
parties started re-negotiations for the fourth and fifth years of their
CBA.
When the talks between the parties bogged down,
respondent union filed a Notice of Strike on the ground of
bargaining deadlock. Thereafter, Honda filed a Notice of Lockout.
On March 31, 1999, DOLE Secretary Laguesma assumed jurisdiction
over the labor dispute and ordered the parties to cease and desist
from committing acts that would aggravate the situation. Both
parties complied accordingly.
however, respondent union filed a second Notice of Strike on the
ground of unfair labor practice alleging that Honda illegally
contracted out work to the detriment of the workers. Respondent
union went on strike and picketed the premises of Honda. DOLE
Acting Secretary Felicisimo Joson, Jr. assumed jurisdiction over the
case and certified the same to the NLRC for compulsory arbitration.
The striking EEs were ordered to return to work and the
management accepted them back under the same terms prior to
the strike staged.
the management of Honda issued a memorandum[4] announcing
its new computation of the 13th and 14th month pay to be granted
to all its EEs whereby the thirty-one (31)-day long strike shall be
considered unworked days for purposes of computing said benefits.
As per the companys new formula, the amount equivalent to 1/12
of the EEs basic salary shall be deducted from these bonuses, with
a commitment however that in the event that the strike is declared
legal, Honda shall pay the amount deducted.
Respondent union opposed the pro-rated computation of the
bonuses in a letter. Honda sought the opinion of the Bureau of
Working Conditions (BWC) on the issue. In a letter, the BWC agreed
with the pro-rata payment of the 13th month pay as proposed by
Honda. The matter was brought before the Grievance Machinery in
accordance with the parties existing CBA but when the issue
remained unresolved, it was submitted for voluntary arbitration. In
his decision[6] dated May 2, 2000, Voluntary Arbitrator Herminigildo
C. Javen invalidated Hondas computation, to wit: The Company is
thus ordered to compute each provision in full month basic pay and
pay the amounts in question within ten (10) days after this Decision
shall have become final and executory. The three (3) days
Suspension of the twenty one (21) EEs is hereby affirmed.
ISSUE: whether the pro-rated computation of the 13th month pay
and the other bonuses in question is valid and lawful.
HELD: A collective bargaining agreement refers to the negotiated
contract between a legitimate labor organization and the ER
concerning wages, hours of work and all other terms and conditions
of employment in a bargaining unit.[8] As in all contracts, the
parties in a CBA may establish such stipulations, clauses, terms and
conditions as they may deem convenient provided these are not
contrary to law, morals, good customs, public order or public policy.
[9] Thus, where the CBA is clear and unambiguous, it becomes the
law between the parties and compliance therewith is mandated by
the express policy of the law.[10]
In some instances, however, the provisions of a CBA may become
contentious, as in this case. Honda wanted to implement a prorated computation of the benefits based on the no work, no pay
rule. According to the company, the phrase present practice as
mentioned in the CBA refers to the manner and requisites with
respect to the payment of the bonuses, i.e., 50% to be given in May
and the other 50% in December of each year. Respondent union,
however, insists that the CBA provisions relating to the
implementation of the 13th month pay necessarily relate to the
computation of the same.

We agree with the findings of the arbitrator that the assailed CBA
provisions are far from being unequivocal. A cursory reading of the
provisions will show that they did not state categorically whether
the computation of the 13th month pay, 14th month pay and the
financial assistance would be based on one full months basic salary
of the EEs, or pro-rated based on the compensation actually
received. The arbitrator thus properly resolved the ambiguity in
favor of labor as mandated by Article 1702 of the Civil Code.[11]
The Court of Appeals affirmed the arbitrators finding and added
that the computation of the 13th month pay should be based on the
length of service and not on the actual wage earned by the worker.
Presidential Decree No. 851, otherwise known as the 13th Month
Pay Law, which required all ERs to pay their EEs a 13th month pay,
was issued to protect the level of real wages from the ravages of
worldwide inflation. It was enacted on December 16, 1975 after it
was noted that there had been no increase in the minimum wage
since 1970 and the Christmas season was an opportune time for
society to show its concern for the plight of the working masses so
that they may properly celebrate Christmas and New Year.[13]
Under the Revised Guidelines on the Implementation of the 13th
month pay issued on November 16, 1987, the salary ceiling of
P1,000.00 under P.D. No. 851 was removed. It further provided that
the minimum 13th month pay required by law shall not be less than
one-twelfth (1/12) of the total basic salary earned by an EE within a
calendar year. The guidelines pertinently provides:
The basic salary of an EE for the purpose of computing the 13th
month pay shall include all remunerations or earnings paid by his
ER for services rendered but does not include allowances and
monetary benefits which are not considered or integrated as part of
the regular or basic salary, such as the cash equivalent of unused
vacation and sick leave credits, overtime premium, night
differential and holiday pay, and cost-of-living allowances.[14]
(Emphasis supplied)
For EEs receiving regular wage, we have interpreted basic salary
to mean, not the amount actually received by an EE, but 1/12 of
their standard monthly wage multiplied by their length of service
within a given calendar year.
Thus, we exclude from the
computation of basic salary payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay and
premiums for work done on rest days and special holidays.[15] In
Hagonoy Rural Bank v. NLRC,[16] St. Michael Academy v. NLRC,[17]
Consolidated Food Corporation v. NLRC,[18] and similar cases, the
13th month pay due an EE was computed based on the EEs basic
monthly wage multiplied by the number of months worked in a
calendar year prior to separation from employment.
The revised guidelines also provided for a pro-ration of this benefit
only in cases of resignation or separation from work. As the rules
state, under these circumstances, an EE is entitled to a pay in
proportion to the length of time he worked during the year,
reckoned from the time he started working during the calendar
year.[19] The Court of Appeals thus held that:
Considering the foregoing, the computation of the 13th month pay
should be based on the length of service and not on the actual
wage earned by the worker. In the present case, there being no
gap in the service of the workers during the calendar year in
question, the computation of the 13th month pay should not be prorated but should be given in full.[20] (Emphasis supplied)
More importantly, it has not been refuted that Honda has not
implemented any pro-rating of the 13th month pay before the
instant case. Honda did not adduce evidence to show that the 13th
month, 14th month and financial assistance benefits were
previously subject to deductions or pro-rating or that these were
dependent upon the companys financial standing. As held by the
Voluntary Arbitrator:
The Company (Honda) explicitly accepted that it was the strike held
that prompt[ed] them to adopt a pro-rata computation, aside [from]
being in [a] state of rehabilitation due to 227M substantial losses in
1997, 114M in 1998 and 215M lost of sales in 1999 due to strike.
This is an implicit acceptance that prior to the strike, a full month
basic pay computation was the present practice intended to be
maintained in the CBA.[21]
The memorandum dated November 22, 1999 which Honda issued
shows that it was the first time a pro-rating scheme was to be
implemented in the company. It was a convenient coincidence for
the company that the work stoppage held by the EEs lasted for
thirty-one (31) days or exactly one month. This enabled them to
devise a formula using 11/12 of the total annual salary as base
amount for computation instead of the entire amount for a 12month period.
That a full month payment of the 13th month pay is the established
practice at Honda is further bolstered by the affidavits executed by
Feliteo Bautista and Edgardo Cruzada. Both attested that when
they were absent from work due to motorcycle accidents, and after
they have exhausted all their leave credits and were no longer
receiving their monthly salary from Honda, they still received the
full amount of their 13th month, 14th month and financial
assistance pay.[22]
With regard to the length of time the company practice should have
been exercised to constitute voluntary ER practice which cannot be
unilaterally withdrawn by the ER, we hold that jurisprudence has
not laid down any rule requiring a specific minimum number of
years. In the above quoted case of Davao Fruits Corporation vs.
Associated Labor Unions, the company practice lasted for six (6)

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J.SUAREZ II, 2ND SEM,SY 12-13
years. In another case, Davao Integrated Port Stevedoring Services
vs. Abarquez, the ER, for three (3) years and nine (9) months,
approved the commutation to cash of the unenjoyed portion of the
sick leave with pay benefits of its intermittent workers. While in
Tiangco vs. Leogardo, Jr. the ER carried on the practice of giving a
fixed monthly emergency allowance from November 1976 to
February 1980, or three (3) years and four (4) months. In all these
cases, this Court held that the grant of these benefits has ripened
into company practice or policy which cannot be peremptorily
withdrawn. In the case at bar, petitioner Sevilla Trading kept the
practice of including non-basic benefits such as paid leaves for
unused sick leave and vacation leave in the computation of their
13th-month pay for at least two (2) years. This, we rule likewise
constitutes voluntary ER practice which cannot be unilaterally
withdrawn by the ER without violating Art. 100 of the Labor Code.
[25] (Emphasis supplied)
UNITED CMC TEXTILE WORKERS UNION vs.THE HONORABLE
LABOR ARBITER, RAYMUNDO VALENZUELA
G.R. No. 70763 April 30, 1987
PARAS, J.:
FACTS: Sometime in 1979, petitioner filed a complaint against
Central Textile Mills, Inc. (CTMI, for brevity) at the Ministry of Labor
and Employment for non-payment of Christmas bonus of the rank
and file EEs of said company as provided in Art. XI of the then
existing CBA between petitioner and CTMI. Among the provisions of
the said collective agreement is the payment of Christmas bonus
based on the following schedule:
10 years and above...............................P 70.00
7 years and up but less than 10 years.......60.00
2 years but less than 7..............................50.00
6 months and up but less than 2 y...........20.00
To be paid to all EEs on or before the beginning of the Christmas
vacation.
LA: we find that Sec. 1, Art XI of the CBA concluded between the
parties dealing on the payment of Christmas Bonus is violated by
the refusal of respondent Central Textile Mills, Inc. to pay the same
despite demand by complainant United CMC Textile Workers Union.
Consequently, respondent, Central Textile Mills, Inc. should be as it
is hereby ordered to implement the same by paying the workers
covered by said CBA the total amount of ONE HUNDRED TWENTY
TWO THOUSAND EIGHT HUNDRED FORTY PESOS (P122,840.00)
corresponding to the 1978 Christmas Bonus, the break down of
which is reflected in the list attached to this decision the accuracy
of the termination of which by complainant union is not, in the
least, disputed by the respondent company. (p. 106, Rollo)
NLRC: affirmed with modification that the complainant (petitioner
herein) was ordered to furnish a copy of the computation list in
order that respondents may verify the correctness and/or validity of
the individual claims and for the latter to present their objection, if
any, to the LA of origin, prior to the execution of the decision.
HELD: We find the contentions of petitioner more meritorious than
the contentions of respondents. When We dismissed the petition for
review of private respondents in G.R. No. 58666 on January
20,1982, for lack of merit, We did so upon the doctrine laid down in
the Marcopper Case which was promulgated on June 11, 1981.
Before the dismissal of said case became final and executory, We
decided the La Carlota case on May 31, 1982 wherein We ruled that
EEs are no longer entitled to an additional Christmas bonus or other
Christmas benefits if they are already entitled to a 13th month pay.
Meanwhile in Case No. 58666 the company filed their MR of the
dismissal of their petition which We denied as per Our resolution on
August 18, 1982. Subsequently, said dismissal became final and
executory as per Entry of Judgment dated September 22, 1982.
Thus, it can be seen that despite the La Carlota ruling We denied
the company's MR and We reiterated Our previous dismissal of the
petition for review for lack of merit. This only goes to show that We
refused to apply or did not choose to apply the La Carlota doctrine
to the case at bar. And We have consistently held in a number of
Our decisions that judgments which had long become final and
executory can no longer be amended or modified by the courts.
Such is the doctrine known as "the law of the case."
Furthermore, the findings of the NLRC as stated in its decision 4
show that the claim is for Christmas bonus for the year 1978 only. It
appears from the records that the EEs of the respondent company
had been paid their bonuses in accordance with the CBA, in
addition to the 13th month pay, for the years 1979 and 1980. The
Page 431 CBA in question took effect on November 1, 1978, 3 years
after the promulgation of P.D. No. 851. If the Christmas bonus was
included in the 13th month pay, then there would be no need for
having a specific provision on Christmas bonus in the CBA. But it
did provide for a bonus in graduated amounts depending on the
length of service of the EE. The intention is clear therefore that the
bonus provided in the CBA was meant to be in addition to the legal
requirement. Moreover, why exclude the payment of the 1978
Christmas bonus and pay only the 1979-1980 bonus. The
classification of the company's workers in the CBA according to
their years of service supports the allegation that the reason for the
payment of bonus was to give bigger reward to the senior EEs a
purpose which is not found in P.D. 851. A bonus under the CBA is an
obligation created by the contract between the management and
workers while the 13th month pay is mandated by the law (P.D.
851).
Likewise We find no merit in respondent's allegations that the
applicability of the said La Carlota ruling to the case at bar is
explicitly recognized by herein petitioner. A cursory reading of the
CBA signed on November 2, 1983 5 shows that petitioner Union
recognizes only the application of the La Carlota doctrine in so far
as it had agreed to the deletion of the provision on payment of

Christmas bonus in the new CBA of 1983 without necessarily giving

up their claim for their 1978 bonus under their former CBA.
PRODUCERS BANK OF THE PHILIPPINES vs. NLRC
[G.R. No. 100701. March 28, 2001]
GONZAGA-REYES, J.:
FACTS:The EE of the producer bank file a petition to the NLRC that
the PBP not complied the wage#6 and non payment of holiday pay.
The petitioner contends that the NLRC gravely abused its discretion
in ruling as it did for the succeeding reasons:
1. It contravened the SC decision in traders Royal bank vs NLRC
2. Its ruling is not justified by law and Art. 100 of the labor code
3. Its ruling is contrary to the BA
4. The so called company practice invoked by its has no legal and
moral bases
Petitioner under conservatorship and distressed is exempted under
wage#6.
ISSUES::Alleged diminution of benefits, - Christmas and 13th
bonus; Non compliance with the wage order#6; Non payment of
legal holiday pay
HELD: :The granting of a bonus is a management prerogative,
something given in addition to what is ordinarily received by or
strictly due the recipient.
Section 28 A Appointment of conservator whenever, on the basis
of a report submitted b appropraiate supervising and examining
department, the MB fins that a bank is in a state of continuing in
ability or unwillingness to maintain a condition of solvency and
liquidity deemed adequate to protect the depositors and creditors,
the MB may appoint a conservator to take charge of the asses,
liabilities and the management of that banking institution all
monies and debs due said bank exercise all powers necessary to
preserve the assets of the bank reorganize the management
thereof and resorted.
He shall have the power to overrule or revoke the actions of the
previous management and board of directors of the bank, any
provision of law to the notwithstanding, and such other powers as
the monetary board shall deemed necessary.
Doctrine: An ER cannot be forced to distribute bonuses which it can
no longer afford to pay, a bonus is an amount granted and paid to
anEE for his industry and loyalty which contributed to the success
of the ERs business and made possible the realization of profile. It is
an act of generosity and is a management prerogative, given in
addition to what is ordinarily received by or strictly due the
recipient. Thus, it is not a demandable and enforceable obligation,
except when it is made part of the wage, salary or compensation of
the EE.
The conservator was justified in reducing the mid-year and
Christmas bonuses of petitioners EEs. Ultimately, it is to the EEs
advantage that the conservatorship achieve its purposes otherwise,
the closure of the company would result in the EEs losing their jobs.
PD 851 requires all EEs to pay their EEs a basic salary of not more
than P1, 000 at 13th monthly pay. However, EEsalready paying their
EEs a 13th month pay are not covered by the law. The term
equivalent shall be constructed to include Christmas bonus, mid
year bonus, cash bonuses and other payments amounting to not
less than 1 /12 of the basic salary. The intention was to grant relief
to those not actually paid a bonus, by whatevername called. Thus,
petitioner is justified in crediting the mid year bonus and Christmas
bones as part of the 13th month pay.
The divisor used by petitioner in arriving at the EEs daily ratefor
the purpose of computing salary related benefits is 314 days. This
finding was not disputed by the NLRC. However, the divisor was for
the sole purpose of increasing the EEs overtime pay and was not
meant to replace the use of 314 as the divisor in the computation of
the daily rate for salary related benefits.
DANILO ESCARIO vs. NLRC
G.R. No. 160302 September 27, 2010
BERSAMIN, J.:
FACTS: The petitioners were among the regular EEs of respondent
Pinakamasarap Corporation (PINA), a corporation engaged in
manufacturing and selling food seasoning. They were members of
petitioner Malayang Samahan ng mga Manggagawa sa Balanced
Foods (Union).
In the morning of March 1993, all the officers and some 200
members of the Union walked out of PINAs premises and
proceeded to the barangay office to show support for Juanito
Caete, an officer of the Union charged with oral defamation by
PINAs personnel manager Manors secretary. It appears that the
proceedings in the barangay resulted in a settlement, and the
officers and members of the Union all returned to work thereafter.
As a result of the walkout, PINA preventively suspended all officers
of the Union because of the March 13, 1993 incident. PINA
terminated the officers of the Union after a month.
PINA filed a complaint for unfair labor practice (ULP) and damages.
The complaint was assigned to then Labor Arbiter Raul Aquino, who
ruled in his decision that the incident was an illegal walkout
constituting ULP; and that all the Unions officers, except Caete,
had thereby lost their employment.
The Union filed a notice of strike, claiming that PINA was guilty of
union busting through the constructive dismissal of its officers. The
Union held a strike vote, at which a majority of 190 members of the
Union voted to strike.
PINA retaliated by charging the petitioners with ULP and
abandonment of work, stating that they had violated provisions on
strike of the collective bargaining agreement (CBA), such as: (a)
sabotage by the insertion of foreign matter in the bottling of

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J.SUAREZ II, 2ND SEM,SY 12-13
company products; (b) decreased production output by slowdown;
(c)
serious misconduct, and willful
disobedience and
insubordination to the orders of the Management and its
representatives; (d) disruption of the work place by invading the
premises and perpetrating commotion and disorder, and by causing
fear and apprehension; (e) abandonment of work since June 28,
1993 despite notices to return to work individually sent to them;
and (f) picketing within the company premises on June 15, 1993
that effectively barred with the use of threat and intimidation the
ingress and egress of PINAs officials, EEs, suppliers, and customers.
The Third Division of the National Labor Relations Commission
(NLRC) issued a temporary restraining order (TRO), enjoining the
Unions officers and members to cease and desist from barricading
and obstructing the entrance to and exit from PINAs premises, to
refrain from committing any and all forms of violence, and to
remove all forms of obstructions such as streamers, placards, or
human barricade. NLRC granted the writ of preliminary injunction.
[10]
Labor Arbiter Jose G. de Vera (LA) rendered a decision: The
complainants prayer for decertification of the respondent union
being outside of the jurisdiction of this Arbitration Branch may not
be given due course.
On appeal, the NLRC sustained the finding that the strike was
illegal, but reversed the LAs ruling that there was abandonment.
However, we disagree with the conclusion that respondents union
members should be considered to have abandoned their
employment. The CA affirmed the NLRC in denying the petitioners
claim for full backwages.
ISSUE: WON petitioners are entitled to full backwages from the
date of dismissal until the date of actual reinstatement due to their
not being found to have abandoned their jobs
HELD: CAs decision affirmed but the decision on the amount of the
backwages in order to accord with equity and jurisprudence is
modified. The petitioners were terminated for joining a strike that
was later declared to be illegal. The NLRC ordered their
reinstatement or, in lieu of reinstatement, the payment of their
separation pay, because they were mere rank-and-file workers
whom the Unions officers had misled into joining the illegal strike.
They were not unjustly dismissed from work. Based on the text and
intent of the two aforequoted provisions of theLabor Code,
therefore, it is plain that Article 264(a) is the applicable one.
Petitioners not entitled to backwages despite their reinstatement.
The petitioners participation in the illegal strike was precisely what
prompted PINA to file a complaint to declare them, as striking EEs,
to have lost their employment status. However, the NLRC ultimately
ordered their reinstatement after finding that they had not
abandoned their work by joining the illegal strike. They were thus
entitled only to reinstatement, regardless of whether or not the
strike was the consequence of the ERs ULP. As a general rule,
backwages are granted to indemnify a dismissed EE for his loss of
earnings during the whole period that he is out of his job.
Considering that an illegally dismissed EE is not deemed to have
left his employment, he is entitled to all the rights and privileges
that accrue to him from the employment. The grant of backwages
to him is in furtherance and effectuation of the public objectives of
theLabor Code, and is in the nature of a command to the ER to
make a public reparation for his illegal dismissal of the EE in
violation of the Labor Code. That backwages are not granted to EEs
participating in an illegal strike simply accords with the reality that
they do not render work for the ER during the period of the illegal
strike. Under the principle of a fair days wage for a fair days labor,
the petitioners were not entitled to the wages during the period of
the strike (even if the strike might be legal), because they
performed no work during the strike. Verily, it was neither fair nor
just that the dismissed EEs should litigate against their ER on the
latters time.[25]
Appropriate Amount for Separation Pay is One Month per Year of
Service. The petitioners were ordered reinstated because they were
union members merely instigated or induced to participate in the
illegal strike. By joining the strike, they did not renounce their
employment relation with PINA but remained as its EEs.
The absence from an order of reinstatement of an alternative relief
should the ER or a supervening event not within the control of the
EE prevent reinstatement negates the very purpose of the order.
The judgment favorable to the EE is thereby reduced to a mere
paper victory, for it is all too easy for the ER to simply refuse to
have the EE back. To safeguard the spirit of social justice that the
Court has advocated in favor of the working man, therefore, the
right to reinstatement is to be considered renounced or waived only
when the EE unjustifiably or unreasonably refuses to return to work
upon being so ordered or after the ER has offered to reinstate him.
RP vs. MINERVA M.P. PACHEO
G.R. No. 178021 January 25, 2012
MENDOZA, J.:
FACTS: Pacheo was a Revenue Attorney IV, Assistant Chief of the
Legal Division of the BIR in Revenue Region No. 7 (RR7), Quezon
City. the BIR issued Revenue Travel Assignment Order (RTAO) No.
25-2002,[3] ordering the reassignment of Pacheo as Assistant Chief,
Legal Division from RR7 in Quezon City to RR4 in San Fernando,
Pampanga. The BIR cited exigencies of the revenue service as basis
for the issuance of the said RTAO.
Pacheo questioned the reassignment through her Letter addressed
to Rene G. Banez, then CIR. She complained that the transfer would
mean economic dislocation since she would have to spend 200.00
on daily travel expenses or approximately 4,000.00 a month. It
would also mean physical burden on her part as she would be
compelled to wake up early in the morning for her daily travel from
Quezon City to San Fernando, Pampanga, and to return home late
at night from San Fernando, Pampanga to Quezon City. She was of
the view that that her reassignment was merely intended to harass
and force her out of the BIR in the guise of exigencies of the
revenue service. In sum, she considered her transfer from Quezon
City to Pampanga as amounting to a constructive dismissal.

Due to the then inaction of the BIR, Pacheo filed a complaint before
the CSC-NCR, praying for the nullification of RTAO No. 25-2002. In
its July 22, 2002 Order,[6] the CSC-NCR treated Pacheos Complaint
as an appeal and dismissed the same, without prejudice, for failure
to comply with Sections 73 and 74 of Rule V(b) of the Uniform Rules
on Administrative Cases in the Civil Service.[7]
In its Letter-reply[8] dated September 13, 2002, the BIR, through its
Deputy Commissioner for Legal and Inspection Group, Edmundo P.
Guevara (Guevara), denied Pacheos protest for lack of merit. It
contended that her reassignment could not be considered
constructive dismissal as she maintained her position as Revenue
Attorney IV and was designated as Assistant Chief of Legal Division.
It emphasized that her appointment to the position of Revenue
Attorney IV was without a specific station. Consequently, she could
properly be reassigned from one organizational unit to another
within the BIR. Lastly, she could not validly claim a vested right to
any specific station, or a violation of her right to security of tenure.
ISSUES: whether or not Pacheos assignment constitutes
constructive dismissal and, thus, entitling her to reinstatement and
backwages. Was Pacheo constructively dismissed by reason of her
reassignment?
HELD: While a temporary transfer or assignment of personnel is
permissible even without the EE's prior consent, it cannot be done
when the transfer is a preliminary step toward his removal, or a
scheme to lure him away from his permanent position, or when it is
designed to indirectly terminate his service, or force his resignation.
Such a transfer would in effect circumvent the provision which
safeguards the tenure of office of those who are in the Civil Service.
[19]
Significantly, Section 6, Rule III of CSC Memorandum Circular No.
40, series of 1998, defines constructive dismissal as a situation
when an EE quits his work because of the agency heads
unreasonable, humiliating, or demeaning actuations which render
continued work impossible. Hence, the EE is deemed to have been
illegally dismissed. This may occur although there is no diminution
or reduction of salary of the EE. It may be a transfer from one
position of dignity to a more servile or menial job.
Anent the first argument of CSC, the Court cannot sustain the
proposition. It was legally impossible for Pacheo to report to her
original place of assignment in Quezon City considering that the
subject RTAO No. 25-2002 also reassigned Amado Rey B. Pagarigan
(Pagarigan) as Assistant Chief, Legal Division, from RR4, San
Fernando, Pampanga to RR7, Quezon City, the very same position
Pacheo formerly held. The reassignment of Pagarigan to the same
position palpably created an impediment to Pacheos return to her
original station.
DETAIL vs. REASSIGNMENT
The Court finds Itself unable to agree to CSCs argument that the
subject RTAO was immediately executory. The Court deems it
necessary to distinguish between a detail and reassignment, as
they are governed by different rules.
A detail is defined and governed by Executive Order 292, Book V,
Title 1, Subtitle A, Chapter 5, Section 26 (6), thus: (6) Detail. A
detail is the movement of an EE from one agency to another
without the issuance of an appointment and shall be allowed, only
for a limited period in the case of EEs occupying professional,
technical and scientific positions. If the EE believes that there is no
justification for the detail, he may appeal his case to the
Commission. Pending appeal, the decision to detail the EE shall be
executory unless otherwise ordered by the Commission.
[Underscoring supplied]
On the other hand, a reassignment is defined and governed by E.O.
292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7), thus: (7)
Reassignment.An EE may be reassigned from one organizational
unit to another in the same agency; Provided, That such
reassignment shall not involve a reduction in rank, status or
salaries.
The principal distinctions between a detail and reassignment lie in
the place where the EE is to be moved and in its effectivity pending
appeal with the CSC. Based on the definition, a detail requires a
movement from one agency to another while a reassignment
requires a movement within the same agency. Moreover, pending
appeal with the CSC, an order to detail is immediately executory,
whereas a reassignment order does not become immediately
effective.
Reassignments involving a reduction in rank, status or salary
violate an EEs security of tenure, which is assured by the
Constitution, the Administrative Code of 1987, and the Omnibus
Civil Service Rules and Regulations. Security of tenure covers not
only EEs removed without cause, but also cases of unconsented
transfers and reassignments, which are tantamount to
illegal/constructive removal.[21]
Having ruled that Pacheo was constructively dismissed, is she
entitled to reinstatement and back wages? The Court agrees with
the CA that she is entitled to reinstatement, but finds Itself unable
to sustain the ruling that she is entitled to full back wages and
benefits. It is a settled jurisprudence[22] that an illegally dismissed
civil service EE is entitled to back salaries but limited only to a
maximum period of five (5) years, and not full back salaries from
his illegal dismissal up to his reinstatement.
SLL INTERNATIONAL CABLES SPECIALIST and SONNY L.
LAGON, vs. NLRC
G.R. No. 172161
March 2, 2011

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J.SUAREZ II, 2ND SEM,SY 12-13
MENDOZA, J.:
FACTS: private respondents Roldan Lopez (Lopez for brevity) and
Danilo Caete (Caete for brevity), and Edgardo Zuiga (Zuiga for
brevity) respectively, were hired by petitioner Lagon as apprentice
or trainee cable/lineman. The three were paid the full minimum
wage and other benefits but since they were only trainees, they did
not report for work regularly but came in as substitutes to the
regular workers or in undertakings that needed extra workers to
expedite completion of work. After their training, Zuiga, Caete
and Lopez were engaged as project EEs by the petitioners in their
Islacom project in Bohol. Private respondents started on March 15,
1997 until December 1997. Upon the completion of their project,
their employment was also terminated. Private respondents
received the amount of P145.00, the minimum prescribed daily
wage for Region VII. In July 1997, the amount of P145 was increased
to P150.00 by the Regional Wage Board (RWB) and in October of
the same year, the latter was increased to P155.00. Sometime in
March 1998, Zuiga and Caete were engaged again by Lagon as
project EEs for its PLDT Antipolo, Rizal project, which ended
sometime in (sic) the late September 1998. As a consequence,
Zuiga and Caetes employment was terminated. For this project,
Zuiga and Caete received only the wage of P145.00 daily. The
minimum prescribed wage for Rizal at that time was P160.00.
private respondents re-applied in the Racitelcom project of Lagon in
Bulacan. Zuiga and Caete were re-employed. Lopez was also
hired for the said specific project. For this, private respondents
received the wage of P145.00. Again, after the completion of their
project in March 1999, private respondents went home to Cebu City.
private respondents for the 4th time worked with Lagons project in
Camarin, Caloocan City with Furukawa Corporation as the general
contractor. Their contract would expire on February 28, 2000, the
period of completion of the project. From May 21, 1997-December
1999, private respondents received the wage of P145.00. At this
time, the minimum prescribed rate for Manila was P198.00. In
January to February 28, the three received the wage of P165.00.
The existing rate at that time was P213.00.
For reasons of delay on the delivery of imported materials from
Furukawa Corporation, the Camarin project was not completed on
the scheduled date of completion. Face[d] with economic
problem[s], Lagon was constrained to cut down the OT work of its
worker[s][,] including private respondents. Thus, when requested
by private respondents to work OT, Lagon refused and told private
respondents that if they insist, they would have to go home at their
own expense and that they would not be given anymore time nor
allowed to stay in the quarters. This prompted private respondents
to leave their work and went home to Cebu. private respondents
filed a complaint for illegal dismissal, non-payment of wages,
holiday pay, 13th month pay for 1997 and 1998 and SIL pay as well
as damages and attorneys fees.
In their answers, petitioners admit employment of private
respondents but claimed that the latter were only project EEs[,] for
their services were merely engaged for a specific project or
undertaking and the same were covered by contracts duly signed
by private respondents. Petitioners further alleged that the food
allowance of P63.00 per day as well as private respondents
allowance for lodging house, transportation, electricity, water and
snacks allowance should be added to their basic pay. With these,
petitioners claimed that private respondents received higher wage
rate than that prescribed in Rizal and Manila.
Lastly, petitioners alleged that since the workplaces of private
respondents were all in Manila, the complaint should be filed there.
Thus, petitioners prayed for the dismissal of the complaint for lack
of jurisdiction and utter lack of merit. (Citations omitted.)
LA: ruled that it had jurisdiction because the "workplace," as
defined in the said rule, included the place where the EE was
supposed to report back after a temporary detail, assignment or
travel, which in this case was Cebu. private respondents were
regular EEs because they were repeatedly hired by petitioners and
they performed activities which were usual, necessary and
desirable in the business or trade of the ER. Private respondents
were underpaid. It ruled that the free board and lodging, electricity,
water, and food enjoyed by them could not be included in the
computation of their wages because these were given without their
written consent. found that petitioners were not liable for illegal
dismissal. The LA viewed private respondents act of going home as
an act of indifference when petitioners decided to prohibit OT work.
NLRC:affirmed
CA: affirmed. they were clearly members of a work pool from which
petitioners drew their project EEs. the failure of petitioners to
comply with the simple but compulsory requirement to submit a
report of termination to the nearest Public Employment Office every
time private respondents employment was terminated was proof
that the latter were not project EEs but regular EEs. the CA noted
that respondent Roldan Lopez did not work in the Antipolo project
and, thus, was not entitled to wage differentials. Also, in computing
the differentials for the period January and February 2000, the CA
disagreed in the award of differentials based on the minimum daily
wage of P223.00, as the prevailing minimum daily wage then was
only P213.00.
ISSUE: WON value of the facilities that the private respondents
enjoyed should be included in the computation of the "wages"
received by them and that the lack of written acceptance of the EEs
of the facilities enjoyed by them should not mean that the value of
the facilities could not be included in the computation of the private
respondents "wages."

HELD: BURDEN OF PROVING PAYMENT:As a general rule, on

payment of wages, a party who alleges payment as a defense has
the burden of proving it.Specifically with respect to labor cases, the
burden of proving payment of monetary claims rests on the ER, the
rationale being that the pertinent personnel files, payrolls, records,
remittances and other similar documents which will show that
OT, differentials, SIL and other claims of workers have been paid
are not in the possession of the worker but in the custody and
absolute control of the ER.
In this case, petitioners, aside from bare allegations that private
respondents received wages higher than the prescribed minimum,
failed to present any evidence, such as payroll or pay slips, to
support their defense of payment. Thus, petitioners utterly failed to
discharge the onus probandi.
Private respondents, on the other hand, are entitled to be paid the
minimum wage, whether they are regular or non-regular EEs.
Section 3, Rule VII of the Rules to Implement the Labor Code
specifically enumerates those who are not covered by the payment
of minimum wage. Project EEs are not among them.
INCLUSION OF FACILITIES IN THE COMPUTATION OF WAGES: Section
1 of DOLE Memorandum Circular No. 2 provides that an ER may
provide subsidized meals and snacks to his EEs provided that the
subsidy shall not be less that 30% of the fair and reasonable value
of such facilities. In such cases, the ER may deduct from the wages
of the EEs not more than 70% of the value of the meals and snacks
enjoyed by the latter, provided that such deduction is with the
written authorization of the EEs concerned.
Moreover, before the value of facilities can be deducted from the
EEs wages, the following requisites must all be attendant: first,
proof must be shown that such facilities are customarily furnished
by the trade; second, the provision of deductible facilities must be
voluntarily accepted in writing by the EE; and finally, facilities must
be charged at reasonable value.Mere availment is not sufficient to
allow deductions from EEs wages.
These requirements, however, have not been met in this case. SLL
failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the EEs salaries. It
also failed to provide proof of the EEs written authorization, much
less show how they arrived at their valuations. At any rate, it is not
even clear whether private respondents actually enjoyed said
facilities.
FACILITIES vs> SUPPLEMENTS: The Court, at this point, makes a
distinction between "facilities" and "supplements." It is of the view
that the food and lodging, or the electricity and water allegedly
consumed by private respondents in this case were not facilities but
supplements.
"Supplements,"
therefore,
constitute
extra
remuneration or special privileges or benefits given to or received
by the laborers over and above their ordinary earnings or wages.
"Facilities," on the other hand, are items of expense necessary for
the laborer's and his family's existence and subsistence so that by
express provision of law (Sec. 2[g]), they form part of the wage and
when furnished by the ER are deductible therefrom, since if they
are not so furnished, the laborer would spend and pay for them just
the same.
In short, the benefit or privilege given to the EE which constitutes
an extra remuneration above and over his basic or ordinary earning
or wage is supplement; and when said benefit or privilege is part of
the laborers' basic wages, it is a facility. The distinction lies not so
much in the kind of benefit or item (food, lodging, bonus or sick
leave) given, but in the purpose for which it is given.23 In the case
at bench, the items provided were given freely by SLL for the
purpose of maintaining the efficiency and health of its workers
while they were working at their respective projects.1avvphi1
For said reason, the cases of Agabon and Glaxo are inapplicable in
this case. At any rate, these were cases of dismissal with just and
authorized causes. The present case involves the matter of the
failure of the petitioners to comply with the payment of the
prescribed minimum wage.
LIDUVINO M. MILLARES et al. vs. NLRC
G.R. No. 122827 March 29, 1999
BELLOSILLO, J.:
FACTS: Petitioners numbering one hundred sixteen (116) occupied
the position of Technical Staff, Unit Manager, Section Manager,
Department Manager, Division Manager and Vice President in the
mill site of respondent Paper Industries Corporation of the
Philippines (PICOP) in Bislig, Surigao del Sur. PICOP suffered a major
financial setback allegedly brought about by the joint impact of
restrictive government regulations on logging and the economic
crisis. To avert further losses, it undertook a retrenchment program
and terminated the services of petitioners. Accordingly, petitioners
received separation pay computed at the rate of one (1) month
basic pay for every year of service. Believing however that the
allowances they allegedly regularly received on a monthly basis
during their employment should have been included in the
computation thereof they lodged a complaint for separation pay
differentials.
The allowances in question pertained to the following :
1. Staff/Manager's Allowance Respondent PICOP provides free
housing facilities to supervisory and managerial EEs assigned in
Bislig. The privilege includes free water and electric consumption.
Owing however to shortage of such facilities, it was constrained to
grant Staff allowance instead to those who live in rented houses
outside but near the vicinity of the mill site. But the allowance
ceases whenever a vacancy occurs in the company's housing
facilities. The former grantee is then directed to fill the vacancy. For

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J.SUAREZ II, 2ND SEM,SY 12-13
Unit, Section and Department Managers, respondent PICOP gives
an additional amount to meet the same kind of expenses called
Manager's allowance.
2. Transportation Allowance To relieve respondent PICOP's motor
pool in Bislig from a barrage of requests for company vehicles and
to stabilize company vehicle requirements it grants transportation
allowance to key officers and Managers assigned in the mill site
who use their own vehicles in the performance of their duties. It is a
conditional grant such that when the conditions no longer obtain,
the privilege is discontinued. The recipients of this kind of
allowance are required to liquidate it by submitting a report with a
detailed enumeration of expenses incurred.
3. Bislig Allowance The Bislig Allowance is given to Division
Managers and corporate officers assigned in Bislig on account of
the hostile environment prevailing therein. But once the recipient is
transferred elsewhere outside Bislig, the allowance ceases.
LA: Applying Art. 97, par. (f), of the Labor Code which defines
"wage," the Executive Labor Arbiter opined that the subject
allowances, being customarily furnished by respondent PICOP and
regularly received by petitioners, formed part of the latter's wages.
Resolving the controversy from another angle, on the strength of
the ruling in Santos v. NLRC and Soriano v. NLRC 3 that in the
computation of separation pay account should be taken not just of
the basic salary but also of the regular allowances that the EE had
been receiving, he concluded that the allowances should be
included in petitioners' base pay. Thus respondent PICOP was
ordered on to pay petitioners 4,481,000.00 representing separation
pay differentials plus ten per cent (10%) thereof as attorney's fees.
4
NLRC: set aside the assailed decision by decreeing that the
allowances did not form part of the salary base used in computing
separation pay. 5 Its ruling was based on the finding that the cases
relied upon by the Executive Labor Arbiter were inapplicable since
they involved illegal dismissal where separation pay was granted in
lieu of reinstatement which was no longer feasible. Instead, what it
considered in point was Estate of the late Eugene J. Kneebone v.
NLRC 6 where the Court held that representation and transportation
allowances were deemed not part of salary and should therefore be
excluded in the computation of separation benefits. Relating the
present case with Art. 97, par. (f), of the Labor Code, the NLRC
likewise found that petitioners' allowances were contingency-based
and thus not included in their salaries.
PETITIONERS CONTENTION:
petitioners submit that their
allowances are included in the definition of "facilities" in Art. 97,
par. (f), of the Labor Code, being necessary and indispensable for
their existence and subsistence. Furthermore they claim that their
availment of the monetary equivalent of those "facilities" on a
monthly basis was characterized by permanency, regularity and
customariness. And to fortify their arguments they insist on the
applicability of Santos,
Soriano, The Insular Life Assurance
Company, Planters Products, Inc. and Songco which are all against
the NLRC holding that the salary base in computing separation pay
includes not just the basic salary but also the regular allowances.
HELD: In case of retrenchment to prevent losses, Art. 283 of the
Labor Code imposes on the ER an obligation to grant to the affected
EEs separation pay equivalent to one (1) month pay or at least onehalf (1/2) month pay for every year of service, whichever is higher.
Since the law speaks of "pay," the question arises, "What exactly
does the term connote?" We correlate Art. 283 with Art. 97 of the
same Code on definition of terms. "Pay" is not defined therein but
"wage." In Songco the Court explained that both words (as well as
salary) generally refer to one and the same meaning, i.e., a reward
or recompense for services performed. Specifically, "wage" is
defined in letter (f) as the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or
other method of calculating the same, which is payable by an ER to
an EE under a written or unwritten contract of employment for work
done or to be done, or for services rendered or to be rendered and
includes the fair and reasonable value, as determined by the
Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the ER to the EE.
"Customary" is founded on long-established and constant practice
connoting regularity. The receipt of an allowance on a monthly basis
does not ipso facto characterize it as regular and forming part of
salary because the nature of the grant is a factor worth considering.
We agree with the observation of the OSG that the subject
allowances were temporarily, not regularly, received by petitioners
because In the case of the housing allowance, once a vacancy
occurs in the company-provided housing accommodations, the EE
concerned transfers to the company premises and his housing
allowance is discontinued . On the other hand, the transportation
allowance is in the form of advances for actual transportation
expenses subject to liquidation,given only to EEs who have personal
cars. The Bislig allowance is given to Division Managers and
corporate officers assigned in Bislig, Surigao del Norte. Once the
officer is transferred outside Bislig, the allowance stops. We add
that in the availment of the transportation allowance, respondent
PICOP set another requirement that the personal cars be used by
the EEs in the performance of their duties. When the conditions for
availment ceased to exist, the allowance reached the cutoff point.
The finding of the NLRC along the same line likewise merits
concurrence, i.e., petitioners' continuous enjoyment of the disputed
allowances was based on contingencies the occurrence of which
wrote finis to such enjoyment.
Although it is quite easy to comprehend "board" and "lodging," it is
not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules

Implementing the Labor Code gives meaning to the term as

including articles or services for the benefit of the EE or his family
but excluding tools of the trade or articles or service primarily for
the benefit of the ER or necessary to the conduct of the ER's
business. The Staff/Manager's allowance may fall under "lodging"
but the transportation and Bislig allowances are not embraced in
"facilities" on the main consideration that they are granted as well
as the Staff/Manager's allowance for respondent PICOP's benefit
and convenience, i.e., to insure that petitioners render quality
performance. In determining whether a privilege is a facility, the
criterion is not so much its kind but its purpose. That the assailed
allowances were for the benefit and convenience of respondent
company was supported by the circumstance that they were not
subjected to withholding tax. Revenue Audit Memo Order No. 1-87
pertinently provides 3.2.:transportation, representation or
entertainment expenses shall not constitute taxable compensation
if:
(a) It is for necessary travelling and representation or
entertainment expenses paid or incurred by the EE in the pursuit of
the trade or business of the ER, and
(b) The EE is required to, and does, make an accounting/liquidation
for such expense in accordance with the specific requirements of
substantiation for such category or expense.
Board and lodging allowances furnished to an EE not in excess of
the latter's needs and given free of charge, constitute income to the
latter except if such allowances or benefits are furnished to the EE
for the convenience of the ER and as necessary incident to proper
performance of his duties in which case such benefits or allowances
do not constitute taxable income.
The Secretary of Labor and Employment under Sec. 6, Rule VII,
Book III, of the Rules Implementing the Labor Code may from time
to time fix in appropriate issuances the "fair and reasonable value
of board, lodging and other facilities customarily furnished by an ER
to his EEs." Petitioners' allowances do not represent such fair and
reasonable value as determined by the proper authority simply
because the Staff/Manager's allowance and transportation
allowance were amounts given by respondent company in lieu of
actual provisions for housing and transportation needs whereas the
Bislig allowance was given in consideration of being assigned to the
hostile environment then prevailing in Bislig.
The inevitable conclusion is that, as reached by the NLRC, subject
allowances did not form part of petitioners' wages.
In Santos 19 the Court decreed that in the computation of
separation pay awarded in lieu of reinstatement, account must be
taken not only of the basic salary but also of transportation and
emergency living allowances. Later, the Court in Soriano, citing
Santos, was general in its holding that the salary base properly
used in computing separation pay where reinstatement was no
longer feasible should include not just the basic salary but also the
regular allowances that the EE had been receiving. Insular merely
reiterated the aforementioned rulings. The rationale is not difficult
to discern. It is the obligation of the ER to pay an illegally dismissed
EE the whole amount of his salaries plus all other benefits, bonuses
and general increases to which he would have been normally
entitled had he not been dismissed and had not stopped working.
20 The same holds true in case of retrenched EEs. And thus we
applied Insular and Soriano in Planters in the computation of
separation pay of retrenched EEs. Songco likewise involved
retrenchment and was relied upon in Planters, Soriano and Santos
in determining the proper amount of separation pay. As culled from
the foregoing jurisprudence, separation pay when awarded to an
illegally dismissed EE in lieu of reinstatement or to a retrenched EE
should be computed based not only on the basic salary but also on
the regular allowances that the EE had been receiving. But in view
of the previous discussion that the disputed allowances were not
regularly received by petitioners herein, there was no reason at all
for petitioners to resort to the above cases.
Neither is Kneebone applicable, contrary to the finding of the NLRC,
because of the difference in factual circumstances. In Kneebone,
the Court was tasked to resolve the issue whether there
presentation and transportation allowances formed part of salary as
to be considered in the computation of retirement benefits. The
ruling was in the negative on the main ground that the retirement
plan of the company expressly excluded such allowances from
salary.
METRO TRANSIT ORGANIZATION, INC. vs. NLRC
G.R. No. 116008 July 11, 1995
FELICIANO, J.:
FACTS: Petitioner Metro is the operator and manager of the LRT
System in Metro Manila. It employs close to 1,000 rank-and-file and
over 200 supervisory EEs. Private respondent t Supervisory EEs
Association Metro(SEAM) is a union composed of supervisory EEs of
petitioner Metro. In May 1989, SEAM was certified as the sole
bargaining unit for the supervisory EEs of Metro.
the first CBA between petitioner Metro and private respondent
SEAM took effect. Prior to December 1989, Metro had a CBA only
with its rank-and-file EEs. During the period when no CBA governed
the terms and conditions of employment between Metro and its
supervisory EEs, whenever rank-and-file EEs were paid a statutorily
mandated salary increase, supervisory EEs were, as a matter of
practice, also paid the same amount plus P50.00.
Metro paid its rank-and-file EEs a salary increase of P500.00 per
month in accordance with the terms of their CBA. Metro, however,
did not extend a corresponding salary increase to its supervisory
EEs. Metro, in compliance with its CBA with SEAM, paid its
supervisory EEs a salary increase of P800.00 per month.

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J.SUAREZ II, 2ND SEM,SY 12-13
Metro paid its rank-and-file and supervisory EEs a P600.00 monthly
increase. The payment thus made to rank-and-file EEs was in
compliance with the second year salary increase provided in their
CBA. the P600.00 per month paid to supervisory EEs was advanced
from their second year salary increase, provided in their CBA, of
P1,000.00 per month. Metro paid its supervisory EEs the remaining
balance of P400.00 per month in addition to the P600.00 a month it
had earlier started to pay. The third year salary increases due rankand-file and supervisory EEs were paid, respectively, as scheduled
in their corresponding CBAs.
private respondent SEAM filed a Notice of Strike before the National
Conciliation and Mediation Board ("NCMB") charging petitioner
Metro with (a) discrimination in terms of wages; (b) underpayment
of salary increase per CBA for 1990 and/or adjustment of salaries
for correction of disparity/inequity in pay with rank-and-file EEs and
(c) harassment and demotion of union officers. Conciliation and
mediation efforts before the NCMB failed.
acting on a petition filed by Metro, the Secretary of Labor assumed
jurisdiction over the labor dispute and certified the same to public
respondent NLRC for same compulsory arbitration.
NLRC:Company is hereby ordered to pay the amount of P550.00 per
month wage increase effective April 17, 1989 and onwards to each
supervisory EE and likewise pay the sum of P600.00 per month
representing underpayment in the correction of inequities in pay or
underpayment of CBA wage increase effective December 1, 1990
and onwards. The charge of harassment and demotion was
dismissed for "lack of basis."
On 22 June 1994, NLRC denied the motion for reconsideration filed
by Metro.
The instant Petition for Certiorari was filed on 14 July 1994
accompanied by a prayer for issuance of a temporary restraining
order to enjoin public respondents from enforcing their award.
On 31 August 1994, the Court, after an oral hearing, issued a
Resolution encouraging petitioner Metro and private respondent
SEAM to vigorously and earnestly exercise their best efforts to
reach an amicable and mutually acceptable settlement of their
claims and counterclaims. In the meantime, the disputants were to
maintain the status quo, in particular, private respondent SEAM and
public respondent NLRC were to refrain from seeking and granting,
respectively, the issuance of a writ of execution in respect of the
decision of the NLRC.
On 29 and 30 September 1994, petitioner Metro and private
respondent SEAM respectively informed the Court that their efforts
amicably to settle their dispute had failed. Cognizant of (a) the
huge disparity between the financial capability of Metro and the
amount awarded to SEAM, 3 (b) the essential public services being
rendered by the parties and (c) in the interest of avoiding any
disruption of these basic services, the Court reiterated its Order of
31 August 1994 enjoining respondents SEAM and the NLRC from
seeking and granting a writ of execution until further orders from
this Court.
ISSUES: 1)whether or not a wage distortion existed in respect of
the salaries of the rank-and-file and supervisory EEs of petitioner
Metro; and 2) assuming a wage distortion existed, whether or not it
has been corrected by petitioner Metro in accordance with law. 4
HELD: 1)the Court finds and so holds that a wage distortion did
occur when the salaries of rank-and-file EEs were increased by
P500.00 per month on 17 April 1989 as stipulated in their CBA and
no corresponding increase was paid to the supervisory EEs. This
fact was admitted by Atty. Virgilio C. Abejo, counsel for petitioner
Metro, during the oral hearing and Metro is bound by that
admission. In addition, Atty. Abejo explained that his client, as a
matter of practice, granted its supervisory EEs a salary increase
(and a premium) whenever it paid its rank-and-file EEs a salary
increase. 6
The defense of management prerogative or discretion invoked by
petitioner Metro in asserting that it is not obligated to grant
supervisory EEs a salary increase whenever rank-and-file EE are
granted an increase is, in this case, unavailing. Basically, Metro's
argument is that such increase was merely a bonus given to
supervisory EEs. A "bonus" is an amount granted and paid to an EE
for his industry and loyalty which contributed to the success of the
ER's business and made possible the realization of profits. It is
something given in addition to what is ordinarily received by or
strictly due to the
recipient. 7
The general rule is that a bonus is a gratuity or an act of liberality
which the recipient has no right to demand as a matter of right. 8 A
bonus, however, is a demandable or enforceable obligation when it
is made part of the wage or salary or compensation of the EE. 9
Whether or not a bonus forms part of wages depends upon the
circumstances and conditions for its payment. If it is additional
compensation which the ER promised and agreed to give without
any conditions imposed for its payment, such as success of
business or greater production or output, then it is part of the wage.
But if it is paid only if profits are realized or if a certain level of
productivity is achieved, it can not be considered part of the wage.
Where it is not payable to all but only to some EEs and only when
their labor becomes more efficient or more productive, it is only an
inducement for efficiency, a prize therefor, not a part of the wage.
10
In the case at bar, the increase of P550.00 sought by private
respondent SEAM was neither an inducement nor was it contingent

on (a) the success of the business of petitioner Metro; or (b) the

increased production or work output of the company or (c) the
realization of profits. The demand for this increase was based on a
company practice, admitted by Metro, of granting a salary increase
(and a premium) to supervisory EEs whenever rank-and-file EEs
were granted a salary increase. That those increases were precisely
designed to correct or minimize the wage distortion effects of
increases given to rank-and-file EEs (under their CBA or under Wage
Orders), highlights the fact that those increases were part of the
wage structure of supervisory EEs. The demanded increase
therefore is not a bonus that is generally not demandable as a
matter of right. The demanded increase, in this instance, is an
enforceable obligation so far as the supervisory EEs of Metro are
concerned.
We conclude that the supervisory EEs, who then had, unlike the
rank-and-file EEs, no CBA governing the terms and conditions of
their employment, had the right to rely on the company practice of
unilaterally correcting the wage distortion effects of a salary
increase given to the rank-and-file EEs, by giving the supervisory
EEs a corresponding salary increase plus a premium. For reasons,
however, shortly to be stated in the disposition of the second issue,
we hold that the P550.00 increase is demandable by SEAM only in
respect of the period beginning 17 April 1989 and ending on 30
November 1989.
It is true enough that, in the present case, the wage distortion to be
corrected by the award of P550.00 increase for supervisory EEs
beginning 17 April 1989, was due to the time gap between the
effectivity date (17 April 1989) of the increase of P500.00 per
month given to rank-and-file EEs under their CBA and the effectivity
date (1 December 1989) of the P800.00 increase given to
supervisory EEs under their own CBA. It is also true that had the
P800.00 increase to supervisory EEs been made retroactive to 17
April 1989 by an appropriate synchronizing provision in the MetroSEAM CBA, no wage distortion would have arisen. The fact,
however, remains that Metro and SEAM did not agree upon such
remedy in their CBA and that the CBA increase given to rank-andfile EEs did produce a distortion effect by obliterating or drastically
reducing the previous gap between the salary rates of rank-and-file
and supervisory EEs. The point to be stressed is that considering
the prior practice of petitioner Metro, its supervisory EEs had the
right to expect rectification of that distortion.
2) In the instant case, the CBA-stipulated increase of P800.00 a
month was intended as the countervailing increase for supervisory
EEs, the rank-and-file EEs having already received their own
increase approximately eight (8) months earlier. In other words, the
wage distortion in the present case arose not because of a
government-decreed increase in minimum wages or because Metro
simply refused to treat its supervisory EEs, differently from its rankand-file workers, but rather because of a failure to synchronize the
CBA-stipulated increases for rank-and-file and for supervisory EEs.
Moreover, as more than once pointed out above, the P800.00
monthly increase given to supervisory EEs should be taken in
conjunction with the P550.00 month increase already awarded to
supervisory EEs under Part I above. When these are taken together,
the wage distortion which occurred on 17 April 1989 was
completely and permanently corrected. There is no legal basis for
requiring Metro to pay not only the P800.00 month increase, but
also, on top thereof, the P550.00 monthly increase to supervisory
EEs, after 1 December 1989 and forever after.
From the foregoing, we conclude that beginning 1 December 1989,
by the grant of the award of P550.00 to supervisory EEs in Part I
(supra) and by the operation of the Metro-SEAM CBA, the wage
distortion which occurred on 17 April 1989 had been corrected. By 1
December 1991, a substantial gap or differential had been reestablished between the salaries of the rank-and-file and
supervisory EEs of petitioner Metro. It was, therefore, grievous
abuse of discretion for the NLRC to disregard such rectification and
to rule that petitioner Metro was liable to its supervisory EEs for
P550.00 monthly increase beyond 1 December 1989 and
"onwards." That distortion, as already pointed out, lasted only from
17 April 1989 up to 30 November 1989, since the following day, 1
December 1989, the CBA of Metro and SEAM went into effect.
Similarly, we believe that the NLRC committed a grave abuse of
discretion in requiring Metro to pay the sum of P600.00 per month
from 1 December 1990 and onwards, i.e., forever after. It will be
recalled that Metro, upon request of SEAM, had agreed that of the
P1,000.00 monthly increase originally scheduled to be effective
under the CBA on 1 December 1990, P600.00 would take effect
instead on 17 April 1990. Metro agreed to do so precisely to remedy
the distortion that would otherwise have resulted (see Tables III and
IV, supra) and so, starting 17 April 1990, supervisory EEs received a
monthly increase of P600.00; and starting 1 December 1990, they
started receiving an additional P400.00 or the total stipulated CBA
increase of P1,000.00 per month.
Again, for the same reasons set out earlier, we consider that these
additional payments of P600.00 per month to supervisory EEs from
17 April 1990 up to 1 December 1990 should be deemed included
in the P1,000.00 monthly increase effective from 1 December 1990
and onwards. Compelling Metro to pay, starting 1 December 1990,
not only the P1,000.00 per month increase stipulated in the CBA
but also an additional P600.00 per month, amounts to allowing
unjust enrichment of supervisory EEs at the expense of their ER
Metro.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., vs.
EASTERN TELECOMS EES UNION,
G.R. No. 185665 February 8, 2012
MENDOZA, J.:

Page 75 of 125

LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
FACTS: Eastern Telecommunications Phils., Inc. (ETPI) is a
corporation
engaged
in
the
business
of
providing
telecommunications facilities, particularly leasing international date
lines or circuits, regular landlines, internet and data services,
employing approximately 400 EEs. Eastern Telecoms EEs Union
(ETEU) is the certified exclusive bargaining agent of the companys
rank and file EEs with a strong following of 147 regular members. It
has an existing collecti[ve] bargaining agreement with the company
to expire in the year 2004 with a Side Agreement signed on
September 3, 2001.
In essence, the labor dispute was a spin-off of the companys plan
to defer payment of the 2003 14th, 15th and 16th month bonuses
sometime in April 2004. The companys main ground in postponing
the payment of bonuses is due to allege continuing deterioration of
companys financial position which started in the year 2000.
However, ETPI while postponing payment of bonuses sometime in
April 2004, such payment would also be subject to availability of
funds.
Invoking the Side Agreement of the existing Collective Bargaining
Agreement for the period 2001-2004 between ETPI and ETEU which
stated as follows: 4. Employment Related Bonuses. The Company
confirms that the 14th, 15th and 16th month bonuses (other than
13th month pay) are granted.
The union strongly opposed the deferment in payment of the
bonuses by filing a preventive mediation complaint with the NCMB
on July 3, 2003, the purpose of which complaint is to determine the
date when the bonus should be paid.
In the conference held at the NCMB, ETPI reiterated its stand that
payment of the bonuses would only be made in April 2004 to which
date of payment, the union agreed. Thus, considering the
agreement forged between the parties, the said agreement was
reduced to a Memorandum of Agreement. The union requested that
the President of the company should be made a signatory to the
agreement, however, the latter refused to sign. In addition to such
a refusal, the company made a sudden turnaround in its position by
declaring that they will no longer pay the bonuses until the issue is
resolved through compulsory arbitration.
The companys change in position was contained in a letter dated
April 14, 2004 written to the union by Mr. Sonny Javier, VicePresident for Human Resources and Administration, stating that
the deferred release of bonuses had been superseded and voided
due to the unions filing of the issue to the NCMB on July 18, 2003.
He declared that until the matter is resolved in a compulsory
arbitration, the company cannot and will not pay any bonuses to
any and all union members.
ETEU filed a Notice of Strike on the ground of unfair labor practice
for failure of ETPI to pay the bonuses in gross violation of the
economic provision of the existing CBA. the Secretary of Labor and
Employment, finding that the company is engaged in an industry
considered vital to the economy and any work disruption thereat
will adversely affect not only its operation but also that of the other
business relying on its services, certified the labor dispute for
compulsory arbitration pursuant to Article 263 (q) of the Labor Code
as amended.
Acting on the certified labor dispute, a hearing was called on July
16, 2004 wherein the parties have submitted that the issues for
resolution are (1) unfair labor practice and (2) the grant of 14th,
15th and 16th month bonuses for 2003, and 14th month bonus for
2004. Thereafter, they were directed to submit their respective
position papers and evidence in support thereof after which
submission, they agreed to have the case considered submitted for
decision.[4]
ISSUES:whether the members of ETEU are entitled to the payment
of 14th, 15th and 16th month bonuses for the year 2003 and 14th
month bonus for year 2004.
HELD: From a legal point of view, a bonus is a gratuity or act of
liberality of the giver which the recipient has no right to demand as
a matter of right.[12] The grant of a bonus is basically a
management prerogative which cannot be forced upon the ER who
may not be obliged to assume the onerous burden of granting
bonuses or other benefits aside from the EEs basic salaries or
wages.[13]
A bonus, however, becomes a demandable or enforceable
obligation when it is made part of the wage or salary or
compensation of the EE.[14] Particularly instructive is the ruling of
the Court in Metro Transit Organization, Inc. v. National Labor
Relations Commission,[15] where it was written: Whether or not a
bonus forms part of wages depends upon the circumstances and
conditions for its payment. If it is additional compensation which
the ER promised and agreed to give without any conditions
imposed for its payment, such as success of business or greater
production or output, then it is part of the wage. But if it is paid only
if profits are realized or if a certain level of productivity is achieved,
it cannot be considered part of the wage. Where it is not payable to
all but only to some EEs and only when their labor becomes more
efficient or more productive, it is only an inducement for efficiency,
a prize therefore, not a part of the wage.
In the case at bench, it is indubitable that ETPI and ETEU agreed on
the inclusion of a provision for the grant of 14th, 15th and 16th
month bonuses in the 1998-2001 CBA Side Agreement,[16] as well
as in the 2001-2004 CBA Side Agreement,[17] which was signed on
September 3, 2001. The provision, which was similarly worded,

states:The Company confirms that the 14th, 15th and 16th month
bonuses (other than the 13th month pay) are granted.
A reading of the above provision reveals that the same provides for
the giving of 14th, 15th and 16th month bonuses without
qualification. The wording of the provision does not allow any other
interpretation. There were no conditions specified in the CBA Side
Agreements for the grant of the benefits contrary to the claim of
ETPI that the same is justified only when there are profits earned by
the company. Terse and clear, the said provision does not state that
the subject bonuses shall be made to depend on the ETPIs financial
standing or that their payment was contingent upon the realization
of profits. Neither does it state that if the company derives no
profits, no bonuses are to be given to the EEs. In fine, the payment
of these bonuses was not related to the profitability of business
operations.
The records are also bereft of any showing that the ETPI made it
clear before or during the execution of the Side Agreements that
the bonuses shall be subject to any condition. Indeed, if ETPI and
ETEU intended that the subject bonuses would be dependent on the
company earnings, such intention should have been expressly
declared in the Side Agreements or the bonus provision should
have been deleted altogether. In the absence of any proof that
ETPIs consent was vitiated by fraud, mistake or duress, it is
presumed that it entered into the Side Agreements voluntarily, that
it had full knowledge of the contents thereof and that it was aware
of its commitment under the contract. Verily, by virtue of its
incorporation in the CBA Side Agreements, the grant of 14th, 15th
and 16th month bonuses has become more than just an act of
generosity on the part of ETPI but a contractual obligation it has
undertaken. Moreover, the continuous conferment of bonuses by
ETPI to the union members from 1998 to 2002 by virtue of the Side
Agreements evidently negates its argument that the giving of the
subject bonuses is a management prerogative.
From the foregoing, ETPI cannot insist on business losses as a basis
for disregarding its undertaking. It is manifestly clear that although
it incurred business losses of 149,068,063.00 in the year 2000, it
continued to distribute 14th, 15th and 16th month bonuses for said
year. Notwithstanding such huge losses, ETPI entered into the 20012004 CBA Side Agreement on September 3, 2001 whereby it
contracted to grant the subject bonuses to ETEU in no uncertain
terms. ETPI continued to sustain losses for the succeeding years of
2001 and 2002 in the amounts of 348,783,013.00 and
315,474,444.00, respectively. Still and all, this did not deter it
from honoring the bonus provision in the Side Agreement as it
continued to give the subject bonuses to each of the union
members in 2001 and 2002 despite its alleged precarious financial
condition. Parenthetically, it must be emphasized that ETPI even
agreed to the payment of the 14th, 15th and 16th month bonuses
for 2003 although it opted to defer the actual grant in April 2004.
All given, business losses could not be cited as grounds for ETPI to
repudiate its obligation under the 2001-2004 CBA Side Agreement.
The Court finds no merit in ETPIs contention that the bonus
provision confirms the grant of the subject bonuses only on a single
instance because if this is so, the parties should have included such
limitation in the agreement. Nowhere in the Side Agreement does it
say that the subject bonuses shall be conferred once during the
year the Side Agreement was signed.
Granting arguendo that the CBA Side Agreement does not
contractually bind petitioner ETPI to give the subject bonuses,
nevertheless, the Court finds that its act of granting the same has
become an established company practice such that it has virtually
become part of the EEs salary or wage. A bonus may be granted on
equitable consideration when the giving of such bonus has been the
companys long and regular practice. In Philippine Appliance
Corporation v. Court of Appeals,[21] it was pronounced:To be
considered a regular practice, however, the giving of the bonus
should have been done over a long period of time, and must be
shown to have been consistent and deliberate. The test or rationale
of this rule on long practice requires an indubitable showing that
the ER agreed to continue giving the benefits knowing fully well
that said EEs are not covered by the law requiring payment thereof.
The records show that ETPI, aside from complying with the regular
13th month bonus, has been further giving its EEs 14th month
bonus every April as well as 15th and 16th month bonuses every
December of the year, without fail, from 1975 to 2002 or for 27
years whether it earned profits or not. The considerable length of
time ETPI has been giving the special grants to its EEs indicates a
unilateral and voluntary act on its part to continue giving said
benefits knowing that such act was not required by law.
Accordingly, a company practice in favor of the EEs has been
established and the payments made by ETPI pursuant thereto
ripened into benefits enjoyed by the EEs.
The rule is settled that any benefit and supplement being enjoyed
by the EEs cannot be reduced, diminished, discontinued or
eliminated by the ER. The principle of non-diminution of benefits is
founded on the constitutional mandate to protect the rights of
workers and to promote their welfare and to afford labor full
protection.[22]
Interestingly, ETPI never presented countervailing evidence to
refute ETEUs claim that the company has been continuously paying
bonuses since 1975 up to 2002 regardless of its financial state. Its
failure to controvert the allegation, when it had the opportunity and
resources to do so, works in favor of ETEU. Time and again, it has
been held that should doubts exist between the evidence presented
by the ER and the EE, the scales of justice must be tilted in favor of
the latter.
PHILIPPINE DUPLICATORS, INC. vs. NLRC

Page 76 of 125

LABOR STANDARDS (Atty. Nolasco)

J.SUAREZ II, 2ND SEM,SY 12-13
G.R. No. 110068 February 15, 1995
FELICIANO, J.:
FACTS: On 11 November 1993, this Court, through its 3RD Division,
rendered a decision dismissing the Petition for Certiorari filed by
petitioner Duplicators in GRN110068. The Court upheld the decision
of public respondent NLRC, which affirmed the order of LA directing
petitioner to pay 13th month pay to private respondent EEs
computed on the basis of their fixed wages plus sales commissions.
The 3RD Division also denied with finality the MR filed by petitioner.
On 17 January 1994, petitioner Duplicators filed (a) a Motion for
Leave to Admit Second MR and (b) a Second MR. This time,
petitioner invoked the decision handed down by this Court, through
its 2ND Division, in the two (2) consolidated cases of Boie-Takeda
Chemicals, Inc. vs. Hon. Dionisio de la Serna and Philippine Fuji
Xerox Corp. vs. Hon. Cresenciano B. Trajano, in GRN92174 and
102552, respectively. In its decision, the 2ND Division inter alia
declared null and void the second paragraph of Section 5 (a) 1 of
the Revised Guidelines issued by then Secretary of Labor Drilon.
Petitioner submits that the decision in the Duplicators case should
now be considered as having been abandoned or reversed by the
Boie-Takeda decision, considering that the latter went "directly
opposite and contrary to" the conclusion reached in the former.
Petitioner prays that the decision rendered in Duplicators be set
aside and another be entered directing the dismissal of the money
claims of private respondent Philippine Duplicators' EEs' Union.
In view of the nature of the issues raised, the 3RD Division of this
Court referred the petitioner's Second MR, and its Motion for Leave
to Admit the Second MR, to the Court en banc en consulta. The
Court en banc, after preliminary deliberation, and inorder to settle
the condition of the relevant case law, accepted GRN110068 as a
banc case.
HELD: Deliberating upon the arguments contained in petitioner's
Second MR, as well as its Motion for Leave to Admit the Second MR,
and after review of the doctrines embodied, respectively, in
Duplicators and Boie-Takeda, we consider that these Motions must
fail.
The decision rendered in Boie-Takeda cannot serve as a precedent
under the doctrine of stare decisis. The Boie-Takeda decision was
promulgated a month after this Court, (through its 3RD Division),
had rendered the decision in the instant case. Also, the petitioner's
1st MR of the decision had already been denied, with finality before
the Boie-Takeda decision became final.
Preliminarily, we note that petitioner Duplicators did not put in issue
the validity of the Revised Guidelines on the Implementary on of
the 13th Month Pay Law, issued on November 16, 1987, by then
Labor Secretary Franklin M. Drilon, either in its Petition for Certiorari
or in its 1st MR. In fact, petitioner's counsel relied upon these
Guidelines and asserted their validity in opposing the decision
rendered by public respondent NLRC. Any attempted change in
petitioner's theory, at this late stage of the proceedings, cannot be
allowed.
More importantly, we do not agree with petitioner that the decision
in Boie-Takeda is "directly opposite or contrary to" the decision in
the present (Philippine Duplicators). To the contrary, the doctrines
enunciated in these two (2) cases in fact co-exist one with the
other. The two (2) cases present quite different factual situations
(although the same word "commissions" was used or invoked) the
legal characterizations of which must accordingly differ.
In the instant case, there is no question that the sales commission
earned by the salesmen who make or close a sale of duplicating
machines distributed by petitioner corporation, constitute part of
the compensation or remuneration paid to salesmen for serving as
salesmen, and hence as part of the "wage" or salary of petitioner's
salesmen. Indeed, it appears that petitioner pays its salesmen a
small fixed or guaranteed wage; the greater part of the salesmen's
wages or salaries being composed of the sales or incentive
commissions earned on actual sales closed by them. No doubt this
particular salary structure was intended for the benefit of the
petitioner corporation, on the apparent assumption that thereby its
salesmen would be moved to greater enterprise and diligence and
closes more sales in the expectation of increasing their sales
commissions. The portion of the salary structure representing
commissions simply comprised an automatic increment to the
monetary value initially assigned to each unit of work rendered by a
salesman. These commissions are not OT payments, nor profitsharing payments nor any other FB. Thus, the salesmen's
commissions, comprising a pre-determined percent of the selling
price of the goods sold by each salesman, were properly included in
the term "basic salary" for purposes of computing their 13th month
pay.
In Boie-Takeda the so-called commissions "paid to or received by
medical representatives of Boie-Takeda Chemicals or by the rank
and file EEs of Philippine Fuji Xerox Co.," were excluded from the
term "basic salary" because these were paid to the medical
representatives and rank-and-file EEs as "productivity bonuses."
The 2ND Division characterized these payments as additional
monetary benefits not properly included in the term "basic salary"
in computing their 13th month pay. We note that productivity
bonuses are generally tied to the productivity, or capacity for
revenue production, of a corporation; such bonuses closely
resemble profit-sharing payments and have no clear director
necessary relation to the amount of work actually done by each
individual EE.
It is also important to note that the purported "commissions" paid
by the Boie-Takeda Company to its medical representatives could

not have been "sales commissions" in the same sense that

Philippine Duplicators paid its salesmen Sales commissions. Medical
representatives are not salesmen; they do not effect any sale of
any article at all. In common commercial practice, in the Philippines
and elsewhere, of which we take judicial notice, medical
representatives are EEs engaged in the promotion of
pharmaceutical products or medical devices manufactured by their
ER. They promote such products by visiting identified physicians
and inform much physicians, orally and with the aid of printed
brochures, of the existence and chemical composition and virtues of
particular products of their company. They commonly leave medical
samples with each physician visited; but those samples are not
"sold" to the physician and the physician is, as a matter of
professional ethics, prohibited from selling such samples to their
patients. Thus, the additional payments made to Boie-Takeda's
medical representatives were not in fact sales commissions but
rather partook of the nature of profit-sharing bonuses.
The doctrine set out in the decision of the 2ND Division is,
accordingly, that additional payments made to EEs, to the extent
they partake of the nature of profit-sharing payments, are properly
excluded from the ambit of the term "basic salary" for purposes of
computing the 13th month pay due to EEs. Such additional
payments are not "commissions" within the meaning of the second
paragraph of Section 5 (a) of the Revised Guidelines Implementing
13th Month Pay.
We observe that the 3RD item excluded from the term "basic
salary" is cast in open ended and apparently circular terms: "other
remunerations which are not part of the basic salary."
However, what particular types of earnings and remuneration are or
are not properly included or integrated in the basic salary are
questions to be resolved on a case to case basis, in the light of the
specific and detailed facts of each case. In principle, where these
earnings and remuneration are closely akin to fringe benefits,
overtime pay or profit-sharing payments, they are properly
excluded in computing the 13th month pay. However, sales
commissions which are effectively an integral portion of the basic
salary structure of an EE, shall be included in determining his 13th
month pay.
PRODUCTIVE BONUS vs. SALES COMMISSION
We recognize that both productivity bonuses and sales commissions
may have an incentive effect. But there is reason to distinguish one
from the other here. Productivity bonuses are generally tied to the
productivity or profit generation of the ER corporation. Productivity
bonuses are not directly dependent on the extent an individual EE
exerts himself. A productivity bonus is something extra for which no
specific additional services are rendered by any particular EE and
hence not legally demandable, absent a contractual undertaking to
pay it. Sales commissions, on the other hand, such as those paid in
Duplicators, are intimately related to or directly proportional to the
extent or energy of an EE's endeavors. Commissions are paid upon
the specific results achieved by a salesman-EE. It is a percentage of
the sales closed by a salesman and operates as an integral part of
such salesman's basic pay.
Finally, the statement of the 2ND Division in Boie-Takeda declaring
null and void the second paragraph of Section 5(a) of the Revised
Guidelines Implementing the 13th Month Pay issued by former
Labor Secretary Drilon, is properly understood as holding that that
second paragraph provides no legal basis for including within the
term "commission" there used additional payments to EEs which
are, as a matter of fact, in the nature of profit-sharing payments or
bonuses. If and to the extent that such second paragraph is so
interpreted and applied, it must be regarded as invalid as having
been issued in excess of the statutory authority of the Secretary of
Labor. That same second paragraph however, correctly recognizes
that commissions, like those paid in Duplicators, may constitute
part of the basic salary structure of salesmen and hence should be
included in determining the 13th month pay; to this extent, the
second paragraph is and remains valid.
STATES MARINE CORPORATION and ROYAL LINE, INC. vs.
CEBU SEAMEN'S ASSOCIATION, INC.,
G.R. No. L-12444
February 28, 1963
PAREDES, J.:
FACTS: Petitioners States Marine Corporation and Royal Line, Inc.
were engaged in the business of marine coastwise transportation,
employing therein several steamships of Philippine registry. They
had a collective bargaining contract with the respondent Cebu
Seamen's Association, Inc. the respondent union filed with the CIR,
a petition against the States Marine Corporation, later amended, by
including as party respondent, the petitioner Royal Line, Inc. The
Union alleged that the officers and men working on board the
petitioners' vessels have not been paid their sick leave, vacation
leave and OT pay; that the petitioners threatened or coerced them
to accept a reduction of salaries, observed by other shipowners;
that after the Minimum Wage Law had taken effect, the petitioners
required their EEs on board their vessels, to pay the sum of P.40 for
every meal, while the masters and officers were not required to pay
their meals and that because Captain Carlos Asensi had refused to
yield to the general reduction of salaries, the petitioners dismissed
said captain who now claims for reinstatement and the payment of
back wages from December 25, 1952, at the rate of P540.00,
monthly.
It was shown by substantial evidence, that since the beginning of
the operation of the petitioner's business, all the crew of their
vessels have been signing "shipping articles" in which are stated
opposite their names, the salaries or wages they would receive. All
seamen, whether members of the crew or deck officers or
engineers, have been furnished free meals by the ship owners or
operators. All the shipping articles signed by the master and the
crew members, contained, among others, a stipulation, that "in

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J.SUAREZ II, 2ND SEM,SY 12-13
consideration of which services to be duly performed, the said
master hereby agrees to pay to the said crew, as wages, the sums
against their names respectively expressed in the contract; and to
supply them with provisions as provided herein ..." (Sec. 8, par. [b],
shipping articles), and during the duration of the contract "the
master of the vessel will provide each member of the crew such
daily subsistence as shall be mutually agreed daily upon between
said master and crew; or, in lieu of such subsistence the crew may
reserve the right to demand at the time of execution of these
articles that adequate daily rations be furnished each member of
the crew." (Sec. 8, par. [e], shipping articles). It is, therefore,
apparent that, aside from the payment of the respective salaries or
wages, set opposite the names of the crew members, the
petitioners bound themselves to supply the crew with ship's
provisions, daily subsistence or daily rations, which include food.
This was the situation before August 4, 1951, when the Minimum
Wage Law became effective. After this date, however, the
companies began deducting the cost of meals from the wages or
salaries of crew members; but no such deductions were made from
the salaries of the deck officers and engineers in all the boats of the
petitioners.
The petitioners' shipping companies, answering, averred that very
much below 30 of the men and officers in their employ were
members of the respondent union; that the work on board a vessel
is one of comparative ease; that petitioners have suffered financial
losses in the operation of their vessels and that there is no law
which provides for the payment of sick leave or vacation leave to
EEs or workers of private firms; that as regards the claim for OT
pay, the petitioners have always observed the provisions of Comm.
Act No. 444, (Eight-Hour Labor Law), notwithstanding the fact that it
does not apply to those who provide means of transportation; that
the shipowners and operators in Cebu were paying the salaries of
their officers and men, depending upon the margin of profits they
could realize and other factors or circumstances of the business;
that in enacting Rep. Act No. 602 (Minimum Wage Law), the
Congress had in mind that the amount of P.40 per meal, furnished
the EEs should be deducted from the daily wages; that Captain
Asensi was not dismissed for alleged union activities, but with the
expiration of the terms of the contract between said officer and the
petitioners, his services were terminated.
A decision was rendered on February 21, 1957 in favor of the
respondent union. The MR thereof, having been denied, the
companies filed the present writ of certiorari, to resolve legal
question involved. Always bearing in mind the deep-rooted principle
that the factual findings of the CIR should not be disturbed, if
supported by substantial evidence.

One should not overlook a fact fully established, that only

unlicensed crew members were made to pay for their meals or
food, while the deck officers and marine engineers receiving higher
pay and provided with better victuals, were not. This pictures in no
uncertain terms, a great and unjust discrimination obtaining in the
present case (Pambujan Sur United Mine Workers v. CIR, et al., L7177, May 31, 1955).
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE),
vs. HON. LEONARDO A. QUISUMBING
G.R. No. 128845
June 1, 2000
KAPUNAN, J.:
FACTS: Private respondent International School, Inc. (the School,
for short), pursuant to Presidential Decree 732, is a domestic
educational institution established primarily for dependents of
foreign diplomatic personnel and other temporary residents. To
enable the School to continue carrying out its educational program
and improve its standard of instruction, Section 2(c) of the same
decree authorizes the School to employ its own teaching and
management personnel selected by it either locally or abroad, from
Philippine or other nationalities, such personnel being exempt from
otherwise applicable laws and regulations attending their
employment, except laws that have been or will be enacted for the
protection of EEs.
Accordingly, the School hires both foreign and local teachers as
members of its faculty, classifying the same into two: (1) foreignhires and (2) local-hires. The School employs four tests to
determine whether a faculty member should be classified as a
foreign-hire or a local hire:a. What is one's domicile? b. Where is
one's home economy? c. To which country does one owe economic
allegiance? d. Was the individual hired abroad specifically to work in
the School and was the School responsible for bringing that
individual to the Philippines? Should the answer to any of these
queries point to the Philippines, the faculty member is classified as
a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded localhires.These include housing, transportation, shipping costs, taxes,
and home leave travel allowance. Foreign-hires are also paid a
salary rate twenty-five percent (25%) more than local-hires. The
School justifies the difference on two "significant economic
disadvantages" foreign-hires have to endure, namely: (a) the
"dislocation factor" and (b) limited tenure. The School explains:

ISSUE: won the deduction were illegal and reimbursement should

be made.

When negotiations for a new CBA, petitioner International School

Alliance of Educators, "a legitimate labor union and the collective
bargaining representative of all faculty members"4 of the School,
contested the difference in salary rates between foreign and localhires. This issue, as well as the question of whether foreign-hires
should be included in the appropriate bargaining unit, eventually
caused a deadlock between the parties.

HELD: We hold that such deductions are not authorized. In the

coastwise business of transportation of passengers and freight, the
men who compose the complement of a vessel are provided with
free meals by the shipowners, operators or agents, because they
hold on to their work and duties, regardless of "the stress and strain
concomitant of a bad weather, unmindful of the dangers that lurk
ahead in the midst of the high seas."

petitioner filed a notice of strike. The failure of the NCMB to bring

the parties to a compromise prompted the DOLE to assume
jurisdiction over the dispute. the DOLE Acting Secretary,
Crescenciano B. Trajano, issued an Order resolving the parity and
representation issues in favor of the School. Then DOLE Secretary
Leonardo A. Quisumbing subsequently denied petitioner's motion
for reconsideratio.

At first blush, it would appear that there exists a contradiction

between the provisions of section 3(f) and section 19 of Rep. Act
No. 602; but from a careful examination of the same, it is evident
that Section 3(f) constitutes the general rule, while section 19 is the
exception. In other words, if there are no supplements given, within
the meaning and contemplation of section 19, but merely facilities,
section 3(f) governs. There is no conflict; the two provisions could,
as they should be harmonized. And even if there is such a conflict,
the respondent CIR should resolve the same in favor of the safety
and decent living laborers (Art. 1702, new Civil Code)..

The School disputes these claims and gives a breakdown of its

faculty members, numbering 38 in all, with nationalities other than
Filipino, who have been hired locally and classified as local hires.5
The Acting Secretary of Labor found that these non-Filipino localhires received the same benefits as the Filipino local-hires. The
compensation package given to local-hires has been shown to apply
to all, regardless of race. Truth to tell, there are foreigners who have
been hired locally and who are paid equally as Filipino local hires.6

It is argued that the food or meals given to the deck officers,

marine engineers and unlicensed crew members in question, were
mere "facilities" which should be deducted from wages, and not
"supplements" which, according to said section 19, should not be
deducted from such wages, because it is provided therein: "Nothing
in this Act shall deprive an EE of the right to such fair wage ... or in
reducing supplements furnished on the date of enactment." In the
case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co., L-7349, July
19, 1955; 51 O.G. 3432, the two terms are defined as follows
SUPPLEMENTS vs. FACILITIES
"Supplements", therefore, constitute extra remuneration or special
privileges or benefits given to or received by the laborers over and
above their ordinary earnings or wages. "Facilities", on the other
hand, are items of expense necessary for the laborer's and his
family's existence and subsistence so that by express provision of
law (Sec. 2[g]), they form part of the wage and when furnished by
the ER are deductible therefrom, since if they are not so furnished,
the laborer would spend and pay for them just the same.
The criterion is not so much with the kind of the benefit or item
(food, lodging, bonus or sick leave) given, but its purpose.
Considering, therefore, as definitely found by the respondent court
that the meals were freely given to crew members prior to August
4, 1951, while they were on the high seas "not as part of their
wages but as a necessary matter in the maintenance of the health
and efficiency of the crew personnel during the voyage", the
deductions therein made for the meals given after August 4, 1951,
should be returned to them, and the operator of the coastwise
vessels affected should continue giving the same benefit..

The Acting secretary upheld the point-of-hire classification for the

distinction in salary rates:
The Principle "equal pay for equal work" does not find applications
in the present case. The international character of the School
requires the hiring of foreign personnel to deal with different
nationalities and different cultures, among the student population.
We also take cognizance of the existence of a system of salaries
and benefits accorded to foreign hired personnel which system is
universally recognized. We agree that certain amenities have to be
provided to these people in order to entice them to render their
services in the Philippines and in the process remain competitive in
the international market.
Furthermore, we took note of the fact that foreign hires have limited
contract of employment unlike the local hires who enjoy security of
tenure. To apply parity therefore, in wages and other benefits would
also require parity in other terms and conditions of employment
which include the employment which include the employment
contract.
A perusal of the parties' 1992-1995 CBA points us to the conditions
and provisions for salary and professional compensation wherein
the parties agree as follows: All members of the bargaining unit
shall be compensated only in accordance with Appendix C hereof
provided that the Superintendent of the School has the discretion to
recruit and hire expatriate teachers from abroad, under terms and
conditions that are consistent with accepted international practice.
Appendix C of said CBA further provides: The new salary schedule is
deemed at equity with the Overseas Recruited Staff (OSRS) salary
schedule. The 25% differential is reflective of the agreed value of
system displacement and contracted status of the OSRS as
differentiated from the tenured status of Locally Recruited Staff
(LRS).

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J.SUAREZ II, 2ND SEM,SY 12-13

To our mind, these provisions demonstrate the parties' recognition

of the difference in the status of two types of EEs, hence, the
difference in their salaries.
The Union cannot also invoke the equal protection clause to justify
its claim of parity. It is an established principle of constitutional law
that the guarantee of equal protection of the laws is not violated by
legislation or private covenants based on reasonable classification.
A classification is reasonable if it is based on substantial distinctions
and apply to all members of the same class. Verily, there is a
substantial distinction between foreign hires and local hires, the
former enjoying only a limited tenure, having no amenities of their
own in the Philippines and have to be given a good compensation
package in order to attract them to join the teaching faculty of the
School.7
ISSUE: that the point-of-hire classification employed by the School
is discriminatory to Filipinos and that the grant of higher salaries to
foreign-hires constitutes racial discrimination.
HELD: Notably, the International Covenant on Economic, Social,
and Cultural Rights, supra, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of
everyone to the enjoyment of just and favourable conditions of
work, which ensure, in particular:
a. Remuneration which provides all workers, as a minimum, with:
(i) Fair wages and equal remuneration for work of equal value
without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed by men,
with equal pay for equal work;
The foregoing provisions impregnably institutionalize in this
jurisdiction the long honored legal truism of "equal pay for equal
work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be
paid similar salaries. This rule applies to the School, its
"international character" notwithstanding.
The School contends that petitioner has not adduced evidence that
local-hires perform work equal to that of foreign-hires. The Court
finds this argument a little cavalier. If an ER accords EEs the same
position and rank, the presumption is that these EEs perform equal
work. This presumption is borne by logic and human experience. If
the ER pays one EE less than the rest, it is not for that EE to explain
why he receives less or why the others receive more. That would be
adding insult to injury. The ER has discriminated against that EE; it
is for the ER to explain why the EE is treated unfairly.
The ER in this case has failed to discharge this burden. There is no
evidence here that foreign-hires perform 25% more efficiently or
effectively than the local-hires. Both groups have similar functions
and responsibilities, which they perform under similar working
conditions. The School cannot invoke the need to entice foreignhires to leave their domicile to rationalize the distinction in salary
rates without violating the principle of equal work for equal pay.
While we recognize the need of the School to attract foreign-hires,
salaries should not be used as an enticement to the prejudice of
local-hires. The local-hires perform the same services as foreignhires and they ought to be paid the same salaries as the latter. For
the same reason, the "dislocation factor" and the foreign-hires'
limited tenure also cannot serve as valid bases for the distinction in
salary rates. The dislocation factor and limited tenure affecting
foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave
travel allowances.
In this case, we find the point-of-hire classification employed by
respondent School to justify the distinction in the salary rates of
foreign-hires and local hires to be an invalid classification. There is
no reasonable distinction between the services rendered by foreignhires and local-hires. The practice of the School of according higher
salaries to foreign-hires contravenes public policy and, certainly,
does not deserve the sympathy of this Court.1avvphi1
We agree, however, that foreign-hires do not belong to the same
bargaining unit as the local-hires. A bargaining unit is "a group of
EEs of a given ER, comprised of all or less than all of the entire body
of EEs, consistent with equity to the ER, indicate to be the best
suited to serve the reciprocal rights and duties of the parties under
the collective bargaining provisions of the law." 29 The factors in
determining the appropriate collective bargaining unit are (1) the
will of the EEs (Globe Doctrine); (2) affinity and unity of the EEs'
interest, such as substantial similarity of work and duties, or
similarity of compensation and working conditions (Substantial
Mutual Interests Rule); (3) prior collective bargaining history; and
(4) similarity of employment status. 30 The basic test of an
asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all EEs the
exercise of their collective bargaining rights. 31
It does not appear that foreign-hires have indicated their intention
to be grouped together with local-hires for purposes of collective
bargaining. The collective bargaining history in the School also
shows that these groups were always treated separately. Foreignhires have limited tenure; local-hires enjoy security of tenure.
Although foreign-hires perform similar functions under the same
working conditions as the local-hires, foreign-hires are accorded
certain benefits not granted to local-hires. These benefits, such as
housing, transportation, shipping costs, taxes, and home leave
travel allowance, are reasonably related to their status as foreignhires, and justify the exclusion of the former from the latter. To

include foreign-hires in a bargaining unit with local-hires would not

assure either group the exercise of their respective collective
bargaining rights.
SHS PERFORATED MATERIALS, INC. et al vs. MANUEL F. DIAZ
G.R. No. 185814 October 13, 2010
MENDOZA, J.:
Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up
corporation organized and existing under the laws of the Republic
of the Philippines and registered with the Philippine Economic Zone
Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a
German national, is its president, in which capacity he determines
the administration and direction of the day-to-day business affairs
of SHS. Petitioner Hinrich Johann Schumacher (Schumacher), also a
German national, is the treasurer and one of the board directors. As
such, he is authorized to pay all bills, payrolls, and other just debts
of SHS of whatever nature upon maturity. Schumacher is also the
Executive Vice-President of the European Chamber of Commerce of
the Philippines (ECCP) which is a separate entity from SHS. Both
entities have an arrangement where ECCP handles the payroll
requirements of SHS to simplify business operations and minimize
operational expenses. Thus, the wages of SHS EEs are paid out by
ECCP, through its Accounting Services Department headed by Juliet
Taguiang (Taguiang).
Manuel F. Diaz (respondent) was hired by petitioner SHS as
Manager for Business Development on probationary status from July
18, 2005 to January 18, 2006, with a monthly salary of
P100,000.00. Respondents duties, responsibilities, and work hours
were described in the Contract of Probationary Employment.
respondent was also instructed by Hartmannshenn to report to the
SHS office and plant at least two (2) days every work week to
observe technical processes involved in the manufacturing of
perforated materials, and to learn about the products of the
company, which respondent was hired to market and sell.
During respondents employment, Hartmannshenn was often
abroad and, because of business exigencies, his instructions to
respondent were either sent by electronic mail or relayed through
telephone or mobile phone. When he would be in the Philippines, he
and the respondent held meetings. As to respondents work, there
was no close supervision by him.
During meetings with the respondent, Hartmannshenn expressed
his dissatisfaction over respondents poor performance.
Respondent allegedly failed to make any concrete business
proposal or implement any specific measure to improve the
productivity of the SHS office and plant or deliver sales except for a
meagre P2,500.00 for a sample product. In numerous electronic
mail messages, respondent acknowledged his poor performance
and offered to resign from the company. Respondent, however,
denied sending such messages but admitted that he had reported
to the SHS office and plant only eight (8) times from July 18, 2005
to November 30, 2005.
On November 16, 2005, in preparation for his trip to the Philippines,
Hartmannshenn tried to call respondent on his mobile phone, but
the latter failed to answer. On November 18, 2005, Hartmannshenn
arrived in the Philippines from Germany, and on November 22 and
24, 2005, notified respondent of his arrival through electronic mail
messages and advised him to get in touch with him. Respondent
claimed that he never received the messages. On November 29,
2005, Hartmannshenn instructed Taguiang not to release
respondents salary. Later that afternoon, respondent called and
inquired about his salary. Taguiang informed him that it was being
withheld and that he had to immediately communicate with
Hartmannshenn. Again, respondent denied having received such
directive.The next day, on November 30, 2005, respondent served
on SHS a demand letter and a resignation letter.
In the evening of the same day, November 30, 2005, respondent
met with Hartmannshenn in Alabang. The latter told him that he
was extremely disappointed for the following reasons: his poor work
performance; his unauthorized leave and malingering from
November 16 to November 30, 2005; and failure to immediately
meet Hartmannshenn upon his arrival from Germany.
Petitioners averred that respondent was unable to give a proper
explanation for his behavior. Hartmannshenn then accepted
respondents resignation and informed him that his salary would be
released upon explanation of his failure to report to work, and proof
that he did, in fact, work for the period in question. He demanded
that respondent surrender all company property and information in
his possession. Respondent agreed to these exit conditions
through electronic mail. Instead of complying with the said
conditions, however, respondent sent another electronic mail
message to Hartmannshenn and Schumacher on December 1,
2005, appealing for the release of his salary.
Respondent, on the other hand, claimed that the meeting with
Hartmannshenn took place in the evening of December 1, 2005, at
which meeting the latter insulted him and rudely demanded that he
accept P25,000.00 instead of his accrued wage and stop working
for SHS, which demands he refused. Later that same night, he sent
Hartmannshenn and Schumacher an electronic mail message
appealing for the release of his salary. Another demand letter for
respondents accrued salary for November 16 to November 30,
2005, 13th month pay, moral and exemplary damages, and
attorneys fees was sent on December 2, 2005.
To settle the issue amicably, petitioners counsel advised
respondents counsel by telephone that a check had been prepared
in the amount of P50,000.00, and was ready for pick-up on
December 5, 2005. On the same date, a copy of the formal reply
letter relating to the prepared payment was sent to the

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J.SUAREZ II, 2ND SEM,SY 12-13
respondents counsel by facsimile transmission. Despite being
informed of this, respondent never picked up the check.
Respondent countered that his counsel received petitioners formal
reply letter only on December 20, 2005, stating that his salary
would be released subsequent to the turn-over of all materials
owned by the company in his possession. Respondent claimed that
the only thing in his possession was a sample panels folder which
he had already returned and which was duly received by Taguiang
on November 30, 2005.
On December 9, 2005, respondent filed a Complaint[7] against the
petitioners for illegal dismissal; non-payment of salaries/wages and
13th month pay with prayer for reinstatement and full backwages;
exemplary damages, and attorneys fees, costs of suit, and legal
interest.
ISSUES: whether or not respondent was constructively dismissed
by petitioners, which determination is, in turn, hinged on finding out
(i) whether or not the temporary withholding of respondents
salary/wages by petitioners was a valid exercise of management
prerogative; and (ii) whether or not respondent voluntarily resigned.
HELD: 1)Management prerogative refers to the right of an ER to
regulate all aspects of employment, such as the freedom to
prescribe work assignments, working methods, processes to be
followed, regulation regarding transfer of EEs, supervision of their
work, lay-off and discipline, and dismissal and recall of work.
Although management prerogative refers to the right to regulate
all aspects of employment, it cannot be understood to include the
right to temporarily withhold salary/wages without the consent of
the EE. To sanction such an interpretation would be contrary to
Article 116 of the Labor Code, which provides: ART. 116.
Withholding of wages and kickbacks prohibited. It shall be
unlawful for any person, directly or indirectly, to withhold any
amount from the wages of a worker or induce him to give up any
part of his wages by force, stealth, intimidation, threat or by any
other means whatsoever without the workers consent.
Any withholding of an EEs wages by an ER may only be allowed in
the form of wage deductions under the circumstances provided in
Article 113 of the Labor Code, as set forth below: ART. 113. Wage
Deduction. No ER, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his EEs, except: (a) In
cases where the worker is insured with his consent by the ER, and
the deduction is to recompense the ER for the amount paid by him
as premium on the insurance;(b) For union dues, in cases where
the right of the worker or his union to check-off has been
recognized by the ER or authorized in writing by the individual
worker concerned; and (c) In cases where the ER is authorized by
law or regulations issued by the Secretary of Labor.
As correctly pointed out by the LA, absent a showing that the
withholding of complainants wages falls under the exceptions
provided in Article 113, the withholding thereof is thus
unlawful.[13]
Although it cannot be determined with certainty whether
respondent worked for the entire period from November 16 to
November 30, 2005, the consistent rule is that if doubt exists
between the evidence presented by the ER and that by the EE, the
scales of justice must be tilted in favor of the latter[24] in line with
the policy mandated by Articles 2 and 3 of the Labor Code to afford
protection to labor and construe doubts in favor of labor. For
petitioners failure to satisfy their burden of proof, respondent is
presumed to have worked during the period in question and is,
accordingly, entitled to his salary. Therefore, the withholding of
respondents salary by petitioners is contrary to Article 116 of the
Labor Code and, thus, unlawful.
2)There is constructive dismissal if an act of clear discrimination,
insensibility, or disdain by an ER becomes so unbearable on the
part of the EE that it would foreclose any choice by him except to
forego his continued employment. It exists where there is cessation
of work because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank
and a diminution in pay. [25]
What made it impossible, unreasonable or unlikely for respondent
to continue working for SHS was the unlawful withholding of his
salary. For said reason, he was forced to resign. It is of no moment
that he served his resignation letter on November 30, 2005, the last
day of the payroll period and a non-working holiday, since his salary
was already due him on November 29, 2005, being the last working
day of said period. In fact, he was then informed that the wages of
all the other SHS EEs were already released, and only his was being
withheld. What is significant is that the respondent prepared and
served his resignation letter right after he was informed that his
salary was being withheld.
It would be absurd to require
respondent to tolerate the unlawful withholding of his salary for a
longer period before his employment can be considered as so
impossible, unreasonable or unlikely as to constitute constructive
dismissal.
Even granting that the withholding of respondents
salary on November 30, 2005, would not constitute an unlawful act,
the continued refusal to release his salary after the payroll period
was clearly unlawful. The petitioners claim that they prepared the
check ready for pick-up cannot undo the unlawful withholding.
It is worthy to note that in his resignation letter, respondent cited
petitioners illegal and unfair labor practice[26] as his cause for
resignation. As correctly noted by the CA, respondent lost no time
in submitting his resignation letter and eventually filing a complaint
for illegal dismissal just a few days after his salary was withheld.
These circumstances are inconsistent with voluntary resignation
and bolster the finding of constructive dismissal.

Respondent was constructively dismissed and, therefore, illegally

dismissed. Although respondent was a probationary EE, he was still
entitled to security of tenure. Section 3 (2) Article 13 of the
Constitution guarantees the right of all workers to security of
tenure. In using the expression all workers, the Constitution puts
no distinction between a probationary and a permanent or regular
EE. This means that probationary EEs cannot be dismissed except
for cause or for failure to qualify as regular EEs.[28]
This Court has held that probationary EEs who are unjustly
dismissed during the probationary period are entitled to
reinstatement and payment of full backwages and other benefits
and privileges from the time they were dismissed up to their actual
reinstatement.[29] Respondent is, thus, entitled to reinstatement
without loss of seniority rights and other privileges as well as to full
backwages, inclusive of allowances, and other benefits or their
monetary equivalent computed from the time his compensation
was withheld up to the time of actual reinstatement. Respondent,
however, is not entitled to the additional amount for 13th month
pay, as it is clearly provided in respondents Probationary Contract
of Employment that such is deemed included in his salary. The
compensation package defined in this paragraph shall represent all
that is due and demandable under this Contract and includes all
benefits required by law such as the 13th month pay. No other
benefits, bonus or allowance shall be due the EE.
Respondents reinstatement, however, is no longer feasible as
antagonism has caused a severe strain in their working
relationship. Under the doctrine of strained relations, the payment
of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or
viable. Payment liberates the EE from what could be a highly
oppressive work environment, and at the same time releases the
ER from the obligation of keeping in its employ a worker it no longer
trusts. Therefore, a more equitable disposition would be an award
of separation pay equivalent to at least one month pay, in addition
to his full backwages, allowances and other benefits.[31]
With respect to the personal liability of Hartmannshenn and
Schumacher, this Court has held that corporate directors and
officers are only solidarily liable with the corporation for termination
of employment of corporate EEs if effected with malice or in bad
faith.[32] Bad faith does not connote bad judgment or negligence;
it imports dishonest purpose or some moral obliquity and conscious
doing of wrong; it means breach of unknown duty through some
motive or interest or ill will; it partakes of the nature of fraud.[33]
To sustain such a finding, there should be evidence on record that
an officer or director acted maliciously or in bad faith in terminating
the EE.[34]
Petitioners withheld respondents salary in the sincere belief that
respondent did not work for the period in question and was,
therefore, not entitled to it. There was no dishonest purpose or ill
will involved as they believed there was a justifiable reason to
withhold his salary. Thus, although they unlawfully withheld
respondents salary, it cannot be concluded that such was made in
bad faith. Accordingly, corporate officers, Hartmannshenn and
Schumacher, cannot be held personally liable for the corporate
obligations of SHS.
CENTRAL AZUCARERA DE TARLAC vs. CENTRAL AZUCARERA
DE TARLAC LABOR UNION-NLU,
G.R. No. 188949 July 26, 2010
NACHURA, J.:
FACTS: Petitioner is a domestic corporation engaged in the
business of sugar manufacturing, while respondent is a legitimate
labor organization which serves as the exclusive bargaining
representative of petitioners rank-and-file EEs. The controversy
stems from the interpretation of the term basic pay, essential in
the computation of the 13th-month pay.
In compliance with Presidential Decree (P.D.) No. 851, petitioner
granted its EEs the mandatory thirteenth (13th) - month pay since
1975. The formula used by petitioner in computing the 13th-month
pay was: Total Basic Annual Salary divided by twelve (12).
Included in petitioners computation of the Total Basic Annual Salary
were the following: basic monthly salary; first eight (8) hours
overtime pay on Sunday and legal/special holiday; night premium
pay; and vacation and sick leaves for each year. Throughout the
years, petitioner used this computation until 2006.[3]
respondent staged a strike. During the pendency of the strike,
petitioner declared a temporary cessation of operations. all the
striking union members were allowed to return to work.
Subsequently, petitioner declared another temporary cessation of
operations. The suspension of operation was lifted, but the rankand-file EEs were allowed to report for work on a fifteen (15) dayper-month rotation basis. petitioner gave the EEs their 13th-month
pay based on the EEs total earnings during the year divided by 12.
Respondent objected to this computation. It averred that petitioner
did not adhere to the usual computation of the 13th-month pay. It
claimed that the divisor should have been eight (8) instead of 12,
because the EEs worked for only 8 months in 2006. It likewise
asserted that petitioner did not observe the company practice of
giving its EEs the guaranteed amount equivalent to their one month
pay, in instances where the computed 13th-month pay was less
than their basic monthly pay.[5]
Petitioner and respondent tried to thresh out their differences in
accordance with the grievance procedure as provided in their CBA.
During the grievance meeting, the representative of petitioner
explained that the change in the computation of the 13th-month
pay was intended to rectify an error in the computation, particularly

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J.SUAREZ II, 2ND SEM,SY 12-13
the concept of basic pay which should have included only the basic
monthly pay of the EEs.
For failure of the parties to arrive at a settlement, respondent
applied for preventive mediation before the NCMB. However,
despite four (4) conciliatory meetings, the parties still failed to
settle the dispute. respondent filed a complaint against petitioner
for money claims based on the alleged diminution of
benefits/erroneous computation of 13th-month pay before the
Regional Arbitration Branch of the NLRC.
LA:dismissed. declaring that the petitioner had the right to rectify
the error in the computation of the 13th-month pay of its EEs.
NLRC: reversed. CA: affirmed.
HELD: The 13th-month pay mandated by Presidential Decree (P.D.)
No. 851 represents an additional income based on wage but not
part of the wage. It is equivalent to one-twelfth (1/12) of the total
basic salary earned by an EE within a calendar year. All rank-andfile EEs, regardless of their designation or employment status and
irrespective of the method by which their wages are paid, are
entitled to this benefit, provided that they have worked for at least
one month during the calendar year. If the EE worked for only a
portion of the year, the 13th-month pay is computed pro rata.[16]
13th-month pay for 2006. Admittedly, it was an error that was
repeatedly committed for almost thirty (30) years. Petitioner insists
that the length of time during which an ER has performed a certain
act beneficial to the EEs, does not prove that such an act was not
done in error. It maintains that for the claim of mistake to be
negated, there must be a clear showing that the ER had freely,
voluntarily, and continuously performed the act, knowing that he is
under no obligation to do so.
Petitioner asserts that such
voluntariness was absent in this case.
the Supplementary Rules and Regulations Implementing P.D. No.
851 was issued. The Supplementary Rules clarifies that OT pay,
earnings, and other remuneration that are not part of the basic
salary shall not be included in the computation of the 13th-month
pay. the Revised Guidelines on the Implementation of the 13thMonth Pay Law was issued. Significantly, under this Revised
Guidelines, it was specifically stated that the minimum 13th-month
pay required by law shall not be less than one-twelfth (1/12) of the
total basic salary earned by an EE within a calendar year.
Furthermore, the term basic salary of an EE for the purpose of
computing the 13th-month pay was interpreted to include all
remuneration or earnings paid by the ER for services rendered, but
does not include allowances and monetary benefits which are not
integrated as part of the regular or basic salary, such as the cash
equivalent of unused vacation and sick leave credits, overtime,
premium, night differential and holiday pay, and cost-of-living
allowances. However, these salary-related benefits should be
included as part of the basic salary in the computation of the 13thmonth pay if, by individual or collective agreement, company
practice or policy, the same are treated as part of the basic salary
of the EEs.
Based on the foregoing, it is clear that there could have no
erroneous interpretation or application of what is included in the
term basic salary for purposes of computing the 13th-month pay
of EEs. From the inception of P.D. No. 851 on December 16, 1975,
clear-cut administrative guidelines have been issued to insure
uniformity in the interpretation, application, and enforcement of the
provisions of P.D. No. 851 and its implementing regulations.
As correctly ruled by the CA, the practice of petitioner in giving
13th-month pay based on the EEs gross annual earnings which
included the basic monthly salary, premium pay for work on rest
days and special holidays, night shift differential pay and holiday
pay continued for almost thirty (30) years and has ripened into a
company policy or practice which cannot be unilaterally withdrawn.
Article 100 of the Labor Code, otherwise known as the NonDiminution Rule, mandates that benefits given to EEs cannot be
taken back or reduced unilaterally by the ER because the benefit
has become part of the employment contract, written or unwritten.
[18] The rule against diminution of benefits applies if it is shown
that the grant of the benefit is based on an express policy or has
ripened into a practice over a long period of time and that the
practice is consistent and deliberate. Nevertheless, the rule will not
apply if the practice is due to error in the construction or application
of a doubtful or difficult question of law. But even in cases of error,
it should be shown that the correction is done soon after discovery
of the error.[19]
The argument of petitioner that the grant of the benefit was not
voluntary and was due to error in the interpretation of what is
included in the basic salary deserves scant consideration. No
doubtful or difficult question of law is involved in this case. The
guidelines set by the law are not difficult to decipher. The
voluntariness of the grant of the benefit was manifested by the
number of years the ER had paid the benefit to its EEs. Petitioner
only changed the formula in the computation of the 13th-month
pay after almost 30 years and only after the dispute between the
management and EEs erupted. This act of petitioner in changing
the formula at this time cannot be sanctioned, as it indicates a
badge of bad faith.
Furthermore, petitioner cannot use the argument that it is suffering
from financial losses to claim exemption from the coverage of the
law on 13th-month pay, or to spare it from its erroneous unilateral
computation of the 13th-month pay of its EEs. Under Section 7 of
the Rules and Regulations Implementing P.D. No. 851, distressed
ERs shall qualify for exemption from the requirement of the Decree

only upon prior authorization by the Secretary of Labor.[20] In this

case, no such prior authorization has been obtained by petitioner;
thus, it is not entitled to claim such exemption.
DEVELOPMENT BANK OF THE PHILIPPINES vs. NLRC
G.R. Nos. 100264-81 January 29, 1993
GUTIERREZ, JR., J.:
FACTS: the private respondents filed with the Provincial Extension
Office of the DOLE in Daet, Camarines Norte 17 individual
complaints against Republic Hardwood Inc.(RHI) for unpaid wages
and separation pay. These complaints were thereafter endorsed to
the Regional Arbitration Branch of the NLRC since the petitioners
had already been terminated from employment.
In its position paper, RHI alleged that it had ceased to operate due
to the government ban against tree-cutting. It further alleged that
its sawmill was totally burned resulting in enormous losses and that
due to its financial setbacks, RHI failed to pay its loan with the DBP.
RHI contended that since DBP foreclosed its mortgaged assets, then
any adjudication of monetary claims in favor of its former EEs must
be satisfied against DBP.
the private respondents filed a motion to implead DBP. On July 13,
1987, DBP filed its opposition to said motion.
LA: endered a joint decision on the complaints, the relevant and
dispositive portions of which read: To require petitioners to file
insolvency proceedings against RHI and later file against DBP their
claims is to prolong the agony of petitioners. To give a technical and
legal meaning to the words of Art. 110 is to subvert the rights of the
petitioners. We hold therefore that as against the contention of
respondent DBP, Art. 4 of the Labor Code is the answer. The social
justice clause of the Constitution is our guide. NLRC: affirmed.
Whether or not the Joint Decision of Executive Labor
Arbiter Gelacio L. Rivera is violative of procedural due
process on the part of DBP;
There is no merit to this contention of DBP. Denial of due process
means the total lack of opportunity to be heard. There is no denial
of due process where a party is given an opportunity to be heard
and to present his case. The petitioner in this case filed an
opposition to the motion to implead it as a party defendant. It
likewise filed a motion for reconsideration of the labor arbiter's
decision. Thereafter, DBP filed an appeal with the NLRC and, later
on, a motion for reconsideration of the NLRC decision. The
petitioner, thus, was given ample opportunity to present its case. It
was not denied due process.
Whether or not the complainant-private respondents are
entitled to separation pay;
There is no merit to DBP's contention that the workers are not
entitled to separation pay. Despite the enormous losses incurred by
RHI due to the fire that gutted the sawmill in 1981 and despite the
logging ban in 1983, the uncontroverted claims for separation pay
show that most of the private respondents still worked up to the
end of 1985. RHI would still have continued its business had not the
petitioner foreclosed all of its assets and properties. Thus, the
closure of RHI's business was not primarily brought about by
serious business losses. Such closure was a consequence of DBP's
foreclosure of RHI's assets. We therefore apply Article 283 which
provides: in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher.
Whether or not Executive Labor Arbiter Gelacio L. Rivera
and the NLRC correctly applied Article 110 of the Labor
Code in this case;
However, because of the petitioner's assertion that the labor arbiter
and respondent NLRC incorrectly applied the provisions of Article
110 of the Labor Code, we are constrained to grant the petition for
certiorari. Article 110, prior to its amendment by Republic Act No.
6715, reads: Worker preference in case of bankruptcy. In the
event of bankruptcy or liquidation of an ER's business, his workers
shall enjoy first preference as regards wages due them for services
rendered during the period prior to the bankruptcy or liquidation,
any provision of law to the contrary notwithstanding. Unpaid wages
shall be paid in full before other creditors may establish any claim
to a share in the assets of the ER.
It is quite clear from the provisions that a declaration of bankruptcy
or a judicial liquidation must be present before the worker's
preference may be enforced. Thus, Article 110 of the Labor Code
and its implementing rule cannot be invoked by the respondents in
this case absent a formal declaration of bankruptcy or a liquidation
order.
Moreover, the reason behind the necessity for a judicial proceeding
or a proceeding in rem before the concurrence and preference of
credits may be applied was explained by this Court in the case of
Philippines Savings Bank v. Lantin (124 SCRA 476 [1983]). We
said:The proceedings in the court below do not partake of the
nature of the insolvency proceedings or settlement of a decedent's
estate. The action filed by Ramos was only to collect the unpaid
cost of the construction of the duplex apartment. It is far from being
a general liquidation of the estate of the Tabligan spouses.
In the case at bar, although the lower court found that "there were
no known creditors other than the plaintiff and the defendant
herein", this can not be conclusive. It will not bar other creditors in
the event they show up and present their claims against the
petitioner bank, claiming that they also have preferred liens against
the property involved. Consequently, Transfer Certificate of Title No.
101864 issued in favor of the bank which is supposed to be

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J.SUAREZ II, 2ND SEM,SY 12-13
indefeasible would remain constantly unstable and questionable.
Such could not have been the intention of Article 2243 of the Civil
Code although it considers claims and credits under Article 2242 as
statutory liens. Neither does the De Barreto case: The claims of all
creditors whether preferred or non-preferred, the identification of
the preferred ones and the totality of the ER's asset should be
brought into the picture. There can then be an authoritative, fair,
and binding adjudication instead of the piece meal settlement
which would result from the questioned decision in this case.
The NLRC, therefore, committed grave abuse of discretion when it
affirmed the labor arbiter's ruling that the workers' preference
espoused in Article 110 may be applied even in the absence of a
declaration of bankruptcy or a liquidation order.
A distinction should be made between a preference of credit and a
lien. A preference applies only to claims which do not attach to
specific properties. A lien creates a charge on a particular property.
The right of first preference as regards unpaid wages recognized by
Article 110 does not constitute a lien on the property of the
insolvent debtor in favor of workers. It is but a preference of credit
in their favor, a preference in application. It is a method adopted to
determine and specify the order in which credits should be paid in
the final distribution of the proceeds of the insolvent's assets. It is a
right to a first preference in the discharge of the funds of the
judgment debtor.
Article 110 of the Labor Code does not purport to create a lien in
favor of workers or EEs for unpaid wages either upon all of the
properties or upon any particular property owned by their ER.
Claims for unpaid wages do not therefore fall at all within the
category of specially preferred claims established under Articles
2241 and 2242 of the Civil Code, except to the extent that such
claims for unpaid wages are already covered Article 2241, number
6: "claims for laborers" wages, on the goods manufactured or the
work done; or by Article 2242, number 3: "claims of laborers and
other workers engaged in the construction, reconstruction or repair
of buildings, canals and other works, upon said buildings, canals
and other works. To the extent that claims for unpaid wages fall
outside the scope of Article 2241, number 6 and 2242, number 3,
they would come within the ambit of the category of ordinary
preferred credits under Article 2244.
The DBP anchors its claim on a mortgage credit. A mortgage
directly and immediately subjects the property upon which it is
imposed, whoever the possessor may be, to the fulfillment of the
obligation for whose security it was constituted (Article 2176, Civil
Code). It creates a real right which is enforceable against the whole
world. It is a lien on an identified immovable property, which a
preference is not. A recorded mortgage credit is a special preferred
credit under Article 2242 (5) of the Civil Code on classification of
credits. The preference given by Article 110, when not falling within
Article 2241 (6) and Article 2242 (3) of the Civil Code and not
attached to any specific property, is an ordinary preferred credit
although its impact is to move it from second priority to first priority
in the order of preference established by Article 2244 of the Civil
Code (Republic v. Peralta, supra).
Clearly, even if DBP and the private respondents assert their
preferred credits in a judicial proceeding, the former's claim must
first be satisfied.
Whether or not there was retroactive application of
Executive Order No. 81 in this case;
Article 110 of the Labor Code has been amended by R.A. No. 6715
and now reads:
Art. 110. Worker preference in case of bankruptcy. In the event of
bankruptcy or liquidation of an ER's business, his workers shall
enjoy first preference as regards their unpaid wages and other
monetary claims, any provision of law to the contrary
notwithstanding. Such unpaid wages, and monetary claims shall be
paid in full before the claims of the Government and other creditors
may be paid. (Emphasis ours.)
We ruled in DBP v. NLRC, supra, that the amendment "expands
worker preference to cover not only unpaid wages but also other
monetary claims to which even claims of the Government must be
deemed subordinate." Hence, under the new law, even mortgage
credits are subordinate to workers' claims.
Lastly, while we are cognizant of the pronouncement of the
Supreme Court with respect to Art. 110 and while we hold in
respect said pronouncements, we are of the earnest view that
considering that Art. 110 has been amended by RA 6715,
complainants' preference over government claims and other
creditors be adhered to. (Rollo, p. 65)
R.A. No. 6715, however, took effect only on March 21, 1989. The
amendment cannot therefore be retroactively applied to, nor can it
affect, the mortgage credit which was secured by the petitioner
several years prior to its effectivity. The public respondent,
therefore, committed grave abuse of discretion when it
retroactively applied the amendment introduced by R.A. No. 6715
to the case at bar.With the foregoing discussion, we no longer find it
necessary to discuss the two other issues raised by the petitioner.
TRADERS ROYAL BANK EES UNION-INDEPENDENT vs. NLRC
G.R. No. 120592 March 14, 1997
REGALADO, J.:
FACTS: Petitioner TRB EEs Union and private respondent Atty.
Emmanuel Noel A. Cruz, head of the E.N.A. Cruz and Associates law
firm, entered into a retainer agreement whereby the former
obligated itself to pay the latter a monthly retainer fee of P3,000.00
in consideration of the law firm's undertaking to render the services

enumerated in their contract. Parenthetically, said retainer

agreement was terminated by the union on April 4, 1990. During
the existence of that agreement, petitioner union referred to private
respondent the claims of its members for holiday, mid-year and
year-end bonuses against their ER, appropriate complaint was filed
by private respondent.
NLRC: rendered a decision in the foregoing case in favor of the EEs,
awarding them holiday pay differential, mid-year bonus differential,
and year-end bonus differential. The NLRC, acting on a motion for
the issuance of a writ of execution filed by private respondent as
counsel for petitioner union, raffled the case to Labor Arbiter
Oswald Lorenzo. However, pending the hearing of the application
for the writ of execution, TRB challenged the decision of the NLRC
before the Supreme Court.
SC:modified the decision of the NLRC by deleting the award of midyear and year-end bonus differentials while affirming the award of
holiday pay differential.
The bank voluntarily complied with such final judgment and
determined the holiday pay differential to be in the amount of
P175,794.32. Petitioner never contested the amount thus found by
TRB. The latter duly paid its concerned EEs their respective
entitlement in said sum through their payroll. 9
After private respondent received the above decision of the
Supreme Court,he notified the petitioner union, the TRB
management and the NLRC of his right to exercise and enforce his
attorney's lien over the award of holiday pay differential through a
letter. private respondent filed a motion before Labor Arbiter
Lorenzo for the determination of his attorney's fees, praying that
ten percent (10%) of the total award for holiday pay differential
computed by TRB at P175,794.32, or the amount of P17,579.43, be
declared as his attorney's fees, and that petitioner union be ordered
to pay and remit said amount to him.
LA:The TRB management manifested before the labor arbiter that
they did not wish to oppose or comment on private respondent's
motion as the claim was directed against the union, while petitioner
union filed a comment and opposition to said motion. After
considering the position of the parties, the labor arbiter issued an
order granting the motion of private respondent. NLRC: affirmrd.
Although petitioner union concedes that the NLRC has jurisdiction
to decide claims for attorney's fees, it contends that the award for
attorney's fees should have been incorporated in the main case and
not after the Supreme Court had already reviewed and passed upon
the decision of the NLRC. Since the claim for attorney's fees by
private respondent was neither taken up nor approved by the
Supreme Court, no attorney's fees should have been allowed by the
NLRC.
Thus, petitioner posits that the NLRC acted without jurisdiction in
making the award of attorney's fees, as said act constituted a
modification of a final and executory judgment of the Supreme
Court which did not award attorney's fees. It then cited decisions of
the Court declaring that a decision which has become final and
executory can no longer be altered or modified even by the court
which rendered the same.
On the other hand, private respondent maintains that his motion to
determine attorney's fees was just an incident of the main case
where petitioner was awarded its money claims. The grant of
attorney's fees was the consequence of his exercise of his
attorney's lien. Such lien resulted from and corresponds to the
services he rendered in the action wherein the favorable judgment
was obtained. To include the award of the attorney's fees in the
main case presupposes that the fees will be paid by TRB to the
adverse party. All that the non-inclusion of attorney's fees in the
award means is that the Supreme Court did not order TRB to pay
the opposing party attorney's fees in the concept of damages. He is
not therefore precluded from filing his motion to have his own
professional fees adjudicated.
HELD: ORDINARY vs. EXTRAORDINARY ATTYS FEES: There are two
commonly accepted concepts of attorney's fees, the so-called
ordinary and extraordinary. In its ordinary concept, an attorney's fee
is the reasonable compensation paid to a lawyer by his client for
the legal services he has rendered to the latter. The basis of this
compensation is the fact of his employment by and his agreement
with the client. In its extraordinary concept, an attorney's fee is an
indemnity for damages ordered by the court to be paid by the
losing party in a litigation. The basis of this is any of the cases
provided by law where such award can be made, such as those
authorized in Article 2208, Civil Code, and is payable not to the
lawyer but to the client, unless they have agreed that the award
shall pertain to the lawyer as additional compensation or as part
thereof.
As an adjunctive episode of the action for the recovery of bonus
differentials in NLRC-NCR Certified Case No. 0466, private
respondent's present claim for attorney's fees may be filed before
the NLRC even though or, better stated, especially after its earlier
decision had been reviewed and partially affirmed. It is well settled
that a claim for attorney's fees may be asserted either in the very
action in which the services of a lawyer had been rendered or in a
separate action.
With respect to the first situation, the remedy for recovering
attorney's fees as an incident of the main action may be availed of
only when something is due to the client. Attorney's fees cannot be
determined until after the main litigation has been decided and the
subject of the recovery is at the disposition of the court. The issue
over attorney's fees only arises when something has been
recovered from which the fee is to be paid.

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J.SUAREZ II, 2ND SEM,SY 12-13
While a claim for attorney's fees may be filed before the judgment
is rendered, the determination as to the propriety of the fees or as
to the amount thereof will have to be held in abeyance until the
main case from which the lawyer's claim for attorney's fees may
arise has become final. Otherwise, the determination to be made by
the courts will be premature. 24Of course, a petition for attorney's
fees may be filed before the judgment in favor of the client is
satisfied or the proceeds thereof delivered to the client.
En contra, private respondent contends that a retainer fee is not
the attorney's fees contemplated for and commensurate to the
services he rendered to petitioner. He asserts that although there
was no express agreement as to the amount of his fees for services
rendered in the case for recovery of differential pay, Article 111 of
the Labor Code supplants this omission by providing for an award of
ten percent (10%) of a money judgment in a labor case as
attorney's fees.
GENERAL
RETAINER/RETAINER
FEE(COMPENSTATION
FOR
COMMITMENT TO RENDER LEGAL SERVICES) vs. SPECIAL
RETAINER(REMUNERATION FOR LEGAL SERVICES ACTUALLY
RENDERED)
The difference between a compensation for a commitment to
render legal services and a remuneration for legal services actually
rendered can better be appreciated with a discussion of the two
kinds of retainer fees a client may pay his lawyer. These are a
general retainer, or a retaining fee, and a special
retainer.
A general retainer, or retaining fee, is the fee paid to a lawyer to
secure his future services as general counsel for any ordinary legal
problem that may arise in the routinary business of the client and
referred to him for legal action. The future services of the lawyer
are secured and committed to the retaining client. For this, the
client pays the lawyer a fixed retainer fee which could be monthly
or otherwise, depending upon their arrangement. The fees are paid
whether or not there are cases referred to the lawyer. The reason
for the remuneration is that the lawyer is deprived of the
opportunity of rendering services for a fee to the opposing party or
other parties. In fine, it is a compensation for lost opportunities.
A special retainer is a fee for a specific case handled or special
service rendered by the lawyer for a client. A client may have
several cases demanding special or individual attention. If for every
case there is a separate and independent contract for attorney's
fees, each fee is considered a special retainer.
As to the first kind of fee, the Court has had the occasion to
expound on its concept in Hilado vs. David29in this wise:
There is in legal practice what is called a "retaining fee," the
purpose of which stems from the realization that the attorney is
disabled from acting as counsel for the other side after he has given
professional advice to the opposite party, even if he should decline
to perform the contemplated services on behalf of the latter. It is to
prevent undue hardship on the attorney resulting from the rigid
observance of the rule that a separate and independent fee for
consultation and advice was conceived and authorized. "A retaining
fee is a preliminary fee given to an attorney or counsel to insure
and secure his future services, and induce him to act for the client.
It is intended to remunerate counsel for being deprived, by being
retained by one party, of the opportunity of rendering services to
the other and of receiving pay from him, and the payment of such
fee, in the absence of an express understanding to the contrary, is
neither made nor received in payment of the services
contemplated; its payment has no relation to the obligation of the
client to pay his attorney for the services for which he has retained
him to perform." (Emphasis supplied).
Evidently, the P3,000.00 monthly fee provided in the retainer
agreement between the union and the law firm refers to a general
retainer, or a retaining fee, as said monthly fee covers only the law
firm's pledge, or as expressly stated therein, its "commitment to
render the legal services enumerated." The fee is not payment for
private respondent's execution or performance of the services listed
in the contract, subject to some particular qualifications or
permutations stated there.
We, therefore, cannot favorably consider the suggestion of
petitioner that private respondent had already waived his right to
charge additional fees because of their failure to come to an
agreement as to its payment.
Firstly, there is no showing that private respondent unequivocally
opted to waive the additional charges in consonance with Part D of
the agreement. Secondly, the prompt actions taken by private
respondent, i.e., serving notice of charging lien and filing of motion
to determine attorney's fees, belie any intention on his part to
renounce his right to compensation for prosecuting the labor case
instituted by the union. And, lastly, to adopt such theory of
petitioner may frustrate private respondent's right to attorney's
fees, as the former may simply and unreasonably refuse to enter
into any special agreement with the latter and conveniently claim
later that the law firm had relinquished its right because of the
absence of the same.
The fact that petitioner and private respondent failed to reach a
meeting of the minds with regard to the payment of professional
fees for special services will not absolve the former of civil liability
for the corresponding remuneration therefor in favor of the latter. A
quasi-contract between the parties in the case at bar arose from
private respondent's lawful, voluntary and unilateral prosecution of
petitioner's cause without awaiting the latter's consent and
approval. Petitioner cannot deny that it did benefit from private
respondent's efforts as the law firm was able to obtain an award of
holiday pay differential in favor of the union. It cannot even hide

behind the cloak of the monthly retainer of P3,000.00 paid to

private respondent because, as demonstrated earlier, private
respondent's actual rendition of legal services is not compensable
merely by said amount.
A quasi-contract is based on the presumed will or intent of the
obligor dictated by equity and by the principles of absolute justice.
Some of these principles are: (1) It is presumed that a person
agrees to that which will benefit him; (2) Nobody wants to enrich
himself unjustly at the expense of another; and (3) We must do
unto others what we want them to do unto us under the same
circumstances
P.I.
MANUFACTURING,
INCORPORATED
vs.
P.I.
MANUFACTURING
SUPERVISORS
AND
FOREMAN
ASSOCIATION and the NATIONAL LABOR UNION
[G.R. No. 167217, February 04, 2008]
SANDOVAL-GUTIERREZ, J.:
FACTS:RA 6640 was signed into law on 10 December 1987,
providing, among others, an increase in the statutory minimum
wage and salary rates of EEs and workers in the private sector. It
provides that the minimum wage of workers and EEs in the private
sector shall be increased by P10, except those outside Manila who
shall receive an increase of P11, provided those that are already
receiving above the minimum wage shall receive an increase of
P10.
PI Manufacturing Supervisors and Foremen Association
(PIMASUFA) entered into a new CBAwhereby the supervisors were
granted an increase of P625 per month and the foremen, P475 per
month. Theincreases were made to retroact to 12 May 1987, or
prior to the passage of RA 6640. The application of said
CBAresulted in a wage distortion, which prompted the PIMASUFA
together with the National Labor Union to file a case against PIMA
for violation of RA 6640. PIMA asseverates that the The Company
and Supervisors and Foremen Contract absolves, quitclaims, and
releases the company for any monetary claim that the supervisors
and theforemen may have previous to the signing of the agreement
on 17 December 1987The Labor Arbiter ruled in favor of PIMASUFA
and ordered PIMA to give the PIMASUFA members wage increases
equivalent to 13.5% of their basic pay. The CA affirmed, but raised
the wage increase to 18.5%.
ISSUE:1 W/N the PIMASUFA, by signing The Company and
Supervisors and Foremen Contract, has waived any benefit itmay
have under RA 6640. 2 W/N the 13.5% increase in the supervisors
and foremens basic salary should be increased to 18.5% to
correctthe wage distortion brought about by the implementation of
RA 6640.
HELD:1 NO. The increase resulting from any wage distortion
brought about by the implementation of the new minimumwage law
is not waivable.
2. NO. Although there was a wage distortion, the same was cured or
remedied when PIMASUFA entered into the1987 CBA with PIMA after
the effectivity of RA 6640. The 1987 CBA increased the monthly
salaries of the supervisors by P626 and P475, which re-establishes
the gap not only between supervisors and foremen but alsobetween
them and the rank-and-file EEs. Such gap as re-established by
virtue of the CBA is more than asubstantial compliance with RA
6640. Moreover, requiring PIMA to pay 18.5%, over and above the
negotiated wage increases provided under the 1987 CBA, is highly
unfair and oppressive to the former.
A CBA constitutes the law between the parties when freely and
voluntarily entered into. It was not shown that PIMASUFA was
coerced or forced by PIMA to sign the 1987 CBA. All of its 13 officers
signed the CBA with theassistance of NLU. They signed it fully
aware of the passage of RA 6640. The duty to bargain requires that
theparties deal with each other with open and fair minds. PIMASUFA
cannot invoke the beneficial provisions of the1987 CBA but
disregard the concessions it voluntarily extends to PIMA.
Doctrine:Quitclaims by laborers are generally frowned upon as
contrary to public policy and are held to be ineffective to bar
recovery for the full measure of the workers rights. The reason for
the rule is that the ER and the EE do not stand on the same footing.
Article 1149 of the Civil Code states that: When the law sets, or
authorizes the setting of a minimum wage for laborers, and a
contract is agreed upon by which a laborer accepts a lower wage,
he shall be entitled to recover thedeficiency.
According to RA 6727, wage distortion is a situation where an
increase in prescribed wage results in theelimination or severe
contraction of intentional quantitative differences in wage or salary
rates between and among EE groups in an establishment as to
effectively obliterate the distinctions embodied in such
wagestructure based on skills, length of service, or other logical
bases of differentiation. Otherwise stated, wagedistortion means
the disappearance or virtual disappearance of pay differentials
between lower and higherpositions in an enterprise because of
compliance with a wage order. The goal of collective bargaining is
the making of agreements that will stabilize business conditions
and fix fairstandards of working conditions.
PRUBANKERS ASSOCIATION vs. PRUDENTIAL BANK & TRUST
COMPANY
G.R. No. 131247 January 25, 1999
PANGANIBAN, J.:
FACTS: the REGIONal Tripartite Wages and Productivity Board
(RTWPB) of REGION5 issued WO RB 05-03 which provided for a
Cost of Living Allowance (COLA) to workers in the private sector
who ha[d] rendered service for at least 3 months before its
effectivity, and for the same period [t]hereafter, in the following
categories: P17.50 in the cities of Naga and Legaspi; P15.50 in the
municipalities of Tabaco, Daraga, Pili and the city of Iriga; and
P10.00 for all other areas in the Bicol REGION.

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J.SUAREZ II, 2ND SEM,SY 12-13

Subsequently the RTWPB of REGION7 issued WO RB 07-03, which

directed the integration of the COLA mandated pursuant to WO.
RO07-02-A into the basic pay of all workers. It also established an
increase in the minimum wage rates for all workers and and EEs in
the private sector as follows: by P10.00 in the cities of Cebu,
Mandaue and Lapulapu; P5.00 in the municipalities of Compostela,
Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the
cities of Davao, Toledo, Dumaguete, Bais, Canlaon and Tagbilaran.
The petitioner then granted a COLA of P17.50 to its EEs at its Naga
Branch, the only branch covered by WO RB 05-03, and integrated
the P150.00 per month COLA into the basic pay of its rank-and-file
EEs at its Cebu, Mabolo and P. del Rosario branches, the branches
covered by WO RB 07-03.
respondent Prubankers Association wrote the petitioner requesting
that the Labor Management Committee be immediately convened
to discuss and resolve the alleged wage distortion created in the
salary structure upon the implementation of the said WO.
Respondent Association then demanded in the Labor Management
Committee meetings that the petitioner extend the application of
the WO to its EEs outside REGIONs 5 and 7, claiming that the
REGIONal implementation of the said orders created a wage
distortion in the wage rates of petitioner's EEs nationwide. As the
grievance could not be settled in the said meetings, the parties
agreed to submit the matter to voluntary arbitration. The
Arbitration Committee formed for that purpose. The issue presented
before the Committee was whether or not the bank's separate and
REGIONal implementation of WO 05-03 at its Naga Branch and WO
07-03 at its Cebu, Mabolo and P. del Rosario branches, created a
wage distortion in the bank nationwide.
CA: no wage distortion, the Court of Appeals held that the variance
in the salary rates of EEs in different REGIONs of the country was
justified by RA 6727. It noted that "the underlying considerations in
issuing the WO are diverse, based on the distinctive situations and
needs existing in each REGION. Hence, there is no basis to apply
the salary increases imposed by WO 07-03 to EEs outside of
REGION7." Furthermore, the Court of Appeals ruled that "the
distinctions between each EE group in the REGION are maintained,
as all EEs were granted an increase in minimum wage rate. 5
ISSUE:
1)whether or not a wage distortion resulted from
respondent's implementation of the aforecited WO.
2)As a
preliminary matter, we shall also take up the question of forumshopping.
HELD: 1) Art. 124. Standards/Criteria for Minimum Wage Fixing
As used herein, a wage distortion shall mean a situation where an
increase in prescribed wage results in the elimination of severe
contraction of intentional quantitative differences in wage or salary
rates between and among EE groups in an establishment as to
effectively obliterate the distinctions embodied in such wage
structure based on skills, length of service, or other logical bases of
differentiation.
"Wage distortion presupposes a classification of positions and
ranking of these positions at various levels. One visualizes a
hierarchy of positions with corresponding ranks basically in terms of
wages and other emoluments. Where a significant change occurs at
the lowest level of positions in terms of basic wage without a
corresponding change in the other level in the hierarchy of
positions, negating as a result thereof the distinction between one
level of position from the next higher level, and resulting in a parity
between the lowest level and the next higher level or rank, between
new entrants and old hires, there exists a wage distortion. The
concept of a wage distortion assumes an existing grouping or
classification of EEs which establishes distinctions among such EEs
on some relevant or legitimate basis. This classification is reflected
in a differing wage rate for each of the existing classes of EEs"
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary
rates; 2. A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a higher one; 3.
The elimination of the distinction between the two levels; 4. The
existence of the distortion in the same REGION of the country
In the present case, it is clear that no wage distortion resulted when
respondent implemented the subject WO in the covered branches.
In the said branches, there was an increase in the salary rates of all
pay classes. Furthermore, the hierarchy of positions based on skills,
lengh of service and other logical bases of differentiation was
preserved. In other words, the quantitative difference in
compensation between different pay classes remained the same in
all branches in the affected REGION. Put differently, the distinction
between Pay Class 1 and Pay Class 2, for example, was not
eliminated as a result of the implementation of the two WO in the
said REGION. Hence, it cannot be said that there was a wage
distortion.
The Court is not persuaded. A wage parity between EEs in different
rungs, is not at issue here, but a wage disparity between EEs in the
same rung but located in different REGIONs of the country.
Contrary to petitioner's postulation, a disparity in wages between
EEs holding similar positions but in different REGIONs does not
constitute wage distortion as contemplated by law. As previously
enunciated, it is the hierarchy of positions and the disparity of their
corresponding wages and other emoluments that are sought to be
preserved by the concept of wage distortion. Put differently, a wage
distortion arises when a wage order engenders wage parity
between EEs in different rungs of the organizational ladder of the
same establishment. It bears emphasis that wage distortion

involves a parity in the salary rates of different pay classes which,

as a result, eliminates the distinction between the different ranks in
the same REGION.
It must be understood that varying in each REGION of the country
are controlling factors such as the cost of living; supply and
demand of basic goods, services and necessities; and the
purchasing power of the peso. Other considerations underscore the
necessity of the law. Wages in some areas may be increased in
order to prevent migration to the National Capital REGION and,
hence, to decongest the metropolis. Therefore, what the petitioner
herein bewails is precisely what the law provides in order to achieve
its purpose.
Equal Pay for Equal Work
Petitioner also avers that the implementation of the Wage Order in
only one REGION violates the equal-pay-for-equal-work principle.
This is not correct. At the risk of being repetitive, we stress that RA
6727 mandates that wages in every REGION must be set by the
particular wage board of that REGION, based on the prevailing
situation therein. Necessarily, the wages in different REGIONs will
not be uniform. Thus, under RA 6727, the minimum wage in
REGION 1 may be different from that in REGION 13, because the
socioeconomic conditions in the two REGIONs are different.
Meaning of "Establishment"
Petitioner further contends that the Court of Appeals erred in
interpreting the meaning of "establishment" in relation to wage
distortion. It quotes the RA 6727 Implementing Rules, specifically
Section 13 thereof which speaks of "workers working in branches or
agencies of establishments in or outside the National Capital
REGION." Petitioner infers from this that the REGIONal offices of the
Bank do not themselves constitute, but are simply branches of, the
establishment which is the whole bank. In effect, petitioner argues
that wage distortion covers the pay scales even of EEs in different
REGIONs, and not only those of EEs in the same REGION or branch.
We disagree.
Sec. 13 provides that the "minimum wage rates of workers working
in branches or agencies of establishments in or outside the National
Capital REGION shall be those applicable in the place where they
are sanctioned" The last part of the sentence was omitted by
petitioner in its argument. Given the entire phrase, it is clear that
the statutory provision does not support petitioner's view that
"establishment" includes all branches and offices in different
REGIONs.
Further negating petitioner's theory is NWPC Guideline No. 1 (S.
1992) entitled "Revised Guidelines on Exemption From Compliance
With the Prescribed Wage/Cost of Living Allowance Increases
Granted by the RTWPB," which states that "establishment" "refers
to an economic unit which engages in one or predominantly one
kind of economic activity with a single fixed location."
Management Practice
Petitioner also insists that the Bank has adopted a uniform wage
policy, which has attained the status of an established
management practice; thus, it is estopped from implementing a
wage order for a specific REGION only. We are not persuaded. Said
nationwide uniform wage policy of the Bank had been adopted prior
to the enactment of RA 6727. After the passage of said law, the
Bank was mandated to REGIONalize its wage structure. Although
the Bank implemented Wage Order Nos.NCR-01 and NCR-02
nationwide instead of REGIONally even after the effectivity of RA
6727, the Bank at the time was still uncertain about how to follow
the new law. In any event, that single instance cannot be
constitutive of "management practice."
2)The voluntary arbitration case involved the issue of whether the
adoption by the Bank of REGIONalized hiring rates was valid and
binding. On the other hand, the issue now on hand revolves around
the existence of a wage distortion arising from the Bank's separate
and REGIONal implementation of the two WO in the affected
branches. A closer look would show that, indeed, the requisites of
forum-shopping are present.
First, there is identity of parties. Both cases are between the Bank
and the Association acting on behalf of all its members. Second,
although the respective issues and reliefs prayed for in the two
cases are stated differently, both actions boil down to one single
issue: the validity of the Bank's REGIONalization of its wage
structure based on RA 6727. Even if the voluntary arbitration case
calls for striking, down the Bank's REGIONalized hiring scheme
while the instant petition calls for the correction of the alleged wage
distortion caused by the REGIONal implementation of Wage Order
No. VII-03, the ultimate relief prayed for in both cases is the
maintenance of the Bank's national wage structure. Hence, the final
disposition of one would constitute res judicata in the other. Thus,
forum-shopping is deemed to exist and, on this basis, the summary
dismissal of both actions is indeed warranted.
Nonetheless, we deem it appropriate to pass upon the main issue
on its merit in view of its importance.
BAY HAVEN, INC. VS. FLORENTINO ABUAN
[G.R. No. 160859, July 30, 2008]
AUSTRIA-MARTINEZ, J.:
FACTS: This is a petition for certiorari on the decision of the CA,
who denied their petition to annul the resolution of theDOLE .Upon
complaint of Florentino Abuan, one of herein respondents, the
DOLE, in the exercise of its visitorial,inspection and enforcement
powers, through its Regional Director for the National Capital
Region (NCR), issued anOrder commanding petitioners to pay
respondents a total of P638,187.15 corresponding to the latter's
claims forunderpayment as petitioners' workers. The Regional

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J.SUAREZ II, 2ND SEM,SY 12-13
Director based his Order on the results of the inspectionconducted
on April 23, 1997 by one of its inspectors who found that petitioner
New Bay Haven Restaurant,committed the following violations
under the labor standards law which are Underpayment of
minimum wage,Underpayment of thirteenth month pay,
Underpayment of regular holiday pay, Underpayment of special
holidaypay, Non-payment of night shift differential pay and Nonregistration of the firm under Rule of Occupational Safetyand Health
Standards. The petitioners filed with the DOLE-NCR Regional Office
a Motion for Reconsideration,alleging that the office had no
jurisdiction over the case and that the order was issued in denial of
petitioners' rightto due process, and the jurisdiction rest on the
NLRC. they added that their right to due process was also
deniedbecause the order was issued without them being furnished
copies of the complaint and the inspection report andwithout being
notified of the hearings held in the case. The DOLE-NCR Assistant
Regional Director, acting for theRegional Director, issued an Order
granting petitioners' motion for reconsideration as he found merit
inpetitioners' allegation of absence of due process in the issuance
of the first order. The order, however, stated thatthe DOLE had
jurisdiction over the case, pursuant to the Labor Code. The next
hearing was set wherein thepetitioners showed payroll sheets and
waivers of quitclaims which were signed by the respondents.
However, thelatter denied of the amount stated in the payroll as
they contend they receive lesser that what is stated there andalso
they were forced to sign the quitclaims. The DOLE issues an order
holding the petitioners liable to therespondents. The case was
elevated to the CA. The CA ruled in dismissing the petition, ruling
that the DOLE hadjurisdiction over the labor standards case and
that petitioners did not present enough evidence to refute
theclaims made by respondents.

quitclaims and releases and talked to the EEs concerned who stated
that they signed the document without knowing its contents but
they are willing to settle if they will be given the amount computed
by DOLE.

ISSUE/S:1) whether the DOLE Secretary and her authorized

representatives have jurisdiction to impose the monetaryliability
against petitioners; and2) whether the DOLE-NCR, as upheld by the
DOLE Secretary and the CA committed an error in awarding the
claimsof respondents.

DOLE Regional Director Lim denied petitioners motion to quash the

writ of execution. Petitioner filed its Memorandum of Appeal to the
Secretary of Labor and Employment[14] who dismissed the appeal
on the ground that same was filed out of time.[15] On MR, the
appeal was granted and the appeal was given due course.
However, the same was dismissedand affirmed the order pf DOLE

HELD:1.The DOLE Secretary and her authorized representatives

such as the DOLE-NCR Regional Director, havejurisdiction to enforce
compliance with labor standards laws under the broad visitorial and
enforcementpowers. The Court has held that the visitorial and
enforcement powers of the Secretary, exercisedthrough his
representatives, encompass compliance with all labor standards
laws and other laborlegislation,regardlessof the amount of the
claims filed by workers.
2.The mere disagreement by the ER with the findings of the labor
officer, or the simple act of presenting controverting evidence, does
not automatically divest the DOLE Secretary or any of hisauthorized
representatives such as the regional directors, of jurisdiction to
exercise their visitorial andenforcement powers under the Labor
Code. Thus, the key requirement for the Regional Director and
theDOLE Secretary to be divested of jurisdiction is that the
evidentiary matters are not verifiable in thecourse of inspection.
Where the evidence presented was verifiable in the normal course
of inspection,even if presented belatedly by the ER, the Regional
Director, and later the DOLE Secretary, may stillexamine them; and
these officers are not divested of jurisdiction to decide the case.
In the present case, petitioners' pieces of evidence of the alleged
contract of lease, payroll sheets, andquitclaims were all verifiable in
the normal course of inspection and, granting that they were
notexamined by the labor inspector, they have nevertheless been
thoroughly examined by the RegionalDirector and the DOLE
Secretary. For these reasons, the exclusion clause of Art. 128(b)
does not apply.
CIRINEO BOWLING PLAZA, INC. vs. GERRY SENSING et al
[G.R. No. 146572. January 14, 2005]
AUSTRIA-MARTINEZ, J.:
FACTS: On November 27, 1995, Eligio Paolo, Jr., an EE of petitioner,
filed a letter complaint with the DOLE, Dagupan District Office,
requesting for the inspection/investigation of petitioner for various
labor law violations. In his inspection report,[4] Labor and
Employment Officer III, Crisanto Rey Dingle, found that petitioner
has 13 EEs and had committed the following violations:
underpayment of minimum wage, 13th month pay, holiday
premiums, overtime premiums, and non-payment of rest day. The
findings in the inspection report were explained to petitioners
officer-in-charge, Ma. Fe Boquiren, who signed the same.
On the first hearing petitioner failed to appear, thus, the hearing
was reset. On the date set, Boquiren, as petitioners representative,
appeared with the information that petitioners President/General
Manager Luisito Cirineo was sick and confined in a hospital. On the
second hearing, Cirineo appeared and asked for more time to settle
with his EEs. The case was reset, but Cirineo failed to appear.
DOLE Regional Office -is hereby ordered to pay them the total
amount of P377,500.58, representing their unpaid/underpaid
wages, 13th month pay, holiday premiums, rest day pay and
overtime premiums and to submit the proof of payment to this
Office within ten (10) days from receipt hereof. Otherwise, a Writ of
Execution will be issued to enforce this order. Respondent is further
ORDERED to adjust the salaries of its EEs to the applicable daily
minimum wages and to submit the proof thereof within the same
period. No motion for reconsideration or appeal memorandum was
filed by petitioner.
petitioners representative, appeared before the DOLE Regional
Office and submitted the quitclaims, waivers and releases of EEsawardees, however, the EEs wrote DOLE a letter denying having
received any amount from petitioner. Thus, DOLEs inspector Dingle
went to petitioners establishment to confirm the authenticity of the

Respondent wrote DOLE a letter requesting that the case be

endorsed to the National Labor Relations Commission since the
resolution of the case required evidentiary matters not disclosed or
verified in the normal course of inspection. They also submitted
documents to show that petitioner and Esperanza Seafoods
Kitchenette are separate and distinct business entities and that
some of the EEs-awardees are actually EEs of the Esperanza
Seafoods Kitchenette.
they never once mentioned the issue of separate juridical
personalities. Respondent had always been bent on settling the
respective claims of all thirteen (13) concerned EEs. In the process,
however, he acknowledged being their ER. He cannot at this
juncture therefore say, that some of the awardees in our ORDER are
EEs of another business entity. This being the case, we cannot
grant his request for indorsement to the NLRC.
DOLE Regional issued a writ of execution seeking to satisfy the
monetary awards given to EEs who are not EEs of Cirineo Bowling
Plaza, Inc.; to satisfy monetary awards given to EEs of Fe Esperanza
C. Octaviano who was not impleaded; to satisfy monetary awards
wrongfully given to EEs employed by establishments employing less
than ten (10) EEs, who are not for this reason entitled to holiday
and holiday premium pay, nor to underpayment of wages; to satisfy
the award of benefits in excess of the jurisdictional amount allowed
by law; to enforce an Order issued beyond the quasi-judicial
authority of the Regional Director[12].

In support thereof, respondent alleges that it had only eight (8) EEs
as the other claimants of labor benefits are EEs of Fe Esperanza
Octaviano doing business under the name and style Esperanza
Seafoods Kitchenette.
We do not agree.
ISSUE: PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT DISMISSED THE INSTANT PETITION
AND OUTRIGHT
DISMISSAL OF PETITIONERS MOTION FOR RECONSIDERATION DUE
TO MERE TECHNICALITIES.
HELD: We find no grave abuse of discretion committed by the CA in
issuing the assailed resolutions. The CA dismissed the petition for
certiorari for failure of petitioner to attach certain documents and to
state the material date. While petitioner filed its motion for
reconsideration, attaching the required documents, the CA correctly
found that it still did not state the material date when it received
the DOLEs Resolution dated April 18, 2000 denying its motion for
reconsideration. Thus, without the date of receipt of the denial of
such motion, the CA could not determine whether the petition was
filed within the reglementary period of 60 days for filing the petition
for certiorari under Rule 65 of the Rules of Court. Under Section 3,
Rule 46 of the 1997 Rules of Civil Procedure, as amended by SC
Circular No. 39-98, in original actions for certiorari filed with the CA,
the petition must include the following material dates.
The failure to perfect an appeal as required by law renders the
judgment final and executory. While there are exceptional cases
where we set aside procedural defects to correct a patent injustice,
there should be an effort on the part of the party invoking liberality
to at least explain its failure to comply with the rules.[20] It appears
that petitioners new counsel failed to state the material date twice.
Petitioners explanation focused on the fact that its President,
Luisito Cirineo, only learned of the DOLEs denial of its motion for
reconsideration on August 1, 2000 when he came back from a trip
from Europe; that efforts to communicate with its former counsel
remained futile. We find such explanation unsatisfactory since the
material dates can easily be verified from the files of the DOLE
office.
Even if we disregard technicality, we find the arguments raised by
petitioner without merit. records show that petitioner never refuted
the findings of the labor inspector as to the identity of the 13 EEs
nor raised the issue of separate juridical personalities of petitioner
Cirineo and Esperanza Seafoods Kitchenette during the
investigation and on the hearings conducted.
Likewise, we sustain the jurisdiction of the DOLE Regional Director.
The visitorial and enforcement powers of the DOLE Regional
Director to order and enforce compliance with labor standard laws
can be exercised even where the individual claim exceeds
P5,000.00. While it is true that under Articles 129 and 217 of the
Labor Code, the Labor Arbiter has jurisdiction to hear and decide
cases where the aggregate money claims of each EE exceeds
P5,000.00, said provisions of law do not contemplate nor cover the
visitorial and enforcement powers of the Secretary of Labor or his
duly authorized representatives.
APEX MINING COMPANY, INC. vs. NLRC
G.R. No. 94951 April 22, 1991
GANCAYCO, J.:
FACTS: Sinclita Candida was employed by Apex Mining Company,
Inc. to perform laundry services at its staff house. Atfirst, she was
paid on a piece rate basis. Later, she was paid on a monthly basis
at P250.00 a month which was ultimately increased to P575.00 a

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J.SUAREZ II, 2ND SEM,SY 12-13
month..- While she was hanging her laundry, she accidentally
slipped and hit her back on a stone. She reported theaccident to
her immediate supervisor and to the personnel officer. As a result of
the accident she was not able tocontinue with her work.- She was
permitted to go on leave for medication and was offered P2k which
was eventually increased to P5k to persuade her to quit her job, but
she refused the offer and preferred to return to work. Petitioner did
not allowher to return to work and dismissed her.- Labor arbiter
ordered Apex Mining Company to pay the complainant Salary
Differential, Emergency LivingAllowance, 13th Month Pay
Differential and separation pay of one month for every year of
service or in a total of P55,161.42. NLRC affirmed.
ISSUE: WON the househelper in the staff houses of an industrial
company is a domestic helper
HELD: NO- Petitioner is a regular EE- Rule XIII, Section l(b), Book 3
of the Labor Code:The term "househelper" as used herein is
synonymous to the term "domestic servant" and shall refer to
anyperson, whether male or female, who renders services in and
about the ER's home and which services areusually necessary or
desirable for the maintenance and enjoyment thereof, and
ministers exclusively to thepersonal comfort and enjoyment of the
ER's family.
The foregoing definition clearly contemplates such househelper or
domestic servant who is employed in theER's home to minister
exclusively to the personal comfort and enjoyment of the ER's
family. Thedefinition cannot be interpreted to include househelp or
laundrywomen working in staffhouses of a company- The criteria is
the personal comfort and enjoyment of the family of the ER in the
home of said ER.- While it may be true that the nature of the work
of a househelper, domestic servant or laundrywoman in a homeor
in a company staffhouse may be similar in nature, the difference in
their circumstances is that in the formerinstance they are actually
serving the family while in the latter case, whether it is a
corporation or a singleproprietorship engaged in business or
industry or any other agricultural or similar pursuit, service is being
renderedin the staffhouses or within the premises of the business of
the ER. In such instance, they are EEs of the company or ER in the
business concerned entitled to the privileges of a regular EE.
Disposition
Petitioner denies having illegally dismissed private respondent and
maintains that respondent abandoned her work. This argument
notwithstanding, there is enough evidence to show that because of
an accident which took place while private respondent was
performing her laundry services, she was not able to work and was
ultimately separated from the service. She is, therefore, entitled to
appropriate relief as a regular EE of petitioner. Inasmuch as private
respondent appears not to be interested in returning to her work for
valid reasons, the payment of separation pay to her is in order.
FILOMENA BARCENAS vs. NLRC (REV SIM DEE)
G.R. No. 87210 July 16, 1990
MEDIALDEA, J.:
FACTS: In 1978, Chua Se Su (Su, for short) in his capacity as the
Head Monk of the Buddhist Temple of Manila and BaguioCity and as
President and Chairman of the Board of Directors of the Poh Toh
Buddhist Association of the Phils. Inc.hired the petitioner, Filomena
Barcenas, who speaks the Chinese language as secretary and
interpreter.- Her position required her to receive and assist Chinese
visitors to the temple, act as tourist guide for foreignChinese
visitors, attend to the callers of the Head Monk as well as to the
food for the temple visitors, run errandsfor the Head Monk such as
paying the Meralco, PLDT, MWSS bills and act as liaison in some
government offices.Aside from her pay and allowances under the
law, she received an amount of P500 per month plus free board
andlodging in the temple.- In December, 1979, Su assumed the
responsibility of paying for the education of Barcenas nephew. In
1981, Suand Barcenas had amorous relations. In May, 1982, or five
months before giving birth to the alleged son of Su onOctober 12,
1982, she was sent home to Bicol. Upon the death of Su in July,
1983, she remained and continued inher job.- . In 1985, Manuel
Chua (Chua, for short) was elected President and Chairman of the
Board of the Poh TohBuddhist Association of the Philippines, Inc. and
Rev. Sim Dee (Dee, for short) was elected Head Buddhist
Priest.Thereafter, Chua and Dee discontinued payment of her
monthly allowance and the additional P500 effective 1983.In
addition, Barcenas and her son were evicted forcibly from their
quarters in the temple by six police officers. Shewas brought first to
the Police precinct in Tondo and then brought to Aloha Hotel where
she was compelled to signa written undertaking not to return to the
Buddhist temple in consideration of the sum of P10,000. She
refusedand Chua shouted threats against her and her son. Her
personal belongings including assorted jewelries werenever
returned.- The Labor Arbiter ruled for Barcenas but the NLRC
reversed.
ISSUES: 1. WON Barcenas was a regular EE of the Manila Buddhist
Temple2. WON Barcenas was illegally dismissed
HELD:1. YES. We agree with the petitioner's claim that she was a
regular EE of the Manila Buddhist Temple as secretaryand
interpreter of its Head Monk, Su. As Head Monk, President and
Chairman of the Board of Directors of the PohToh Buddhist
Association of the Philippines, Su was empowered to hire the
petitioner under Article V of the By-laws of the Association which
states:"The President or in his absence, the Vice President shall
represent the Association in all its dealings with thepublic, subject
to the Board, shall have the power to enter into any contract or
agreement in the name of theAssociation, shall manage the active
business operation of the Association, shall deal with the bank or
banks."- Chua and Dee, on the other hand, claimed that Barcenas
was never an EE of the Poh Toh Temple but aservant who confined

herself to the temple and to the personal needs of the late Chua Se
Su and thus, her positionis co-terminus with that of her master.
However, the work that she performed in the temple could not
becategorized as mere domestic work. Barcenas, being proficient in
the Chinese language, attended to the visitors,mostly Chinese, who
came to pray or seek advice before Buddha for personal or business
problems; arrangedmeetings between these visitors and Su and
supervised the preparation of the food for the temple visitors; acted
as tourist guide of foreign visitors; acted as liaison with some
government offices; and made the payment for thetemple, Meralco,
MWSS and PLDT bills. Indeed, these tasks may not be deemed
activities of a household helper.They were essential and important
to the operation and religious functions of the temple.
2. NO.Her status as a regular EE ended upon her return to Bicol in
May, 1982 to await the birth of her lovechildallegedly by Su. The
records do not show that she filed any leave from work or that a
leave was granted her.Neither did she return to work after the birth
of her child on October 12,1982, whom she named Robert Chua
aliasChua Sim Tiong [Whoa, wait a minute! If youre alert youll
realize that Sim is the NEW Head Monks name!Hmmm dont you
think something elses going on here?
The NLRC found that it was only in July, 1983 after Sudied that she
went back to the Manila Buddhist Temple.- She herself supplied the
reason for her return. She stated:"It was the death-bed instruction
to her by Chua Se So to stay at the temple and to take care of the
two boys andto see to it that they finish their studies to become
monks and when they are monks to eventually take over thetwo
temples as their inheritance from their father."- Thus, her return to
the temple was no longer as an EE but rather as Su's mistress who
is bent onprotecting the proprietary and hereditary rights of her son
and nephew. In her pleadings, the petitioner claims thatthey were
forcefully evicted from the temple, harassed and threatened by
respondents and that the Poh TohBuddhist Association is a trustee
corporation with the children as cestui que trust. These claims are
not proper inthis labor case. They should be appropriately threshed
out in the complaints already filed by the petitioner beforethe civil
courts. Due to these claims, we view the respondents' offer of
P10,000 as indicative more of their desire toevict the petitioner and
her son from the temple rather than an admission of an ER-EE
relation.- The petitioner's claim for unpaid wages since May, 1982
which she filed only in 1986, has already prescribed.Under Article
292 of the Labor Code, all money claims arising from ER-EE
relations must be filedwithin three years from the time the cause of
action accrued, otherwise they shall forever be barred.- Finally,
while petitioner contends that she continued to work in the temple
after Su died, there is, however, noproof that she was re-hired by
the new Head Monk. In fact, she herself manifested that
respondents made it clearto her in no uncertain terms that her
services as well as her presence and that of her son were no longer
needed.However, she persisted and continued to work in the
temple without receiving her salary because she expectedChua and
Dee to relent and permit the studies of the two boys. Consequently,
under these circumstances, noER-EE relationship could have arisen.
Disposition
Decision of the NLRC is AFFIRMED
DIOSCORO F. BACSIN VS. EDUARDO O. WAHIMAN
[G.R. No. 146053, April 30, 2008]
VELASCO, JR., J.:
FACTS: Petitioner is a public school teacher of Pandan Elementary
School, Pandan, Mambajao, Camiguin Province. Respondent
Eduardo O. Wahiman is the father of AAA, an elementary school
student of the petitioner. AAA claimed that petitioner asked her to
be at his office to do an errand.[2] Once inside, she saw him get a
folder from one of the cartons on the floor near his table, and place
it on his table. He then asked her to come closer, and when she did,
held her hand, then touched and fondled her breast. She stated
that he fondled her breast five times, and that she felt afraid.[3] A
classmate of hers, one Vincent B. Sorrabas, claiming to have
witnessed the incident, testified that the fondling incident did
happen just as AAA related it.[4]
Petitioner was charged with Misconduct. In his defense, petitioner
claimed that the touching incident happened by accident, just as he
was handing AAA a lesson book.[6] He further stated that the
incident happened in about two or three seconds, and that the girl
left his office without any complaint. CSC found petitioner guilty of
grave misconduct(sexual harassment) and dismissed him from the
service. Petitioner filed a MR but the same was denied
the CA determined that the issue revolved around petitioner's right
to due process, and based on its finding that petitioner had the
opportunity to be heard, found that there was no violation of that
right. The CA ruled that, even if petitioner was formally charged
with "disgraceful and immoral conduct and misconduct," the CSC
found that the allegations and evidence sufficiently proved
petitioner's guilt of grave misconduct, punishable by dismissal from
the service.
ISSUE/S: 1.won the petitioner could be guilty of acts of sexual
harassment, grave misconduct, which was different from or an
offense not alleged in the formal charge filed against him at the
inception of the administrative case. 2.won the penalty of dismissal
from the service imposed by the Civil Service Commission and
affirmed by the Court of Appeals is in accord with Rule XIV, Section
(23) of the Omnibus Civil Service Rules and applicable rulings.
HELD:1.YES. The charge against the respondent in an
administrative case need not be drafted with the precision of an
information in a criminal prosecution. It is sufficient that he is
apprised of the substance of the charge against him; what is

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J.SUAREZ II, 2ND SEM,SY 12-13
controlling is the allegation of the acts complained of, not the
designation of the offense.It is clear that petitioner was sufficiently
informed of the basis of the charge against him, which washis act of
improperly touching one of his students. Thus informed, he
defended himself from such charge. The failure to designate the
offense specifically and with precision is of no moment in
thisadministrative case. Charges against him imputes acts covered
and penalized under Anti-sexual harassment act of 1995*Domingo
v. Rayala: it is not necessary that the demand, request, or
requirement of a sexual favor bearticulated in a categorical oral or
written statement. It may be discerned, with equal certitude, from
theacts of the offender. act of mashing the breast, in an education
environment, upon a student, who felt fear at the time Bacsin
touched her, are sufficient grounds for grave misconduct. The act of
petitioner of fondling one of his students is against a law, RA7877,
and is doubtless inexcusable. The particular act of petitioner cannot
in any way be construed as acase of simple misconduct. Sexually
molesting a child is, by any norm, a revolting act that it cannot
butbe categorized as a grave offense. Parents entrust the care and
molding of their children to teachers,and expect them to be their
guardians while in school. Petitioner has violated that trust.
2.The charge of grave misconduct proven against petitioner
demonstrates his unfitness to remain as a teacher and continue to
discharge the functions of his office.*no denial of due process: The
essence of due process is simply an opportunity to be heard, or,
asapplied to administrative proceedings, an opportunity to explain
one's side or an opportunity to seek fora reconsideration of the
action or ruling complained of. These elements are present in this
case, wherepetitioner was properly informed of the charge and had
a chance to refute it, but failed.A teacher who perverts his
position by sexually harassing a student should not be allowed,
under anycircumstance, to practice this noble profession. So it must
be here. Disposition: DISMISS Petition.
OCEAN BUILDERS CONSTRUCTION CORP. VS. SPS. CUBACUB
[G.R. No. 150898, April 13, 2011]
CARPIO MORALES, J.:
FACTS: Bladimir Cubacub (Bladimir) was employed as maintenance
man by petitioner company Ocean Builders Construction Corp. at its
office in Caloocan City.
Bladimir was afflicted with chicken pox. He was thus advised by
petitioner Dennis Hao (Hao), the companys general manager, to
rest for 3days which he did at the companys barracks where he
lives free of charge.
Three days later, Bladimir went about his usual chores of manning
the gate of the company premises and even cleaned the company
vehicles. Later in the afternoon, however, he asked a co-worker,
Ignacio Silangga (Silangga), to accompany him to his house in
Capas, Tarlac so he could rest. Informed by Silangga of Bladimirs
intention, Hao gave Bladimir P1,000.00 and ordered Silangga to
instead bring Bladimir to the nearest hospital.
Along with co-workers Narding and Tito Vergado, Silangga thus
brought Bladimir to the Caybiga Community Hospital (Caybiga
Hospital), a primary-care hospital around one kilometer away from
the office of the company.
The hospital did not allow Bladimir to leave the hospital. He was
then confined, with Narding keeping watch over him. The next day,
April 13, 1995, a doctor of the hospital informed Narding that they
needed to talk to Bladimirs parents, hence, on Silanggas request,
their co-workers June Matias and Joel Edrene fetched Bladimirs
parents from Tarlac.
At about 8:00in the evening of the same day, April 13, 1995,
Bladimirs parents-respondent spouses Cubacub, with their friend Dr.
Hermes Frias (Dr. Frias), arrived at the Caybiga Hospital and
transferred Bladimir to the Quezon City General Hospital (QCGH)
where he was placed in the intensive care unit and died the
following day, April 14, 1995.
The death certificate issued by the QCGH recorded Bladimirs
immediate cause of death as cardio-respiratory arrest and the
antecedent cause as pneumonia. On the other hand, the death
certificate issued by Dr. Frias recorded the causes of death as
cardiac arrest, multiple organ system failure, septicemia and
chicken pox.
Bladimirs parents-herein respondents later filed on August 17, 1995
before the Tarlac RTC a complaint for damages against petitioners,
alleging that Hao was guilty of negligence which resulted in the
deterioration of Bladimirs condition leading to his death.
RTC- dismissed the complaint, holding that Hao was not negligent.
It ruled that Hao was not under any obligation to bring Bladimir to
better tertiary hospitals, and assuming that Bladimir died of chicken
pox aggravated by pneumonia or some other complications due to
lack of adequate facilities at the hospital, the same cannot be
attributed to Hao.
CA-reversed, rendered holding the defendants solidarily liable to
plaintiffs-appellants. MR denied.
ISSUE: whether the ER isnegligent, thus liable for the death of his
EE.
HELD: At the onset, the Court notes that the present case is one
for damages based on torts, the ER-EE relationship being merely
incidental. To successfully prosecute an action anchored on torts,
three elements must be present, viz: (1) duty (2) breach (3) injury
and proximate causation. The assailed decision of the appellate
court held that it was the duty of petitioners to provide adequate

medical assistance to the EEs under Art. 161 of the Labor Code,
failing which a breach is committed.
In the present case, there is no allegation that the company
premises are hazardous. Neither is there any allegation on the
number of EEs the company has. If Haos testimony[4] would be
believed, the company had only seven regular EEs and 20
contractual EEs - still short of the minimum 50 workers that an
establishment must have for it to be required to have a full-time
registered nurse.
The Court can thus only determine whether the actions taken by
petitioners when Bladimir became ill amounted to the necessary
assistance to ensure adequate and immediate medical attendance
to Bladimir as required under Art. 161 of the Labor Code. As found
by the trial court and borne by the records, petitioner Haos
advice for Bladimir to, as he did, take a 3-day rest and to later
have him brought to the nearest hospital constituted adequate and
immediate medical attendance that he is mandated, under Art.
161, to provide to a sick EE in an emergency.
AT ALL EVENTS, the alleged negligence of Hao cannot be
considered as the proximate cause of the death of Bladimir.
Proximate cause is that which, in natural and continuous sequence,
unbroken by an efficient intervening cause, produces injury, and
without which, the result would not have occurred.[5] An injury or
damage is proximately caused by an act or failure to act, whenever
it appears from the evidence in the case that the act or omission
played a substantial part in bringing about or actually causing the
injury or damage, and that the injury or damage was either a direct
result or a reasonably probable consequence of the act or omission.
[6]
Verily, the issue in this case is essentially factual in nature. The
dissent, apart from adopting the appellate courts findings, finds
that Bladimir contracted chicken pox from a co-worker and Hao was
negligent in not bringing that co-worker to the nearest physician, or
isolating him as well. This finding is not, however, borne by the
records. Nowhere in the appellate courts or even the trial
courts decision is there any such definite finding that Bladimir
contracted chicken pox from a co-worker. At best, the only allusion
to another EE being afflicted with chicken pox was when Hao
testified that he knew it to heal within three days as was the case of
another worker, without reference, however, as to when it
happened.[7]
the petition is GRANTED. The challenged Decision of the Court of
Appeals is REVERSED, and the complaint is hereby DISMISSED.
ROMIE D. ESCASINAS and EVAN RIGOR SINGCO vs. SHANGRILAS MACTAN ISLAND RESORT
G.R. No. 178827 March 4, 2009
CARPIO MORALES, J.:
FACTS: Registered nurses Jeromie D. Escasinas and Evan Rigor
Singco (petitioners) were engaged in 1999 and 1996, respectively,
by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her
clinic at respondent Shangri-las Mactan Island Resort (Shangri-la)
in Cebu of which she was a retained physician.
petitioners filed with the NLRC Regional Arbitration Branch a
complaint for regularization, underpayment of wages, non-payment
of holiday pay, night shift differential and 13th month pay
differential against respondents, claiming that they are regular EEs
of Shangri-la. Shangri-la claimed, however, that petitioners were
not its EEs but of respondent doctor whom it retained via
Memorandum of Agreement (MOA)[2] pursuant to Article 157 of
the Labor Code, as amended. Respondent doctor for her part
claimed that petitioners were already working for the previous
retained physicians of Shangri-la before she was retained by
Shangri-la; and that she maintained petitioners services upon their
request.
LA-regular EE of shangre-la as they usually perform work which is
necessary and desirable to Shangri-las business; that they observe
clinic hours and render services only to Shangri-las guests and EEs;
that payment for their salaries were recommended to Shangri-las
Human Resource Department (HRD); that respondent doctor was
Shangri-las in-house physician, hence, also an EE; and that the
MOA between Shangri-la and respondent doctor was an insidious
mechanism in order to circumvent [the doctors] tenurial security
and that of the EEs under her. ordered the shang to grant them
wages and benefits from the time their service were engaged.
NLRC-Brushing aside petitioners contention that since their
application for employment was addressed to Shangri-la, it was
really Shangri-la which hired them and not respondent doctor, the
NLRC noted that the applications for employment were made by
persons who are not parties to the case and were not shown to
have been actually hired by Shangri-la.
for some months, payment of petitioners wages were
recommended by Shangri-las HRD did not prove that it was
Shangri-la which pays their wages. It thus credited respondent
doctors explanation that the recommendations for payment were
based on the billings she prepared for salaries of additional nurses
during Shangri-las peak months of operation, in accordance with
the retainership agreement, the guests payments for medical
services having been paid directly to Shanrgi-la.
CA-affirmed NLRCs decision that no ER-EE relationship exists
between Shangri-la and petitioners. The appellate court concluded
that all aspects of the employment of petitioners being under the
supervision and control of respondent doctor and since Shangri-la is
not principally engaged in the business of providing medical or

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J.SUAREZ II, 2ND SEM,SY 12-13
healthcare services, petitioners could not be regarded as regular
EEs of Shangri-la. Petitioners MR was denied.

where he was placed in the intensive care unit and died the
following day, April 14, 1995.

ISSUE:1,that Article 157 of the Labor Code does not make it

mandatory for a covered establishment to employ health personnel;
that the services of nurses is not germane nor indispensable to its
operations; 2.that respondent doctor is a legitimate individual
independent contractor who has the power to hire, fire and
supervise the work of the nurses under her.

The death certificate issued by the QCGH recorded Bladimirs

immediate cause of death as cardio-respiratory arrest and the
antecedent cause as pneumonia. On the other hand, the death
certificate issued by Dr. Frias recorded the causes of death as
cardiac arrest, multiple organ system failure, septicemia and
chicken pox.

HELD:Under the foregoing provision, Shangri-la, which employs

more than 200 workers, is mandated to furnish its EEs with the
services of a full-time registered nurse, a part-time physician and
dentist, and an emergency clinic which means that it should
provide or make available such medical and allied services to its
EEs, not necessarily to hire or employ a service provider.

Bladimirs parents-herein respondents later filed on August 17, 1995

before the Tarlac RTC a complaint for damages against petitioners,
alleging that Hao was guilty of negligence which resulted in the
deterioration of Bladimirs condition leading to his death.

The term full-time in Art. 157 cannot be construed as referring to

the type of employment of the person engaged to provide the
services, for Article 157 must not be read alongside Art. 280[9] in
order to vest ER-EE relationship on the ER and the person so
engaged.
The phrase services of a full-time registered nurse should thus be
taken to refer to the kind of services that the nurse will render in
the companys premises and to its EEs, not the manner of his
engagement.
2. The existence of an independent and permissible contractor
relationship is generally established by considering the following
determinants:
whether the contractor is carrying on an
independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to
assign the performance of a specified piece of work; the control and
supervision of the work to another; the ER's power with respect to
the hiring, firing and payment of the contractor's workers; the
control of the premises; the duty to supply the premises, tools,
appliances, materials and labor; and the mode, manner and terms
of payment.[11]
On the other hand, existence of an ER- EE relationship is
established by the presence of the following determinants: (1)
the selection and engagement of the workers; (2) power of
dismissal; (3) the payment of wages by whatever means; and (4)
the power to control the worker's conduct, with the latter assuming
primacy in the overall consideration.[12]
Against the above-listed determinants, the Court holds that
respondent doctor is a legitimate independent contractor. That
Shangri-la provides the clinic premises and medical supplies for use
of its EEs and guests does not necessarily prove that respondent
doctor lacks substantial capital and investment. Besides, the
maintenance of a clinic and provision of medical services to its EEs
is required under Art. 157, which are not directly related to Shangrilas principal business operation of hotels and restaurants.
With respect to the supervision and control of the nurses and clinic
staff, it is not disputed that a document, Clinic Policies and EE
Manual[16] claimed to have been prepared by respondent doctor
exists, to which petitioners gave their conformity[17] and in which
they acknowledged their co-terminus employment status. It is thus
presumed that said document, and not the EE manual being
followed by Shangri-las regular workers, governs how they perform
their respective tasks and responsibilities.
In fine, as Shangri-la does not control how the work should be
performed by petitioners, it is not petitioners ER.
OCEAN BUILDERS CONSTRUCTION CORP. VS. SPS. CUBACUB
[G.R. No. 150898, April 13, 2011]
CARPIO MORALES, J.:
FACTS: Bladimir Cubacub (Bladimir) was employed as maintenance
man by petitioner company Ocean Builders Construction Corp. at its
office in Caloocan City.
Bladimir was afflicted with chicken pox. He was thus advised by
petitioner Dennis Hao (Hao), the companys general manager, to
rest for 3days which he did at the companys barracks where he
lives free of charge.
Three days later, Bladimir went about his usual chores of manning
the gate of the company premises and even cleaned the company
vehicles. Later in the afternoon, however, he asked a co-worker,
Ignacio Silangga (Silangga), to accompany him to his house in
Capas, Tarlac so he could rest. Informed by Silangga of Bladimirs
intention, Hao gave Bladimir P1,000.00 and ordered Silangga to
instead bring Bladimir to the nearest hospital.
Along with co-workers Narding and Tito Vergado, Silangga thus
brought Bladimir to the Caybiga Community Hospital (Caybiga
Hospital), a primary-care hospital around one kilometer away from
the office of the company.
The hospital did not allow Bladimir to leave the hospital. He was
then confined, with Narding keeping watch over him. The next day,
April 13, 1995, a doctor of the hospital informed Narding that they
needed to talk to Bladimirs parents, hence, on Silanggas request,
their co-workers June Matias and Joel Edrene fetched Bladimirs
parents from Tarlac.
At about 8:00in the evening of the same day, April 13, 1995,
Bladimirs parents-respondent spouses Cubacub, with their friend Dr.
Hermes Frias (Dr. Frias), arrived at the Caybiga Hospital and
transferred Bladimir to the Quezon City General Hospital (QCGH)

RTC- dismissed the complaint, holding that Hao was not negligent.
It ruled that Hao was not under any obligation to bring Bladimir to
better tertiary hospitals, and assuming that Bladimir died of chicken
pox aggravated by pneumonia or some other complications due to
lack of adequate facilities at the hospital, the same cannot be
attributed to Hao.
CA-reversed, rendered holding the defendants solidarily liable to
plaintiffs-appellants. MR denied.
ISSUE: whether the ER isnegligent, thus liable for the death of his
EE.
HELD: At the onset, the Court notes that the present case is one
for damages based on torts, the ER-EE relationship being merely
incidental. To successfully prosecute an action anchored on torts,
three elements must be present, viz: (1) duty (2) breach (3) injury
and proximate causation. The assailed decision of the appellate
court held that it was the duty of petitioners to provide adequate
medical assistance to the EEs under Art. 161 of the Labor Code,
failing which a breach is committed.
In the present case, there is no allegation that the company
premises are hazardous. Neither is there any allegation on the
number of EEs the company has. If Haos testimony[4] would be
believed, the company had only seven regular EEs and 20
contractual EEs - still short of the minimum 50 workers that an
establishment must have for it to be required to have a full-time
registered nurse.
The Court can thus only determine whether the actions taken by
petitioners when Bladimir became ill amounted to the necessary
assistance to ensure adequate and immediate medical attendance
to Bladimir as required under Art. 161 of the Labor Code. As found
by the trial court and borne by the records, petitioner Haos
advice for Bladimir to, as he did, take a 3-day rest and to later
have him brought to the nearest hospital constituted adequate and
immediate medical attendance that he is mandated, under Art.
161, to provide to a sick EE in an emergency.
AT ALL EVENTS, the alleged negligence of Hao cannot be
considered as the proximate cause of the death of Bladimir.
Proximate cause is that which, in natural and continuous sequence,
unbroken by an efficient intervening cause, produces injury, and
without which, the result would not have occurred.[5] An injury or
damage is proximately caused by an act or failure to act, whenever
it appears from the evidence in the case that the act or omission
played a substantial part in bringing about or actually causing the
injury or damage, and that the injury or damage was either a direct
result or a reasonably probable consequence of the act or omission.
[6]
Verily, the issue in this case is essentially factual in nature. The
dissent, apart from adopting the appellate courts findings, finds
that Bladimir contracted chicken pox from a co-worker and Hao was
negligent in not bringing that co-worker to the nearest physician, or
isolating him as well. This finding is not, however, borne by the
records. Nowhere in the appellate courts or even the trial
courts decision is there any such definite finding that Bladimir
contracted chicken pox from a co-worker. At best, the only allusion
to another EE being afflicted with chicken pox was when Hao
testified that he knew it to heal within three days as was the case of
another worker, without reference, however, as to when it
happened.[7]
the petition is GRANTED. The challenged Decision of the Court of
Appeals is REVERSED, and the complaint is hereby DISMISSED.
ROMIE D. ESCASINAS and EVAN RIGOR SINGCO vs. SHANGRILAS MACTAN ISLAND RESORT
G.R. No. 178827 March 4, 2009
CARPIO MORALES, J.:
FACTS: Registered nurses Jeromie D. Escasinas and Evan Rigor
Singco (petitioners) were engaged in 1999 and 1996, respectively,
by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her
clinic at respondent Shangri-las Mactan Island Resort (Shangri-la)
in Cebu of which she was a retained physician.
petitioners filed with the NLRC Regional Arbitration Branch a
complaint for regularization, underpayment of wages, non-payment
of holiday pay, night shift differential and 13th month pay
differential against respondents, claiming that they are regular EEs
of Shangri-la. Shangri-la claimed, however, that petitioners were
not its EEs but of respondent doctor whom it retained via
Memorandum of Agreement (MOA)[2] pursuant to Article 157 of
the Labor Code, as amended. Respondent doctor for her part
claimed that petitioners were already working for the previous
retained physicians of Shangri-la before she was retained by
Shangri-la; and that she maintained petitioners services upon their
request.

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J.SUAREZ II, 2ND SEM,SY 12-13

LA-regular EE of shangre-la as they usually perform work which is

necessary and desirable to Shangri-las business; that they observe
clinic hours and render services only to Shangri-las guests and EEs;
that payment for their salaries were recommended to Shangri-las
Human Resource Department (HRD); that respondent doctor was
Shangri-las in-house physician, hence, also an EE; and that the
MOA between Shangri-la and respondent doctor was an insidious
mechanism in order to circumvent [the doctors] tenurial security
and that of the EEs under her. ordered the shang to grant them
wages and benefits from the time their service were engaged.
NLRC-Brushing aside petitioners contention that since their
application for employment was addressed to Shangri-la, it was
really Shangri-la which hired them and not respondent doctor, the
NLRC noted that the applications for employment were made by
persons who are not parties to the case and were not shown to
have been actually hired by Shangri-la.
for some months, payment of petitioners wages were
recommended by Shangri-las HRD did not prove that it was
Shangri-la which pays their wages. It thus credited respondent
doctors explanation that the recommendations for payment were
based on the billings she prepared for salaries of additional nurses
during Shangri-las peak months of operation, in accordance with
the retainership agreement, the guests payments for medical
services having been paid directly to Shanrgi-la.
CA-affirmed NLRCs decision that no ER-EE relationship exists
between Shangri-la and petitioners. The appellate court concluded
that all aspects of the employment of petitioners being under the
supervision and control of respondent doctor and since Shangri-la is
not principally engaged in the business of providing medical or
healthcare services, petitioners could not be regarded as regular
EEs of Shangri-la. Petitioners MR was denied.
ISSUE:1,that Article 157 of the Labor Code does not make it
mandatory for a covered establishment to employ health personnel;
that the services of nurses is not germane nor indispensable to its
operations; 2.that respondent doctor is a legitimate individual
independent contractor who has the power to hire, fire and
supervise the work of the nurses under her.
HELD:Under the foregoing provision, Shangri-la, which employs
more than 200 workers, is mandated to furnish its EEs with the
services of a full-time registered nurse, a part-time physician and
dentist, and an emergency clinic which means that it should
provide or make available such medical and allied services to its
EEs, not necessarily to hire or employ a service provider.
The term full-time in Art. 157 cannot be construed as referring to
the type of employment of the person engaged to provide the
services, for Article 157 must not be read alongside Art. 280[9] in
order to vest ER-EE relationship on the ER and the person so
engaged.
The phrase services of a full-time registered nurse should thus be
taken to refer to the kind of services that the nurse will render in
the companys premises and to its EEs, not the manner of his
engagement.
2. The existence of an independent and permissible contractor
relationship is generally established by considering the following
determinants:
whether the contractor is carrying on an
independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to
assign the performance of a specified piece of work; the control and
supervision of the work to another; the ER's power with respect to
the hiring, firing and payment of the contractor's workers; the
control of the premises; the duty to supply the premises, tools,
appliances, materials and labor; and the mode, manner and terms
of payment.[11]
On the other hand, existence of an ER- EE relationship is
established by the presence of the following determinants: (1)
the selection and engagement of the workers; (2) power of
dismissal; (3) the payment of wages by whatever means; and (4)
the power to control the worker's conduct, with the latter assuming
primacy in the overall consideration.[12]
Against the above-listed determinants, the Court holds that
respondent doctor is a legitimate independent contractor. That
Shangri-la provides the clinic premises and medical supplies for use
of its EEs and guests does not necessarily prove that respondent
doctor lacks substantial capital and investment. Besides, the
maintenance of a clinic and provision of medical services to its EEs
is required under Art. 157, which are not directly related to Shangrilas principal business operation of hotels and restaurants.
With respect to the supervision and control of the nurses and clinic
staff, it is not disputed that a document, Clinic Policies and EE
Manual[16] claimed to have been prepared by respondent doctor
exists, to which petitioners gave their conformity[17] and in which
they acknowledged their co-terminus employment status. It is thus
presumed that said document, and not the EE manual being
followed by Shangri-las regular workers, governs how they perform
their respective tasks and responsibilities.
In fine, as Shangri-la does not control how the work should be
performed by petitioners, it is not petitioners ER.
EMMANUEL BABAS v. LORENZO SHIPPING CORPORATION
G.R. No. 186091 | December 15, 2010 |
FACTS: Respondent Lorenzo Shipping Corporation (LSC) is a duly
organized domestic corporation engaged in the shipping industry; it
owns several equipment necessary for its business. On September

29, 1997, LSC entered into a General Equipment Maintenance

Repair and Management Services Agreement3 (Agreement) with
Best Manpower Services, Inc. (BMSI). Under the Agreement, BMSI
undertook to provide maintenance and repair services to LSCs
container vans, heavy equipment, trailer chassis, and generator
sets. BMSI further undertook to provide checkers to inspect all
containers received for loading to and/or unloading from its vessels.
Simultaneous with the execution of the Agreement, LSC leased its
equipment, tools, and tractors to BMSI.4 The period of lease was
coterminous with the Agreement.
BMSI then hired petitioners on various dates to work at LSC as
checkers, welders, utility men, clerks, forklift operators, motor pool
and machine shop workers, technicians, trailer drivers, and
mechanics. Six years later, or on May 1, 2003, LSC entered into
another contract with BMSI, this time, a service contract.5
In September 2003, petitioners filed with the Labor Arbiter (LA) a
complaint for regularization against LSC and BMSI. On October 1,
2003, LSC terminated the Agreement, effective October 31, 2003.
Consequently, petitioners lost their employment.
BMSI asserted that it is an independent contractor. It averred that it
was willing to regularize petitioners; however, some of them lacked
the requisite qualifications for the job. BMSI was willing to reassign
petitioners who were willing to accept reassignment. BMSI denied
petitioners claim for underpayment of wages and non-payment of
13th month pay and other benefits.
LSC, on the other hand, averred that petitioners were EEs of BMSI
and were assigned to LSC by virtue of the Agreement. BMSI is an
independent job contractor with substantial capital or investment in
the form of tools, equipment, and machinery necessary in the
conduct of its business. The Agreement between LSC and BMSI
constituted legitimate job contracting. Thus, petitioners were EEs of
BMSI and not of LSC.
After due proceedings, the LA rendered a decision6 dismissing
petitioners complaint. The LA found that petitioners were EEs of
BMSI. It was BMSI which hired petitioners, paid their wages, and
exercised control over them.
Petitioners appealed to the National Labor Relations Commission
(NLRC), arguing that BMSI was engaged in labor-only contracting.
They insisted that their ER was LSC. On January 16, 2008, the NLRC
promulgated its decision. NLRC reversed the LAs decision.
NLRCs finding: BMSI is not engaged in legitimate job contracting.
BMSI has no equipment, no office premises, no capital and no
investments as shown in the Agreement itself.
BMSI has no independent business or activity or job to perform in
respondent LSC free from the control of respondent LSC except as
to the results thereof. In view of the absence of such independent
business or activity or job to be performed by respondent BMSI in
respondent LSC [petitioners] performed work that was necessary
and desirable to the main business of respondent LSC. Respondents
were not able to refute the allegations of [petitioners] that they
performed the same work that the regular workers of LSC
performed and they stood side by side with regular EEs of
respondent LSC performing the same work. Necessarily, the control
on the manner and method of doing the work was exercised by
respondent LSC and not by respondent BMSI since the latter had no
business of its own to perform in respondent LSC.
LSC went to the CA via certiorari. On October 10, 2008, the CA
rendered the now challenged Decision, reversing the NLRC. In
holding that BMSI was an independent contractor, the CA relied on
the provisions of the Agreement, wherein BMSI warranted that it is
an independent contractor, with adequate capital, expertise,
knowledge, equipment, and personnel necessary for the services
rendered to LSC. According to the CA, the fact that BMSI entered
into a contract of lease with LSC did not ipso facto make BMSI a
labor-only contractor; on the contrary, it proved that BMSI had
substantial capital. The CA was of the view that the law only
required substantial capital or investment. Since BMSI had
substantial capital, as shown by its ability to pay rents to LSC, then
it qualified as an independent contractor. It added that even under
the control test, BMSI would be the real ER of petitioners, since it
had assumed the entire charge and control of petitioners services.
The CA further held that BMSIs Certificate of Registration as an
independent contractor was sufficient proof that it was an
independent contractor. Hence, the CA absolved LSC from liability
and instead held BMSI as ER of petitioners. Petitioners filed a
motion for reconsideration, but the CA denied it on January 21,
2009. Hence, this appeal by petitioners.
ISSUE: WON CA ERRED IN IGNORING THE CLEAR EVIDENCE OF
RECORD THAT RESPONDENT WAS ENGAGED IN LABOR-ONLY
CONTRACTING TO DEFEAT PETITIONERS RIGHT TO SECURITY OF
TENURE.
HELD: We dismiss the petition insofar as petitioners Soriano and
Anajao are concerned. In declaring BMSI as an independent
contractor, the CA, in the challenged Decision, heavily relied on the
provisions of the Agreement, wherein BMSI declared that it was an
independent contractor, with substantial capital and investment.
De Los Santos v. NLRC instructed us that the character of the
business, i.e., whether as labor-only contractor or as job contractor,
should be measured in terms of, and determined by, the criteria set
by statute. The parties cannot dictate by the mere expedience of a
unilateral declaration in a contract the character of their business.
Despite the fact that the service contracts contain stipulations
which are earmarks of independent contractorship, they do not
make it legally so. The language of a contract is neither
determinative nor conclusive of the relationship between the
parties. Petitioner SMC and AMPCO cannot dictate, by a declaration
in a contract, the character of AMPCO's business, that is, whether
as labor-only contractor, or job contractor. AMPCO's character
should be measured in terms of, and determined by, the criteria set
by statute.
Thus, in distinguishing between prohibited labor-only contracting
and permissible job contracting, the totality of the facts and the
surrounding circumstances of the case are to be considered.
Labor-only contracting, a prohibited act, is an arrangement where
the contractor or subcontractor merely recruits, supplies, or places

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J.SUAREZ II, 2ND SEM,SY 12-13
workers to perform a job, work, or service for a principal. In laboronly contracting, the following elements are present: (a) the
contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work, or service under its
own account and responsibility; and (b) the EEs recruited, supplied,
or placed by such contractor or subcontractor perform activities
which are directly related to the main business of the principal.20
On the other hand, permissible job contracting or subcontracting
refers to an arrangement whereby a principal agrees to put out or
farm out with the contractor or subcontractor the performance or
completion of a specific job, work, or service within a definite or
predetermined period, regardless of whether such job, work, or
service is to be performed or completed within or outside the
premises of the principal.
A person is considered engaged in legitimate job contracting or
subcontracting if the following conditions concur:
(a) The contractor carries on a distinct and independent business
and undertakes the contract work on his account under his own
responsibility according to his own manner and method, free from
the control and direction of his ER or principal in all matters
connected with the performance of his work except as to the results
thereof;
(b) The contractor has substantial capital or investment; and
(c) The agreement between the principal and the contractor or
subcontractor assures the contractual EEs' entitlement to all labor
and occupational safety and health standards, free exercise of the
right to self-organization, security of tenure, and social welfare
benefits.22
Given the above standards, we sustain the petitioners contention
that BMSI is engaged in labor-only contracting.
First, petitioners worked at LSCs premises, and nowhere else. Other
than the provisions of the Agreement, there was no showing that it
was BMSI which established petitioners working procedure and
methods, which supervised petitioners in their work, or which
evaluated the same. There was absolute lack of evidence that BMSI
exercised control over them or their work, except for the fact that
petitioners were hired by BMSI.
Second, LSC was unable to present proof that BMSI had substantial
capital. The record before us is bereft of any proof pertaining to the
contractors capitalization, nor to its investment in tools,
equipment, or implements actually used in the performance or
completion of the job, work, or service that it was contracted to
render. What is clear was that the equipment used by BMSI were
owned by, and merely rented from, LSC.
The law casts the burden on the contractor to prove that it has
substantial capital, investment, tools, etc. EEs, on the other hand,
need not prove that the contractor does not have substantial
capital, investment, and tools to engage in job-contracting.
Third, petitioners performed activities which were directly related to
the main business of LSC. The work of petitioners as checkers,
welders, utility men, drivers, and mechanics could only be
characterized as part of, or at least clearly related to, and in the
pursuit of, LSCs business. Logically, when petitioners were
assigned by BMSI to LSC, BMSI acted merely as a labor-only
contractor.
Lastly, as found by the NLRC, BMSI had no other client except for
LSC, and neither BMSI nor LSC refuted this finding, thereby
bolstering the NLRC finding that BMSI is a labor-only contractor.
The CA erred in considering BMSIs Certificate of Registration as
sufficient proof that it is an independent contractor. In San Miguel
Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito
Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N.
Policarpio, we held that a Certificate of Registration issued by the
Department of Labor and Employment is not conclusive evidence of
such status. The fact of registration simply prevents the legal
presumption of being a mere labor-only contractor from arising.
Indubitably, BMSI can only be classified as a labor-only contractor.
The CA, therefore, erred when it ruled otherwise. Consequently, the
workers that BMSI supplied to LSC became regular EEs of the latter.
Having gained regular status, petitioners were entitled to security
of tenure and could only be dismissed for just or authorized causes
and after they had been accorded due process.
Accordingly, we hold that the NLRC committed no grave abuse of
discretion in its decision. Conversely, the CA committed a reversible
error when it set aside the NLRC ruling. Petition granted.
OREGAS v. NLRC, 559 SCRA 153
FACTS: Petitioners Rommel C. Oregas, Darwin R. Hilario and
Sherwin A. Arboleda worked as valet parking and door attendants in
respondent Dusit Hotel Nikko. They have employment contracts
with respondent FVA. In 2000, FVA recalled petitioners from Dusit.
Petitioners then instituted a complaint for illegal dismissal,
regularization, premium pay for holiday and rest day, holiday pay,
service incentive leave pay, 13th month pay and attorney's fees
against respondents Dusit, Philippine Hotelier's, Inc. and FVA.

selection and engagement, records showed that petitioners applied

with and were employed by FVA. Although they were required to
test drive by Dusit, it was done only to verify if they had the
necessary skills and competence required by the job. On the matter
of control, it was established that petitioners maintained their daily
time records with FVA. On the matter of dismissal, FVA exercised its
power to dismiss when it recalled petitioners from Dusit. Finally, on
the matter of payment of wages, it is undisputed that petitioners
were under the payrolls and accounts of FVA. Nevertheless, the
NLRC noted that after petitioners' recall, they were no longer given
new assignments. Since more than six months have already lapsed,
petitioners were deemed to have been constructively dismissed
and therefore entitled to separation pay of one-half month pay for
every year of service.

Petitioners alleged that despite the length of their service, Dusit

never granted them the status and benefits of a regular EE. Thus,
when the rank and file EEs' union of Dusit learned that petitioners
were entitled to regularization, Dusit immediately terminated their
services due to "end of contract."

P&G is principally engaged in the manufacture and production of

different consumer and health products, which it sells on a
wholesale basis to various supermarkets and distributors. [8] To
enhance consumer awareness and acceptance of the products, P&G
entered into contracts with Promm-Gem and SAPS for the
promotion and merchandising of its products.

On 3/6/2001, Labor Arbiter Potenciano S. Canizares, Jr. dismissed

the complaint for lack of merit. Petitioners failed to prove that they
were EEs of Dusit. Petitioners admitted that they transferred to FVA
after their previous placement agencies terminated their contracts
of services with Dusit. Labor Arbiter Canizares also noted that
petitioners signed application and employment contracts with FVA
and were under its payrolls and accounts. Thus, FVA was
petitioners' ER. Finally, he ruled that petitioners were merely
recalled and not dismissed from the service by FVA.
On appeal, the NLRC issued a Resolution dated August 25, 2003,
modifying the decision of Labor Arbiter. The NLRC observed that the
four-fold test in determining the existence of an ER-EE relationship
is present in petitioners' relationship with FVA. On the matter of

Petitioners elevated the case to the CA which affirmed the NLRC

resolution. Reconsideration having been denied, petitioners raises
the instant petition.
ISSUES
WON Respondent FVA is an independent contractor
WON there an ER-EE RELATIONSHIP exists between Petitioners and
Respondent Hotel
HELD

1. YES.

the Labor Arbiter, NLRC and the CA were unanimous in

finding that FVA was a legitimate job contractor. Among the
circumstances that established the status of FVA as a legitimate
job contractor are: (1) FVA is registered with the DOLE and the
DTI;(2) FVA has a Contract for Services with Dusit for the supply
of valet parking and door attendant services;(3) FVA has an
independent business and provides valet parking and door
attendant services to other clients like Mandarin Oriental, Manila
Hotel, Peninsula Manila Hotel, Westin Philippine Plaza, Golden B
Hotel, Pan Pacific Manila Hotel, and Strikezone Bowling Lane;and
(4) FVA's total assets from 1997 to 1999 amount to
P1,502,597.70 to P9,021,335.13.In addition, it provides the
uniforms and lockers of its EEs.

2. NO.

By applying the four-fold test used in determining an ER-EE

relationship, the status of FVA as the ER of petitioners is
indubitably established.

a. Petitioners

applied and signed employment contracts

with FVA. They were merely assigned to Dusit conformably
with the Contract for Services between FVA and Dusit.

b. FVA

assigned a supervisor in Dusit to monitor

petitioners' attendance, leaves of absence, performance
and conduct. Petitioners also maintained their daily time
records with FVA.

c. Petitioners were duly notified by FVA that they would be

assigned to Dusit for five months only. Thereafter, they
may either be recalled for transfer to other clients or be
reassigned to Dusit depending on the result of FVA's
evaluation of their performance. In this case, FVA opted to
recall petitioners from Dusit.

d. While FVA billed Dusit for the services rendered, it was

actually FVA which paid petitioners' salaries. Worthy of

note, FVA registered petitioners with the Bureau of Internal
Revenue and the Social Security System as its EEs.
In summary, this Court accepts as established the fact that FVA is a
legitimate job contractor and, in contemplation of law, the ER of
petitioners.
DISPOSITION: The instant petition is DENIED for lack of merit. CAs
decision is AFFIRMED.
ALIVIADO v. PROCTER and GAMBLE PHILS
G.R. No. 160506, JUNE 6, 2011
FACTS: Petitioners worked as merchandisers of P&G from various
dates, allegedly starting as early as 1982 or as late as June 1991, to
either May 5, 1992 or March 11, 1993.
They all individually signed employment contracts with either
Promm-Gem or SAPS for periods of more or less five months at a
time. They were assigned at different outlets, supermarkets and
stores where they handled all the products of P&G. They received
their wages from Promm-Gem or SAPS.
SAPS and Promm-Gem imposed disciplinary measures on erring
merchandisers for reasons such as habitual absenteeism,
dishonesty or changing day-off without prior notice.

In December 1991, petitioners filed a complaint against P&G for

regularization, service incentive leave pay and other benefits with
damages. The complaint was later amended to include the matter
of their subsequent dismissal.
Ruling of the Labor Arbiter: Labor Arbiter dismissed the complaint
for lack of merit and ruled that there was no ER-EE relationship
between petitioners and P&G. He found that the selection and
engagement of the petitioners, the payment of their wages, the
power of dismissal and control with respect to the means and
methods by which their work was accomplished, were all done and

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J.SUAREZ II, 2ND SEM,SY 12-13
exercised by Promm-Gem/SAPS. He further found that Promm-Gem
and SAPS were legitimate independent job contractors.

WHEREFORE, the petition is GRANTED. The case be REMANDED to

the Labor Arbiter for the computation.

Ruling of the NLRC: The appeal of complainants is hereby

DISMISSED and the decision appealed from AFFIRMED.

SONZA vs. ABS-CBN

GR 138051 June 10, 2004

Ruling of the Court of Appeals: CA likewise denied the petition.

Hence, this petition.
Petitioners Arguments: Petitioners insist that they are EEs of
P&G. They claim that they were recruited by the salesmen of P&G
and were engaged to undertake merchandising chores for P&G long
before the existence of Promm-Gem and/or SAPS. They further
claim that when the latter had its so-called re-alignment program,
petitioners were instructed to fill up application forms and report to
the agencies which P&G created.
Respondents Arguments: On the other hand, P&G points out that
the instant petition raises only questions of fact and should thus be
thrown out as the Court is not a trier of facts. It argues that
findings of facts of the NLRC, particularly where the NLRC and the
Labor Arbiter are in agreement, are deemed binding and conclusive
on the Supreme Court.
ISSUES: (1) whether P&G is the ER of petitioners; (2) whether
petitioners were illegally dismissed; and (3) whether petitioners are
entitled for payment of actual, moral and exemplary damages as
well as litigation costs and attorneys fees.
HELD: The petition has merit. As a rule, the Court refrains from
reviewing factual assessments of lower courts and agencies
exercising adjudicative functions, such as the NLRC. Occasionally,
however, the Court is constrained to wade into factual matters
when there is insufficient or insubstantial evidence on record to
support those factual findings; or when too much is concluded,
inferred or deduced from the bare or incomplete facts appearing on
record.[23] In the present case, we find the need to review the
records to ascertain the facts. In order to resolve the issue of
whether P&G is the ER of petitioners, it is necessary to first
determine whether Promm-Gem and SAPS are labor-only
contractors or legitimate job contractors.
In the event that the contractor or subcontractor fails to pay the
wages of his EEs in accordance with this Code, the ER shall be
jointly and severally liable with his contractor or subcontractor to
such EEs to the extent of the work performed under the contract, in
the same manner and extent that he is liable to EEs directly
employed by him.
There is labor-only contracting where the person supplying
workers to an ER does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are
performing activities which are directly related to the principal
business of such ER. In such cases, the person or intermediary
shall be considered merely as an agent of the ER who shall be
responsible to the workers in the same manner and extent as if the
latter were directly employed by him.

FACTS: ABS-CBN and MJMDC entered into a contract on may 1994.

ABS-CBN was represented by its officers while MJMDC was
represented by Sonza, as president and general manager and Mel
Tiangco, as EVP and treasurer referred to in the agreement as
agent, MJDC agreed to provide Sonzas services exclusively ABSCBN as talent for radio and television. The agreement listed the
services Sonza would render.
On April 1996, Sonza wrote a letter to ABS-CBNs president in
regard to his resignation in view of the events concerning his
programs and career.
April 30, 1996, Sonza filed a complaint against the ABS-CBN before
the DOLE. Sonza complained that the ABS-CBN did not pay his
salaries, separation pay, and service incentive, leave pay, signing
bonus, travel allowances and amounts due under the EE stock
option plan (ESOP).
On July 10 1996, ABS-CBN filed a motion to dismiss on the ground
that there is no ER-EE relationship. Sonza filed an opposition to the
motion on July 19, 1996.
Meanwhile, ABS-CBN opened a account to continually remit Sonza
fees under the agreement.
Labor arbiter denied the motion to dismiss; however in his decision
labor arbiter dismissed the complaint for lack of jurisdiction and
that there is not ER-EE relationship.
On appeal, the NLRC affirmed the decision of the labor arbiter. The
same was also denied upon the motion for reconsideration.

Clearly, the law and its implementing rules allow contracting

arrangements for the performance of specific jobs, works or
services. Indeed, it is management prerogative to farm out any of
its activities, regardless of whether such activity is peripheral or
core in nature. However, in order for such outsourcing to be valid,
it must be made to an independent contractor because the current
labor rules expressly prohibit labor-only contracting.
In the instant case, the financial statements of Promm-Gem show
that it
has authorized capital stock of P1 million and a paid-in capital, or
capital available for operations, of P500,000.00 as of 1990. It also
has long term assets worth P432,895.28 and current assets
ofP719,042.32. Promm-Gem has also proven that it maintained its
own warehouse and office space with a floor area of 870 square
meters. It also had under its name three registered vehicles which
were used for its promotional/merchandising business. Promm-Gem
also has other clients aside from P&G. Under the circumstances, we
find that Promm-Gem has substantial investment which relates to
the work to be performed. These factors negate the existence of
the element specified in Section 5(i) of DOLE Department Order No.
18-02.
The records also show that Promm-Gem supplied its complainantworkers with the relevant materials, such as markers, tapes, liners
and cutters, necessary for them to perform their work. PrommGem also issued uniforms to them. It is also relevant to mention
that Promm-Gem already considered the complainants working
under it as its regular, not merely contractual or project, EEs. This
circumstance negates the existence of element (ii) as stated in
Section 5 of DOLE Department Order No. 18-02, which speaks
of contractual EEs. This, furthermore, negates on the part of
Promm-Gem bad faith and intent to circumvent labor laws which
factors have often been tipping points that lead the Court to strike
down the employment practice or agreement concerned as
contrary to public policy, morals, good customs or public order.
Under the circumstances, Promm-Gem cannot be considered as a
labor-only contractor. We find that it is a legitimate independent
contractor.
Furthermore, the petitioners have been charged with the
merchandising and promotion of the products of P&G, an activity
that has already been considered by the Court as doubtlessly
directly related to the manufacturing business, which is the
principal business of P&G. Considering that SAPS has no
substantial capital or investment and the workers it recruited are
performing activities which are directly related to the principal
business of P&G, we find that the former is engaged in labor-only
contracting.

ISSUE: WON there was an ER-EE relationship between ABS-CBN

and Sonza?
HELD: No ER-EE relationship.SONZA maintains that all essential
elements of an ER-EE relationship are present in this case. The last
element, the so-called control test, is the most important element
Power of Control
The Agreement required SONZA to attend only rehearsals and
tapings of the shows, as well as pre- and post-production staff
meetings. ABS-CBN could not dictate the contents of SONZAs script.
However, the Agreement prohibited SONZA from criticizing in his
shows ABS-CBN or its interests. The clear implication is that SONZA
had a free hand on what to say or discuss in his shows provided he
did not attack ABS-CBN or its interests.
The Agreement stipulates that SONZA shall abide with the rules and
standards of performance covering talents of ABS-CBN. The
Agreement does not require SONZA to comply with the rules and
standards of performance prescribed for EEs of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired
party indicate that the latter is an EE of the former. In this case,
SONZA failed to show that these rules controlled his performance.
We find that these general rules are merely guidelines towards the
achievement of the mutually desired result, which are top-rating
television and radio programs that comply with standards of the
industry. We have ruled that:
Further, not every form of control that a party reserves to himself
over the conduct of the other party in relation to the services being
rendered may be accorded the effect of establishing an ER-EE
relationship. The facts of this case fall squarely with the case of
Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn 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 ER-EE relationship unlike
the second, which address both the result and the means used to
achieve it.
Lastly, SONZA insists that the exclusivity clause in the Agreement is
the most extreme form of control which ABS-CBN exercised over
him.
This argument is futile. Being an exclusive talent does not by itself
mean that SONZA is an EE of ABS-CBN. Even an independent
contractor can validly provide his services exclusively to the hiring
party. In the broadcast industry, exclusivity is not necessarily the
same as control.
SONZA seeks the recovery of allegedly unpaid talent fees, 13th
month pay, separation pay, service incentive leave, signing bonus,
travel allowance, and amounts due under the EE Stock Option Plan.
These claims are all based on the May 1994 Agreement and stock
option plan, and not on the Labor Code. This case call for an
interpretation and implementation of the May 1994 Agreement. In
effect, SONZAs cause of action is for breach of contract which is
intrinsically a civil dispute cognizable by the regular courts.
GARDEN OF MEMORIES vs. NLRC
G.R. No. 160278, February 8, 2012
BIENVENIDO
D.
GOMA
v.
PAMPLONA
PLANTATION
INCORPORATED
557 SCRA 124
FACTS: Petitioner commenced the instant suit by filing a complaint
for illegal dismissal, underpayment of wages, non-payment of
premium pay for holiday and rest day, five (5) days incentive leave
pay, damages and attorney's fees, against the respondent. The

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J.SUAREZ II, 2ND SEM,SY 12-13
case was filed with the Sub-Regional Arbitration Branch No. VII of
Dumaguete City. Petitioner claimed that he worked as a carpenter
at the Hacienda Pamplona since 1995; that he worked from 7:30
a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. daily with a
salary rate of P90.00 a day paid weekly; and that he worked
continuously until 1997 when he was not given any work
assignment.[4] On a claim that he was a regular EE, petitioner
alleged to have been illegally dismissed when the respondent
refused without just cause to give him work assignment. Thus, he
prayed for backwages, salary differential, service incentive leave
pay, damages and attorney's fees.
On the other hand, respondent denied having hired the petitioner
as its regular EE. It instead argued that petitioner was hired by a
certain Antoy Caaveral, the manager of the hacienda at the time
it was owned by Mr. Bower and leased by Manuel Gonzales, a jaialai pelotari known as "Ybarra."[6] Respondent added that it was
not obliged to absorb the EEs of the former owner.
In 1995, Pamplona Plantation Leisure Corporation (PPLC) was
created for the operation of tourist resorts, hotels and bars.
Petitioner, thus, rendered service in the construction of the facilities
of PPLC. If at all, petitioner was a project but not a regular EE.[7]
On June 28, 1999, Labor Arbiter Geoffrey P. Villahermosa dismissed
the case for lack of merit.[8] The Labor Arbiter concluded that
petitioner was hired by the former owner, hence, was not an EE of
the respondent. Consequently, his money claims were denied.[9]
On appeal to the National Labor Relations Commission (NLRC), the
petitioner obtained favorable judgment when the tribunal reversed
and set aside the Labor Arbiter's decision.
The NLRC upheld the existence of an ER-EE relationship,
ratiocinating that it was difficult to believe that a simple carpenter
from far away Pamplona would go to Dumaguete City to hire a
competent lawyer to help him secure justice if he did not believe
that his right as a laborer had been violated.
Contrary to the NLRC's finding, the CA concluded that there was no
ER-EE relationship. The CA stressed that petitioner having raised a
positive averment, had the burden of proving the existence of an
ER-EE relationship.
ISSUE: 1) Is the petitioner a regular EE of the respondent? 2) If so,
was he illegally dismissed from employment? and 3) Is he entitled
to his monetary claims?
HELD: A thorough examination of the records compels this Court to
reach a conclusion different from that of the CA. It is true that
petitioner admitted having been employed by the former owner
prior to 1993 or before the respondent took over the ownership and
management of the plantation, however, he likewise alleged having
been hired by the respondent as a carpenter in 1995 and having
worked as such for two years until 1997.
He is a project EE as he was hired - 1) for a specific project or
undertaking, and 2) the completion or termination of such project
or undertaking has been determined at the time of engagement of
the EE.
In other words, as regards those workers who worked in 1995
specifically in connection with the construction of the facilities of
Pamplona Plantation Leisure Corporation, their employment was
definitely "temporary" in character and not regular employment.
Their employment was deemed terminated by operation of law the
moment they had finished the job or activity under which they were
employed.[22]
Thus, departing from its initial stand that it never hired petitioner,
the respondent eventually admitted the existence of ER-EE
relationship before the CA. It, however, qualified such admission by
claiming that it was PPLC that hired the petitioner and that the
nature of his employment therein was that of a "project" and not
"regular" EE.
The employment relationship having been established, the next
question we must answer is: Is the petitioner a regular or project
EE?
We find the petitioner to be a regular EE provided in Article 280 of
the Labor Code, as amended.
Respondent is engaged in the management of the Pamplona
Plantation as well as in the operation of tourist resorts, hotels, inns,
restaurants, etc. Petitioner, on the other hand, was engaged to
perform carpentry work. His services were needed for a period of
two years until such time that the respondent decided not to give
him work assignment anymore. Owing to his length of service,
petitioner became a regular EE, by operation of law.
A project EE is assigned to carry out a specific project or
undertaking the duration and scope of which are specified at the
time the EE is engaged in the project. A project is a job or
undertaking which is distinct, separate and identifiable from the
usual or regular undertakings of the company. A project EE is
assigned to a project which begins and ends at determined or
determinable times.[30]
The principal test used to determine whether EEs are project EEs as
distinguished from regular EEs, is whether or not the EEs were
assigned to carry out a specific project or undertaking, the duration
or scope of which was specified at the time the EEs were engaged
for that project.[31] In this case, apart from respondent's bare
allegation that petitioner was a project EE, it had not shown that
petitioner was informed that he would be assigned to a specific

project or undertaking. Neither was it established that he was

informed of the duration and scope of such project or undertaking
at the time of his engagement.
Most important of all, based on the records, respondent did not
report the termination of petitioner's supposed project employment
to the Department of Labor and Employment (DOLE). Department
Order No. 19 (as well as the old Policy Instructions No. 20) requires
ERs to submit a report of an EE's termination to the nearest public
employment office every time the employment is terminated due to
a completion of a project. Respondent's failure to file termination
reports, particularly on the cessation of petitioner's employment,
was an indication that the petitioner was not a project but a regular
EE.[32]
We stress herein that the law overrides such conditions which are
prejudicial to the interest of the worker whose weak bargaining
position necessitates the succor of the State. What determines
whether a certain employment is regular or otherwise is not the will
or word of the ER, to which the worker oftentimes acquiesces.
Neither is it the procedure of hiring the EE nor the manner of paying
the salary or the actual time spent at work. It is the character of the
activities performed by the ER in relation to the particular trade or
business of the ER, taking into account all the circumstances,
including the length of time of its performance and its continued
existence. Given the attendant circumstances in the case at bar, it
is obvious that one year after he was employed by the respondent,
petitioner became a regular EE by operation of law.[33]
As to the question of whether petitioner was illegally dismissed, we
answer in the affirmative.
Well-established is the rule that regular EEs enjoy security of tenure
and they can only be dismissed for just cause and with due process,
i.e., after notice and hearing. In cases involving an EE's dismissal,
the burden is on the ER to prove that the dismissal was legal. This
burden was not amply discharged by the respondent in this case.
Obviously, petitioner's dismissal was not based on any of the just or
authorized causes enumerated under Articles 282, 283 and 284 of
the Labor Code, as amended. After working for the respondent for a
period of two years, petitioner was shocked to find out that he was
not given any work assignment anymore. Hence, the requirement
of substantive due process was not complied with.
Apart from the requirement that the dismissal of an EE be based on
any of the just or authorized causes, the procedure laid down in
Book VI, Rule I, Section 2 (d) of the Omnibus Rules Implementing
the Labor Code, must be followed. Failure to observe the rules is a
violation of the EE's right to procedural due process.
Having shown that petitioner is a regular EE and that his dismissal
was illegal, we now discuss the propriety of the monetary claims of
the petitioner. An illegally dismissed EE is entitled to: (1) either
reinstatement, if viable, or separation pay if reinstatement is no
longer viable, and (2) backwages.
In the instant case, we are prepared to concede the impossibility of
the reinstatement of petitioner considering that his position or any
equivalent position may no longer be available in view of the length
of time that this case has been pending. Moreover, the protracted
litigation may have seriously abraded the relationship of the parties
so as to render reinstatement impractical. Accordingly, petitioner
may be awarded separation pay in lieu of reinstatement.
Petitioner's separation pay is pegged at the amount equivalent to
petitioner's one (1) month pay, or one-half (1/2) month pay for
every year of service, whichever is higher, reckoned from his first
day of employment up to finality of this decision. Full backwages,
on the other hand, should be computed from the date of his illegal
dismissal until the finality of this decision.
On petitioner's entitlement to attorney's fees, we must take into
account the fact that petitioner was illegally dismissed from his
employment and that his wages and other benefits were withheld
from him without any valid and legal basis. As a consequence, he
was compelled to file an action for the recovery of his lawful wages
and other benefits and, in the process, incurred expenses. On these
bases, the Court finds that he is entitled to attorney's fees
equivalent to ten percent (10%) of the monetary award.[42]
Lastly, we affirm the NLRC's award of salary differential. In light of
our foregoing disquisition on the illegality of petitioner's dismissal,
and our adoption of the NLRC's findings, suffice it to state that such
issue is a question of fact, and we find no cogent reason to disturb
the findings of the labor tribunal. Petition granted.
DELA CRUZ v. MAERSK FILIPINAS CREWING, INC.
551 SCRA 284
FACTS: Respondent Elite Shipping A.S. hired petitioner Dante D. de
la Cruz as third engineer for the vessel M/S Arktis Morning through
its local agency in the Philippines, co-respondent Maersk Filipinas
Crewing Inc. Dela Cruz was deployed to Jebel Ali, United Arab
Emirates and boarded M/S Arktis Morning. In a logbook entry, chief
engineer Normann Per Nielsen expressed his dissatisfaction over
Dela Cruz 's performance: he has been informed that if he does not
improve his Job/Working performance within [a] short time he will
be signed off according to CBA Article 1 (7)1. Entry was followed by
another one which was similar in content
And then, Dela Cruz was finally informed of his discharge through a
notice captioned "Notice according to CBA Article 1 (7): Reason for
the decision is The chief engineer has made 2 entries in the
engine logbook, regarding your insufficient job/working, which you
are well aware of. Dela Cruz was then made to disembark at the

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J.SUAREZ II, 2ND SEM,SY 12-13
port of Houston, Texas and was repatriated to Manila Dela Cruz
thereafter filed a complaint for illegal dismissal

employment.5 Both likewise claimed payment of overtime and

service incentive leave.

Labor Arbiter: ruled that Dela Cruz was dismissed without just
cause and due process as the logbook entry (which respondents
claimed to be the first notice to petitioner) was vague.NLRC: upheld
LA decision CA: reversed the decision. CA deemed the logbook
entries to be sufficient compliance with the first notice requirement
of the law Issues

In his defense, petitioner averred that respondents were part-time

project EEs and were employed only when there were electrical jobs
to be done in a particular housing unit contracted by petitioner. He
maintained that the services of respondents as project EEs were
coterminous with each project. As project EEs, the time of rendition
of their services was not fixed. Thus, there was no practical way of
determining the appropriate compensation of the value of
respondents accomplishment, as their work assignment varied
depending on the needs of a specific project.6

ISSUES:

1.
2.

WON Dela Cruz was illegally dismissed

WON Dela Cruz was a regular ER fee Held and
Ratio

HELD: 1. Yes. An ER has the burden of proving that an EE's

dismissal was for a just cause and that it complied with the
rudimentary requirements of due process, that is, the opportunity
to be heard and to defend oneself. Procedural due process requires
that a seaman must be given a written notice of the charges
against him and afforded a formal investigation where he can
defend himself personally or through a representative before he can
be dismissed and disembarked from the vessel The ER is bound to
furnish him two notices: (1) the written charge and (2) the written
notice of dismissal (in case that is the penalty imposed) in
accordance with the POEA Revised Standard Employment Terms
and Conditions Governing the Employment of Filipino Seafarers on
Board Ocean-Going Vessels (POEA Revised Standard Employment
Terms and Conditions)
The notice must state with particularity the acts or omissions for
which his dismissal is being sought In this case, the logbook entries
did not substantially comply with the first notice, or the written
notice of charge(s). Respondents should have indicated the grounds
for the threatened termination, the specific acts or omissions
illustrating the same, along with the date and the approximate time
of their occurrence.
The same thing may be said of the written notice of dismissal. It
sorely lacked the necessary details that should accompany it. The
records were devoid of any proof indicating that petitioner was ever
given an opportunity to present his side. Respondents dismally
failed to prove that petitioner's termination from employment was
for cause Hence, not only was Dela Cruz's dismissal procedurally
flawed, it was also without just cause. The first sixty (60) days of
service is to be considered a probationary period which entitles a
shipowner or his representative to terminate the contract by giving
fourteen (14) days of written notice.
2.No. Seafarers are not covered by the term regular employment,
as defined under Article 280 of the Labor Code Instead, they are
considered contractual EEs whose rights and obligations are
governed primarily by the POEA Standard Employment Contract for
Filipino Seamen, the Rules and Regulations Governing Overseas
Employment, and, more importantly, by Republic Act No. 8042,
otherwise known as The Migrant Workers and Overseas Filipinos Act
of 1995.
It is an accepted maritime industry practice that the employment of
seafarers is for a fixed period only. The Court acknowledges this to
be for the mutual interest of both the seafarer and the ER.
Seafarers cannot stay for a long and indefinite period of time at sea
as limited access to shore activity during their employment has
been shown to adversely affect them. Furthermore, the diversity in
nationality, culture and language among the crew necessitates the
limitation of the period of employment.
While the court recognizes that petitioner was a member of
Seamen's Union of the Philippines which had a CBA with respondent
Elite Shipping A.S. providing for a probationary period of
employment, the CBA cannot override the provisions of the POEA
Standard Employment Contract. The law is read into, and forms
part of, contracts. And provisions in a contract are valid only if they
are not contrary to law, morals, good customs, public order or
public policy. This is the only logical explanation possible as the
parties cannot and should not violate the POEA's directive that a
contract of enlistment must not exceed 12 months.
GREGORIO S. SABEROLA, vs. RONALD SUAREZ
G.R. No. 151227
July 14, 2008
NACHURA, J.:
FACTS: The case stemmed from a Complaint3 for illegal dismissal
with money claims filed by respondents against petitioner before
the Regional Arbitration Branch of Davao City. Petitioner is the
owner and manager of G.S. Saberola Electrical Services, a firm
engaged in the construction business specializing in installing
electrical devices in subdivision homes and in commercial and noncommercial buildings. Respondents were employed by petitioner as
electricians. They worked from Monday to Saturday and,
occasionally, on Sundays, with a daily wage of P110.00.
Respondent Ronald Suarez (Suarez) was employed by petitioner
from February 1995 until October 1997; while respondent
Raymundo Lirasan, Jr. (Lirasan) worked from February 1995 until
September 1997.4 Respondent Lirasan alleged that he was
dismissed without cause and due process. He was merely informed
by petitioner that his services were no longer needed without any
explanation why he was terminated. Both respondents claimed that
they received compensation below the minimum wage. They were
given a fixed rate of P110.00 while the mandated minimum wage
was P135.00, per Wage Order No. 5 issued by the Regional Tripartite
and Productivity Board of Region XI. They also alleged that they did
not receive 13th month pay for the entire period of their

LA:dismissed. respondents were project EEs and were not entitled

to their monetary claims. NLRC: affirmed. maintained that
respondents were project EEs of petitioner. However, it declared
that respondent Suarez was illegally dismissed from employment. It
also awarded the monetary claims of respondents. CA: dismissed.
ISSUES: (1) whether respondent Suarez was illegally terminated,
and (2) whether respondents are entitled to their monetary claims.
1) Petitioner, as an electrical contractor, depends for his business
on the contracts that he is able to obtain from real estate
developers and builders of buildings. Thus, the work provided by
petitioner depends on the availability of such contracts or projects.
The duration of the employment of his work force is not permanent
but coterminous with the projects to which the workers are
assigned.
HELD: A project EE is one whose "employment has been fixed for a
specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the
EE or where the work or service to be performed is seasonal in
nature and the employment is for the duration of the
season."However, respondents, even if working as project EEs,
enjoy security of tenure. Section 3, Article XIII, of the Constitution
guarantees the right of workers to security of tenure, and because
of this, an EE may only be terminated for just or authorized causes
that must comply with the due process requirements17 mandated
by law.
In Archbuild Masters and Construction, Inc. v. NLRC,18 we held that
the employment of a project worker hired for a specific phase of a
construction project is understood to be coterminous with the
completion of such phase and not upon the accomplishment of the
whole project. A worker hired for a particular phase of a
construction project can be dismissed upon the completion of such
phase. Project workers in the construction industry may also be
terminated as the phase of a construction project draws nearer to
completion when their services are no longer needed, provided
they are not replaced.19
Nonetheless, when a project EE is dismissed, such dismissal must
still comply with the substantive and procedural requirements of
due process. Termination of his employment must be for a lawful
cause and must be done in a manner which affords him the proper
notice and hearing.20
In this regard, we hold that respondent Suarez was illegally
terminated by petitioner. A project EE must be furnished a written
notice of his impending dismissal and must be given the
opportunity to dispute the legality of his removal.21 In termination
cases, the burden of proof rests on the ER to show that the
dismissal was for a just or authorized cause. ERs who hire project
EEs are mandated to state and prove the actual basis for the EEs
dismissal once its veracity is challenged. Petitioner failed to present
any evidence to disprove the claim of illegal dismissal. It was
uncontested that the last work of the respondents with petitioners
company was the electrical installation in some housing units at the
Ciudad Esperanza Housing Project.
2)We have consistently held that as a rule, one who pleads
payment has the burden of proving it. Even when the plaintiff
alleges non-payment, still the general rule is that the burden rests
on the defendant to prove payment, rather than on the plaintiff to
prove non-payment. The debtor has the burden of showing with
legal certainty that the obligation has been discharged by payment.
In the instant case, the burden of proving payment of the monetary
claims rests on petitioner, being the ER of respondents. This is
because the pertinent personnel files, payrolls, records, remittances
and other similar documents that would show that the claims have
been paid are not in the possession of the worker but in the custody
and absolute control of the ER.24 Sadly, the petitioner failed to do
so.
PEDY CASERES and ANDITO vs. UNIVERSAL ROBINA SUGAR
MILLING CORPORATION (URSUMCO)
G.R.NO. 159343 September 28, 2007
AUSTRIA-MARTINEZ, J.:
FACTS: Universal Robina Sugar Milling Corporation (respondent) is
a corporation engaged in the cane sugar milling business.
Petitioner Pedy Caseres first applied with private respondent
URSUMCO on January 9, 1989 as a worker assisting the crane
operator at the transloading station. while Andito Pael (petitioner
Pael). in 1993Upon application, Caseres was interviewed and made
to understand that his employment would be co-terminus with the
phase of work to which he would be then assigned, that is until
February 5, 1989 and thereafter he would be free to seek
employment elsewhere. Caseres agreed and signed the contract of
employment for specific project or undertaking. After an absence
of more than five (5) months, Caseres re-applied with respondent as
a seasonal project worker assisting in the general underchassis
reconditioning to transport units on July 17, 1989. Like his first
assignment, Caseres was made to understand that his services

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J.SUAREZ II, 2ND SEM,SY 12-13
would be co-terminus with the work to which he would be then
assigned that is from July 17, 1989 to July 20, 1989 and that
thereafter he is free to seek employment elsewhere to which
Caseres agreed and readily signed the contract of employment for
specific project or undertaking issued to him. Thereafter Caseres
voluntarily signed several other employment contracts for various
undertakings with a determinable period. As in the first contract,
Caseres' services were co-terminus with the work to which he was
assigned, and that thereafter, he was free to seek employment with
other sugar millers or elsewhere.
Petitioners' contracts were renewed from time to time, until May
1999 when they were informed that their contracts will not be
renewed anymore. Petitioners filed a complaint for illegal dismissal,
regularization, incentive leave pay, 13th month pay, damages and
attorneys fees.
LA: dismissed the complaint for not being substantiated with clear
and convincing evidence. NLRC: affirmed the LA's dismissal. CA:
dismissed the petition filed before it.
ISSUES: 1)WON THE PETITIONERS ARE SEASONAL/PROJECT/TERM
EES NOT REGULAR EES OF RESPONDENTS; 2)PETITIONERS WERE
ILLEGALLY DISMISSED AND ARE ENTITLED TO BACKWAGES AND
OTHER MONETARY BENEFITS PRAYED FOR IN THE COMPLAINT.
HELD: ART.280 provides for three kinds of EEs: (a) regular EEs or
those who have been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
ER; (b) project EEs or those whose employment has been fixed for
a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the
EE or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season; and
(c) casual EEs or those who are neither regular nor project EEs.
The principal test for determining whether an EE is a project EE or a
regular EE is whether the employment has been fixed for a specific
project or undertaking, the completion or termination of which has
been determined at the time of the engagement of the EE.
In the case at bar, We note that complainants never bothered to
deny that they voluntarily, knowingly and willfully executed the
contracts of employment. Neither was there any showing that
respondents exercised moral dominance on the complainants, x x x
it is clear that the contracts of employment are valid and binding on
the complainants.
The execution of these contracts in the case at bar is necessitated
by the peculiar nature of the work in the sugar industry which has
an off milling season. The very nature of the terms and conditions
of complainants' hiring reveals that they were required to perform
phases of special projects for a definite period after, their services
are available to other farm owners. This is so because the planting
of sugar does not entail a whole year operation, and utility works
are comparatively small during the off-milling season. x x x[14]
The fact that petitioners were constantly re-hired does not ipso
facto establish that they became regular EEs. Their respective
contracts with respondent show that there were intervals in their
employment. In petitioner Caseres's case, while his employment
lasted from August 1989 to May 1999, the duration of his
employment ranged from one day to several months at a time, and
such successive employments were not continuous. With regard to
petitioner Pael, his employment never lasted for more than a month
at a time. These support the conclusion that they were indeed
project EEs, and since their work depended on the availability of
such contracts or projects, necessarily the employment of
respondents work force was not permanent but co-terminous with
the projects to which they were assigned and from whose payrolls
they were paid. As ruled in Palomares v. National Labor Relations
Commission,[18] it would be extremely burdensome for their ER to
retain them as permanent EEs and pay them wages even if there
were no projects to work on.
Moreover, even if petitioners were repeatedly and successively rehired, still it did not qualify them as regular EEs, as length of service
is not the controlling determinant of the employment tenure of a
project EE,[19] but whether the employment has been fixed for a
specific project or undertaking, its completion has been determined
at the time of the engagement of the EE.[20] Further, the proviso
in Article 280, stating that an EE who has rendered service for at
least one (1) year shall be considered a regular EE, pertains to
casual EEs and not to project EEs.[21]
Accordingly, petitioners cannot complain of illegal dismissal
inasmuch as the completion of the contract or phase thereof for
which they have been engaged automatically terminates their
employment.
LEYTE GEOTHERMAL POWER PROGRESSIVE EES UNION vs.
PNOC-EDC
G.R. No.170351, March 30, 2011
ARO vs. NLRC
G.R. No.174792, March 7, 2012
LOLITA R. LACUESTA vs. ATENEO DE MANILA UNIVERSITY
G.R. No. 152777, Dec. 9, 2005
FACTS:Respondent Ateneo hired, on a contractual basis, petitioner
Lolita R. Lacuesta as a part-time lecturer for the 2nd semester of
school year 1988-1989. She was re-hired, still on a contractual
basis, for the 1st and 2nd semesters of school year 1989-1990.
Petitioner was appointed as full-time instructor on probation
effective June 1, 1990 until March 31, 1991. Her contract as faculty
on probation was renewed on April 1, 1991 until March 31, 1992

and again from April 1, 1992 until March 31, 1993. During years she
was on probation status. In a letter dated January 27, 1993,
respondent notified petitioner that her contract would no longer be
renewed because she did not integrate well with the English
Department and that she was not being terminated, but her
contract would simply expire; hence, Lacuestas petition.
ISSUE:Whether or not petitioner has already acquired permanent
employment and was illegally dismissed.
HELD:The requisites to acquire permanent employment, or security
of tenure, are (1) the teacher is a full-time teacher; (2) the teacher
must have rendered three consecutive years of service; and (3)
such service must have been satisfactory. Only when one has
served as a full-time teacher can he acquire permanent or regular
status. The petitioner was a part-time lecturer before she was
appointed as a full-time instructor on probation. As a part-time
lecturer, her employment as such had ended when her contract
expired. Thus, the three semesters she served as part-time lecturer
could not be credited to her in computing the number of years she
has served to qualify her for permanent status. Moreover,
completing the probation period does not automatically qualify her
to become a permanent EE of the university. Petitioner could only
qualify to become a permanent EE upon fulfilling the reasonable
standards for permanent employment as faculty member.
Consistent with academic freedom and constitutional autonomy, an
institution of higher learning has the prerogative to provide
standards for its teachers and determine whether these standards
have been met. In the instant case, petitioner, did not attain
permanent status and was not illegally dismissed.
MT. CARMEL COLLEGE vs. NLRC
G.R. No. 117514 October 4, 1996
PUNO, J.:p
FACTS: petitioner school hired private respondent as grade school
teacher under a written Contract of Probationary Employment.
Paragraph 5 of the contract provides for private respondent's salary
and the duration of her employment, thus:
5. That my salary or wage shall be P1,675 per month and until such
time as the School decides to retain me in its permanent employ,
my employment therein shall be deemed to run from SY 1989-1990
to SY 1991-1992 (day to day of month to month) and my service
may be terminated at any time after I fail to comply with the
foregoing conditions laid down by the School. The School shall have
no further liability to me whatsoever, either by way of separation
pay or otherwise.
In March 1992, petitioner school terminated the services of private
respondent as she did not pass the National Teacher's Board
examination. Private respondent filed a complaint for illegal
dismissal against the petitioners.
LA: guilty of illegal dismissal and ordered them to reinstate private
respondent with full backwages. NLRC: reversed the decision of the
LA. It found private respondent's dismissal from service to be legal.
Public respondent, however, ordered petitioners to pay private
respondent the amount of P10,200.00, representing her salary for
the unexpired portion of her probationary period. According to
public respondent, private respondent's probationary employment
was supposed to end in June 1992, but her services were
terminated three (3) months earlier, in March 1992. Hence, it
ordered petitioners to pay private respondent her salary
corresponding to those months. 5
ISSUE: WON the NLRC gravely abused its discretion in finding an
"unexpired portion" in private respondent's probationary contract,
which expires at the end of the school year 1991-1992, and holding
petitioners liable for the payment of her salary equivalent to that
"unexpired portion". 6
HELD: Under Section 48 of the Manual of Regulations for Private
Schools, a school year or academic year begins on the second
Monday of June and shall consist of "approximately 40 weeks of
normally 5 school days each, exclusive of approved vacations and
including legal and special holidays, and special activities."
a calendar year consists of twelve (12) months, while a school year
consists only of ten (10) months. A school year begins in June of
one calendar year and ends in March of the succeeding calendar
year.
Public respondent therefore erred in finding that private
respondent's probationary employment was supposed to end in
June 1992. The contract clearly states the duration of private
respondent's term it shall begin at the opening of school year
1989-1990 (i.e., June 1989) and shall end at the closing of school
year 1991-1992 (i.e., March, 1992). Hence, petitioners are not
obliged to pay private respondent her salary for the months of April,
May and June as her employment already ceased in March, in
accordance with the provisions of her employment contract.
ALFARO vs. CA
GR No. 140182, Aug. 28, 2001
FACTS: Petitioner Candido Alfaro (Alfaro) was employed as a
helper/operator of private respondent Star Paper Corp. (Star Paper).
When Alfaro reported back to work after availing a sick leave, he
wassurprised to find out that another worker was recruited to take
his place. Consequently, he wastransferred to the wrapping section
of Star Paper. Subsequently, he was assigned to a new work
whichwas even more difficult.One day, Alfaro alleged that he was
pressured to sign a resignation letter, and a Release andQuit Claim
in exchange for P3,000 as his 13th month pay and 15 days sick
leave pay. After a few months, he filed a complaint to the Labor
Arbiter (LA) for non-payment of separation pay andcomplaint for

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J.SUAREZ II, 2ND SEM,SY 12-13
illegal dismissal. Contrastingly, Star Paper contends that, because
of his illness, it wasAlfaro who asked the company to allow him to
resign. The LA, National Labor Relations Commission(NLRC) and the
Court of Appeals (CA) all ruled that Alfaro did resign voluntarily.
Respondent, in the lower court, alleged that Petitioner contracted
PTB Minimal Active while still under its employ for which reasons
petitioner applied for SSS benefits. Subsequently, complainant
asked the respondent that he be allowed to resign with benefits.
After getting a favorable reply, complainant submitted a written
resignation letter.
The LA ruled for the respondent, which was later upheld by the CA.
ISSUE:Whether or not the CA is correct in holding that the
respondent was not illegally dismissed by the private respondent.
HELD: Petition DENIED. The factual findings of the LA, NLRC, as
affirmed by CA, reveal that Alfaro resigned from hiswork due to his
illness, with the understanding that Star Paper would give him a
separation paywhichunfortunately, Star Paper did not comply with.
The claim of Alfaro that he was illegally dismissedcannot be
sustained, considering that his voluntary resignation has been
indubitably established as a factby the three tribunals..Voluntary
resignation is defined as an act of an EE, who finds himself in a
situation inwhich he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service; thus,he has no
other choice but to disassociate himself from his employment.
Based on the facts, it wasAlfaro who negotiated for a resignation
with separation pay as the manner in which his
employmentrelations with Star Paper would end. Alfaro was already
suffering from a lingering illness at the time hetendered his
resignation. Alfaros continued employment would have been
detrimental not only to hishealth, but also to his performance as an
EE of Star Paper. Alfaros resignation with separationpay was the
best option for him under the said circumstances.The Court adds
further that not all waivers and quitclaims are invalid as against
public policy. If the agreement was voluntarily entered into and
represented a reasonable settlement, it is binding on theparties and
may not later be disowned, simply because of a change of mind.
Moreover, an EE whoresigns and executes a quitclaim in favor of
the ER is generally estopped from filing any furthermoney claims
against the ER arising from the employment. Considering, however,
that Star Paperdid not comply with its agreement with Alfaro, the
Court ordered Star Paper to pay Alfaro his separationpay amounting
to P8,452.50
INTERTROD MARITIME, INC. and TROODOS SHIPPING CO. vs.
NLRC and ERNESTO DE LA CRUZ
G.R. No. 81087 June 19, 1991
PADILLA, J.:p
FACTS: On 10 May 1982, private respondent Ernesto de la Cruz
signed a shipboard employment contract with petitioner Troodos
Shipping Company as principal and petitioner Intertrod Maritime,
Inc., as agent to serve as Third Engineer on board the M/T
"BREEDEN" for a period of twelve (12) months with a basic monthly
salary of US$950.00. Private respondent eventually boarded a sister
vessel, M/T "AFAMIS" and proceeded to work as the vessel's Third
Engineer under the same terms and conditions of his employment
contract previously referred to. 2
On 26 August 1982, while the ship M/T "Afamis was at Port Pylos,
Greece, private respondent requested for relief, due to "personal
reason." 3 The Master of the ship approved his request but
informed private respondent that repatriation expenses were for his
account and that he had to give 30 days notice in view of the
Clause 5 of the employment contract so that a replacement for him
(private respondent) could be arranged. 4
On 30 August 1982, while the vessel was at Port Said in Egypt and
despite the fact that it was only 4 days after private respondent's
request for relief, the Master "signed him off" and paid him in cash
all amounts due him less the amount of US$780.00 for his
repatriation expenses, as evidenced by the wages account signed
by the private respondent. 5
On his return to the Philippines, private respondent filed a
complaint with the National Seamen Board (NSB)(now POEA)
charging petitioners for breach of employment contract and
violation of NSB rules and regulations. Private respondent alleged
that his request for relief was made in order to take care of a
Filipino member of the crew of M/T "AFAMIS" who was hospitalized
on 25 August 1982 in Athens, Greece. However, the Master of the
ship refused to let him immediately disembark in Greece so that the
reason for his request for relief ceased to exist. Hence, when the
Master of the ship forced him to step out in Egypt despite his
protestations to the contrary, there being no more reason to
request for relief, an illegal dismissal occurred and he had no other
recourse but to return to the Philippines at his own expense.
In its Answer to the complaint, petitioners denied the allegations of
the complainant and averred that the contract was cut short
because of private respondent's own request for relief so that it was
only proper that he should pay for his repatriation expenses in
accordance with the provisions of their employment contract.
ISSUE: whether or not complainant's termination is illegal.
HELD: Article 21(c) of the Labor Code requires that the Philippine
Overseas Employment Administration (formerly NSB) should
approve and verify a contract for overseas Employment. 11 A
contract, which is approved by the National Seamen Board, such as
the one in this case, is the law between the contracting parties; and
where there is nothing in it which is contrary to law, morals, good
customs, public policy or public order, the validity of said contract
must be sustained. 12

Clearly, therefore, private respondent Ernesto de la Cruz was

required by the employment contract not only to pay his own
repatriation expenses but also to give 30 days notice should he
decide to terminate his employment prior to the expiration of the
period provided in the contract. When the Master approved his
request for relief, the Master emphasized that private respondent
was required to give 30 days notice and to shoulder his own
repatriation expenses. Approval of his request for relief, therefore,
did not constitute a waiver by petitioners of the provisions of the
contract, as private respondent would have us believe, for it was
made clear to him that the provisions of the contract, insofar as the
thirty 30days notice and repatriation expenses were concerned,
were to be enforced.
Private respondent claims that his request for relief was only for the
reason of taking care of a fellow member of the crew so much so
that when he was not allowed to disembark in Port Pylos, Greece,
the reason no longer existed and, therefore, when he was forced to
"sign off" at Port Said, Egypt even when he signified intentions of
continuing his work, he was illegally dismissed. We sympathize
with the private respondent; however, we cannot sustain such
contention. Resignation is the voluntary act of an EE who "finds
himself in a situation where he believes that personal reasons
cannot be sacrificed in favor of the exigency of the service, then he
has no other choice but to disassociate himself from his
employment." 16 The ER has no control over resignations and so,
the notification requirement was devised in order to ensure that no
disruption of work would be involved by reason of the resignation.
This practice has been recognized because "every business
enterprise endeavors to increase its profits by adopting a device or
means designed towards that goal." 17
Resignations, once accepted and being the sole act of the EE, may
not be withdrawn without the consent of the ER. In the instant case,
the Master had already accepted the resignation and, although the
private respondent was being required to serve the t30 days notice
provided in the contract, his resignation was already approved.
Private respondent cannot claim that his resignation ceased to be
effective because he was not immediately discharged in Port Pylos,
Greece, for he could no longer unilaterally withdraw such
resignation. When he later signified his intention of continuing his
work, it was already up to the petitioners to accept his withdrawal
of his resignation. The mere fact that they did not accept such
withdrawal did not constitute illegal dismissal for acceptance of the
withdrawal of the resignation was their (petitioners') sole
prerogative.
Under the terms of the employment contract, it is the ship's Master
who determines where a seaman requesting relief may be "signed
off." It is, therefore, erroneous for private respondent to claim that
his resignation was effective only in Greece and that because he
was not immediately allowed to disembark in Greece (as the ER
wanted compliance with the contractual conditions for termination
on the part of the EE), the resignation was to be deemed
automatically withdrawn.
The decision of the NLRC is therefore set aside. To sustain it would
be to authorize undue oppression of the ER. After all, "the law, in
protecting the rights of the laborer, authorizes neither oppression
nor self-destruction of the ER." 19
BLUE ANGEL MANPOWER AND SECURITY SERVICES, INC. vs.
CA
G.R. No. 161196
July 28, 2008
VELASCO, JR., J.:
FACTS: Blue Angel, a messengerial and security agency, hired
private respondents Romel Castillo, Wilson Ciriaco, Gary Garces,
and Chesterfield Mercader as security guards and detailed them at
the National College of Business and Arts (NCBA) in Cubao, Quezon
City.
On April 20, 1999, Castillo and Mercader, later joined by Ciriaco and
Garces, filed a complaint for illegal deductions and other money
claims against Blue Angel. Eventually, they amended their
complaint to include illegal dismissal. According to the four guards,
they were required, while still with Blue Angel, to work from 7:00
a.m. to 7:00 p.m. without OT and premium holiday pay, among
other benefits. They also alleged receiving only PhP 5,000 a month
or PhP 166 per day and, from this amount, Blue Angel deducted PhP
100 as cash bond. They further averred that Blue Angel, when
apprised of their original complaint, illegally terminated Garces and
Ciriaco on April 11 and 12, 1999, respectively, and Castillo and
Mercader on April 28, 1999. The four guards prayed for (1) payment
of backwages, wage differentials, premium and overtime pay for
holidays, and 13th month pay; (2) reimbursement of their cash
bond; (3) reinstatement or separation pay; and (4) damages.
Blue Angel, for its part, denied the charges of illegal dismissal. It
alleged that, on two occasions, the officer-in-charge (OIC) of the
Security Force of NCBA, Reynaldo Dayag, reported that the four
complaining guards had, while on guard duty detail with the school,
committed several infractions, among them: insubordination,
sleeping while on duty, and absence without leave (AWOL). When
summoned to explain their side on the derogatory report, only
Castillo, Ciriaco, and Garces, according to Blue Angel, showed up,
but not Mercader who had since stopped reporting for work and
thus considered on AWOL. Continuing, Blue Angel alleged that when
told that they would be subjected to an investigation, Castillo,
Ciriaco, and Garces pleaded that they be allowed to resign instead.
The three, so Blue Angel claimed, then tendered their pro-forma
letters of resignation followed by handwritten resignation letters in
the nature of quitclaims. To refute the guards claims of nonpayment of what was due them, Blue Angel presented the payrolls

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J.SUAREZ II, 2ND SEM,SY 12-13
and vouchers from July 1997 to April 1999 that showed the four
guards respective gross salaries and deductions.
LA: ordered to immediately reinstate them with backwages. NLRC:
affirmed with modification that of the LA.
ISSUE: WON private respondents were illegally dismissed hinges on
the determination of whether or not they freely and voluntarily
resigned as shown by the two sets of resignation letters.
HELD: Blue Angel insists that the guards had pleaded to be allowed
to resign when they were told of the pending investigation, and that
they eventually tendered their pro-forma resignation letters
followed by their own handwritten resignation letters. Our review of
the circumstances surrounding these resignation letters does not
support Blue Angels contentions that these letters are indications
that private respondents had voluntarily resigned. We agree with
the labor arbiter when he pointed out that the undated, similarly
worded resignation letters tended to show that the guards were
made to copy the pro-forma letters, in their own hand, to make
them appear more convincing that the guards had voluntarily
resigned. As the labor arbiter noted, the element of voluntariness of
the resignations is even more suspect considering that the second
set of resignation letters were pre-drafted, similarly worded, and
with blank spaces filled in with the effectivity dates of the
resignations.5 In their Comment, private respondents claimed being
forced to sign and copy the pro-forma resignation letters and
quitclaims on pain that they would not get their remaining
compensations.6

an investigation was conducted and upon initial review of

respondents business records, it appears that petitioner was
among those involved in the irregular and fraudulent preparation
and encashment of respondents corporate checks amounting to at
least P500,000.00.
Petitioner alleged that Mr. Tecson demanded her resignation on
several occasions. On February 15, 2000, Mr. Tecson allegedly told
her MAG-RESIGN KANA AGAD KASI MAIIPIT KAMI, in the presence
of Lizz Villafuerte, the Accounting Manager. As a result of this
alleged force and intimidation, petitioner tendered her resignation
letter.
On January 13, 2003, or three years after her resignation, petitioner
filed a complaint against Cinderella alleging that her severance
from employment was involuntary amounting to constructive
dismissal. Cinderella denied the charge of constructive dismissal. It
claimed that petitioner voluntarily resigned from office before the
internal audit was completed and before any formal investigation
was initiated. She tendered her resignation on February 7, 2000,
then submitted another resignation letter on February 15, 2000
where she confirmed the first resignation letter. Respondent
alleged that the complaint for constructive dismissal was a mere
afterthought demonstrated by the long delay of filing the same.
LA: constructively and illegally dismissed. NLRC:affirmed the
decision of the LA.
ISSUE: whether petitioner was constructively dismissed.

We are more inclined to believe the dismissed guards. Other

circumstances have been aptly pointed out by respondents-guards
in their Comment that we are wont to agree that they were forced
into a situation where to refuse to sign the resignation letters and
quitclaims meant loss of money for the immediate and urgent basic
needs of their family. To buttress the conclusion that the resignation
letters were involuntary on the part of the guards, we find
convincing the circumstances mentioned in the Comment of
respondents-guards. For one, it seemed unlikely and improbable
that Garces and Ciriaco would voluntarily resign on April 26, 1999
when they had 15 and 12 days earlier, or on April 11 and 12, 1999,
already been terminated. Then again, it was likewise inconsistent
and implausible that Castillo would voluntarily tender his
resignation and sign a quitclaim on April 28, 1999, when Mercader
and he had in fact already filed a complaint against Blue Angel with
the NLRC regarding illegal deductions of their salary eight days
earlier, or on April 20, 1999.7 Lastly, there is nothing on record
showing that Blue Angel provided any proof that Castillo, Ciriaco,
and Garces had indeed committed the infractions attributed to
them. Blue Angel merely enumerated the offenses without
providing particulars as to the date and place these infractions were
committed. Neither did Blue Angel present written notices,
warnings, and affidavits of the OIC to support its allegations against
the guards.

HELD: From the totality of evidence on record, it was clearly

demonstrated that respondent Cinderella has sufficiently
discharged its burden to prove that petitioners resignation was
voluntary. In voluntary resignation, the EE is compelled by personal
reason(s) to disassociate himself from employment. It is done with
the intention of relinquishing an office, accompanied by the act of
abandonment.[21] To determine whether the EE indeed intended to
relinquish such employment, the act of the EE before and after the
alleged resignation must be considered.[22]

With the finding that private respondents were illegally dismissed,

they are entitled to reinstatement to their positions without loss of
their seniority rights and with full backwages, inclusive of
allowances, and to other benefits or their monetary equivalent
computed from the time private respondents compensation was
withheld from them up to the time of their actual reinstatement as
provided for in Article 279 of the Labor Code.

Hence, petitioner cannot take refuge in the argument that it is the

ER who bears the burden of proof that the resignation is voluntary
and not the product of coercion or intimidation. Having submitted a
resignation letter, it is then incumbent upon her to prove that the
resignation was not voluntary but was actually a case of
constructive dismissal with clear, positive, and convincing evidence.
[26] Petitioner failed to substantiate her claim of constructive
dismissal.

As the law now stands, illegally dismissed EEs are entitled to two
reliefs, namely: backwages and reinstatement.lawph!l They are
entitled to reinstatement, if viable, or separation pay, if
reinstatement is no longer feasible, and backwages.10 The award
of one does not preclude the other as the Court had, in proper
cases, ordered the payment of both.11 Where an EE would have
been entitled to reinstatement with full backwages, but
circumstances, i.e., strained relationships, make reinstatement
impossible, the more equitable disposition would be to award
separation pay equivalent to at least one month pay, or one month
pay for every year of service, whichever is higher, in addition to full
backwages, inclusive of allowances, and benefits or their monetary
equivalent, computed from the time the EEs compensation was
withheld up to the time of the EEs actual reinstatement.12
As to the other money claims of private respondents, the
vouchers,13 payrolls,14 and other documentary evidence15 show
that the other monetary benefits being claimed by private
respondents have already been duly paid.
MA. FININA E. VICENTE vs. CA
G.R. No. 175988 August 24, 2007
YNARES-SANTIAGO, J.:
FACTS: Petitioner Finina E. Vicente was employed by respondent
Cinderella Marketing Corporation (Cinderella) as Management
Coordinator in January 1990. Prior to her resignation in February
2000, she held the position of Consignment Operations Manager
with a salary of P27,000.00 a month.[5] She was tasked with the
oversight, supervision and management of the Consignment
Department dealing directly with Cinderellas consignors.[6]
Petitioner alleged that it has been a practice among the EEs of
Cinderella to obtain cash advances by charging the amount from
the net sales of Cinderellas suppliers/consignors. Mr. Miguel Tecson
(AVP-Finance) approves the requests for cash advances, Mr. Arthur
Coronel (AVP-Merchandising) issues the memos instructing the
accounting department to issue the corporate checks and finally,
Ms. Theresa Santos (General Manager) rediscounts them by issuing
her personal checks.
After some time, one of Cinderellas suppliers complained about the
unauthorized deductions from the net sales due them. Accordingly,

Petitioner relinquished her position when she submitted the letters

of resignation. The resignation letter submitted on February 15,
2000 confirmed the earlier resignation letter she submitted on
February 7, 2000. The resignation letter contained words of
gratitude which can hardly come from an EE forced to resign.
Subsequently, petitioner stopped reporting for work although she
met with the officers of the corporation to settle her
accountabilities but never raised the alleged intimidation employed
on her. Also, though the complaint was filed within the 4-year
prescriptive period, its belated filing supports the contention of
respondent that it was a mere afterthought. Taken together, these
circumstances are substantial proof that petitioners resignation
was voluntary.

We agree with the Court of Appeals that it was grave error on the
part of the NLRC to rely on the allegation that Mr. Tecson threatened
and forced petitioner to resign. Other than being unsubstantiated
and self-serving, the allegation does not suffice to support the
finding of force, intimidation, and ultimately constructive dismissal.
Bare allegations of constructive dismissal, when uncorroborated by
the evidence on record, cannot be given credence.
In St. Michael Academy v. National Labor Relations Commission,[28]
we ruled that mere allegations of threat or force do not constitute
substantial evidence to support a finding of forced resignation. We
enumerated the requisites for intimidation to vitiate consent as
follows:
(1) that the intimidation caused the consent to be given; (2) that
the threatened act be unjust or unlawful; (3) that the threat be real
or serious, there being evident disproportion between the evil and
the resistance which all men can offer, leading to the choice of
doing the act which is forced on the person to do as the lesser evil;
and (4) that it produces a well-grounded fear from the fact that the
person from whom it comes has the necessary means or ability to
inflict the threatened injury to his person or property. x x x[29]
None of the above requisites was established by petitioner.
Moreover, we note that petitioner is holding a managerial position
with a salary of P27,000.00 a month. Hence, she is not an ordinary
EE with limited understanding such that she would be easily
maneuvered or coerced to resign against her will. Thus, we find no
compelling reason to disturb the findings and conclusions of the
Court of Appeals that petitioner voluntarily resigned and was not
constructively dismissed by respondent.
COLEGIO DE SAN JUAN DE LETRAN CALAMBA vs. BELEN P.
VILLAS
G.R. No. 137795
March 26, 2003
CORONA, J.:
FACTS: The antecedent facts show that respondent Belen Villas
was employed by the petitioner School as high school teacher in
September 1985. On May 15, 1995, she applied for a study leave
for six months, from June to December 31, 1995. In a letter dated
June 2, 1995, Mrs. Angelina Quiatchon, principal of the high school

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J.SUAREZ II, 2ND SEM,SY 12-13
department, told Villas that her request for study leave was granted
for one school year subject to the following conditions:
1. The requested study leave takes effect on June 5, 1995 and ends
on March 31, 1996;
2. The requested study leave involves no remuneration on the part
of the School;
3. The documents that justify the requested study leave should be
submitted upon return on April 1, 1996;
4. Faculty Manual Section 40 Special Provisions on the Granting of
Leave of Absence should be observed:
a. Once proven beyond reasonable doubt during the period of the
approved leave of absence that the faculty member shall engage
himself in employment outside the institution, the administration
shall regard the faculty member on leave as resigned;
b. The maximum length of leave of absence that may be applied for
by the faculty member and granted by administration is twelve (12)
months. If, at the lapse of the period, the faculty member fails to
return for work, the administration shall regard the faculty member
as resigned.4
Respondent alleged that she intended to utilize the first semester of
her study leave to finish her masteral degree at the Philippine
Womens University (PWU). Unfortunately, it did not push through
so she took up an Old Testament course in a school of religion and
at the same time utilized her free hours selling insurance and
cookware to augment her familys income. However, during the
second semester of her study leave, she studied and passed 12
units of education subjects at the Golden Gate Colleges in Batangas
City. In response to the letters sent her by petitioner to justify her
study leave, she submitted a certification from Golden Gate
Colleges and a letter explaining why she took up an Old Testament
course instead of enrolling in her masteral class during the first
semester.
On June 3, 1996, the President and Rector of the School, Fr.
Ramonclaro G. Mendez, O. P., wrote her, stating that her failure to
enroll during the first semester was a violation of the conditions of
the study leave and that the reasons she advanced for failure to
enroll during the first semester were not acceptable, thus:
In the first place, prudence dictates that you should have
ascertained first that you are still eligible to study at PWU to finish
your masteral degree before applying and securing the approval of
your leave by the School. In the second place, you should have
informed the School at once that you could not enroll in the first
semester so that your leave could have been adjusted for only onehalf (1/2) year. Thirdly, your engaging in some part-time business
instead of studying in the first semester of your leave is sufficient
justification for the School to consider you as resigned under the
Faculty Manual. And lastly, your failure to study in the first semester
of your study leave without informing the School beforehand
constitutes deception, to say the least, which is not a good example
to the other teachers.5
Her case was subsequently referred to the grievance committee, as
provided for in the collective bargaining agreCBA, and the report
was submitted on July 12, 1996, both to the union and the School.
However, since the grievance committee could not reach a
decision, the case was referred for voluntary arbitration.
Respondent then filed a case for illegal dismissal and the case was
assigned to VA Mayuga who found that respondent was illegally
dismissed.
ISSUE:whether or not respondents alleged violation of the
conditions of the study grant constituted serious misconduct which
justified her termination from petitioner School.
HELD: Under the Labor Code, there are twin requirements to justify
a valid dismissal from employment: (a) the dismissal must be for
any of the causes provided in Article 282 of the Labor Code
(substantive aspect) and (b) the EE must be given an opportunity to
be heard and to defend himself (procedural aspect).7 The
procedural aspect requires that the EE be given two written notices
before she is terminated consisting of a notice which apprises the
EE of the particular acts/omissions for which the dismissal is sought
and the subsequent notice which informs the EE of the ERs
decision to dismiss him.In the case at bar, the requirements for
both substantive and procedural aspects were not satisfied.
We affirm the findings of the Court of Appeals that there was no
violation of the conditions of the study leave grant. Thus,
respondent could not be charged with serious misconduct
warranting her dismissal as a teacher in petitioner School.
Petitioner has failed to convince us that the three alleged violations
of the study leave grant constituted serious misconduct which
justified the termination of respondents employment.
Misconduct is improper or wrongful conduct. It is the transgression
of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent
and not mere error of judgment.9 Under Article 282 of the Labor
Code, the misconduct, to be a just cause for termination, must be
serious. This implies that it must be of such grave and aggravated
character and not merely trivial or unimportant.10 Examples of
serious misconduct justifying termination, as held in some of our
decisions, include: sexual harassment (the managers act of
fondling the hands, massaging the shoulder and caressing the nape
of a secretary);11 fighting within company premises;12 uttering
obscene, insulting or offensive words against a superior;13
misrepresenting that a student is his nephew and pressuring and
intimidating a co-teacher to change that students failing grade to
passing.14

In this light, the alleged infractions of the respondent could hardly

be considered serious misconduct.
With regard to respondents alleged failure to report for work on
April 1, 1996 and failure to enroll during the first semester, the
Court of Appeals and the Voluntary Arbitrator found that she did in
fact report for work on April 1, 1996 and that she was in fact
enrolled during the first semester. Assuming arguendo that she did
fail to report for work on April 1, 1996 and enroll during the first
semester, the most respondent could be charged with was simple
misconduct. In both instances, there was evidence of substantial
compliance by respondent.
Her alleged failure to report for work exactly on April 1, 1996 is not
equivalent to "failure to return for work," a sanctionable offense
under the Faculty Manual. As correctly pointed out by the VA,
petitioner failed to establish that there was a distinct and definite
assignment that needed to be done personally by respondent, and
specifically on April 1, 1996, which she failed to do on said date.
Although we give credence to petitioners argument that a private
high school teacher still has work at the end of the schoolyear to
assist in the graduation preparations and in the beginning of the
school year to assist in the enrollment such tasks cannot be
considered a teachers main duties, the failure to perform which
would be tantamount to dereliction of duty or abandonment.
Besides, there is no disagreement that respondent reported for
work on May 15, 1996 at which time petitioner School could have
asked her to assist in the enrollment period. At most, respondent
failed to help out during the preparations for graduation and this, to
us, was not a significant reason for terminating or dismissing her
from her job.
With regard to her alleged failure to enroll during the first semester,
although we agree with the President and Rector, Fr. Mendez, that
respondent should have first ascertained whether she was still
eligible to study at the PWU before applying for a study leave,17
such lapse was more of an error in judgment rather than an act of
serious misconduct. If respondent intended to use her study leave
for other unauthorized purposes, as petitioner would like us to
believe, she would not have enrolled at the Golden Gate Colleges
during the second semester. Yet she did, as borne out by the
certification18 prepared by the Registrar of Golden Gate Colleges.
Furthermore, we find that respondent did not violate the prohibition
on engaging in employment outside the school as specified in her
study leave grant and as provided in the Faculty Manual. We find
the provision of the Faculty Manual ambiguous as the term
"employment" connotes a number of meanings. Employment in its
general sense connotes any work or service rendered in exchange
for money. The loose connotation of employment may therefore
cover jobs without an ER-EE relationship. However, inasmuch as in
this case, petitioner School drafted the said policy, the term
"employment" should be strictly construed against it.20 Moreover,
it is a settled rule that in controversies between a laborer and his
master, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writings should be resolved in the
formers favor.21 The act of respondent in selling insurance and
cookware was not the "employment" prohibited by the Faculty
Manual. The prohibition against outside employment was enacted
to prevent the teacher from using the study leave period for
unsanctioned purposes since the School pays the teacher while
pursuing further studies. That rationale was not violated by
respondent for the reason that her part-time activity of selling
insurance and cookware could not have prevented her in any way
from studying and, more importantly, she was not being paid by the
School while on leave. How did the school expect her and her family
to survive without any income for one whole year?
Considering that these notices are mandatory, the absence of one
renders any management decision to terminate null and void.
Petitioner failed to give respondent the first notice which should
have informed the latter of the formers intention to dismiss her.
Petitioner argues that it complied with this requirement as there
were several exchanges of communication between the School and
respondent regarding the cause of her termination. However, we
find that these letters did not apprise respondent that her dismissal
was being sought by petitioner School as said letters only required
respondent to submit proof of enrollment.
With regard to the respondents claim for the six-month study leave
and vacation pay, we affirm the decision25 of the Voluntary
Arbitrator that respondent is not entitled to such benefits:
While it is true that the CBA between respondent and complainants
union provides for six months pay for qualified teachers who will go
on sabbatical or study leave, the same was expressly waived by
complainant when she signed conforme to the letter dated June 2,
1995 approving her study leave which states among others, to wit:
2. The requested study leave involves no remuneration on the part
of the school. And considering that her leave of absence for the
whole school year 1995-1996 was presumed to be a leave of
absence without pay, then she did not earn her vacation leave
incentive for the next coming summer. We find it just, fair and
reasonable to grant vacation pay on April and May of every
calendar as additional incentive only to those teachers who
rendered continuous service to the Collegio the preceding school
year.
We similarly affirm the Voluntary Arbitrators decision that
respondent is not entitled to moral and exemplary damages and
attorneys fees because there is no evidence showing that bad faith
or malice attended the dismissal of respondent. Moral damages are
recoverable only where the dismissal is attended by bad faith or
fraud, or constitutes an act oppressive to labor, or is done in a
manner contrary to morals, good customs or public policy. A

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J.SUAREZ II, 2ND SEM,SY 12-13
dismissal may be contrary to law but, by itself alone, it does not
necessarily establish bad faith.26
NAGKAKAISANG LAKAS NG MANGGAGAWA SA KEIHIN (NLMKOLALIA-KMU) and HELEN VALENZUELA vs. KEIHIN
PHILIPPINES CORPORATION,
GR No. 171115, August 9, 2010
DEL CASTILLO, J.:
FACTS: Petitioner Helen Valenzuela (Helen) was a production
associate in respondent Keihin Philippines Corporation (Keihin), a
company engaged in the production of intake manifold and throttle
body used in motor vehicles manufactured by Honda.
It is a standard operating procedure of Keihin to subject all its EEs
to reasonable search before they leave the company premises. On
September 5, 2003, while Helen was about to leave the company
premises, she saw a packing tape near her work area and placed it
inside her bag because it would be useful in her transfer of
residence. When the lady guard on duty inspected Helens bag, she
found the packing tape inside her bag. The guard confiscated it and
submitted an incident report dated September 5, 2003 to the
Guard-in-Charge, who, in turn, submitted a memorandum regarding
the incident to the Human Resources and Administration
Department on the same date.
The following day, or on September 6, 2003, respondent company
issued a show cause notice to Helen accusing her of violating F.2 of
the companys Code of Conduct, which says, "Any act constituting
theft or robbery, or any attempt to commit theft or robbery, of any
company property or other associates property. Penalty: D
(dismissal)." Helens supervisor, called her to his office and
directed her to explain in writing why no disciplinary action should
be taken against her.
Helen, in her explanation, admitted the offense and even
manifested that she would accept whatever penalty would be
imposed upon her. She, however, did not reckon that respondent
company would terminate her services for her admitted offense.
On September 26, 2003, Helen received a notice of disciplinary
action informing her that Keihin has decided to terminate her
services. On October 15, 2003, petitioners filed a complaint against
respondent for illegal dismissal, non-payment of 13th month pay,
with a prayer for reinstatement and payment of full backwages, as
well as moral and exemplary damages. Petitioners alleged that
Helens act of taking the packing tape did not constitute serious
misconduct, because the same was done with no malicious intent.
Keihin, on the other hand, maintained that Helen was guilty of
serious misconduct because there was a deliberate act of stealing
from the company.
LA:dismissing the complaint of illegal dismissal. NLRC: dismissed
the appeal of the petitioners and affirmed in toto the Decision of
the Labor Arbiter.
CA: dismissed the petition outright for not having been filed by an
indispensable party in interest under Section 2, Rule 3 of the Rules
of Court.
ISSUE:1) Whether, in taking the packing tape for her own personal
use, Helen committed serious misconduct, which is a just cause for
her dismissal from service. (substantive aspect of the case);
2)Whether the petition of petitioners is out rightly dismissible for
not having been filed by an indispensable party in interest
(procedural aspect of the case)
HELD:1. Yes. Article 282 of the Labor Code enumerates the just
causes for termination. Misconduct is defined as "the transgression
of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment." For serious misconduct to justify
dismissal under the law, "(a) it must be serious, (b) must relate to
the performance of the EEs duties; and (c) must show that the EE
has become unfit to continue working for the ER."
In the case at bar, Helen took the packing tape with the thought
that she could use it for her own personal purposes. When Helen
was asked to explain in writing why she took the tape, she stated,
"Kumuha po ako ng isang packing tape na gagamitin ko sa
paglilipat ng gamit ko sa bago kong lilipatang bahay." In other
words, by her own admission, there was intent on her part to
benefit herself when she attempted to bring home the packing tape
in question.
It is noteworthy that prior to this incident, there had been several
cases of theft and vandalism involving both respondent companys
property and personal belongings of other EEs. In order to address
this issue of losses, respondent company issued two memoranda
implementing an intensive inspection procedure and reminding all
EEs that those who will be caught stealing and performing acts of
vandalism will be dealt with in accordance with the companys
Code of Conduct. Despite these reminders, Helen took the packing
tape and was caught during the routine inspection. All these
circumstances point to the conclusion that it was not just an error of
judgment on the part of Helen, but a deliberate act of theft of
company property.
The petitioners also argue that the penalty of dismissal is too harsh
and disproportionate to the offense committed since the value of
the thing taken is very minimal. Petitioners cite the case of Caltex
Refinery
EEs
Association
v.
National
Labor
Relations
Commission where Arnelio M. Clarete (Clarete) was found to have
willfully breached the trust and confidence reposed in him by taking
a bottle of lighter fluid. In said case, we refrained from imposing the
supreme penalty of dismissal since the EE had no violations "in his

eight years of service and the value of the lighter fluid is very
minimal compared to his salary.
After a closer study of both cases, we are convinced that the case
of Caltex is different from the case at hand. Although both Clarete
and Helen had no prior violations, the former had a clean record of
eight years with his ER. On the other hand, Helen was not even on
her second year of service with Keihin when the incident of theft
occurred. And what further distinguishes the instant case
from Caltex is that respondent company was dealing with several
cases of theft, vandalism, and loss of company and EEs property
when the incident involving Helen transpired.
Regarding the requirement of procedural due process in dismissal of
EEs, petitioners argue that the first notice failed to explain the
charge being leveled against Helen. According to the petitioners,
the notice was vague and lacked sufficient definitiveness.
2. It is clear that petitioners failed to include the name of the
dismissed EE Helen Valenzuela in the caption of their petition
for certiorari filed with the CA as well as in the body of the said
petition. Instead, they only indicated the name of the labor union
Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA) as
the party acting on behalf of Helen. As a result, the CA rightly
dismissed the petition based on a formal defect.
Under Section 7, Rule 3 of the Rules of Court, "parties in interest
without whom no final determination can be had of an action shall
be joined as plaintiffs or defendants." If there is a failure to implead
an indispensable party, any judgment rendered would have no
effectiveness.31 It is "precisely when an indispensable party is not
before the court (that) an action should be dismissed. The absence
of an indispensable party renders all subsequent actions of the
court null and void for want of authority to act, not only as to the
absent parties but even to those present." 32 The purpose of the
rules on joinder of indispensable parties is a complete
determination of all issues not only between the parties
themselves, but also as regards other persons who may be affected
by the judgment. A decision valid on its face cannot attain real
finality where there is want of indispensable parties.
Loss of Trust and Confidence
JOSE S. SANTOS, JR.,vs. NLRC, HAGONOY INSTITUTE INC., et
al
G.R. No. 115795. March 6, 1998
FACTS: Petitioner, a married man, was employed as a teacher by
the private respondent Hagonoy Institute Inc. from June 1980 until
his dismissal on June 1, 1991. Likewise working as a teacher for the
private respondent was Mrs. Arlene T. Martin, also married. In the
course of their employment, the couple fell in love. Thereafter,
rumors regarding the couples relationship spread, especially among
the faculty members and school officials.
Concerned about the rumors, private respondent advised Mrs.
Martin to take a leave of absence which she ignored, as she
continued to report for work. Consequently, on November 9, 1990,
she was barred from reporting for work and was not allowed to
enter the private respondents premises, effectively dismissing her
from her employment.
In view of her termination from the service, Mrs. Martin filed a case
for illegal dismissal before the NLRC Regional Arbitration Branch No.
III, San Fernando, Pampanga2 against the private respondent. After
the parties had submitted their respective evidence and position
paper, Labor Arbiter Ariel Santos rendered a decision dismissing the
complaint. NLRC reversed LA.
The reversal was anchored on the failure by the private respondent,
in dismissing Mrs. Martin, to accord her the necessary procedural
due process. Private respondent set up a committee to investigate
the veracity of the rumors. After two weeks of inquiry, the
committee rendered its report confirming the illicit relationship
between the petitioner and Mrs. Martin.
In view of the committees finding, on December 19, 1990,
petitioner was charged administratively for immorality and was
required to present his side on the controversy. Five months later or
in May 1991, petitioner was informed by the private respondents
Board of Directors of his dismissal effective June 1, 1991.6 Unable
to accept such verdict, petitioner filed a complaint for illegal
dismissal on August 12, 1991 before the NLRC Regional Arbitration
Branch No. III, San Fernando, Pampanga. After a full blown trial was
conducted, Labor Arbiter Quintin C. Mendoza rendered a decision
dated January 12, 1993, dismissing petitioners complaint but at the
same time awarding monetary sums as financial assistance.
ISSUE: WON petitioner should be dismissed.
HELD: We have consistently held that in order to constitute a valid
dismissal, two requisites must concur: (a) the dismissal must be for
any of the causes expressed in Art. 282 of the Labor Code, and (b)
the EE must be accorded due process, basic of which are the
opportunity to be heard and defend himself.9
Private respondent, in justifying the termination of the petitioner,
contends that being a teacher, he must live up to the high moral
standards required of his position. In other words, it asserts that its
purpose in dismissing the petitioner was to preserve the respect of
the community towards the teachers and to strengthen the
educational system.11
On the other hand, petitioner merely argues that the alleged illicit
relationship was not substantially proven by convincing evidence by
the private respondent as to justify his dismissal.
On the outset, it must be stressed that to constitute immorality, the
circumstances of each particular case must be holistically
considered and evaluated in light of the prevailing norms of
conduct and applicable laws.12 American jurisprudence has defined
immorality as a course of conduct which offends the morals of the
community and is a bad example to the youth whose ideals a

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J.SUAREZ II, 2ND SEM,SY 12-13
teacher is supposed to foster and to elevate,13 the same including
sexual misconduct. Thus, in petitioners case, the gravity and
seriousness of the charges against him stem from his being a
married man and at the same time a teacher.
We cannot overemphasize that having an extra-marital affair is an
afront to the sanctity of marriage, which is a basic institution of
society. Even our Family Code provides that husband and wife must
live together, observe mutual love, respect and fidelity. This is
rooted in the fact that both our Constitution and our laws cherish
the validity of marriage and unity of the family. Our laws, in
implementing this constitutional edict on marriage and the family
underscore their permanence, inviolability and solidarity. As a
teacher, petitioner serves as an example to his pupils, especially
during their formative years and stands in loco parentis to them. To
stress their importance in our society, teachers are given substitute
and special parental authority under our laws.
Consequently, it is but stating the obvious to assert that teachers
must adhere to the exacting standards of morality and decency.
There is no dichotomy of morality. A teacher, both in his official and
personal conduct, must display exemplary behavior. He must freely
and willingly accept restrictions on his conduct that might be
viewed irksome by ordinary citizens. In other words, the personal
behavior of teachers, in and outside the classroom, must be beyond
reproach. It seems obvious that when a teacher engages in extramarital relationship, especially when the parties are both married,
such behavior amounts to immorality, justifying his termination
from employment.
Having concluded that immorality is a just cause for dismissing
petitioner, it is imperative that the private respondent prove the
same. Since the burden of proof rests upon the ER to show that the
dismissal was for a just and valid cause, the same must be
supported by substantial evidence.
Undoubtedly, the question of immorality by the petitioner is factual
in nature. Thus, we reiterate the well-settled rule that factual
findings by the NLRC, particularly when it coincides with those by
the Labor Arbiter, are accorded respect, even finality, and will not
be disturbed for as long as such findings are supported by
substantial evidence. A scrutiny of the records of the instant
petition leads us to concur with the NLRCs finding that petitioner
indeed entered into an illicit relationship with his co-teacher. This
fact was attested to by the testimonies of nine witnesses (a fourth
year student, a security guard, a janitor and six co-teachers) which
petitioner failed to rebut.
We hold henceforth separation pay shall be as a measure of social
justice only in these instances where the EE is validly dismissed for
cause other than serious misconduct or those reflecting his moral
character. Where the reason for the valid dismissal is, for example,
habitual intoxication or an offense involving moral turpitude, like
theft or illicit sexual relationship with a fellow worker, the ER may
not be required to give the dismissed EE separation pay, or
financial assistance, or whatever other name it is called, on the
ground of social justice. DISMISSED.
RUFINO NORBERTO F. SAMSON vs. NLRC
[G.R. No. 121035. April 12, 2000]
FACTS: This pertains to the case (NCR-00-01-00652-94) filed by the
complainant Rufino Norberto F. Samson against the respondents
Schering Plough Corp. (SPC for brevity) and Mr. Leo C. Riconalla,
National Sales Manager, for money equivalent of rice subsidy for
the period April 1990 to December 1992 and holiday pay, now
deemed submitted for resolution based on records available.
On February 1, 1994, said complainant filed another case (NCR-0002-00887-94) for illegal preventive suspension raffled to the
Honorable Labor Arbiter Donato G. Quinto, Jr. and consolidated to
the above case number. Likewise, on February 4, 1994, complainant
filed a Motion to Amend Complaint and averred pertinently that x x
x complainant was placed under an indefinite preventive
suspension on 25 January 1994; and x x x was arbitrarily and
summarily terminated from employment on 03 February 1994 on
ground of loss of confidence.
In a letter dated 25 January 1994 (Annex A) addressed to the
complainant Mr. Samson signed by one J.L. Estingor, the latter
called the attention of (sic) the complainants conduct x x x in a
manner inimical to the interests of SPC
(made utterances of obscene, insulting, and offensive words,
referring to or directed against SPCs Management Committee, in
the presence of several co-EEs, threats to some co-EEs, advising
them to watch out for some disruptive actions to happen during the
National Sales Conference.)
Complainant was given two (2) days from receipt of the foregoing
letter and to explain x x x why no disciplinary action, including
termination, should be taken against the complainant and in the
meantime was placed on preventive suspension effective
immediately, until further notice.
On the basis of the pleadings filed by the parties and evidence on
record, the labor arbiter rendered his Decision, dated 25 August
1994, declaring the dismissal of petitioner illegal. The labor arbiter
ruled that petitioners conduct is not so serious as to warrant his
dismissal because: 1) the alleged offensive words were uttered
during an informal and unofficial get-together of EEs where there
was social drinking and petitioner was already tipsy; 2) the words
were uttered to show disapproval over managements decision on
the "Cua Lim" case; 3) the penalty for the offense is only "verbal
reminder" under respondent companys rules and regulations; and
4) petitioner was already admonished during a meeting on 4
January 1994. Accordingly, respondent company was ordered to

reinstate petitioner as District Sales Manager and to pay him

backwages.
Both parties appealed said decision to the NLRC. Petitioner filed a
partial appeal of the denial of his claim for holiday pay and the cash
equivalent of the rice subsidy. For its part, respondent company
sought the reversal of the decision of the labor arbiter alleging that
the latter erred in ruling that petitioners employment was
terminated without valid cause and in ordering his reinstatement. In
reversing the labor arbiters decision, the NLRC found that there
was just cause, i.e., gross misconduct, for petitioners dismissal.
ISSUE: WON petitioner is validly dismissed
RULING: Factual findings of the NLRC are accorded respect. In this
case, however, there is compelling reason to deviate from this
salutary principle because the findings of facts of the NLRC are in
conflict with that of the labor arbiter. Accordingly, this Court must of
necessity review the records to determine which findings should be
preferred as more conformable to the evidentiary facts.
As borne by the records, petitioners dismissal was brought about
by the utterances he made during an informal Christmas gathering
of respondent companys Sales and Marketing Division on 17
December 1993. Petitioner was heard to have uttered, "Si
EDT (referring to Epitacio D. Titong, General Manager and President
of respondent company), bullshit yan," "sabihin mo kay EDT yan"
and "sabihin mo kay EDT, bullshit yan," while making the "dirty
finger" gesture. Petitioner likewise told his co-EEs that the
forthcoming national sales conference of respondent company
would be a "very bloody one."
The NLRC ruled that the foregoing actuation of petitioner
constituted gross misconduct warranting his dismissal. Citing
jurisprudence, the NLRC held that "in terminating the employment
of managerial EEs, the ER is allowed a wider latitude of discretion
than in the case of ordinary rank-and-file." We do not agree with the
findings of the NLRC.
Misconduct is improper or wrong conduct. It is the transgression of
some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment. The misconduct to be serious must
be of such grave and aggravated character and not merely trivial
and unimportant. Such misconduct, however serious, must,
nevertheless, be in connection with the EEs work to constitute just
cause for his separation.
In this case, the alleged misconduct of petitioner, when viewed in
its context, is not of such serious and grave character as to warrant
his dismissal. First, petitioner made the alleged offensive utterances
and obscene gesture during an informal Christmas gathering of
respondent companys district sales managers and marketing staff.
The gathering was just a casual get-together of EEs. It is to be
expected during this kind of gatherings, where tongues are more
often than not loosened by liquor or other alcoholic beverages, that
EEs freely express their grievances and gripes against their ERs.
EEs should be allowed wider latitude to freely express their
sentiments during these kinds of occasions which are beyond the
disciplinary authority of the ER. Significantly, it does not appear in
the records that petitioner possessed any ascendancy over the EEs
who heard his utterances as to cause demoralization in the ranks.
Second, petitioners outburst was in reaction to the decision of the
management in the "Cua Lim" case. Admittedly, using the words
"bullshit" and "putang ina" and making lewd gesture to express his
dissatisfaction over said management decision were clearly in bad
taste but these acts were not intended to malign or cast aspersion
on the person of respondent companys president and general
manager.
Third, respondent company itself did not seem to consider the
offense of petitioner serious and grave enough to warrant an
immediate investigation on the matter. It must be recalled that
petitioner uttered the alleged offensive language at an informal
gathering on 17 December 1993. He then allegedly made
threatening remarks about the forthcoming sales conference on 3
January 1994. During a meeting on 4 January 1994, Mr. Titong, Jr.,
the president and general manager of respondent company and
allegedly to whom the offensive words were directed, merely
admonished petitioner stating that, "when there is a disagreement,
act in a professional and civilized manner." Respondent company
allowed several weeks to pass before it deemed it necessary to
require petitioner to explain why no disciplinary action should be
taken against him for his behavior. This seeming lack of urgency on
the part of respondent company in taking any disciplinary action
against petitioner negates its charge that the latters misbehavior
constituted serious misconduct. There being no just cause for
petitioners dismissal, the same is consequently unlawful. Petitioner
is thus entitled to reinstatement to his position as District Sales
Manager, unless such position no longer exists, in which case he
shall be given a substantially equivalent position without loss of
seniority rights. He is likewise entitled to the payment of his full
backwages. With respect to petitioners other monetary claims,
however, we agree with the findings of the labor arbiter that he
failed to establish his entitlement thereto. GRANTED.
VH MANUFACTURING INC V NLRC (GAMIDO)
322 SCRA 417DE LEON; January 19, 2000
FACTS: Since November 5, 1985 Gamido was employed in
VHManufacturings
business
of
manufacturing
liquefied
petroleumgas (LPG) cylinders. He served as a quality control
inspectorwith the principal duty of inspecting LPG cylinders for
anypossible defects. His service with the company was
abruptlyinterrupted on February 14, 1995, when he was served a

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J.SUAREZ II, 2ND SEM,SY 12-13
noticeof termination of his employment.- His dismissal stemmed
from an incident on February 10, 1995wherein VHs company
President, Alejandro Dy Juanco,allegedly caught private Gamido
sleeping on the job. On thatsame day, private respondent was
asked through a writtennotice from the petitioners Personnel
Department to explainwithin twenty-four (24) hours why no
disciplinary action shouldbe taken against him for his violation of
Company Rule 15-bwhich provides for a penalty of separation for
sleeping duringworking hours. Without delay, private respondent
replied in aletter which reads:
"Sir, ipagpaumanhin po ninyo kungnakapikit ako sa aking puwesto
dahil hinihintay ko po ang nilihahi Abreu para i quality pasensiya na
po kung hindi ko ponamalayan ang pagdaan ninyo dahil maingay
po ang paintingbooth."
Notwithstanding his foregoing reply, he wasterminated.- Feeling
aggrieved, he filed a complaint for illegal dismissal,praying for
reinstatement to his position as quality controlinspector. Labor
Arbiter declared that Gamidos dismissal isanchored on a valid and
just cause. NLRC reversed thedecision.
ISSUE:WON Gamidos dismissal was too harsh a penaltly for
hisviolation of company rule 15-b
HELD: YES- Basically, the reason cited for the dismissal of
privaterespondent is sleeping on the job in violation of Company
Rule15-b. But according to Gamido, he was not sleeping on the
jobbut was merely idle, waiting for the next cylinder to be checked.In view of the gravity of the penalty of separation, as providedby
the Company Rules and Regulation., in termination disputes,the
burden of proof is always on the ER to prove that thedismissal was
for a just and valid cause. What is at stake here isnot only the job
itself of the EE but also his regularincome therefrom which is the
means of livelihood of his family.- A thorough review of the record
discloses that, contrary to thefindings of the Labor Arbiter,
petitioners claim that privaterespondent slept on the job was not
substantiated by anyconvincing evidence other than the bare
allegation of theofficer.- Next, VHs reliance on the authorities it
cited that sleeping onthe job is always a valid ground for dismissal,
is misplaced. Theauthorities cited involved security guards whose
dutynecessitates that they be awake and watchful at all
timesinasmuch as their function, to use the words
inLuzonStevedoring Corp. v. Court of Industrial Relations, is "to
protectthe company from pilferage or loss." Accordingly, the
doctrinelaid down in those cases is not applicable to the case at
bar.- Finally, while an ER enjoys a wide latitude of discretionin the
promulgation of policies, rules and regulations on work-related
activities of the EEs, those directives, however,must always be fair
and reasonable,
and the corresponding penalties, when prescribed, must be
commensurate to theoffense involved and to the degree of the
infraction. In the caseat bar, the dismissal meted out on private
respondent for allegedly sleeping on the job, under the attendant
circumstances, appears to be too harsh a penalty, consideringthat
he was being held liable for first time, after nine 9 of unblemished
service, for an alleged offense which caused no prejudice to the ER,
aside from absence of substantiationof the alleged offense.Neither
was it shown that privaterespondents alleged negligence or
neglect of duty, if any, wasgross and habitual. Thus, reinstatement
is just and proper.
petition is hereby DISMISSED and the challengedDecision and Order
of public respondent NLRC are AFFIRMED
ROSARIO vs. VICTORY RICEMILL
397 SCRA 760 CALLEJO; February 19, 2003
FACTS Emilio Uy owned Victory Ricemill. He employed Rosario
astruck driver. Petitioner was tasked to, among others, haul
palayfrom various points and bring them to respondents ricemill.
Inaddition, petitioner acted as personal driver to the family of Mr.Uy
during their trips to Manila Uy dismissed Rosario. According to
respondent, petitioner wasguilty of insubordination when he refused
to serve as driver ofMr. Uys son when the latter needed a driver.
Also, petitionerwas instructed to deliver 600 bags of cement to Felix
Hardware.Instead, petitioner delivered the same to one Eduardo
Interior,who had not since then paid for P60k. Because of
petitionerstendency to disobey the orders to him, Uy was
constrained toengage the services of another driver. Petitioner
resented thenew driver and became uncooperative, disrespectful
andquarrelsome. Petitioner, armed with a dagger, fought with
theother driver and inflicted an injury on the latter.
Petitionerlikewise inflicted injuries on the head of a co EE, whenhe
intervened in the fight and tried to pacify petitioner.
A complaint for illegal dismissal with money claims was filed by
petitioner
Labor arbiter found that there were valid causes for the
termination of petitioners employment.The NLRC found that
petitioner was denied due process duringthe proceedings with the
regional labor arbiter as petitioner wasnot given the opportunity to
present his additional rebuttalevidence. On the other hand,
respondent was allowed to submitin evidence various exhibits to
discredit the rebuttal testimonyof petitioner. Case was remanded.
Petitioner submitted the affidavit ofRoque, who averred thatthe 600
bags of cement delivered to Eduardo Interior had beenpaid as
evidenced by in the sum of P58,950.00 payable torespondent.
Regional labor arbiter promulgated his decision stating that he
found no reason to deviate from his previous decision. NLRC
affirmed the ruling of the regional labor arbiter. CA found that
respondent had justifiable cause to dismisspetitioner. CA also
observed that although there was no strictcompliance with the two
notice rule, it could be gleaned fromthe records that petitioner was
given ample opportunity toexplain his side. Moreover, even
granting that respondent fellshort of the two notice requirement,

such irregularity, accordingto the CA, does not militate against the
legality of the
dismissal.
ISSUES 1. WON petitioners termination was for a just and lawful
cause; 2. WON petitioners dismissal from his employment was in
accordance with the due process requirement of the law; 3. WON
petitioner is entitled to backwages
HELD 1. YES
Petitioners actuations clearly constituted willful
disobedienceand serious misconduct justifying his dismissal under
Article282(a) of the Labor Code which provides:Art. 282.
Termination by ER. An ER mayterminate an employment for any of
the following causes: (a) Serious misconduct or willful disobedience
by theEE of the lawful orders of his ER orrepresentative in
connection with his work; Willful disobedience of the ERs lawful
orders, as a justcause for the dismissal of an EE, envisages
theconcurrence of at least two requisites: (1) the EEsassailed
conduct must have been willful or intentional, thewillfulness being
characterized by a "wrongful and perverseattitude;" and (2) the
order violated must have beenreasonable, lawful, made known to
the EE and mustpertain to the duties which he had been engaged
to discharge.
2. NO To effect the dismissal of an EE the law requires notonly that
there be just and valid cause as provided under Article282. It
likewise enjoins the ER to afford the EE theopportunity to be heard
and to defend himself. The ER ismandated to furnish the EE with
two written notices: (a)a written notice containing a statement of
the cause for thetermination to afford the EE ample opportunity to
beheard and defend himself with the assistance of
hisrepresentative, if he so desires; (b) if the ER decides toterminate
the services of the EE, the ER mustnotify him in writing of the
decision to dismiss him, statingclearly the reason therefore.
While respondent furnished petitioner the written noticeinforming
him of his dismissal, respondent failed to furnishpetitioner the
written notice apprising him of the charge orcharges against him.
Consequently, petitioner was deprived ofthe opportunity to respond
thereto. When the dismissal is effected for a just and valid cause,
thefailure to observe procedural requirements does not
invalidatenor nullify the dismissal of an EE. The consequence ofthe
failure either of the ER or the EE to live up tothis precept is to make
him liable in damages, not to render hisact void. The measure of
damages is the amount of wages theEE should have received were
it not for the terminationof his employment without prior notice. If
warranted, nominaland moral damages may also be awarded.
3. YES Under the Labor Code, only the absence of a just cause for
thetermination of employment can make the dismissal of anEE
illegal.
Art. 279. Security of Tenure. In cases of regularemployment, the
ER shall not terminate the services ofan EE except for a just cause
or when authorized bythis Title. An EE who is unjustly dismissed
from workshall be entitled to reinstatement without loss of
seniorityrights
and
other
privileges
and
to
his
full
backwages,inclusive of allowances, and to his other benefits or
theirmonetary equivalent computed from the time hiscompensation
was withheld from him up to the time of hisactual reinstatement.
Thus, only if the termination of employment is not for any ofthe
causes provided by law is it illegal and, therefore, theEE should be
reinstated and paid backwages. On the other hand, if it is shown
that the EE wasdismissed for any of the just causes mentioned in
said Art. 282,then, in accordance with that article, he should not
bereinstated. However, he must be paid backwages from the
timehis employment was terminated until it is determined that
thetermination of employment is for a just cause because thefailure
to hear him before he is dismissed renders thetermination of his
employment without legal effect. .
SMC vs. PONTILLAS
G.R. No.155178, May 7, 2008
NATIONAL BOOKSTORE INC V CA (YMASA,GABRIEL)
378 SCRA 194 BELLOSILLO; February 27, 2002
FACTS
Petitioner
National
Bookstore
employed private
respondentsYmasa and Gabriel as Cash Custodian and Head
Cashier. Theywere routinely tasked with counting the previous days
salesand placing them in separate plastic bags to be deposited
inINTERBANK and PCIB. The bags were held for safekeeping in
theBranch vault but upon retrieval to deposit the money withroving
tellers, the money was counted again but the amount forPCIB was
short of P42,758.
Private respondents were asked by Management to explain
inwriting why they should not be dismissed for the loss ofcompany
funds and were placed under preventive suspension.Private
respondents in turn denied responsibility, emphasizingthey had no
access to the vault and that they were thoroughlysearched by the
guard before leaving. They also asserted theirloyalty and sincerity
in their work as they had been employedthere over 13 years.
Petitioner found their explanation unsatisfactory and terminated
them for gross neglect of duty and loss of confidence. Private
respondents filed a complaint for illegaldismissal. The Labor Arbiter
found in their favor, stating that thedismissal was not founded on
valid and justifiable grounds.Petitioners appeal with the NLRC was
denied, as was theirpetition for certiorari with the CA for lack of
merit.
ISSUE: WON private respondents were illegally dismissed
HELD: YES The onus of proving that the dismissal of the EE was
fora valid and authorized cause rests on the ER. Failure todischarge
the same would mean the dismissal was not justifiedand therefore
illegal.The requisites for a valid dismissal are (a) the EE mustbe
afforded due process (b) the dismissal must be for a validcause.

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J.SUAREZ II, 2ND SEM,SY 12-13
Petitioner complied with the first requisite by furnishingthe EEs with
written notices stating cause fortermination, and having decided to
do so, the reasons therefor. Petitioner accused private respondents
of gross neglect ofduty and loss of confidence. Gross negligence is
defined as thefailure to exercise slight care or diligence. A perusal
of therecords show they werent even remotely negligent of
theirduties. They were able to illustrate with candor and
sinceritythe procedure they took prior to the loss
petitionersallegations on the other hand, were not supported by
anysubstantive evidence. Assuming arguendo they were
negligent,a single act cannot be categorized as habitual and thus
cannotbe a just cause for dismissal. Loss of confidence on the other
hand must be based on thewillful breach of trust and founded on
clearly established facts.Petitioner failed to establish with certainty
the facts upon whichsuch a breach of confidence could be based.
Privaterespondents were thus illegally dismissed. Petition is DENIED
for lack of merit.
SALAS vs. ABOITIZ ONE
556 SCRA 376
FACTS: Salas was a material controller of Aboitiz, and was tasked
with monitoring andmaintaining the availability and supply of
Quickbox needed by Aboitiz in its day-to-day operations. At one
point,
Salas
had
run
out
of
Large
Quickbox,
hamperingAboitiz business operation. Aboitiz then wrote Salas
a memorandum requiringhim to explain in writing within seventytwo hours why he should not bedisciplinarily dealt with for his (i)
failure to monitor the stock level of LargeQuickbox which led
to inventory stock out; and (ii) failure to report to [his]immediate
superior the Large Quickbox problem when the stock level
wasalready critical, when the Large Quickbox level was near stock
out, and the stocklevel had a stock out. Five days after, an
administrative hearing was conductedto give Salas opportunity to
explain his side. Twenty-two days after, Aboitiz senthim a decision
notice, terminating him for loss of trust and confidence,
effectivemid-month. Salas then sent a letter to Mr. Hamoy
requesting reconsideration of the decision, asking if he could avail
of the early retirement plan, having workedfor Aboitiz for ten years
already. He also asked to be allowed to tender hisresignation
instead of being terminated. Lastly, he asked to be employed
untilthe end of the month, so as to have enough time to look for
another job. Mr.Hamoy denied the request for early retirement plan,
stating that the company'stable of discipline provided the penalty
of dismissal for the offenses he hadcommitted. The extension,
however, was granted, and even extended for amonth.Claiming
termination without cause, Salas filed with the Labor Arbiter a
complaintagainst Aboitiz and its president Sabin Aboitiz for illegal
dismissal with prayer forreinstatement, and for payment of full
backwages, moral and exemplarydamages, as well as attorneys
fees. Aboitiz responded that there was validtermination, asserting
that Salas was dismissed for just cause and with dueprocess, Salas
having willfully breached his duty when he ran out of
LargeQuickbox , justifying the termination of his employment.The
Labor Arbiter sustained
Salas'
dismissal.
On appeal, the
NLRC reversed.Gross negligence being characterized by want of
even slight care acting oromitting to act in a situation where there
is a duty
to act, willfully
andintentionally
with a conscious
indifference to consequence, Salas could not beheld guilty, having
done his duty to make proper requisition in advance. Failureto
follow-up is not an indicator of remission of duty. Salas can only be
guilty of negligence, for failing to properly monitor and document
the stocks
in
hiscustody. As
he admitted
during the
administrative hearing, there were thosewhich were even missing.
Worst, he tampered the records to show that the stockon 31 May
2003 is for 02 June 2003. While there was no intention to defraud
thecompany. The NLRC thus denied his prayer for backwages, and
ordered
thepayment
of
separation
pay
instead
of
reinstatementAboitiz filed a motion for reconsideration, while
Salas sought partialreconsideration of the decision, both of which
were denied by the NLRC. Salasand Aboitiz filed petitions for
certiorari with the CA. Salas questioned the denialof his prayer for
backwages and other monetary benefits, ad the order
directingpayment of separation pay instead of reinstatement.
Aboitiz questioned NLRC'sreversal. The CA sustained Salas'
dismissal, holding that Salas was guilty of serious misconduct under
Art. 282(a) for tampering the records to show that thestock on May
31 2003 was for June 2 2003, gross and habitual neglect under
Art.282(b), and willful breach of the trust (Art. 282 (c)) reposed on
Salas by Aboitiz, because as "warehouseman", and therefore
a confidential EE, Salasconcededly tampered company records
to hide his gross and habitual neglect,and worse, sold the
companys eight units of used airconditioners withoutauthority.
ISSUE: Whether simple negligence can be a basis for dismissal
on ground of loss of trust and confidence.
HELD: Salas was terminated for neglect of duty and willful breach
of trust. Grossnegligence connotes want or absence of or failure to
exercise slight care ordiligence, or the entire absence of care. To
warrant removal from service, thenegligence should not merely be
gross , but also habitual
Although it was Salas'duty to monitor and maintain the availability
and supply of Quickbox, recordsshow that Salas had made a
requisition as early as May 21, 2003, even makingseveral followups. If there is anything that Salas can be faulted for, it is hisfailure
to promptly inform his immediate supervisor of the non-delivery of
therequisitioned items. Nevertheless, such failure did not amount to
gross neglectof duty or to willful breach of trust, which would justify
his dismissal fromservice.Moreover, there appears nothing to
suggest that Salas position was a highly oreven primarily
confidential position, so that he can be removed for loss of trustand
confidence by the ER. A "position of trust and confidence is
onewhere a person is "entrusted with confidence on delicate
matters," or with thecustody, handling, or care and protection of
the ERs property. In therecords of the case, there is no semblance

of willful breach of trust on the partof Salas. It is true that there was
erasure or alteration on the bin card. Aboitiz,however, failed to
demonstrate that it was done to cover up Salas allegednegligence.
Other than the bin card and Aboitizs barefaced assertion, no
otherevidence was offered to prove the alleged cover-up. The CA,
therefore, erred inadopting Aboitizs unsubstantiated assertion to
justify Salas dismissal. The lossof trust must be based not on
ordinary breach but, in the language of Article282(c) of the Labor
Code, on willful breach. A breach is willful if it is doneintentionally,
knowingly
and
purposely,
without
justifiable
excuse,
asdistinguished from an act done carelessly, thoughtlessly,
heedlessly orinadvertently. In this case, Aboitiz utterly failed to
establish the requirementsprescribed by law and jurisprudence for a
valid dismissal on the ground of breach of trust and
confidence.Neither can Aboitiz validate Salas dismissal on the
ground of seriousmisconduct for his alleged failure to account for
unused accountable forms. Thecharge came only after Salas
dismissal. The subject accountable forms wereissued to Salas in
2001. Inexplicably, this alleged infraction was never includedas
ground in the notice of termination. It was only three (3) months
after thefiling of the complaint for illegal dismissal that Aboitiz
asserted that Salas failedto account for these unused accountable
forms. It is clear that such assertion of serious misconduct was a
mere afterthought to justify the illegal dismissal.Aboitizs reliance
on the past offenses of Salas for his eventual dismissal islikewise
unavailing.
The correct rule
has
always
been that
such previousoffenses may be used as valid justification for
dismissal from work only if theinfractions are related to
the subsequent offense upon which the basis of termination is
decreed. While it is true that Salas had been suspended on for
failure to meet the security requirements of the company, and for
his failure toassist in the loading at the fuel depot , such offenses
are not related to Salaslatest infraction, hence, cannot be used as
added justification for the dismissal.Undoubtedly, no just cause
exists to warrant Salas dismissal. Consequently, heis entitled
to reinstatement to
his former position without loss
of seniorityrights, and to payment of backwages. However, the
award of backwages is modified because Salas was not
entirelyfaultless.
***As stated in the decision notice, Salas was terminated for
neglect of duty and willful breach of trust. Gross negligence
connotes want or absence of or failure to exercise slight care or
diligence, or the entire absence of case. IT evinces a thoughtless
disregard of consequences without exerting any effort to avoid
them. To warrant removal from service, the negligence should not
merely be gross, but also habitual. If there is anything that Salas
can be faulted for, it is his failure to promptly inform his immediate
supervisor of the non-delivery of the requisitioned items.
Nevertheless, such failure did not amount to gross neglect of duty
or to willful breach of trust, which would justify his dismissal from
service. The CA also justified Salas' dismissal on ground of willful
breach of trust. It lent credence to Aboitiz's posture that Salas was
a warehouseman holding a position of trust and confidence. We
disagree. Salas, as material controller was tasked with monitoring
and maintaining the availability and supply of Quickbox. There
appears nothing to suggest that Salas' position was a highly or
even primarily confidential position, so that he can be removed for
loss of trust and confidence by the ER.
Indeed, an ER has the right, under the law, to dismiss an EE based
on fraud or willful breach of the trust bestowed upon him by his ER
or the latter's authorized representative. However, the loss of trust
must be based not on ordinary breach but, in the language of
Article 282(c) of the Labor Code, on willful breach. a breach is willful
if it is done intentionally, knowingly, and purposely, withouth
justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly, or inadvertently. It must rest on
substantial grounds and not on the ER's arbitrariness, whims,
caprices, or suspicion; otherwise, the EE would eternally remain at
the mercy of the ER. It should be genuine and not simulated; now
should it appear as a mere afterthought to justify an earlier action
taken in bad faith or a subterfuge for causes which are improper,
illegal, or unjustified. It has never been intended to afford an
occasion for abuse because of its subjective nature. There must,
therefore, be an actual breach of duty committed by the EE which
must be established by substantial evidence. In this case, Aboitiz
utterly failed to establish the requirements prescribed by law and
jurisprudence for a valid dismissal on the ground of breach of trust
and confidence. Undoubtedly, no just cause exists to warrant Salas'
dismissal. Consequently, he is entitled to reinstatement to his
former position without loss of seniority rights, and to payment of
backwages. However, as Salas was not entirely faultless, and
although such negligence would not justify Salas' termination from
employment in view of the stringent condition imposed by the
Labor Code on termination of employment due to gross and
habitual neglect, the same cannot be condoned, much less
tolerated.
CHALLENGE SOCKS CORP. VS. CA
GRN165268 NOV.8,2005
FACTS
CHALLENGE SOCKS CORP (CSC) hired Elvie Buguat as
knittingoperator. In the course of her employment, she incurred
absences andtardiness without prior approval and had been
neglectful of herduties. May 25, 1998: she failed to check the socks
she was workingon causing excess use of yarn and damage to the
socksdesign. She was suspended for 5 days and warned that a
repetition of the same act would mean dismissal from the service.
February 2, 1999: she committed the same infraction and wasgiven
a warning. Despite the previous warnings, Buguat continued to
behabitually absent and inattentive to her task. March 1, 1999: she
again failed to properly count the bundleof socks assigned to her.
March 2, 1999: CSC terminated her services on grounds of habitual

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J.SUAREZ II, 2ND SEM,SY 12-13
absenteeism without prior leave, tardiness and neglectof work.
Thereafter, Buguat filed a complaint for illegal dismissal.
[8]
LA: Buguat was illegally dismissed; ordered CSC to reinstateher
without loss of seniority rights and benefits, but w/obackwages;
ruled that mistake in counting bundles of socks istolerable and
should be punished by suspension only. NLRC: adopted the findings
of LA. Denied CSC's Appeal andMR. CA: reversed and set aside LAs
and NLRCs decisions; CSCwas ordered to pay BUGUAT full
backwages; remanded to theRegional LA for the computation of the
backwages. CA also noted that petitioner failed to comply with the
twinnotice requirement in terminating an EE hence, thedismissal
was considered ineffectual.
ISSUE:WON Buguats termination is valid

disconnected his electrical service due to his failure to pay his

electric bills.

HELD: YES. One of the just causes for terminating an employment

underArticle 282 of the Labor Code is gross and habitual neglect
bythe EE of her duties. This cause includes grossinefficiency,
negligence and carelessness. Such just causes isderived from the
right of the ER to select and engage hisEEs. As a knitting operator,
Elvie was required to check the socksshe was working on and to
count the bundles of socks she hadto pack to be forwarded to the
Looping Section. Her repeated commission of the same offense
could beconsidered willful disobedience. Elvie, despite the
suspensionand warning, continued to disregard the company rules
andregulations

In this investigation, you are entitled to be assisted by a counsel or

an authorized union representative. You are also allowed to present
evidence and material witnesses to testify in your favor. Should you
fail to appear on the aforementioned date, we shall take it to mean
that you are waiving your right to present your side and refute the
aforesaid charge and evidence against you. If you appear alone, we
shall take it to mean that you are waiving your right to be
represented by such counsel or union representative.5

Habitual neglect implies repeated failure to perform onesduties for

a period of time. Buguats repeated acts of absenceswithout leave
and her frequent tardiness reflect her indifferentattitude to and lack
of motivation in her work. Her repeatedand habitual infractions,
committed despite several warnings,constitute gross misconduct.
Habitual absenteeism withoutleave constitute gross negligence and
is sufficient to justifytermination of an EE. Her repeated negligence
is not tolerable; neither should itmerit the penalty of suspension
only. The record of an EE is a relevant consideration indetermining
the penalty that should be meted out. An EEs past misconduct and
present behavior must betaken together in determining the proper
imposable penalty. The totality of infractions or the number of
violations committedduring the period of employment shall be
considered indetermining the penalty to be imposed upon an
erringEE.The offenses committed by him should not be takensingly
and separately but in their totality.Fitness for continuedemployment
cannot be compartmentalized into tight littlecubicles of aspects of
character, conduct, and ability separateand independent of each
other. It is the totality, not the compartmentalization, of
suchcompany
infractions
that
Buguat
had
consistently
committedwhich justified her dismissal. Terminating an employment
is one of petitionersprerogatives. Management has the prerogative
to discipline its EEsand to impose appropriate penalties on erring
workers pursuantto company rules and regulations. The Court has
upheld a companys management prerogativesso long as they are
exercised in good faith for the advancementof the ERs interest and
not for the purpose of defeatingor circumventing the rights of the
EEs under special lawsor under valid agreements. In the case at
bar, petitioner exercised in good faith itsmanagement prerogative
as there is no dispute that Buguathad been habitually absent, tardy
and neglectful of her work, tothe damage and prejudice of the
company. Her dismissal wastherefore proper. The law imposes
many obligations on the ER such asproviding just compensation to
workers, observance of theprocedural requirements of notice and
hearing in thetermination of employment. On the other hand, the
law alsorecognizes the right of the ER to expect from its workersnot
only good performance, adequate work and diligence, butalso good
conduct and loyalty.The ER may not becompelled to continue to
employ such persons whosecontinuance in the service will patently
be inimical to hisinterests. The ER has the burden of proving that
the dismissedworker has been served two notices : ( 1) one to
apprise him of the particular acts or omissions for which his
dismissal issought, and (2) the other to inform him of his
ERsdecision to dismiss him. A review of the records shows that
private respondent wasserved a written termination notice on the
very day she wasactually dismissed from the service. It was not
shown that CSCnotified Elvie in advance of the charge or charges
against hernor was she given an opportunity to refute the charges
madeagainst her.
Agabon v. National Labor Relations Commission
: Upheld asvalid the dismissal for just cause even if there was
nocompliance with the requirements of procedural due
process.While the procedural infirmity cannot be cured, it should
notinvalidate the dismissal.However, the ER should be heldliable for
noncompliance with the procedural requirements of due process.
Disposition
CAS DECISION IS
AFFIRMED;
backwages isDELETED; Nominal damages (for violation of Buguats
statutorydue process) in the amount of P30,000.00.
MANSION PRINTING CENTER vs. BITARA, Jr.
G.R. No.168120, January 25, 2012
MERALCO vs. BELTRAN
G.R. No.173774, January 30, 2012
NORMAN YABUT vs. MANILA ELECTRIC COMPANY and
MANUEL M. LOPEZ,
G.R. No. 190436 January 16, 2012
REYES, J.:
FACTS: On October 4, 2003, Meralco's Inspection Office issued a
memorandum3 addressed to Meralco's Investigation-Legal Office,
informing it of an illegal service connection at the petitioner's
residence. The Inspection Office claimed discovering shunting wires
installed on the meter base, registered under petitioner Yabut's
name. These wires allegedly allowed power transmission to the
petitioner's residence despite the fact that Meralco had earlier

Given this report, Meralco's Head of Investigation-Litigation Office

issued to the petitioner a notice4 dated November 3, 2003,
received by the petitioner's wife on the same day and with
pertinent portions that read: Please report to our Mr. Rodolfo C.
Serra of the Investigation-Litigation on November 11, 2003, at 9:00
a.m. as the Inspection had found your disconnected electric service
directly connected by a shunting wire to energize your empty meter
base. If proven true, such act constitutes dishonesty in violation of
Section 7 (3) of the Company Code on EE Discipline and/or serious
misconduct or an act analogous to fraud or commission of a crime
under Article 282 (a) and (e) of the Labor Code of the Philippines.

The offense under Section 7 (3) of Meralco's Company Code on EE

Discipline referred to in the aforequoted notice is with penalty of
dismissal on the first offense and is defined as follows:
While Yabut denied responsibility about the illegal connection, the
pictures taken specifically showing the shunted wires on the meter
base and his wife's admission that he was the one responsible are
sufficient proofs of his guilt. We give credit to the admission of his
wife as she did it with spontaneity without force or intimidation in
our part. His alibi that he seldom stayed in his house is
controverted by his admission that within the period in question
from July to October 3, 2003, he stayed home for 24 times. It is
surprising that, being a field representative who has knowledge
about illegal connection, it escaped from his attention the said
illegal connection when it could easily be detected since his
metering point is installed in front of his house.
We are not inclined to believe that he resorted to flying connection
as it is apparent that at the time his electric service was
disconnected in April, 2003, the Balagtas Branch found his service
to have registered KWHR consumption from 1555 to 2194 for a total
of 639 KWHR indicating that although his electric service was
disconnected, it continued to register electricity. Moreover, the
burden of proof is upon him to present to us the one responsible but
he failed to do so. In the absence of such proof, it is concluded that
he, being the registered customer and a resident, was the one who
installed the illegal connection purposely to alleviate the sickly
condition of his wife and two children.9
In view of these findings, respondent Meralco, through its Senior
Assistant Vice President for Human Resources Administration R. A.
Sapitula, issued on February 4, 2004 a notice of dismissal10
addressed to the petitioner. The notice cites violation of Section 7,
paragraph 3 of Meralco's Company Code on EE Discipline and
Article 282 (a), (c), (d) and (e) of the Labor Code of the Philippines
as bases for the dismissal.
LA: illegally dismissed from the service and hence, entitled to
reinstatement plus backwages and attorney's fees. NLRC:
dismissing the herein respondents' appeal for lack of merit.
CA:dismissal lawful, the appellate court attributed unto Yabut
authorship of the meter tampering and illegal use of electricity
acts which it regarded as serious misconduct. The Court observed:
ISSUE: Whether or not the CA committed an error of law in
annulling and setting aside the resolutions of the NLRC that
declared the herein petitioner illegally dismissed by the
respondents.
HELD: Significantly, (t)ampering with electric meters or metering
installations of the Company or the installation of any device, with
the purpose of defrauding the Company is classified as an act of
dishonesty from Meralco EEs, expressly prohibited under company
rules. It is reasonable that its commission is classified as a severe
act of dishonesty, punishable by dismissal even on its first
commission, given the nature and gravity of the offense and the
fact that it is a grave wrong directed against their ER.
To reiterate, Article 282 (a) provides that an ER may terminate an
employment because of an EE's serious misconduct, a cause that
was present in this case in view of the petitioner's violation of his
ER's code of conduct. Misconduct is defined as the transgression of
some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment. For serious misconduct to justify
dismissal, the following requisites must be present: (a) it must be
serious; (b) it must relate to the performance of the EE's duties; and
(c) it must show that the EE has become unfit to continue working
for the ER.22
In reviewing the CAs Decision, we again consider the petitioner's
duties and powers as a Meralco EE. And we conclude that he
committed a serious misconduct. Installation of shunting wires is
without doubt a serious wrong as it demonstrates an act that is
willful or deliberate, pursued solely to wrongfully obtain electric
power through unlawful means. The act clearly relates to the
petitioner's performance of his duties given his position as branch
field representative who is equipped with knowledge on meter
operations, and who has the duty to test electric meters and handle
customers' violations of contract. Instead of protecting the
companys interest, the petitioner himself used his knowledge to

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J.SUAREZ II, 2ND SEM,SY 12-13
illegally obtain electric power from Meralco. His involvement in this
incident deems him no longer fit to continue performing his
functions for respondent-company.
While the installation of the shunted wires benefited the herein
petitioner as a customer of Meralco, his act cannot be fully severed
from his status as the respondent's EE. As correctly observed by the
CA, (i)t is an offense against the Company Code of EE Discipline.
As a field representative, he is knowledgeable on the mechanics of
meter and metering installation.23
The dismissal is also justified as the act imputed upon the petitioner
qualifies as fraud or willful breach by the EE of the trust reposed in
him by his ER or duly authorized representative under Article 282
(c) of the Labor Code. While the petitioner contests this ground by
denying that his position is one of trust and confidence, it is
undisputed that at the time of his dismissal, he was holding a
supervisory position after he rose from the ranks since
commencement of his employment with Meralco. As a supervisor
with duty and power that included testing of service meters and
investigation of violations of contract of customers, his position can
be treated as one of trust and confidence, requiring a high degree
of honesty as compared with ordinary rank-and-file EEs.
Considering the foregoing, this Court agrees that there were just
causes for the petitioner's dismissal. We emphasize that dismissal
of a dishonest EE is to the best interest not only of the
management but also of labor. As a measure of self-protection
against acts inimical to its interest, a company has the right to
dismiss its erring EEs. An ER cannot be compelled to continue
employing an EE guilty of acts inimical to the ERs interest,
justifying loss of confidence in him.26
On the matter of procedural due process, it is well-settled that
notice and hearing constitute the essential elements of due process
in the dismissal of EEs. The ER must furnish the EE with two written
notices before termination of employment can be legally effected.
The first apprises the EE of the particular acts or omissions for
which dismissal is sought. The second informs the EE of the ER's
decision to dismiss him. With regard to the requirement of a
hearing, the essence of due process lies simply in an opportunity to
be heard, and not that an actual hearing should always and
indispensably be held.27
These requirements were satisfied in this case. The first required
notice was dated November 3, 2003, sufficiently notifying the
petitioner of the particular acts being imputed against him, as well
as the applicable law and the company rules considered to have
been violated. Notably, in his sworn statement dated November 17,
2003, the petitioner admitted receiving Meralco's notice of
investigation dated November 3, 2003.
On November 17, 2003, Meralco conducted a hearing on the
charges against the petitioner. During said time, the petitioner was
accorded the right to air his side and present his defenses on the
charges against him. Significantly, a high-ranking officer of the
supervisory union of Meralco assisted him during the said
investigation. His sworn statement29 that forms part of the case
records even listed the matters that were raised during the
investigation.
Finally, Meralco served a notice of dismissal dated February 4, 2004
upon the petitioner. Such notice notified the latter of the company's
decision to dismiss him from employment on the grounds clearly
discussed therein.
PRUDENTIAL BANK vs. MAURICIO
G.R. No.183350, January 18, 2012
NORKIS DISTRIBUTORS, INC. vs. DELFIN S. DESCALLAR,
G.R. No. 185255 March 14, 2012
VILLARAMA, JR., J.:
FACTS: On April 26, 1993, respondent Delfin S. Descallar was
assigned at the Iligan City Branch of petitioner Norkis Distributors,
Inc., a distributor of Yamaha motorcycles. He became a regular EE
on February 1, 1994 and was promoted as Branch Manager on June
30, 1997. He acted as branch administrator and had supervision
and control of all the EEs. Respondent was also responsible for sales
and collection.
In a memorandum dated June 20, 2002, petitioners required
respondent to explain in writing within 48 hours why he should not
be penalized or terminated for being AWOL or rendering under-time
service on certain dates from April 3, 2002 to June 11, 2002.[4] On
June 21, 2002, respondent submitted his written explanation
wherein he stated that he reported to the office on those dates, but
he either went to the bank or followed-up on prospects. As he was
still within city limits, he did not file any official leave or travel
record. He added that on June 11, 2002, he was at the pier pulling
out ten units of MC stocks.
On July 5, 2002, Norkis conducted an investigation through Mr.
Edmund Y. Pingkian. Finding that respondent was not able to prove
that he was really in the branch or on official travel, petitioners
suspended him for 15 days without pay beginning July 8, 2002.
According to petitioners, respondent admitted during the
investigation that he used company time for his personal affairs,
but only for a few hours and not the whole day.
While respondent was still serving his suspension, the Internal
Auditor of the company made a random operational review and
audit of the Iligan City Branch. Several findings against respondent
were noted by the auditor, to wit:

1. Refusal to accept redemption payment from customer Gamboa

on their deposited motorcycle unit and unauthorized use of said
deposited motorcycle unit;
2. Requiring customer Amy Pastor to pay an amount in excess of
her account balance;
3. Disbursement of sales commissions to unauthorized persons;
4. Application of sales commission on the down payments of
several walk-in customers.[7]
On July 20, 2002, petitioners asked respondent to explain the
findings against him within 4 hours from receipt of notice.
Respondent found the time given to be cruel but nevertheless
submitted his written explanation on the same day.
Later, respondent and Branch Control Officer Rosanna Lanzador
received a memorandum dated July 23, 2002, informing them that
during a cash count conducted on July 12, 2002, a shortage of P800
in the companys TNT fund was discovered.
Likewise, an
irregularity was found in the disbursement of sales commissions
amounting to P1,700. These amounts were charged equally to the
accounts of respondent and Lanzador.
Thereafter, in another memorandum dated July 25, 2002,
respondent was placed under preventive suspension for 15 working
days without pay. On August 12, 2002, petitioners issued a Notice
to Show Cause to respondent. On August 21, 2002, petitioners
terminated respondents services for loss of trust and confidence
and gross inefficiency.[12]
LA: illegally dismissed. NLRC: reversed the LAs decision and found
respondent to have been validly dismissed. The NLRC, however,
upheld the Labor Arbiters finding that petitioners are liable to
respondent for unpaid wages. CA: reinstated with modification the
decision of the LA.
HELD: petitioners terminated his employment on the ground of loss
of trust and confidence for supposedly committing acts inimical to
the companys interests. However, in termination cases, the burden
of proof rests upon the ER to show that the dismissal is for a just
and valid cause and failure to do so would necessarily mean that
the dismissal was illegal.[20] The ERs case succeeds or fails on the
strength of its evidence and not on the weakness of the EEs
defense. If doubt exists between the evidence presented by the ER
and the EE, the scales of justice must be tilted in favor of the latter.
Moreover, the quantum of proof required in determining the legality
of an EEs dismissal is only substantial evidence or such relevant
evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds, equally reasonable,
might conceivably opine otherwise.[21] Thus, it is incumbent upon
petitioners to prove by substantial evidence that valid grounds exist
for terminating respondents employment on the ground of loss of
trust and confidence. However, our review of the records of this
case reveals that the CA correctly held that petitioners failed to
discharge this burden.
In terminating respondents services, petitioners relied on several
grounds. First, petitioners relied on the affidavit of customer Ludy
Gamboa. In her affidavit, Ludy Gamboa accused respondent of
refusing to accept payment of P7,000 to redeem a motorcycle unit
sometime on May 21-23, 2001.[22] However, respondent was able
to prove by submitting the Monthly Inventory Report[23] that the
motorcycle unit had already been repossessed by the company due
to Gamboas failure to settle her account. Respondents refusal to
receive the partial payment was therefore undeniably justified. And
the motorcycle already having been repossessed, it could also be
sold to any person who might like to buy it including respondents
nephew.
Second, petitioners also allege that respondent charged customer
Amy Pastor an excessive amount. In her affidavit, Pastor claimed
that sometime on January 2002, respondent required her to pay the
amount of P5,566, while her outstanding balance was only P378.
[24] However, a closer look at the audit report conducted by the
internal auditor of petitioner Norkis, Joelito L. Florenosos, would
show that there was no over-collection.[25] Said exculpatory
finding was also made after the internal auditor noted that the
official receipt respondent issued to cover the said collection
showed no such over-collection. Why petitioners chose to believe
Pastors affidavit over the findings of its own internal auditor which
was duly supported by documentary evidence is perplexing.
Third, petitioners accuse respondent of giving unauthorized
commissions to Mr. Gary Bellen. Respondent however asserted,
and petitioners did not rebut, that Bellen is a legitimate
Personalized Sales Representative of Norkis Distributors, as
evidenced by the contract they signed.[26] Respondent also
explained, and petitioners again did not rebut, that Bellen tutored
the staff in computer programming and operation free of charge, on
the condition that he may entertain customers and receive
commissions. Clearly, therefore, the arrangement made with Bellen
was even beneficial to the company. Hence, in giving commissions
to Bellen, as sales representative, it cannot be said that respondent
willfully breached petitioners trust and confidence in him.
Fourth, petitioners argue that respondents failure to reach his
monthly sales quota is a valid basis for loss of trust and confidence.
In his explanation, respondent asserted that certain factors were to
be considered for the low sales performance in their branch such as
the existence of other competitors which offered low down
payments, low monthly installments, and other promotional items.
Respondent also emphasized that the customers capacity to pay
had been affected by the financial crisis at the time, thus making it
more difficult to collect from them.

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J.SUAREZ II, 2ND SEM,SY 12-13
To our mind, the failure to reach the monthly sales quota cannot be
considered an intentional and unjustified act of respondent
amounting to a willful breach of trust on his part that would call for
his termination based on loss of confidence. This is simply not the
willful breach of trust and confidence contemplated in Article 282(c)
of the Labor Code. Indeed, the low sales performance could be
attributed to several factors which are beyond respondents control.
To be a valid ground for an EEs dismissal, loss of trust and
confidence must be based on a willful breach.[27] To repeat, a
breach is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse.[28]
The normal consequences of respondents illegal dismissal, then,
are reinstatement without loss of seniority rights, and payment of
back wages computed from the time compensation was withheld
from him up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay
equivalent to one month salary for every year of service should be
awarded as an alternative. The payment of separation pay is in
addition to payment of back wages.[29]
Sy v. Metrobank
506 SCRA 580
FACTS: Petitioner Dennis D. Sy, herein substituted by his heirs
Soledad Y. Sy, Ronald Allan Y. Sy, and Melinda S. Pompenada, was
the branch manager in Bajada, Davao City, of respondent
Metropolitan Bank and Trust Company.
Under the banks Retirement Plan, an EE must retire upon reaching
the age of 55 years or after rendering 30 years of service,
whichever comes first. Sy would have rendered 30 years of service
by August 18, 1999.However, on February 5, 1999, he was
reappointed as branch manager for a term of one year starting
August 18, 1999 until August 18, 2000. His monthly compensation
was accordingly increased from P50,400 to P54,500, effective
August 16, 1999.
Meanwhile, on November 10 and 15, 1999, the bank released the
results of the audit conducted in its Bajada branch. On November
15, 1999, Sy tendered an irrevocable letter of retirement. In his
letter, he requested the timely release of his retirement pay and
other benefits. His request was denied.
The bank alleged that Sy allowed spouses Gorgonio and Elizabeth
Ong to conduct "kiting" activities in their account with the bank.
Thus, the bank placed Sy under preventive suspension and gave
him 48 hours to submit a written explanation. In response, Sy wrote
a letter explaining that he only made a wrong credit judgment.Not
satisfied with his answer, the bank notified Sy of other alleged
violations of company policies.
In reply, Sy explained in writing that the accommodation granted to
spouses Samuel Aquino and Charito Sy-Aquino was only P650,000,
not P9.11M as claimed by the bank. He added that the spouses
even offered a parcel of land as collateral and were willing to sell a
vehicle in settlement of their obligation with the bank.Unconvinced,
the bank dismissed Sy on December 15, 1999.
Sy filed against the bank a complaint for illegal suspension, illegal
dismissal and money claims, docketed as RAB-11-01-00024-0.
However, the Labor Arbiter dismissed the case for lack of merit.
On appeal, the National Labor Relations Commission (NLRC)
deemed Sy compulsorily retired. Thus, the NLRC awarded him
retirement benefits, unpaid salary, monetary value of unused leave
credits, 13th month pay, Christmas bonus, and refund of provident
fund.
The parties sought reconsideration, which were both denied for lack
of merit. Respondent bank elevated the matter to the Court of
Appeals, which set aside the ruling of the NLRC and reinstated the
Decision of the Labor Arbiter. On motion for reconsideration,
however, the Court of Appeals modified its ruling and ordered the
bank to reimburse Sys contribution to the provident fund.
ISSUES: (1) Was petitioner illegally terminated? (2) If his dismissal
was valid, would he still be entitled to retirement benefits?
HELD: Sy was validly dismissed on the ground of fraud and willful
breach of trust under Article 282 of the Labor Code. Records show
that as bank manager, he authorized "kiting" or drawing of checks
against uncollected funds in wanton violation of the banks
policies. 19 It was sufficient basis for the bank to lose trust in him.
Unlike a rank-and-file worker, where breach of trust as a ground for
valid dismissal requires proof of involvement in the alleged anomaly
and where mere uncorroborated accusation by the ER will not
suffice, the sheer existence of a basis for believing that the ERs
trust has been breached is enough for the dismissal of amanagerial
EE.
Petitioners conduct betrays his culpability. Shortly after the audit
conducted in the Bajada branch, he tendered an "irrevocable letter
of retirement." In the said letter, he requested that his retirement
be made effective December 1, 1999. Said request arouses
suspicion considering that he had previously agreed to the
extension of his employment as branch manager until August 18,
2000. Petitioners evident failure to offer any reasonable
explanation for such sudden shift in his plans is prejudicial to his
cause.

As for the requirement of due process, records show that it has

been fully satisfied in the instant case. The bank had complied with
the two-notice requirement, i.e.: (a) a written notice of the cause
for his dismissal to afford him ample opportunity to be heard and to
defend himself with the assistance of counsel, if he so desires; and
(b) a written notice of the decision to terminate him, stating clearly
the reason therefor.
Petitioner, however, theorizes that having been compulsorily
retired, he could no longer be dismissed by the bank. His premise is
absurd. Indeed, he would have qualified for compulsory retirement
under the banks Retirement Plan. However, he opted to accept the
banks offer of extending his employment for another year with a
corresponding salary increase. Thus, in effect, he had never retired.
Unfortunately for him, while serving such extended term, the bank
discovered his unauthorized grant of accommodation to accounts
engaged in "kiting" activity. Such act is a clear breach of the trust
reposed in him by the bank. He cannot now elude dismissal for a
just cause by claiming he was already retired compulsorily.
Is petitioner nevertheless entitled to retirement benefits? Under the
Labor Code, only unjustly dismissed EEs are entitled to retirement
benefits and other privileges including reinstatement and
backwages. Since petitioners dismissal was for a just cause, he is
not entitled to any retirement benefit. To hold otherwise would be to
reward acts of willful breach of trust by the EE. It would also open
the floodgate to potential anomalous banking transactions by bank
EEs whose employments have been extended. Since a banks
operation is essentially imbued with public interest, it owes great
fidelity to the public it deals with. In turn, it cannot be compelled to
continue in its employ a person in whom it has lost trust and
confidence and whose continued employment would patently be
inimical to the banks interest. While the scale of justice is tilted in
favor of workers, the law does not authorize blind submission to the
claim of labor regardless of merit.
While the Court commiserates with petitioner who has spent with
the bank the best three decades of his employable life, we find no
room to accord him compassionate justice. Records showed that he
violated the bank policies prior to his compulsory retirement. Thus,
there can be no earned retirement benefits to speak of. No such
provision is provided for by the Labor Code. In fact, even the Civil
Service Law imposes forfeiture of retirement benefits in valid
dismissal cases.
Notably, the Court has also disallowed claims for retirement
benefits in valid dismissal cases because the retirement plan itself
precluded EEs dismissed for cause from availing it. Although no
such prohibition in the retirement plan was alleged or proved in this
case, we nevertheless deny petitioners claims because his
offenses, vis--vis his long years of service with the bank, reflect a
regrettable lack of loyalty which he should have strengthened
instead of betrayed.The petition is hereby DENIED.
John Hancock Life Insurance Corp. v. Davis
GR 169549 | Sept. 3, 2008
FACTS: Respondent Joanna Cantre Davis was agency
administration officer of petitioner John Hancock Life Insurance
Corporation.On October 18, 2000, Patricia Yuseco, petitioner's
corporate affairs manager, discovered that her wallet was missing.
She immediately reported the loss of her credit cards to AIG and BPI
Express. To her surprise, she was informed that "Patricia Yuseco"
had just made substantial purchases using her credit cards in
various stores in the City of Manila. She was also told that a
proposed transaction in Abenson's-Robinsons Place was
disapproved because "she" gave the wrong information upon
verification.
Because loss of personal property among its EEs had become
rampant in its office, petitioner sought the assistance of the
National Bureau of Investigation (NBI). The NBI, in the course of its
investigation, obtained a security video from Abenson's showing
the person who used Yuseco's credit cards. Yuseco and other
witnesses positively identified the person in the video as
respondent.
Consequently, the NBI and Yuseco filed a complaint for qualified
theft against respondent in the office of the Manila city prosecutor.
But because the affidavits presented by the NBI (identifying
respondent as the culprit) were not properly verified, the city
prosecutor dismissed the complaint due to insufficiency of
evidence.
Meanwhile, petitioner placed respondent under preventive
suspension and instructed her to cooperate with its ongoing
investigation. Instead of doing so, however, respondent filed a
complaint for illegal dismissalalleging that petitioner terminated her
employment without cause.
The labor arbiter, in a decision dated May 21, 2002, found that
respondent committed serious misconduct (she was the principal
suspect for qualified theft committed inside petitioner's office
during work hours). There was a valid cause for her dismissal. Thus,
the
complaint
was
dismissed
for
lack
of
merit.
Respondent appealedthe labor arbiter's decision to the National
Labor Relations Commission (NLRC) which affirmed the assailed
decision on July 31, 2003. Respondent moved for reconsideration
but it was denied in a resolution dated October 30, 2003.
Aggrieved, respondent filed a petition for certiorariin the Court of
Appeals (CA) claiming that the NLRC committed grave abuse of
discretion in affirming the decision of the labor arbiter. She claimed
there was no valid cause for her termination because the city

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J.SUAREZ II, 2ND SEM,SY 12-13
prosecutor of Manila "did not find probable cause for qualified theft
against her." The dismissal of the complaint proved that the
charges against her were based on suspicion.
The CA, in its July 4, 2005 decision found that the labor arbiter and
NLRC merely adopted the findings of the NBI regarding
respondent's culpability. Because the affidavits of the witnesses
were not verified, they did not constitute substantial evidence. The
labor arbiter and NLRC should have assessed evidence
independently as "unsubstantiated suspicions, accusations and
conclusions of ERs (did) not provide legal justification for dismissing
an EE." Thus, the CA granted the petition.Petitioner moved for
reconsideration but it was denied. Hence, this petition.
ISSUE: WON petitioner substantially proved the presence of valid
cause for respondent's termination.
HELD: We grant the petition.Misconduct involves "the transgression
of some established and definite rule of action, forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment."
In this case, petitioner dismissed respondent based on the NBI's
finding that the latter stole and used Yuseco's credit cards. But
since the theft was not committed against petitioner itself but
against one of its EEs, respondent's misconduct was not workrelated and therefore, she could not be dismissed for serious
misconduct.
Nonetheless, Article 282(e) of the Labor Code talks of other
analogous causes or those which are susceptible of comparison to
another in general or in specific detail. For an EE to be validly
dismissed for a cause analogous to those enumerated in Article
282, the cause must involve a voluntary and/or willful act or
omission
of
the
EE.
A cause analogous to serious misconduct is a voluntary and/or
willful act or omission attesting to an EE's moral depravity. Theft
committed by an EE against a person other than his ER, if proven
by substantial evidence, is a cause analogous to serious
misconduct.
Did petitioner substantially prove the existence of valid cause for
respondent's separation? Yes. The labor arbiter and the NLRC relied
not only on the affidavits of the NBI's witnesses but also on that of
respondent. They likewise considered petitioner's own investigative
findings. Clearly, they did not merely adopt the findings of the NBI
but independently assessed evidence presented by the parties.
Their conclusion (that there was valid cause for respondent's
separation from employment) was therefore supported by
substantial evidence.All things considered, petitioner validly
dismissed respondent for cause analogous to serious misconduct.
Petition is hereby GRANTED.
YRASUEGUI VS. PAL
FACTS:Armando G. Yrasuegui was an international flight steward of
Philippine Airlines, Inc. (PAL). He stands five feet and eight inches
(5'8") with a large body frame. The proper weight for a man of his
height and body structure is from 147 to 166 pounds, the ideal
weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manualof PAL.
Yraseguis weight problem: Yrasegui encountered a great deal of
weight problem. From meeting the required weight limit of 166
pounds, he ballooned, reaching the weights upto 215 to 217
pounds. PAL was lenient enough to grant him a number of vacation
leaves to address his weight concerns. He was thus required to
report for periodical weight checks. However, instead of losing, he
gained more weight. It was when he reached 217 pounds where he
made a commitment in writing to lose 17 pounds in 90 days and
continue reducing from then on. He remained overweight despite
the 90-day period given him to reach his ideal weight. Time and
again, Yrasuegui refused to comply with the weight checks. When
he finally tipped the scale, he weighed at 212 pounds. Clearly, he
was still way over his ideal weight of 166 pounds. From then on,
nothing was heard from petitioner until he followed up his case
requesting for leniency. He continuously gained weight. On
November 13, 1992, PAL finally served petitioner a Notice of
Administrative Charge for violation of company standards on weight
requirements. Ultimately, Yrasuegui was formally informed by PAL
that due to his inability to attain his ideal weight, "and considering
the utmost leniency" extended to him "which spanned a period
covering a total of almost five years," his services were considered
terminated "effective immediately."

1.
2.

3.

The Labor Arbiter ruled in favor of Yrasuegui stating that

although reasonable, the weight standards need not be
complied with under pain of dismissal since his weight
did not hamper the performance of his duties.
The NLRC AFFIRMED the decision of the LA. According to
the NLRC, "obesity, or the tendency to gain weight
uncontrollably regardless of the amount of food intake,
is a disease in itself. As a consequence, there can be no
intentional defiance or serious misconduct by petitioner
to the lawful order of PAL for him to lose weight.
The CA reversedthe NLRC opining that the weight
standards of PAL are meant to be a continuing
qualification for an EE's position. The failure to adhere to
the weight standards is an analogous cause for the
dismissal of an EE under Article 282(e) of the Labor
Code in relation to Article 282(a).

ISSUE: Is obesity a just cause in terminating the EEs services?

HELD:The obesity of petitioner is a ground for dismissal under

Article 282(e)of the Labor Code.
It is a continuing qualification. Tersely put, an EE may be dismissed
the moment he is unable to comply with his ideal weight as
prescribed by the weight standards. The dismissal of the EE would
thus fall under Article 282(e) of the Labor Code. The standards
violated in this case were not mere "orders" of the ER; they were
the "prescribed weights" that a cabin crew must maintain in order
to qualify for and keep his or her position in the company.
In this sense, the failure to maintain these standards does not fall
under Article 282(a) whose express terms require the element of
willfulness in order to be a ground for dismissal. The failure to meet
the ER's qualifying standards is in fact a ground that falls under
Article 282(e) - the "other causes analogous to the foregoing."
By its nature, these "qualifying standards" are norms that apply
prior to and after an EE is hired. They apply prior to employment
because these are the standards a job applicant must initially meet
in order to be hired. They apply after hiring because an EE must
continue to meet these standards while on the job in order to keep
his job. Under this perspective, a violation is not one of the faults
for which an EE can be dismissed pursuant to pars. (a) to (d) of
Article 282; the EE can be dismissed simply because he no longer
"qualifies" for his job irrespective of whether or not the failure to
qualify was willful or intentional.
In fine, We hold that the obesity of petitioner, when placed in the
context of his work as flight attendant, becomes an analogous
cause under Article 282(e) of the Labor Code that justifies his
dismissal from the service. His obesity may not be unintended, but
is nonetheless voluntary. As the CA correctly puts it, voluntariness
basically means that the just cause is solely attributable to the EE
without any external force influencing or controlling his actions. This
element runs through all just causes under Article 282, whether
they be in the nature of a wrongful action or omission. Gross and
habitual neglect, a recognized just cause, is considered voluntary
although it lacks the element of intent found in Article 282(a), (c),
and (d).
Extra:Yraseguis contentions are interesting enough to take note of:
1. Obesity is a "physical abnormality and/or illness. Relying on
Nadura v. Benguet Consolidated, Inc..
The reliance on Nadura is off-tangent. The factual milieu in Nadura
is substantially different from the case at bar. First, Nadura was not
decided under the Labor Code. The law applied in that case was
Republic Act (RA) No. 1787. Second, the issue of flight safety is
absent in Nadura, thus, the rationale there cannot apply here.
Third, in Nadura, the EE who was a miner, was laid off from work
because of illness, i.e., asthma. Here, petitioner was dismissed for
his failure to meet the weight standards of PAL. He was not
dismissed due to illness. Fourth, the issue in Nadura is whether or
not the dismissed EE is entitled to separation pay and damages.
Here, the issue centers on the propriety of the dismissal of
petitioner for his failure to meet the weight standards of PAL. Fifth,
in Nadura, the EE was not accorded due process. Here, petitioner
was accorded utmost leniency. He was given more than four (4)
years to comply with the weight standards of PAL.
2. On Discrimination .Petitioner cites Bonnie Cook v. State of Rhode
Island, Department of Mental Health, Retardation and Hospitals,
decided by the United States Court of Appeals. In that case, Cook
worked from 1978 to 1980 and from 1981 to 1986 as an
institutional attendant for the mentally retarded at the Ladd Center
that was being operated by respondent. She twice resigned
voluntarily with an unblemished record. Even respondent admitted
that her performance met the Center's legitimate expectations. In
1988, Cook re-applied for a similar position. At that time, "she stood
5'2" tall and weighed over 320 pounds." Respondent claimed that
the morbid obesity of plaintiff compromised her ability to evacuate
patients in case of emergency and it also put her at greater risk of
serious
diseases.
Unlike Cook, however, petitioner is not morbidly obese. In the words
of the District Court for the District of Rhode Island, Cook was
sometime before 1978 "at least one hundred pounds more than
what is considered appropriate of her height." According to the
Circuit Judge, Cook weighed "over 320 pounds" in 1988. Clearly,
that is not the case here. At his heaviest, petitioner was only less
than 50 pounds over his ideal weight.
RBC CABLE MASTER SYSTEM vs. BALUYOT
G.R. No.172670, January 20, 2006
GSP Manufacturing Corp. v. Cabanban
GR 150454 | July 14, 2006
FACTS: Respondent Paulina Cabanban worked with petitioner GSP
Manufacturing Corporation (GSP) as a sewer from February 7, 1985
until her alleged termination on March 1, 1992. On June 16, 1992,
respondent filed with the National Labor Relations Commission
(NLRC), National Capital Region Arbitration Branch, a complaint
against petitioners for illegal dismissal, non-payment of holiday
pay, service incentive leave pay and 13th month pay.
Respondent claimed she was terminated by petitioners because she
failed to dissuade her daughter from continuing her employment at
the Sylvia Santos Company, a business competitor of petitioners. In
their defense, petitioners argued that respondent abandoned her
work on March 14, 1992 and that they reported this to the
Department of Labor and Employment on May 15, 1992.
On May 7, 1993, labor arbiter Melquiades Sol D. del Rosario found
petitioners guilty of illegal dismissal. Petitioners appealed to the

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J.SUAREZ II, 2ND SEM,SY 12-13
NLRC. On August 10, 1995, the NLRC issued a resolution
affirming in toto the decision of the labor arbiter. Hence, this
petition.
ISSUE: WON the findings of fact of the Court of Appeals were
arrived at arbitrarily
HELD: The petition is without merit. As petitioners are well aware
of, factual findings of the NLRC, particularly when they are in
agreement with those of the labor arbiter, are deemed binding and
conclusive on this Court. As long as their decisions are devoid of
any unfairness or arbitrariness in their evaluation of the evidence
all that is left for us to do is stamp our affirmation and declare its
finality. Having perused the records, we find no such arbitrariness
here.
We would like to reiterate some salient points laid down in our prior
pronouncements concerning abandonment of employment.
Abandonment as a just ground for dismissal requires the deliberate,
unjustified refusal of the EE to perform his employment
responsibilities. Mere absence or failure to work, even after notice
to return, is not tantamount to abandonment. The records are
bereft of proof that petitioners even furnished respondent such
notice.
Furthermore, it is a settled doctrine that the filing of a complaint for
illegal dismissal is inconsistent with abandonment of employment.
An EE who takes steps to protest his dismissal cannot logically be
said to have abandoned his work. The filing of such complaint is
proof enough of his desire to return to work, thus negating any
suggestion of abandonment.
Clearly, petitioners claim that respondents complaint was "an
afterthought," having been filed a long time after the date of the
supposed abandonment, was utterly without merit. As the Court of
Appeals correctly pointed out, citing the case of Pare v. NLRC,
respondent had four years within which to institute her action for
illegal dismissal. Compared to the six months it took the aggrieved
EE in that case to file his complaint for illegal dismissal,
respondents 84 days was not unreasonably long at all. The petition
is hereby DENIED.
Shie Jie Corp. v. NFL
GR 153148, July 15, 2005
FACTS: Respondents, in their complaint, alleged that they were
employed as fish processors by petitioners. On July 20, 1998,
Sammy Yang and Michael Yang, petitioners, confronted them about
their union activities.
Immediately, they were ordered to go
home. The next day, petitioners suspended them for one week
effective July 22 to 28, 1998 (except respondent Wilfredo Toribio).
Upon their return, they were served with a notice of petitioners
memorandum terminating their services for abandonment of
work.
Petitioners, in their answer, denied respondents allegations. They
claimed that on July 20, 1998, about 2:45 oclock in the afternoon,
13 rank-and-file EEs staged a walk-out and abandoned their work.
Among them were respondents Wilfredo Toribio, Nida Toribio,
Yolanda Lorenzo, Sorraya Amping, Vivian Mendoza, Merylene Delos
Reyes, Arnold Francisco, and Manuel Francisco. As a consequence,
petitioners business operations were interrupted and paralyzed,
prompting them to issue a memorandum suspending respondents
for one week or from July 22 to 28, 1998. However, on July 24,
1998, petitioners, in another memorandum, directed them to report
for work on July 27, 1998. Instead, respondents Ernesto Etrata,
Sorraya Amping, Yasher Taning, Yolanda Lorenzo, Merylene Delos
Reyes, and Wilfredo Toribio submitted their resignation letters and
quitclaims. Subsequently or on July 28, 1998, petitioners sent
respondents Arnold Francisco, Nida Toribio, Vivian Mendoza, and
Manuel Francisco a notice terminating their services for
abandonment of work.
On August 20, 1999, the Labor Arbiter rendered a Decision finding
respondents guilty of unfair labor practice (for dismissing
petitioners illegally); and ordering them, jointly and severally, to
pay petitioners P843, 960.62.
On appeal, the National Labor Relations Commission (NLRC)
promulgated its Decision dated April 27, 2000 reversing the Labor
Arbiters
Decision
and
dismissing
respondents
complaint.Respondents then filed a motion for reconsideration but
were denied by the NLRC in a Resolution dated June 29, 2000.
Hence, they filed with the Court of Appeals a petition
for certiorari.On November 29, 2001, the Appellate Court rendered
a Decision reversing and setting aside the NLRCs Decision and
reinstating the Labor Arbiters Decision. On December 21, 2001,
petitioners filed a motion for reconsideration, but were denied by
the Appellate Court in a Resolution dated April 9, 2002.
ISSUE: WON the CA erred in holding that petitioners failed to prove
by substantial evidence that respondents voluntarily resigned
and/or abandoned their work.
HELD: Voluntary resignation is defined as the act of an EE, who
finds himself in a situation in which he believes that personal
reasons cannot be sacrificed in favor of the exigency of the service;
thus, he has no other choice but to disassociate himself from his
employment. Acceptance of a resignation tendered by an EE is
necessary to make the resignation effective. No such acceptance,
however, was shown in the instant case.
Moreover, the fact that respondents immediately filed a complaint
for illegal dismissal against petitioners and repudiated their alleged

resignation completely negated petitioners claim that they

voluntarily resigned.
In Molave Tours Corporation vs. National Labor Relations
Commission, it was held: By vigorously pursuing the litigation of
his action against petitioner, private respondent clearly manifested
that he has no intention of relinquishing his employment, which act
is wholly incompatible to petitioners assertion that he voluntarily
resigned.
Neither do we find any indication that respondents have shown by
some overt acts their intention to sever their employment in
petitioner company.
In this case, respondents
1998 because they were
effective July 22 to 28,
considered abandonment
employment.

did not report back for work on July 27,

suspended by petitioners for one week
1998. Verily, their absence cannot be
of work, a just cause for termination of

In fine, considering that respondents did not abandon their work,

their dismissal from the service is illegal. The petition is DENIED.
JO vs. NLRC
324 SCRA 437
MERALCO vs. GANA
G.R. No.191288, March 7, 2012
BLUE SKY TRADING CO. vs. BLAS
G.R. No.190559, March 7, 2012
CANADIAN OPPORTUNITIES vs. DALANGIN, jr.
G.R. No.172223, February 6, 2012
Ung wala ako:
Meralco v. gana
Blue sky trading co v. blas
Sabuguero v. nlrc
Intl management v. logarta
Wuert phil. v. ynson
Hantex trading v. ca
Bank of lubao v. manabat
Morales v. harbor center
Social legislation cases.
CHENIVER DECO PRINT TECHNICS CORP. vs. NLRC
FACTS:Cheniver operates a printing business. Cheniverinformed its
workers about the transfer of the companyfrom its site in Makati to
Batangas. Cheniver decided torelocate its business in view of the
expiration of the leasecontract on the premises it occupied in
Makati and therefusal of the lessor to renew the same. Earlier, the
localauthorities also took action to force out Cheniver fromMakati
because of the alleged hazards petitioner's plantposed to the
residents nearby.In view of the impending transfer, Cheniver gave
itsEEs up to the end of June 1992 to informmanagement of their
willingness to go with Cheniver,otherwise, it would hire
replacements. Cheniver wrote itsEEs to report to the new location
within 7 days,otherwise, they would be considered to have lost
interestin their work and would be replaced. Five days later,
theunion advised Cheniver that its members are not willingto go
along with the transfer to the new site. Nonetheless,Cheniver gave
its workers additional time within whichto report to the new work
place. Later on, the laborfederation informed petitioner that the
EEsdecided to continue working for petitioner. However, notone
reported for work at petitioner's new site. It appearsthat several
EEs namely, decided not to work atthe new site but just opted to be
paid financial assistanceoffered by petitioner. Broadly speaking,
there appears no completedissolution of Cheniver's business
undertaking butthe relocation of petitioner's plant to Batangas, in
ourview, amounts to cessation of petitioner's businessoperations in
Makati.
HELD: It must be stressed that thephrase "closure or cessation of
operation of anestablishment or undertaking not due to
seriousbusiness losses or reverses" under Article 283 of theLabor
Code includes both the complete cessation ofall business
operations and the cessation of only partof a company's
business.There is no doubt that petitioner has legitimatereason to
relocate its plant because of the expirationof the lease contract on
the premises it occupied. Thatis its prerogative. But even though
the transfer wasdue to a reason beyond its control, Cheniver has
toaccord its EEs some relief in the form ofseverance pay. Now, let it
be noted that thetermination of employment by reason of closure
orcessation of business is authorized under Article 283of the Labor
Code.Consequently, Cheniver must pay his EEstheir termination
pay in the amount correspondingto their length of service. Since the
closure ofpetitioner's business is not on account of seriousbusiness
losses, petitioner shall give privaterespondents separation pay
equivalent to at least one(1) month or one-half (1/2) month pay for
every yearof service, whichever is higher.Cheniver's contention that
private respondentsresigned from their jobs, does not appear
convincing.As public respondent observed, the subsequenttransfer
of petitioner to another place hardlyaccessible to its workers
resulted in the latter'suntimely separation from the service not to
their ownliking, hence, not construable as resignation.Resignation
must be voluntary and made with theintention of relinquishing the
office, accompaniedwith an act of relinquishment. Indeed, it would
havebeen illogical for private respondents herein to resignand then
file a complaint for illegal dismissal.Resignation is inconsistent with
the filing of the saidcomplaint. The phrase "closure or cessation of
operations ofestablishment or undertaking" includes a partial
ortotal closure or cessation. Ordinarily, the closing of awarehouse
facility and the termination of theservices of EEs there assigned is a
matter thatis left to the determination of the ER in thegood faith
exercise of its management prerogatives.And the phrase "closure or
cessation not due toserious business losses or financial

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J.SUAREZ II, 2ND SEM,SY 12-13
reverses"recognizes the right of the ER to close or ceaseits business
operations or undertaking even in absence of serious business
losses or financialreverses, as long as he pays his EEs
theirtermination pay in the amount corresponding totheir length of
service. It has been ruled that anER may adopt policies or changes
oradjustments in the operations to insure profit to itselfor protect
the investments of its stockholders, and inthe exercise of such
management prerogative, theER may merge or consolidate its
business withanother, or sell or dispose all or substantially all of
itsassets and properties which may bring about thedismissal or
termination of its EEs in theprocess.
PT&T, vs. NLRC
[G.R. No. 147002. April 15, 2005]
CALLEJO, SR., J.:
FACTS: Agnes Bayao and Mildred Castillo were hired by the PT&T
in November 1991 and August 1995, respectively, both as account
executives stationed in Baguio City. They received a Memorandum
inviting them to consider a 2-3-month assignment to the provinces
of Rizal and Laguna in view of PT&Ts expansion in the aforesaid
area. They refused the offer, on the ground that the transfer would
entail additional expense on their part and there were no clear
guidelines and procedures for its implementation.
Meanwhile, the expansion project of PT&T failed to materialize due
to lack of capital. PT&T realized that it needed to undertake
measures against losses to prevent the company from going
bankrupt, particularly by reducing its workforce from 2,500 to 900
EEs. Pursuant thereto, it implemented a Voluntary Staff Reduction
Program (VSRP) which was availed of by 478 EEs. Failing to attain
its target, PT&T implemented an extended VSRP, but still not
enough EEs availed of the program. PT&T decided to implement a
temporary retrenchment of some EEs dubbed as Temporary Staff
Reduction Program (TSRP) lasting for not more than 5 months.
Pursuant to the program, affected EEs would receive financial
assistance equivalent to 15 days salary and a loan equivalent to 2
months salary chargeable to the account of the EE concerned.
Bayao and Castillo received a Letter informing them that the
cumulative net losses of PT&T for the last 4 years had reached
P293.4 million and that they were among the EEs affected by the
TSRP. When they reported for work they were informed that the
position of account executive no longer existed; in its stead, the
positions of Service Account Representatives (SAR) and Service
Account Specialists (SAS) were created and had already been filled
up.
That same day, they promptly filed a complaint for illegal dismissal
with the NLRC against PT&T and Delia Oficial in her capacity as
manager for Baguio City.
In the interim, Del Rosario sent a Letter stating that they were part
of the Temporary Staff Reduction Program (TSRP) for a period of
5 months in order to help ease the severe financial problems of
the company. That the management and the Union agreed that 80
EEs who would not be recalled will be paid the following: 2. The
grant of financial assistance equivalent to one and one half month
inclusive of the one half month pay previously offered by
management to the 80 EEs who will be separated; 3. The payment
of separation pay for every year of service to the 80 EEs to be
identified by the union, and shall be paid under the same terms and
conditions as provided under the extended VSRP.
While you are not part of the bargaining unit, management is
extending to you the same separation package provided we receive
a formal letter from you applying for the Staff Reduction Program
package. Please submit said letter on or before 15 November 1998.
Payments shall be released only upon receipt of said letter. Your
separation from the company is effective.
LA: Complainants were constructively dismissed. NLRC: dismissed
the appeal and affirmed the decision of the LA and denied MR. CA:
Affirmed NLRC
that there was no valid ground for retrenchment, considering that
when Bayao and Castillo returned, their positions were already filled
up; at the same time, PT&T did not inform its EEs and the DOLE of
the scheduled retrenchment at least one month before its
implementation. MR denied.
Hence this petition.
ISSUE: whether or not the retrenchment program implemented by
petitioner PT&T is valid.
HELD: in order that retrenchment due to serious business losses
may be validly exercised, the following requisites must concur: (a)
necessity of the retrenchment to prevent losses, and proof of such
losses; (b) written notice to the EEs and to the DOLE at least one (1)
month prior to the intended date of retrenchment; and (c) payment
of separation pay equivalent to one (1) month pay or at least onehalf (1/2) month pay for every year of service, whichever is higher.
[14]
Under the first requisite, it is imperative and incumbent on the part
of the ER to sufficiently and convincingly establish business
reverses of the kind or in the amount that would justify
retrenchment.[15] To justify retrenchment, the ER must prove
serious business losses, as not all business losses suffered by an ER
would justify retrenchment under the aforesaid Article 283.[16] The
loss referred to in the said provision cannot be of just any kind or
amount, otherwise, a company could easily feign excuses to suit its
whims and prejudices or to rid itself of unwanted EEs.[17] As
consistently held by this Court, to guard against abuse, any claim of
actual or potential business losses must satisfy the following
established standards, to wit; (a) the losses incurred are substantial
and not de minimis; (b) the losses are actual or reasonably

imminent; (c) the retrenchment is reasonably necessary and is

likely to be effective in preventing the expected losses; and (d) the
alleged losses, if already incurred, or the expected imminent losses
sought to be forestalled are proven by sufficient and convincing
evidence.[18]
The Court has previously ruled that financial statements audited by
independent external auditors constitute the normal method of
proof of the profit and loss performance of a company. In this case,
PT&T incurred losses, it presented its audited financial statements
and the auditing firm declared PT&T incurred a substantial loss. The
foregoing clearly indicates that the petitioner PT&T sufficiently
complied with its burden to prove that it incurred substantial losses
as to warrant the exercise of the extreme measure of retrenchment
to prevent the company from totally going under.
mandatory written notice served both to the EE concerned and the
DOLE at least one month prior to the intended date of
retrenchment.[24] The purpose of this requirement is not only to
give EEs some time to prepare for the eventual loss of their jobs
and their corresponding income, look for other employment and
ease the impact of the loss of their jobs[25] but also to give the
DOLE the opportunity to ascertain the verity of the alleged cause of
termination.[26]
In the case at bar, the memorandum of Del Rosario, to Bayao and
Castillo informing the latter that they were included in the TSRP to
be implemented The said memorandum was received but they had
barely two weeks notice of the intended retrenchment program.
Clearly then, the one-month notice rule was not complied with. At
the same time, the petitioners never showed that any notice of the
retrenchment was sent to the DOLE.
This provision, however, speaks of a permanent retrenchment as
opposed to a temporary lay-off as is the case here. There is no
specific provision of law which treats of a temporary retrenchment
or lay-off and provides for the requisites in effecting it or a period or
duration therefor. These EEs cannot forever be temporarily laid-off.
To remedy this situation or fill the hiatus, Article 286 may be
applied but only by analogy to set a specific period that EEs may
remain temporarily laid-off or in floating status. Six months is the
period set by law that the operation of a business or undertaking
may be suspended thereby suspending the employment of the EEs
concerned. The temporary lay-off wherein the EEs likewise cease to
work should also not last longer than six months. After six months,
the EEs should either be recalled to work or permanently
retrenched following the requirements of the law, and that failing to
comply with this would be tantamount to dismissing the EEs and
the ER would thus be liable for such dismissal.[30]
The law requires two notices one to the EE/s concerned and
another to the DOLE not just one. The notice to the DOLE is
essential because the right to retrench is not an absolute
prerogative of an ER but is subject to the requirement of law that
retrenchment be done to prevent losses. The DOLE is the agency
that will determine whether the planned retrenchment is justified
and adequately supported by facts.[32]
Interestingly enough, the evidence on record indicates that
respondents Bayao and Castillo were not merely temporarily laidoff. Letter of Del Rosario addressed to the respondents clearly
stated that the latter were to be considered separated from the
company and that they were each being extended a separation
package. It must be stressed, however, that compliance with the
one-month notice rule is mandatory regardless of whether the
retrenchment is temporary or permanent. This is so because Article
283 itself does not speak of temporary or permanent retrenchment;
hence, there is no need to qualify the term. Ubi lex non distinguit
nec nos distinguere debemus (when the law does not distinguish,
we must not distinguish).
However, the ERs failure to comply with the one month notice
requirement prior to retrenchment does not render the termination
illegal; it merely renders the same defective, entitling the dismissed
EE to payment of indemnity in the form of nominal damages.[35]
Based on prevailing jurisprudence, the amount of indemnity is
pegged at P30,000.00.[36]
Finally, since petitioner PT&T was able to establish that it incurred
serious business losses, justifying the retrenchment, the final
requisite is the payment of separation pay. Pursuant to Section 283
of the Labor Code, as amended, the retrenchment having been
effected due to serious business losses, respondents Bayao and
Castillo are each entitled to one month pay or to at least one-half
month pay for every year of service, whichever is higher. A fraction
of at least six months shall be considered one whole year.
MAYA FARMS EES ORGANIZATION et al vs.NLRC
G.R. No. 106256 December 28, 1994
KAPUNAN, J.:
FACTS: private respondents announced the adoption of an early
retirement program as a cost-cutting measure considering that
their business operations suffered major setbacks over the years.
The program was voluntary and could be availed of only by EEs
with at least eight (8) years of service. 1 Dialogues were thereafter
conducted to give the parties an opportunity to discuss the details
of the program. Accordingly, the program was amended to reduce
the minimum requirement of eight (8) years of service to only five
(5) years.
However, the response to the program was nil. There were only a
few takers. To avert further losses, private respondents were
constrained to look into the companies' organizational set-up in
order to streamline operations. Consequently, the early retirement
program was converted into a special redundancy program

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J.SUAREZ II, 2ND SEM,SY 12-13
intended to reduce the work force to an optimum number so as to
make operations more viable. a total of 69 EEs from the two
companies availed of the special redundancy program. the two
companies sent letters to 66 EEs informing them that their
respective positions had been declared redundant. The notices
likewise stated that their services would be terminated effective 30
days from receipt thereof. Separation benefits, including the
conversion of all earned leave credits and other benefits due under
existing CBAs were thereafter paid to those affected.
a notice of strike was filed by the petitioners which accused private
respondents, among others, of unfair labor practice, violation of
CBA and discrimination. Conciliation proceedings were held by the
National Conciliation and Mediation Board (NCMB) but the parties
failed to arrive at a settlement. the two companies filed a petition
with the Secretary of Labor and Employment asking the latter to
assume jurisdiction over the case and/or certify the same for
compulsory arbitration. The acting secretary certified the case to
herein public respondent for compulsory arbitration.
the parties were called to a hearing to identify the issues involved
in the case. Thereafter, they were ordered to submit their
respective position papers. Petirioners averred that, In all cases of
lay-off or retrenchment resulting in termination of employment in
the line of work, the Last-In-First-Out (LIFO) Rule must always be
strictly observed and also alleged that the companies' claim that
they were in economic crisis was fabricated because in 1990, a net
income of over 83 million pesos was realized by Liberty Flour Mills
Group of Companies. 2 Furthermore, with the termination of the
sixty-six (66) EEs pursuant to the special redundancy program, the
remaining work force, especially the drivers, became overworked
and overburdened so much so that they found themselves doing
overtime work and reporting for duty even during rest days.
Invoking the workers' constitutional right to security of tenure,
petitioners prayed for the reinstatement of the sixty-six (66) EEs
and the payment of attorney's fees as they were constrained to hire
the services of counsel in order to protect the workers' rights.
On their part, private respondents contend that their decision to
implement a special redundancy program was an exercise of
management prerogative which could not be interfered with unless
it is shown to be tainted with bad faith and ill motive. Private
respondents explained that they had no choice but to reduce their
work force, otherwise, they would suffer more losses. Furthermore,
they denied that the program violated CBA provisions.
SEC: confirmed the legality of the separation of the 66 EEs of
management thereby dismissing the charges of violation of CBA
and unfair labor practice on the part of management. Not satisfied
with the above-quoted decision, petitioners interposed that public
respondent grossly erred and gravely abused its discretion when it
ruled that: (a) the termination of the sixty-six (66) EEs was in
accordance with the LIFO rule in the CBA; (b) the termination of the
sixty-six (66) EEs was in accordance with Article 283 of the Labor
Code; and (c) the payment or offer of payment can substitute for
the 30-day required notice prior to termination. 5
HELD:The termination of the sixty-six EEs was done in accordance
with Article 283 of the Labor Code. The basis for this was the
companies' study to streamline operations so as to make them
more viable. Positions which overlapped each other, or which are in
excess of the requirements of the service, were declared redundant.
We sustain the companies' prerogative to adopt the alleged
redundancy/retrenchment program to minimize if not, to avert
losses in the conduct of its operations. However, the companies'
decision on this matter is not absolute. The basis for such an action
must be far from being whimsical and the same must be proved by
substantial evidence. In addition, the implementation of such a
decision or policy must be in accordance with existing laws, rules
and procedure and provisions of the CBA between the parties, if
there be any. Short of any of these conditions, management policy
to pursue and terminate its EEs allegedly to avert losses, must fail.
While it may be true that the Liberty Flour Mills Group of Companies
as a whole posted a net income of P83.3 Million, it is admitted that
with respect to operations of the meat processing and livestock
which were undertaken by herein companies sustained losses in the
sum of P2,257,649.88 (Exh. "3"). This is the reason, as advanced by
management, for its decision to streamline positions resulting in the
reduction of manpower compliment (sic). 9
The NLRC correctly held that private respondents did not violate the
LIFO It is not disputed that the LIFO rule applies to termination of
employment in the line of work. 12 Verily, what is contemplated in
the LIFO rule is that when there are two or more EEs occupying the
same position in the company affected by the retrenchment
program, the last one employed will necessarily be the first to go.
In the case of packers, prior to the involuntary redundancy
program,21 EEs occupied the position of packers. Out of this
number, only 5 were retained. In this group of EEs, the earliest date
of employment was October 27, 1969, and the latest packer was
employed in 1989. The most senior EEs occupying the position of
packers were retained. The same is true with respect to egg sorters.
The egg sorters employed on or before April 26, 1972 were
retained. All those employed after said date were separated. With
respect to the position of drivers, there were eight drivers prior to
the involuntary redundancy program. Thereafter only 3 positions
were retained. Accordingly, the three drivers who were most senior
in terms of period of employment, were retained.
However, it is maintained that in meat processing department there
were 3 Asst. Superintendents assigned as head of the 3 sections
thereat. The reason advanced by the company in retaining Bandong

was that as Asst. Superintendent for meat processing she could

"already take care of the operations of the other sections." The
nature of work of each assistant superintendent as well as
experience were taken into account by management. Such criteria
was not shown to be whimsical nor carpricious.
Finally, contrary to petitioners' contention, there is nothing on
record to show that the 30-day notice of termination to the workers
was disregarded and that the same substituted with separation pay
by private respondents. As found by public respondent, written
notices of separation were sent to the EEs on January 17, 1992. The
notices expressly stated that the termination of employment was to
take effect one month from receipt thereof. Therefore, the
allegation that separation pay was given in lieu of the 30-day notice
required by law is baseless.
GOLDEN THREAD KNITTING INDUSTIRES v. NLRC | 304 SCRA
720 | March 11, 1999
FACTS
several EEs of Golden Thread Knitting Industries (GTK) were
dismissed for different reasons. 2 EEs were allegedly for slashing
the companys products (towels), 2 for redundancy, 1 for
threatening the personnel manager and violating the company
rules, and 1 for abandonment of work.
The laborers filed complaints for illegal dismissal. They allege that
the company dismissed them in retaliation for establishing and
being members of the Labor Union.
GTK, on the other hand, contend that there were valid causes for
the terminations. The dismissals were allegedly a result of the
slashing of their products, rotation of work, which in turn was
caused by the low demand for their products, and abandonment of
work. WRT to the cases involving the slashing of their products and
threats to the personnel manager, the dismissals were in effect a
form of punishment.
The labor arbiter ruled partially in favor of GTK. He said that there
was no showing that the dismissals were in retaliation for
establishing a union. He, however, awarded separation pay to some
EEs.
NLRC, however, appreciated the evidence differently. It held that
there was illegal dismissal and ordered reinstatement.
ISSUE: WON there was illegal dismissal
HELD: YES
RatioDismissal is the ultimate penalty that can be meted to an EE.
It must therefore be based on a clear and not on an ambiguous or
ambivalent ground.
Reasoning
WRT to the case involving slashing of towels, the EEs were not
given procedural due process. There was no notice and hearing,
only outright denial of their entry to the work premises by the
security guards. The charges of serious misconduct were not
sufficiently proved.
WRT to the EEs dismissed for redundancy, there was also denial
of procedural due process. Hearing and notice were not observed.
Thus, although the characterization of an EEs services is a
management function, it must first be proved with evidence, which
was not done in this case. the company cannot merely declare that
it was overmanned.
WRT to the EE dismissed for disrespect, the SC believed the story
version of the company (which essentially said that the personnel
manager was threatened upon mere service of a suspension order
to the EE), but ruled that the dismissal could not be upheld.
the dismissal will not be upheld where it appears that the EEs
act of disrespect was provoked by the ER. xxx the EE hurled
incentives at the personnel manager because she was provoked
by the baseless suspension imposed on her. The penalty of
dismissal must be commensurate with the act, conduct, or
omission to the EE.
The dismissal was too harsh a penalty; a suspension of 1 week
would have sufficed.
GTK exercised their authority to dismiss without due regard to
the provisions of the Labor Code. The right to terminate should
be utilized with extreme caution because its immediate effect is
to put an end to an EE's present means of livelihood while its
distant effect, upon a subsequent finding of illegal dismissal, is
just as pernicious to the ER who will most likely be required to
reinstate the subject EE and grant him full back wages and other
benefits.
Disposition Decision AFFIRMED
FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF
THEPHILIPPINES (FASAP), vs. PAL
YNARES-SATIAGO, J.:
FACTS: Petitioner FASAP is the duly certified collective bargaining
representative of PAL flight attendants and stewards, or collectively
known as PAL cabin crew personnel. PAL retrenched 5,000 of its
EEs, including more than 1,400 of its cabin crew personnel. PAL
adopted the retrenchment scheme allegedly to cut costs and
mitigate huge financial losses as a result of a downturn in the
airline industry brought about by the Asian financial crisis. During
said period, PAL claims to have incurred P90 billion in liabilities,
while its assets stood at P85 billion.[3]
PAL adopted its so-called "Plan 14" whereby PAL's fleet of aircraft
would be reduced from 54 to 14, thus requiring the services of only
654 cabin crew personnel.[4] PAL admits that the retrenchment is
wholly premised upon such reduction in fleet,[5] and to "the strike
staged by PAL pilots since this action also translated into a
reduction of flights."[6] PAL claims that the scheme resulted in
"savings x x x amounting to approximately P24 million per month savings that would greatly alleviate PAL's financial crisis."[7]

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J.SUAREZ II, 2ND SEM,SY 12-13
Prior to the full implementation of the assailed retrenchment
program, FASAP and PAL conducted a series of consultations and
meetings and explored all possibilities of cushioning the impact of
the impending reduction in cabin crew personnel. However, the
parties failed to agree on how the scheme would be implemented.
Thus PAL unilaterally resolved to utilize the criteria set forth in the
CBA in retrenching cabin crew personnel: that is, that retrenchment
shall be based on the individual EE's efficiency rating and seniority.
PAL determined the cabin crew personnel efficiency ratings through
an evaluation of the individual cabin crew member's overall
performance for the year 1997 alone.[9] Their respective
performance during previous years, i.e., the whole duration of
service with PAL of each cabin crew personnel, was not considered.
The factors taken into account on whether the cabin crew member
would be retrenched, demoted or retained were: 1) the existence of
excess sick leaves; 2) the crew member's being physically
overweight; 3) seniority; and 4) previous suspensions or warnings
imposed.[10]
While consultations between FASAP and PAL were ongoing, the
latter began implementing its retrenchment program by initially
terminating the services of 140 probationary cabin attendants only
to rehire them in April 1998. Moreover, their employment was made
permanent and regular. On July 15, 1998, however, PAL carried out
the retrenchment of its more than 1,400 cabin crew personnel. , PAL
was placed under corporate rehabilitation and a rehabilitation plan
was approved per SEC.
PAL, through its Chairman and Chief Executive Officer (CEO) Lucio
Tan, made an offer to transfer shares of stock to its EEs and three
seats in its Board of Directors, on the condition that all the existing
CBAs with its EEs would be suspended for 10 years, but it was
rejected by the EEs. PAL informed its EEs that it was shutting down
its operations effective despite the previous approval of its
rehabilitation plan.
PAL ceased its operations and sent notices of termination to its EEs.
Two days later, PAL EEs, through the Philippine Airlines EEs
Association (PALEA) board, sought the intervention of then
President Joseph E. Estrada. PALEA offered a 10-year moratorium on
strikes and similar actions and a waiver of some of the economic
benefits in the existing CBA. Lucio Tan, however, rejected this
counter-offer.[14]
the PALEA board again wrote the President proposing the following
terms and conditions, subject to ratification by the general
membership:
1.Each PAL EE shall be granted 60,000 shares of stock with a par
value of P5.00, from Mr. Lucio Tan's shareholdings, with three (3)
seats in the PAL Board and an additional seat from government
shares as indicated by His Excellency;
2.Likewise, PALEA shall, as far as practicable, be granted adequate
representation in committees or bodies which deal with matters
affecting terms and conditions of employment;
3.To enhance and strengthen labor-management relations, the
existing Labor-Management Coordinating Council shall be
reorganized and revitalized, with adequate representation from
both PAL management and PALEA;
4.To assure investors and creditors of industrial peace, PALEA
agrees, subject to the ratification by the general membership, (to)
the suspension of the PAL-PALEA CBA for a period of ten (10) years,
provided the following safeguards are in place:
a.PAL shall continue recognizing PALEA as the duly certified
bargaining agent of the regular rank-and-file ground EEs of the
Company;
b.The `union shop/maintenance of membership' provision under the
PAL-PALEA CBA shall be respected.
c.No salary deduction, with full medical benefits.
5.PAL shall grant the benefits under the 26 July 1998 Memorandum
of Agreement forged by and between PAL and PALEA, to those EEs
who may opt to retire or be separated from the company.
6.PALEA members who have been retrenched but have not received
separation benefits shall be granted priority in the hiring/rehiring of
EEs.
7.In the absence of applicable Company rule or regulation, the
provisions of the Labor Code shall apply.[15]
In a referendum conducted on October 2, 1998, PAL EEs ratified the
above proposal. PAL resumed domestic operations and, soon after,
international flights as well.[16]
five months after the mass dismissal of its cabin crew personnel,
PAL began recalling to service those it had previously retrenched.
PAL 820, FASAP 20. PAL submitted a "stand-alone" rehabilitation
plan to the SEC by which it undertook a recovery on its own while
keeping its options open for the entry of a strategic partner in the
future. Accordingly, it submitted an amended rehabilitation plan to
the SEC with a proposed revised business and financial
restructuring plan, which required the infusion of US$200 million in
new equity into the airline.
the SEC approved the proposed "Amended and Restated
Rehabilitation Plan" of PAL and appointed a permanent
rehabilitation receiver for the latter. the cash infusion of US$200
million made by Lucio Tan on June 4, 1999 was acknowledged.[22]
PAL officially exited receivership
FASAP filed a Complaint for unfair labor practice, illegal
retrenchment with claims for reinstatement and payment of
salaries, allowances and backwages of affected FASAP members.
respondents filed a Motion to Dismiss and/or Consolidation with
NCMB pending with the Office of the Secretary of the Department of
Labor and Employment and/or Suspension and Referral of Claims to
the interim rehabilitation proceedings (motion to dismiss).[26]

LA: denying respondents' motion to dismiss; granting a writ of

preliminary injunction against PAL's implementation of its
retrenchment program with respect to FASAP members; setting
aside the respective notices of retrenchment addressed to the cabin
crew; directing respondents to restore the said retrenched cabin
crew to their positions and PAL's payroll until final determination of
the case; and directing respondents to file their position paper.
NLRC: reversed the decision of the Labor Arbiter. The NLRC directed
the lifting of the writ of injunction and to vacate the directive
setting aside the notices of retrenchment and reinstating the
dismissed cabin crew to their respective positions and in the PAL
payroll.[28]
Respondents appealed to the NLRC. Meanwhile, FASAP moved for
the implementation of the reinstatement aspect of the Labor
Arbiter's decision. Despite respondents' opposition, the Labor
Arbiter issued a writ of execution with respect to the reinstatement
directive in his decision. Respondents moved to quash the writ, but
the Labor Arbiter denied the same. Again, respondents took issue
with the NLRC.
ISSUE: whether PAL's retrenchment scheme was justified.
HELD: The burden clearly falls upon the ER to prove economic or
business losses with sufficient supporting evidence. Its failure to
prove these reverses or losses necessarily means that the EE's
dismissal was not justified.[43] Any claim of actual or potential
business losses must satisfy certain established standards, all of
which must concur, before any reduction of personnel becomes
legal.[44] These are:
(1) That retrenchment is reasonably necessary and likely to prevent
business losses which, if already incurred, are not merely de
minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in
good faith by the ER;
(2) That the ER served written notice both to the EEs and to the
Department of Labor and Employment at least one month prior to
the intended date of retrenchment;
(3) That the ER pays the retrenched EEs separation pay equivalent
to one (1) month pay or at least one-half () month pay for every
year of service, whichever is higher;
(4) That the ER exercises its prerogative to retrench EEs in good
faith for the advancement of its interest and not to defeat or
circumvent the EEs' right to security of tenure; and,
(5) That the ER used fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among the EEs,
such as status, efficiency, seniority, physical fitness, age, and
financial hardship for certain workers.[45]
FIRST ELEMENT: PAL failed to substantiate its claim of actual and
imminent substantial losses which would justify the retrenchment of
more than 1,400 of its cabin crew personnel. Although the
Philippine economy was gravely affected by the Asian financial
crisis, however, it cannot be assumed that it has likewise brought
PAL to the brink of bankruptcy. Likewise, the fact that PAL
underwent corporate rehabilitation does not automatically justify
the retrenchment of its cabin crew personnel.
Records show that PAL was not even aware of its actual financial
position when it implemented its retrenchment program. It initially
decided to cut its fleet size to only 14 ("Plan 14") and based on said
plan, it retrenched more than 1,400 of its cabin crew personnel.
Later on, however, it abandoned its "Plan 14" and decided to retain
22 units of aircraft ("Plan 22"). Unfortunately, it has retrenched
more than what was necessary. PAL admits that:
To prove that PAL was financially distressed, it could have submitted
its audited financial statements but it failed to present the same
with the Labor Arbiter. Instead, it narrated a litany of woes without
offering any evidence to show that they translated into specific and
substantial losses that would necessitate retrenchment.
Interestingly, PAL submitted its audited financial statements only
when the case was the subject of certiorari proceedings in the Court
of Appeals by attaching in its Comment[76] a copy of its
consolidated audited financial statements for the years 2002, 2003
and 2004.[77] However, these are not the financial statements that
would have shown PAL's alleged precarious position at the time it
implemented the massive retrenchment scheme in 1998. PAL
should have submitted its financial statements for the years 1997
up to 1999; and not for the years 2002 up to 2004 because these
financial statements cover a period markedly distant to the years in
question, which make them irrelevant and unacceptable.
By submitting a "stand-alone" rehabilitation plan, PAL
acknowledged that it could undertake recovery on its own and that
it possessed enough resources to weather the financial storm, if
any.
FOURTH ELEMENT: When PAL implemented Plan 22, instead of Plan
14, which was what it had originally made known to its EEs, it could
not be said that it acted in a manner compatible with good faith. It
offered no satisfactory explanation why it abandoned Plan 14;
instead, it justified its actions of subsequently recalling to duty
retrenched EEs by making it appear that it was a show of good
faith; that it was due to its good corporate nature that the decision
to consider recalling EEs was made. The truth, however, is that it
was unfair for PAL to have made such a move; it was capricious and
arbitrary, considering that several thousand EEs who had long been
working for PAL had lost their jobs, only to be recalled but assigned
to lower positions (i.e., demoted), and, worse, some as new hires,
without due regard for their long years of service with the airline.
The irregularity of PAL's implementation of Plan 14 becomes more
apparent when it rehired 140 probationary cabin attendants whose

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J.SUAREZ II, 2ND SEM,SY 12-13
services it had previously terminated, and yet proceeded to
terminate the services of its permanent cabin crew personnel.
Moreover, the management's September 4, 1998 offer to transfer
PAL shares of stock in the name of its EEs in exchange for the
latter's commitment to suspend all existing CBAs for 10 years; the
closure of its operations when the offer was rejected; and the
resumption of its business after the EEs relented; all indicate that
PAL had not acted in earnest in regard to relations with its EEs at
the time.
FIFTH ELEMENT: In the implementation of its retrenchment scheme,
PAL evaluated the cabin crew personnel's performance during the
year preceding the retrenchment (1997), based on the following set
of criteria or rating variables found in the Performance Evaluation
Form of the cabin crew personnel's Grooming and Appearance
Handbook:A.INFLIGHT PROFICIENCY EVALUATION - 30%; B.JOB
PERFORMANCE - 35%;C.ATTENDANCE - 35%
we do not agree with the findings of the appellate court that the
criteria utilized by PAL in the actual retrenchment were reasonable
and fair. retrenchment of cabin crew personnel due to "other
reasons" which, however, are not specifically stated and shown to
be for a valid cause. This is not allowed because it has no basis in
fact and in law.
Moreover, in assessing the overall performance of each cabin crew
personnel, PAL only considered the year 1997. This makes the
evaluation of each cabin attendant's efficiency rating capricious
and prejudicial to PAL EEs covered by it. By discarding the cabin
crew personnel's previous years of service and taking into
consideration only one year's worth of job performance for
evaluation, PAL virtually did away with the concept of seniority,
loyalty and past efficiency, and treated all cabin attendants as if
they were on equal footing, with no one more senior than the other.
In sum, PAL's retrenchment program is illegal because it was based
on wrongful premise (Plan 14, which in reality turned out to be Plan
22, resulting in retrenchment of more cabin attendants than was
necessary) and in a set of criteria or rating variables that is unfair
and unreasonable when implemented. It failed to take into account
each cabin attendant's respective service record, thereby
disregarding seniority and loyalty in the evaluation of overall EE
performance.
Anent the claim of unfair labor practices committed against
petitioner, we find the same to be without basis. Article 261 of the
Labor Code provides that violations of a CBA, except those which
are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the parties' CBA.
Moreover, "gross violations of CBA" under the same Article referred
to flagrant and/or malicious refusal to comply with the economic
provisions of such agreement, which is not the issue in the instant
case.
Quitclaims executed as a result of PAL's illegal retrenchment
program are likewise annulled and set aside because they were not
voluntarily entered into by the retrenched EEs; their consent was
obtained by fraud or mistake, as volition was clouded by a
retrenchment program that was, at its inception, made without
basis.
As to PAL's recall and rehire process (of retrenched cabin crew EEs),
the same is likewise defective. Considering the illegality of the
retrenchment, it follows that the subsequent recall and rehire
process is likewise invalid and without effect.
A corporate officer is not personally liable for the money claims of
discharged corporate EEs unless he acted with evident malice and
bad faith in terminating their employment.[97] We do not see how
respondent Patria Chiong may be held personally liable together
with PAL, it appearing that she was merely acting in accordance
with what her duties required under the circumstances. Being an
Assistant Vice President for Cabin Services of PAL, she takes direct
orders from superiors, or those who are charged with the
formulation of the policies to be implemented.
LOPEZ SUGAR CORPORATION vs. FEDERATION OF FREE
WORKERS
G.R. Nos. 75700-01 August 30, 1990
FELICIANO, J.:
FACTS: Petitioner, allegedly to prevent losses due to major
economic problems, and exercising its privilege under CBA entered
into between petitioner and private respondent Philippine Labor
Union Association ("PLUA-NACUSIP"), caused the retrenchment and
retirement of a number of its EEs. petitioner filed with the Bacolod
District Office of the then MOLE a combined report on retirement
and application for clearance to retrench, affecting 86 of its EEs. Of
these 86 EEs, 59 were retired and 27 were to be retrenched "in
order to prevent losses."
private respondent Federation of Free Workers ("FFW"), as the
certified bargaining agent of the rank-and-file EEs of petitioner, filed
a complaint for unfair labor practices and recovery of union dues.
FFW claimed that the terminations undertaken by petitioner were
violative of the security of tenure of its members and were intended
to "bust" the union and hence constituted an unfair labor practice.
FFW claimed that after the termination of the services of its
members, petitioner advised 110 casuals to report to its personnel
office. FFW further argued that to justify retrenchment, serious
business reverses must be "actual, real and amply supported by
sufficient and convincing evidence." FFW prayed for reinstatement
of its members who had been retired or retrenched.

Petitioner denied having hired casuals to replace those it had

retired or retrenched. It explained that the announcement calling
for 110 workers to report to its personnel office was only for the
purpose of organizing a pool of extra workers which could be
tapped whenever there were temporary vacancies by reason of
leaves of absence of regular workers.
another report on retirement affecting an additional 25 EEs was
filed by petitioner. petitioner filed its Position Paper in NLRC
contending that certain economic factors jeopardizing its very
existence rendered the dismissals necessary. As a business firm,
the Applicant must earn [a] fair return of (sic) its investment. Its
income is generated from the sales of the Central's shares of sugar
and molasses production. It has however no control of the selling
price of both products. It is of common knowledge that for the past
years the price of sugar has been very low. In order to survive, the
Applicant has effected several forms of cost reduction. Now that
there is hope in the price of sugar the applicant is again faced with
two major economic problems, i.e., the stoppage of its railway
operation and the spiralling cost of production.
The Applicant was forced to stop its railway operation because the
owners of the land upon which the Applicant's railway lines traverse
are no longer willing to allow the Applicant to make further use of
portions of their lands. The other economic problem that confronted
the Applicant is the rising cost of labor, materials, supplies,
equipment, etc. These two major economic problems the rising cost
of production and the stoppage of its railway facilities, put together
pose a very serious threat against the economic survival of the
Applicant. In view of this, the Applicant was constrained to touch on
the last phase of its cost reduction program which is the reduction
of its workforce.
LA: denied petitioner's application for clearance to retrench its EEs
on the ground that for retrenchment to be valid, the ER's losses
must be serious, actual and real and must be amply supported by
sufficient and convincing evidence. The application to retire was
also denied on the ground that petitioner's prerogative to so retire
its EEs was granted by the CBA which agreement had long ago
expired. Petitioner was, therefore, ordered to reinstate 27 retired or
retrenched EEs represented by private respondent Philippine Labor
Union Association ("PLUA") and FFW and to pay them full
backwages from the time of termination until actual reinstatement.
NLRC: petitioner and respondent FFW appealed the case to public
respondent NLRC. finding no justifiable reason for disturbing the
decision of the Labor Arbiter, affirmed that decision.
HELD: In ts ordinary connotation, he phrase "to revent losses"
means hat retrenchment or termination of the services of some EEs
is authorized to be undertaken by the ER sometime before the
losses anticipated are actually sustained or realized. It is not, in
other words, the intention of the lawmaker to compel the ER to stay
his hand and keep all his EEs until sometime after losses shall have
in fact materialized ; 7 if such an intent were expressly written into
the law, that law may well be vulnerable to constitutional attack as
taking property from one man to give to another. This is simple
enough.
To determination of when, or under what circumstances, the ER
becomes legally privileged to retrench and reduce the number of
his EEs:
1, the losses expected should be substantial and not merely de
minimis in extent.
2, the substantial loss apprehended must be reasonably imminent,
as such imminence can be perceived objectively and in good faith
by the ER.
3, be reasonably necessary and likely to effectively prevent the
expected losses. The ER should have taken other measures prior or
parallel to retrenchment to forestall losses.An ER who, for instance,
lays off substantial numbers of workers while continuing to
dispense fat executive bonuses and perquisites or so-called "golden
parachutes", can scarcely claim to be retrenching in good faith to
avoid losses. retrenching must be exercised essentially as a
measure of last resort,
4.but certainly not the least important, alleged if already realized,
and the expected imminent losses sought to be forestalled, must be
proved by sufficient and convincing evidence. The reason for
requiring this quantum of proof is readily apparent: any less
exacting standard of proof would render too easy the abuse of this
ground for termination of services of EEs.
these losses must be serious, actual and real. We find the answer
to be negative. We have scanned the records but failed to find
evidence submitted to show that applicant company would suffer
serious business losses or reverses as a consequence of the alleged
major economic problems. In fact, applicant company asseverated
that these problems only threatens its survival, hence, it had to
reduce its work force. Another thing, while applicant company was
retrenching its regular EEs, it also hired the services of casuals. This
militated its claim to reduce its work force to set up cost reduction.
It must be stated that settled is the rule that serious business
losses or reverses must be actual, real and amply supported by
sufficient and convincing evidence.
that no proof of actual declining gross and net revenues was
submitted. No audited financial statements showing the financial
condition of petitioner corporation during the above mentioned crop
years were submitted. Since financial statements audited by
independent external auditors constitute the normal method of
proof of the profit and loss performance of a company, it is not easy
to understand why petitioner should have failed to submit such
financial statements.

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J.SUAREZ II, 2ND SEM,SY 12-13
it fairly conspicuously failed to specify the cost-reduction measures
actually undertaken in good faith before resorting to retrenchment.
Upon the other hand, it appears from the record that petitioner,
after reducing its work force, advised 110 casual workers to register
with the company personnel officer as extra workers.
We conclude that because the attempted retrenchment on the part
of the petitioner was legally ineffective, all retrenched EEs should
be reinstated and backwages paid them corresponding to a period
of three (3) years without qualification or deduction, in accordance
with the three-year rule laid down in a long line of cases. 17 In the
case of EEs who had received payments for which they had
executed quitclaims, the amount of such payments shall be
deducted from the backwages due to them. Where reinstatement is
no longer possible because the positions they had previously filled
are no longer in existence, petitioner shall pay backwages plus, in
lieu of reinstatement, separation pay in the amount of one-month's
pay for every year of service including the three (3) year-period of
putative service for which backwages will be paid. Upon the other
hand, we find valid the retirement of those EEs who were retired by
petitioner pursuant to the applicable provisions of the CBA.
NORTH DAVAO MINING CORPORATION vs. NLRC
[G.R. No. 112546. March 13, 1996]
FACTS: North Dava) was incorporated in 1974 as a 100% privatelyowned company. Later, PNB became part owner thereof as a result
of a conversion into equity of a portion of loans obtained by North
Davao from said bank. PNB transferred all its loans to and equity in
North Davao in favor of the national government which, by virtue of
Proclamation No. 50 later turned them over to petitioner Asset
Privatization Trust (APT). the national government held 81.8% of the
common stock and 100% of the preferred stock of said company.[4]
Respondent Wilfredo Guillema is one among several EEs of North
Davao who were separated by reason of the companys closure,
and who were the complainants in the cases before the respondent
labor arbiter.
North Davao completely ceased operations due to serious business
reverses. From 1988 until its closure in 1992, North Davao suffered
net losses averaging P3B per year, for each of the 5 years prior to
its closure. five months prior to its closure, its total liabilities had
exceeded its assets by 20.392 billion pesos, as shown by its
financial statements audited by the Commission on Audit. When it
ceased operations, its remaining EEs were separated and given the
equivalent of 12.5 days pay for every year of service, computed on
their basic monthly pay, in addition to the commutation to cash of
their unused vacation and sick leaves. However, it appears that,
during the life of the petitioner corporation, from the beginning of
its operations in 1981 until its closure in 1992, it had been giving
separation pay equivalent to 30 days pay for every year of service.
Moreover, inasmuch as the region where North Davao operated was
plagued by insurgency and other peace and order problems, the
EEs had to collect their salaries at a bank in Tagum, Davao del
Norte, some 58 kilometers from their workplace and about 2
hours travel time by public transportation; this arrangement
lasted from 1981 up to 1990.
Subsequently, a complaint was filed with respondent labor arbiter
by respondent Wilfredo Guillema and 271 other seperated EEs for:
(1) additional separation pay of 17.5 days for every year of service;
(2) back wages equivalent to two days a month; (3) transportation
allowance; (4) hazard pay; (5) housing allowance; (6) food
allowance; (7) post-employment medical clearance; and (8) future
medical allowance, all of which amounted to P58,022,878.31 as
computed by private respondent.[5]
LA: rendered a decision ordering petitioner North Davao to pay the
complainants the same which amounted to P10,240,517.75.
Attorneys fees equivalent to ten percent (10%) thereof were also
granted.[6]
NLRC: affirmed the decision in toto. MR deinied.
1. Whether or not an ER whose business operations
ceased due to serious business losses or financial reverses
is obliged to pay separation pay to its EEs separated by
reason of such closure.
The underscored portion of Art. 283 governs the grant of seperation
benefits in case of closures or cessation of operation of business
establishments NOT due to serious business losses or financial
reverses x x x. Where, however, the closure was due to business
losses - as in the instant case, in which the aggregate losses
amounted to over P20 billion - the Labor Code does not impose any
obligation upon the ER to pay separation benefits, for obvious
reasons. There is no need to belabor this point. Even the public
respondents, in their Comment[10] filed by the Solicitor General,
impliedly concede this point.
the basis for the claim of the additional separation benefit of 17.5
days is alleged discrimination, i.e., unequal treatment of EEs, which
is proscribed as an unfair labor practice by Art. 248 (e) of said
Code. the total cessation of operation due to mind-boggling losses
was a supervening fact that prevented the company from
continuing to grant the more generous amount of separation pay.
The fact that North Davao at the point of its forced closure
voluntarily paid any separation benefits at all - although not
required by law - and 12.5-days worth at that, should have elicited
admiration instead of condemnation. But to require it to continue
being generous when it is no longer in a position to do so would
certainly be unduly oppressive, unfair and most revolting to the
conscience.
At this juncture, we note that the Solicitor General in his Comment
challenges the petitioners assertion that North Davao, having

closed down, no longer has the means to pay for the benefits. The
Solicitor General stresses that North Davao was among the assets
transferred by PNB to the national government, and that by virtue
of Proclamation No. 50 dated December 8, 1986, the APT was
constituted trustee of this government asset. He then concludes
that (i)t would, therefore, be incongruous to declare that the
National Government, which should always be presumed to be
solvent, could not pay now private respondents money claims.
Such argumentation is completely misplaced. Even if the national
government owned or controlled 81.8% of the common stock and
100% of the preferred stock of North Davao, it remains only a
stockholder thereof, and under existing laws and prevailing
jurisprudence, a stockholder as a rule is not directly, individually
and/or personally liable for the indebtedness of the corporation.
The obligation of North Davao cannot be considered the obligation
of the national government, hence, whether the latter be solvent or
not is not material to the instant case. The respondents have not
shown that this case constitutes one of the instances where the
corporate veil may be pierced.[14] From another angle, the national
government is not the ER of private respondent and his cocomplainants, so there is no reason to expect any kind of bailout by
the national government under existing law and jurisprudence.
2. Whether or not time spent in collecting wages in a place
other than the place of employment is compensable
notwithstanding that the same is done during official time.
From the evidence on record, we find that the hours spent by
complainants in collecting salaries at a bank in Tagum, Davao del
Norte shall be considered compensable hours worked. Considering
further the distance between Amacan, Maco to Tagum which is 2
hours by travel and the risks in commuting all the time in collecting
complainants salaries, would justify the granting of backwages
equivalent to two (2) days in a month as prayed for.
3. Whether or not private respondents are entitled to
transportation expenses in the absence of evidence that
these expenses were incurred.
Corollary to the above findings, and for equitable reasons, we
likewise hold respondents liable for the transportation expenses
incurred by complainants at P40.00 round trip fare during pay
days.
MANATDA v. PT&T
548 SCRA 64
FACTS: In September 1988, petitioner was employed by
respondent Philippine Telegraph and Telephone Corporation (PT&T)
as junior clerk with a monthly salary of P3, 839.74. She was later
promoted as Account Executive, the position she held until she was
temporarily laid off from employment on 1 September 1998.
Petitioner temporary separation from employment was pursuant to
the Temporary Staff Reduction Program adopted by respondent due
to serious business reverses. On 16 November 1998, petitioner
received a letter from respondent inviting her to avail herself of its
Staff Reduction Program Package equivalent to one-month salary
for every year of service, one and one-half month salary, pro-rated
13th month pay, conversion to cash of unused vacation and sick
leave credits, and Health Maintenance Organization and group life
insurance coverage until full payment of the separation package.
Petitioner, however, did not opt to avail herself of the said package.
On 26 February 1999, petitioner received a Notice of Retrenchment
from respondent permanently dismissing her from employment
effective 16 February 1999.
Petitioner filed illegal dismissal before the Labor Arbiter. Petitioner
submitted evidence that the respondents have no grounds for
retrenchment and that the company is not suffering from serious
losses. However, the respondent also submitted financial reports to
sustain its ground of a valid retrenchment. The Labor Arbiter held in
favor of the petitioner which was affirmed by the NLRC. It further
noted that the Department of Labor and Employment (DOLE) was
not notified by the respondent of its retrenchment program as
required by law.
On appeal to CA, the decision of the NLRC was reversed. It held that
the company is suffering serious financial losses as reflected on its
financial statements submitted and prepared by independent
auditors of the company. Hence, this petition.
ISSUE:Whether there is a valid retrenchment by the respondent
company
HELD:Pertinent provision is Article 283 of the Labor Code.For a
valid retrenchment, the following requisites must be complied with:
(a) the retrenchment is necessary to prevent losses and such losses
are proven; (b) written notice to the EEs and to the DOLE at least
one month prior to the intended date of retrenchment; and (c)
payment of separation pay equivalent to one-month pay or at least
one- half month pay for every year of service, whichever is higher.
The financial statements reflect that respondent suffered
substantial loss in the amount of P558 Million by 30 June 1998. The
Report of SGV & Co. substantiates the alleged precarious financial
condition of the respondent. The financial statements audited by
independent external auditors constitute the normal method of
proving the profit and loss performance of a company.
The respondent complied with the requisite notices to the EE and
the DOLE to effect a valid retrenchment. Petitioner failed to refute
that she received the written notice of retrenchment from
respondent on 16 November 1998. Although respondent failed to
furnish DOLE with a formal letter notifying it of the retrenchment, it
still substantially complied with the requirement. Since the National
Conciliation and Mediation Board, the reconciliatory arm of DOLE,
supervised the negotiation for separation package, we agree with

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J.SUAREZ II, 2ND SEM,SY 12-13
the Court of Appeals that it would be superfluous to still require
respondent to serve notice of the retrenchment to DOLE.
In fact, even granting arguendo that respondent was not
experiencing losses, it is still authorized by Article 283[26] of the
Labor Code to cease its business operations. Explicit in the said
provision is that closure or cessation of business operations is
allowed even if the business is not undergoing economic losses.
The owner, for any bona fide reason, can lawfully close shop
anyone. Just as no law forces anyone to go into business, no law
can compel anybody to continue in it. It would indeed be stretching
the intent and spirit of the law if we were to unjustly interfere with
the management prerogative to close or cease its business
operations, just because said business operations are not suffering
any loss or simply to provide the workers continued employment.
WILTSHIRE FILE CO INC vs. NLRC
193 SCRA 665 February 7, 1991
FELICIANO;
FACTS - Private respondent Vicente T. Ong was the Sales Manager
of petitioner Wiltshire File Co., Inc. ("Wiltshire") from 16 March 1981
up to 18 June 1985. On 13 June 1985, upon private respondent's
return from a business and pleasure trip abroad, he was informed
by the President of petitioner Wiltshire that his services were being
terminated. Private respondent maintains that he tried to get an
explanation from management of his dismissal but to no avail. On
18 June 1985, when private respondent again tried to speak with
the President of Wiltshire, the company's security guard handed
him a letter which formally informed him that his services were
being terminated upon the ground of redundancy.
- Private respondent filed, on 21 October 1985, a complaint before
the Labor Arbiter for illegal dismissal alleging that his position could
not possibly be redundant because nobody (save himself) in the
company was then performing the same duties. Private respondent
further contended that retrenching him
could not prevent further losses because it was in fact through his
remarkable performance as Sales Manager that the Company had
an unprecedented increase in domestic market share the preceding
year. For that accomplishment, he continued, he was promoted to
Marketing Manager and was authorized by the President to hire four
(4) Sales Executives five (5) months prior to his termination.
- In its answer, petitioner company alleged that the termination of
respondent's services was a cost-cutting measure: that in
December 1984, the company had experienced an unusually low
volume of orders: and that it was in fact forced to rotate its EEs in
order to save the company. Despite the rotation of EEs, petitioner
alleged; it continued to experience financial losses and private
respondent's position, Sales Manager of the company, became
redundant.
- On 2 December 1986, during the proceedings before the Labor
Arbiter, petitioner, in a letter1 addressed to the Regional Director of
the then Ministry of Labor and Employment, notified that official
that effective 2 January 1987, petitioner would close its doors
permanently due to substantial business losses.
- In a decision dated 11 March 1987, the Labor Arbiter declared the
termination of private respondent's services illegal and ordered
petitioner to pay private respondent backwages, unpaid salaries in
the amount of, accumulated sick and vacation leaves in the amount
of, hospitalization benefit package in the amount, unpaid
commission in the amount of, moral damages in the amount of and
attorney's fees in the amount of. On appeal by petitioner Wiltshire,
the National Labor Relations Commission ("NLRC") affirmed in toto
on 9 February 1988 the decision of the Labor Arbiter.
- In this Petition forCertiorari, it is submitted that private
respondent's dismissal was justified and not illegal. Petitioner
maintains that it had been incurring business losses beginning 1984
and that it was compelled to reduce the size of its personnel force.
Petitioner also contends that redundancy as a cause for termination
does not necessarily mean duplication of work but a "situation
where the services of an EE are in excess of what is demanded by
the needs of an undertaking
ISSUE WON private respondents dismissal was justified on the
ground of retrenchment
HELD YES - The Court resolved to grant due course to the Petition
for Certiorari. The Resolutions of the National Labor Relations
Commission dated 9 February 1988 and 7 March 1988 are hereby
SET ASIDE and NULLIFIED. The Temporary Restraining Order issued
by this Court on 21 March 1988 is hereby made PERMANENT.
Ratio. Having reviewed the record of this case, the Court has
satisfied itself that indeed petitioner had serious financial
difficulties before, during and after the termination of the services
of private respondent. For one thing, the audited financial
statements of the petitioner for its fiscal year ending on 31 July
1985 prepared by a firm of independent auditors, showed a net loss
in the amount of P4,431,321.00 and a total deficit or capital
impairment at the end of year of P6,776,493.00.2 In the preceding
fiscal year (1983-1984), while the company showed a net after tax
income of P843,506.00, it actually suffered a deficit or capital
impairment of P2,345,172.00. Most importantly, petitioner Wiltshire
finally closed its doors and terminated all operations in the
Philippines on January 1987, barely two (2) years after the
termination of private respondent's employment. We consider that
finally shutting down business operations constitutes strong
confirmatory evidence of petitioner's previous financial distress.
The Court finds it very difficult to suppose that petitioner Wiltshire
would take the final and irrevocable step of closing down its
operations in the Philippines simply for the sole purpose of easing
out a particular officer or EE, such as the private respondent.
Labor Law 1 A2010 - 4 - Disini - Turning to the legality of the
termination of private respondent's employment, we find merit in
petitioner's basic argument. The Court was unable to sustain public
respondent NLRC's holding that private respondent's dismissal was

not justified by redundancy and hence illegal. In the first place,

while the letter informing private respondent of the termination of
his services used the word "redundant", that letter also referred to
the company having "incur[red] financial losses which [in] fact has
compelled [it] to resort to retrenchment to prevent further losses".3
Thus, what the letter was in effect saying was that because of
financial losses, retrenchment was necessary, which retrenchment
in turn resulted in the redundancy of private respondent's position.
- In the second place, the Court does not believe that redundancy in
an ER's personnel force necessarily or even ordinarily refers to
duplication of work. That no other person was holding the same
position that private respondent held prior to the termination of his
services, does not show that his position had not become
redundant. Indeed, in any well- organized business enterprise, it
would be surprising to find duplication of work and two (2) or more
people doing the work of one person. Redundancy, for purposes of
our Labor Code, exists where the services of an EE are in excess of
what is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is
superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product
line or service activity previously manufactured or undertaken by
the enterprise.4 The ER has no legal obligation to keep in its payroll
more EEs than are necessarily for the operation of its business.
- In the third place, in the case at bar, petitioner Wiltshire, in view of
the contraction of its volume of sales and in order to cut down its
operating expenses, effected some changes in its organization by
abolishing some positions and thereby effecting a reduction of its
personnel. Thus, the position of Sales Manager was abolished and
the duties previously discharged by the Sales Manager simply
added to the duties of the General Manager, to whom the Sales
Manager used to report.
- It is of no legal moment that the financial troubles of the company
were not of private respondent's making. Private respondent cannot
insist on the retention of his position upon the ground that he had
not contributed to the financial problems of Wiltshire. The
characterization of private respondent's services as no longer
necessary or sustainable, and therefore properly terminable, was an
exercise of business judgment on the part of petitioner company.
The wisdom or soundness of such characterization or decision was
not subject to discretionary review on the part of the Labor Arbiter
nor of the NLRC so long, of course, as violation of law or merely
arbitrary and malicious action is not shown. It should also be noted
that the position held by private respondent, Sales Manager, was
clearly managerial in character.
ESCAREAL V NLRC (PHILIPPINE REFINING CO INC)
213 SCRA 472 September 2, 1992
DAVIDE JR;
FACTS - Escareal was hired by the PRC for the position of Pollution
Control Manager effective on 16 September 1977 with a starting
monthly pay of P4,230 00; the employment was made permanent
effective on 16 March 1978. The contract of employment provides,
inter alia, that his "retirement date will be the day you reach your
60th birthday, but there is provision (sic) for voluntary retirement
when you reach your 50th birthday. Bases for the hiring of Escareal
are LOI No. 588 implementing the National Pollution Control Decree,
P.D No. 984, and Memorandum Circular No. 02, implementing LOI
No. 588, which amended Memorandum Circular No. 007, Series of
1977, issued by the National Pollution Control Commission (NPCC).
- 1 April 1979: Escareal was also designated as Safety Manager
pursuant to Article 162 of the Labor Code (P.D. 442, as amended)
and the pertinent implementing rule thereon. At the time of such
designation, Escareal was duly accredited as a Safety Practitioner
by the Bureau of Labor Standards, Department of Labor and
Employment (DOLE) and the Safety Organization of the Philippines.
- In addition, the pertinent rules on Occupational Health and Safety
implementing the Labor Code provide for the designation of fulltime safety men to ensure compliance with the safety requirements
prescribed by the Bureau of Labor Standards. Consequently,
Escareal's designation was changed to Pollution Control and Safety
Manager.
- In the course of his employment, Escareal's salary was regularly
upgraded; the last pay hike was granted on 28 March Labor Law 1
A2010 - 7 - Disini 1988 when he was officially informed that his
salary was being increased to P23,100.00 per month effective 1
April 1988. This last increase is indisputably a far cry from his
starting monthly salary of P4,230.00.
- Sometime in the first week of November 1987, PRC's Personnel
Administration Manager George B. Ditching informed Escareal
about the company's plan to declare the position of Pollution
Control and Safety Manager redundant. Ditching attempted to
convince Escareal to accept the redundancy offer or avail of the
company's early retirement plan. Escareal refused and instead
insisted on completing his contract as he still had about three and a
half (3 1/2) years left before reaching the mandatory retirement age
of sixty (60).
- 15 June 1988: Escareal's immediate superior, PRC's Engg Dept
Manager Jesus P. Javelona, formally informed Escareal that the
position of "Safety and Pollution Control Manager will be declared
redundant effective at the close of work hours on 15th July 1988."
Escareal was also notified that the functions and duties of the
position to be declared redundant will be absorbed and integrated
with the duties of the Industrial Engineering Manager; as a result
thereof, Escareal "will receive full separation benefits provided
under the PRC Retirement Plan and additional redundancy payment
under the scheme applying to EEs who are 50 years old and above
and whose jobs have been declared redundant by Management."
- Escareal protested his dismissal via his 22 June 1988 letter to
Javelona. This notwithstanding, the PRC unilaterally circulated a
clearance dated 12 July 1988, to take effect on 15 July 1988,
indicating therein that its purpose is for Escareal's "early
retirement" and not redundancy. Escareal confronted Javelona; the
latter, in his letter dated 13 July 1988, advised the former that the

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J.SUAREZ II, 2ND SEM,SY 12-13
employment would be extended for another month, or up to 15
August 1988. Escareal responded with a letter dated 25 July 1988
threatening legal action.
- 14 July 1988: PRC's Industrial Relations Manager Bernardo N.
Jambalos III sent a Notice of Termination to the DOLE informing the
latter that Escareal was being terminated on the ground of
redundancy effective 16 August 1988.
- 5 August 1988:Escareal had a meeting with Cesar Bautista and Dr.
Reynaldo Alejandro, PRC's President and Corporate Affairs Director,
respectively. To his plea that he be allowed to finish his contract of
employment as he only had three (3) years left before reaching the
mandatory retirement age, Bautista retorted that the termination
was final.
- 8 August 1988: Escareal presented to Javelona a computation
showing the amount of P2,436,534.50 due him (Escareal) by way of
EE compensation and benefits.
- On the date of the effectivity of his termination, Escareal was only
fifty-seven (57) years of age. He had until 21 July 1991, his sixtieth
(60th) birth anniversary, before he would have been compulsorily
retired. Also, on the date of effectivity of Escareal's termination, 16
August 1988, (UP Chemical Engg graduate) Miguelito S. Navarro,
PRC's Industrial Engineering Manager, was designated as the
Pollution Control and Safety Officer.
- In view of all this, Escareal filed a complaint for illegal dismissal
with damages against the private respondent PRC before the NLRC.
Labor Arbiter Manuel P. Asuncion rendered a decision ordering PRC
to pay Escareal his redundancy pay in accordance with existing
company policy on the matter, without prejudice to the grant of
additional benefits offered by PRC during the negotiation stage of
the case, though it never materialized for failure of the parties to
reach an agreement.
- On appeal, NLRC affirmed the Labor Arbiter's decision, with
modification ordering PRC to pay Escareal his retirement pay in
accordance with the company policy and other benefits granted to
him thereunder, less outstanding obligations of the complainant
with the company at the time of his dismissal. Separate MFRs of
PRC and Escareal were both dismissed. Hence, this petition.
ISSUES 1. WON PRC had valid and acceptable basis to declare the
position of Pollution Control and Safety Manager redundant
2. WON Escareal's right to security of tenure was violated by PRC
3. WON Escareal's employment was for a fixed definite period to
end at his 60th birthday because of the stipulation as to the
retirement age of sixty (60) years
4. WON Escareal is entitled to backwages and retirement benefits 5.
WON Escareal is entitled to damages and attorney's fees
HELD 1. NO - Wiltshire File Co., Inc. vs. NLRC: Redundancy, for
purposes of the Labor Code, exists where the services of an EE are
in excess of what is reasonably demanded by the actual
requirements of the enterprise; a position is redundant when it is
superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as 257the overhiring of
workers, a decreased volume of business or the dropping of a
particular product line or service activity previously manufactured
or undertaken by the enterprise.
- Redundancy in an ER's personnel force, however, does not
necessarily or even ordinarily refer to duplication of work. That no
other person was holding the same position which the dismissed EE
held prior to the termination of his services does not show that his
position had not become redundant.
- PRC had no valid and acceptable basis to declare the position of
Pollution Control and Safety Manager redundant as the same may
not be considered as superfluous; said positions are
required by law. Thus, it cannot be gainsaid that the services of
Escareal are in excess of what is reasonably required by the
enterprise. Otherwise, PRC would not have allowed ten (10)
long years to pass before opening its eyes to that fact; neither
would it have increased the Escareal's salary to P23,100.00 a
month effective 1 April 1988. That Escareal's positions were not
duplicitous is best evidenced by PRC's recognition of their
imperative need thereof, this is underscored by the fact that
Miguelito S. Navarro, the company's Industrial Engineering
Manager, was designated as Pollution Control and Safety Manager
on the very same day of Escareal's termination.
- Indeed, the proposition that a department manned by a number of
engineers presumably because of the heavy workload, could still
take on the additional responsibilities which were originally reposed
in an altogether separate section headed by Escareal, is difficult to
accept.
- If PRC felt that either Escareal was incompetent or that the task
could be performed by someone more qualified, then why is it that
the person designated to the position hardly had any experience in
the field concerned? And why reward Escareal, barely five (5)
months before the dismissal, with an increase in salary?
- If based on the ground of redundancy, such a move would be
invalid as the creation of said position is mandated by the law; the
same cannot therefore be declared redundant.
- If the aim was to generate savings in terms of the salaries that
PRC would not be paying Escareal any more as a result of the
streamlining of operations for improved efficiency, such a move
could hardly be justified in the face of PRC's hiring of ten (10) fresh
graduates for the position of Management Trainee and advertising
for vacant positions in the Engineering/Technical Division at around
the time of the termination.
- There would seem to be no compelling reason to save money by
removing such an important position. As shown by their recent
financial statements, PRC's year-end net profits had steadily
increased from 1987 to 1990.
- While concededly, Article 283 of the Labor Code does not require
that the ER should be suffering financial losses before he can
terminate the services of the EE on the ground of redundancy, it
does not mean either that a company which is doing well can effect
such a dismissal whimsically or capriciously. The fact that a

company is suffering from business losses merely provides stronger

justification for the termination. 2. YES
- It is evident that Escareal's right to security of tenure was violated
by the private respondent PRC. Both the Constitution Labor Law 1
A2010 - 8 - Disini (Section 3, Article XIII) and the Labor Code (Article
279, P.D. 442, as amended) enunciate this right as available to an
EE.
- Security of tenure is a right which may not be denied on mere
speculation of any unclear and nebulous basis. - In this regard, it
could be concluded that the respondent PRC was merely in a hurry
to terminate the services of Escareal as soon as possible in view of
the latter's impending retirement; it appears that said company was
merely trying to avoid paying the retirement benefits Escareal
stood to receive upon reaching the age of sixty (60). PRC acted in
bad faith.
3. NO - There is no indication that PRC intended to offer
uninterrupted employment until Escareal reached the mandatory
retirement age, the contract of employement merely informs
Escareal of the compulsory retirement age and the terms pertaining
to the retirement.
- The letter to Escareal confirming his appointment does not
categorically state when the period of employment would end. It
stands to reason then that Escareal's employment was not one with
a specific period.
4. YES - Article 279, LC: an "EE who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement." - Torillo vs.
Leagardo, Jr. / Santos vs. NLRC: "The normal consequences of a
finding that an EE has been illegally dismissed are, firstly, that the
EE becomes entitled to reinstatement to his former position without
loss of seniority rights and, secondly, the payment of backwages
corresponding to the period from his illegal dismissal up to actual
reinstatement. xxx Though the grant of reinstatement commonly
carries with it an award of backwages, the inappropriateness or
non-availability of one does not carry with it the inappropriateness
or non-availability of the other. xxx Put a little differently, payment
of backwages is a form of relief that restores the income that was
lost by reason of unlawful dismissal, separation pay, in contrast, is
oriented towards the immediate future, the transitional period the
dismissed EE must undergo before locating a replacement job."
- Reinstatement of Escareal would have been proper. However,
since he reached the mandatory retirement age on 21 July 1991,
reinstatement is no longer feasible. He should thus be awarded his
backwages from 16 August 1988 to 21 July 1991, inclusive of
allowances and the monetary equivalent of the other benefits due
him for that period, plus retirement benefits under the PRC's
compulsory retirement scheme which he would have been entitled
to had he not been illegally dismissed.
5. NO - In his complaint and the attached Affidavit-Complaint,
Escareal does not mention any claim for damages and attorney s
fees; furthermore, no evidence was offered to prove them. An
award therefor would not be justified.
Disposition Petition granted
CECILE DE OCAMPO vs. NLRC
G.R. No. 101539 September 4, 1992
MEDIALDEA, J.:
FACTS: Baliwag Mahogany Corporation (company eith 900 total
work force) and Baliwag Mahogany Corporation Union-CFW( union)
entered into a collective bargaining agreement containing, among
other things, provisions on conversion into cash of unused vacation
and sick leaves; grievance machinery procedure; and the right of
the company to schedule work on Sundays and holidays.
the union made several requests from the company, one of which
was the cash conversion of unused vacation and sick leave. the
company ruled to allow payment of unused vacation and sick
leaves for the period of 1987-1988 but disallowed cash conversion
of the 1988-1989 unused leaves. the company issued suspension
orders affecting 20 EEs for failure to render overtime work. The
suspension was for a period of 3 days. On the same day, the union
filed a notice of strike on the grounds of unfair labor practice
particularly the violation of the CBA provisions on non-payment of
unused leaves and illegal dismissal of 7 EEs.
the company issued a notice of termination to 3 EEs or union
members allegedly to effect cost reduction and redundancy. The
members of the union conducted a picket at the main gate of the
company. On the same day, the company filed a petition to declare
the strike illegal with prayer for injunction against the union, Cecile
de Ocampo et al. During the conciliation meeting held at National
Conciliation and Mediation Board (NCMB) relative to the notice of
strike filed by the union, the issue pertaining to the legality of the
termination of 3 union members was raised by the union. However,
both parties agreed to discuss it separately.
Subsequently, in a letter, the union requested for the presence of a
NCMB representative during a strike vote held by the union. The
strike vote resulted to 388 votes out of 415 total votes in favor of
the strike. Consequently, the union staged a strike. the company
filed a petition to assume jurisdiction with the Department of Labor
and Employment. the company filed an amended petition, praying
among other things, that the strike staged by the union be declared
illegal, there being no genuine strikeable issue and the violation of
the no-strike clause of the existing CBA between the parties.
The Secretary of Labor: certified the entire labor dispute to the
respondent Commission for compulsory arbitration and directed all
striking workers including the dismissed EEs to return to work and
the management to accept them back. The company filed an
urgent motion for assignment of a sheriff to enforce the order of the

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J.SUAREZ II, 2ND SEM,SY 12-13
Secretary. Which assigned a sheriff to implement the order, it
removed the barricades and opened the main gate of the company.
Criminal complaints for illegal assembly, grave threats, and grave
coercion were filed against ocampo et al. the company caused the
publication of his return to work order in two (2) newspapers,
namely NGAYON and ABANTE. the union, through its President
Cecile de Ocampo, requested the Regional Director of DOLE, Region
III to intervene in the existing dispute with management. the
company extended the deadline for the workers to return to work.
NLRC: declared the strikes illegal. Company filed MR that public
respondent seriously erred in not dismissing the EEs particularly the
union officers, who participated in the illegal strike. In its
supplemental motion for reconsideration, the company contended
that as a result of the strike, it failed to meet the purchase orders
for the quarter valued at fifteen million pesos. Petitioners filed an
opposition to the company's motion for reconsideration and
subsequently a supplemental comment/opposition to motion for
reconsideration.
NLRC directed the Labor Arbiter to receive evidence on the issues
raised in the motion for reconsideration and additional evidence on
the issues already passed upon and to submit a report thereon.
NLRC affirmed its decision.
ISSUE: Whether or not the dismissals of petitioners from their
positions by the company on the ground of redundancy was done in
good faith.
HELD:
We sustain respondent Commission's finding that
petitioners' dismissal was justified by redundancy due to superfluity
and hence legal. We believe that redundancy, for purposes of our
Labor Code, exists where the services of an EE are in excess of
what is reasonably demanded by the actual requirement of the
enterprise. Succinctly put, a position is redundant where it is
superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as over hiring of workers,
decreased volume of business, or dropping of a particular product
line or service activity previously manufactured or undertaken by
the enterprise. The ER had no legal obligation to keep in its payroll
more EEs, than are necessary for the operation of its business.
The reduction of the number of workers in a company made
necessary by the introduction of the services of Gemac Machineries
in the maintenance and repair of its industrial machinery is
justified. There can be no question as to the right of the company to
contract the services of Gemac Machineries to replace the services
rendered by the terminated mechanics with a view to effecting
more economic and efficient methods of production.
In contracting the services of Gemac Machineries, as part of the
company's cost-saving program, the services rendered by the
mechanics became redundant and superfluous, and therefore
properly terminable. The company merely exercised its business
judgment or management prerogative. And in the absence of any
proof that the management abused its discretion or acted in a
malicious or arbitrary manner, the court will not interfere with the
exercise of such prerogative.
Well-settled is the rule that the factual findings of administrative
bodies are entitled to great weight, and these findings are accorded
not only respect but even finality when supported by substantial
evidence. Hence, the truth or the falsehood of alleged facts is not
for this Court now to re-examine.
VICENTE SY vs. CA
G.R. No. 142293
February 27, 2003
QUISUMBING, J.:
FACTS: Sometime in 1958, private respondent Jaime Sahot5
started working as a truck helper for petitioners family-owned
trucking business named Vicente Sy Trucking. In 1965, he became a
truck driver of the same family business, renamed T. Paulino
Trucking Service, later 6Bs Trucking Corporation in 1985, and
thereafter known as SBT Trucking Corporation since 1994.
Throughout all these changes in names and for 36 years, private
respondent continuously served the trucking business of
petitioners.
In April 1994, Sahot was already 59 years old. He had been
incurring absences as he was suffering from various ailments.
Particularly causing him pain was his left thigh, which greatly
affected the performance of his task as a driver. He inquired about
his medical and retirement benefits with the Social Security System
(SSS) on April 25, 1994, but discovered that his premium payments
had not been remitted by his ER.
Sahot had filed a week-long leave sometime in May 1994. On May
27th, he was medically examined and treated for EOR, presleyopia,
hypertensive retinopathy, Osteoarthritis and heart enlargement. On
said grounds, Belen Paulino of the SBT Trucking Service
management told him to file a formal request for extension of his
leave. At the end of his week-long absence, Sahot applied for
extension of his leave for the whole month of June, 1994. It was at
this time when petitioners allegedly threatened to terminate his
employment should he refuse to go back to work.
At this point, Sahot found himself in a dilemma. He was facing
dismissal if he refused to work, But he could not retire on pension
because petitioners never paid his correct SSS premiums. The fact
remained he could no longer work as his left thigh hurt abominably.
Petitioners ended his dilemma. They carried out their threat and
dismissed him from work.. He ended up sick, jobless and penniless.

Sahot filed a complaint for illegal dismissal. He prayed for the

recovery of separation pay and attorneys fees against Vicente Sy
and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T.
Paulino Trucking Service, 6Bs Trucking and SBT Trucking, herein
petitioners.
For their part, petitioners admitted they had a trucking business in
the 1950s but denied employing helpers and drivers. They contend
that private respondent was not illegally dismissed as a driver
because he was in fact petitioners industrial partner. They add that
it was not until the year 1994, when SBT Trucking Corporation was
established, and only then did respondent Sahot become an EE of
the company, with a monthly salary that reached P4,160.00 at the
time of his separation.
LA: ruled that there was no illegal dismissal in Sahots case. Private
respondent had failed to report to work. Moreover, said the Labor
Arbiter, petitioners and private respondent were industrial partners
before January 1994. The Labor Arbiter concluded by ordering
petitioners to pay "financial assistance" of P15,000 to Sahot for
having served the company as a regular EE since January 1994
only.
NLRC:modified the judgment of the Labor Arbiter. It declared that
private respondent was an EE, not an industrial partner, since the
start. Private respondent Sahot did not abandon his job but his
employment was terminated on account of his illness, pursuant to
Article 2849 of the Labor Code. Accordingly, the NLRC ordered
petitioners to pay private respondent separation pay in the amount
of P60,320.00, at the rate of P2,080.00 per year for 29 years of
service.
CA: court affirmed with modification the judgment of the NLRC. It
held that private respondent was indeed an EE of petitioners since
1958. It also increased the amount of separation pay awarded to
private respondent to P74,880, computed at the rate of P2,080 per
year for 36 years of service from 1958 to 1994. It decreed:
ISSUES: (1) Whether or not an ER-EE relationship existed between
petitioners and respondent Sahot; (2) Whether or not there was
valid dismissal; and (3) Whether or not respondent Sahot is entitled
to separation pay.
HELD: 1)Before a case for illegal dismissal can prosper, an ER-EE
relationship must first be established. there was error committed by
the Labor Arbiter when he concluded that complainant was an
industrial partner prior to 1994.How can we entertain in our mind
that a twenty-three (23) year old man, working as a truck helper, be
considered an industrial partner. Hence we rule that complainant
was only an EE, not a partner of respondents from the time
complainant started working for respondent.17
they determined private respondents wages and rest day.20
Records of the case show that private respondent actually engaged
in work as an EE. During the entire course of his employment he did
not have the freedom to determine where he would go, what he
would do, and how he would do it. He merely followed instructions
of petitioners and was content to do so, as long as he was paid his
wages. Indeed, said the CA, private respondent had worked as a
truck helper and driver of petitioners not for his own pleasure but
under the latters control.
Article 176721 of the Civil Code states that in a contract of
partnership two or more persons bind themselves to contribute
money, property or industry to a common fund, with the intention
of dividing the profits among themselves.22 Not one of these
circumstances is present in this case. No written agreement exists
to prove the partnership between the parties. Private respondent
did not contribute money, property or industry for the purpose of
engaging in the supposed business. There is no proof that he was
receiving a share in the profits as a matter of course, during the
period when the trucking business was under operation. Neither is
there any proof that he had actively participated in the
management, administration and adoption of policies of the
business. Thus, the NLRC and the CA did not err in reversing the
finding of the Labor Arbiter that private respondent was an
industrial partner from 1958 to 1994.
Petitioners contend that it was private respondent who refused to
go back to work. The decision of the Labor Arbiter pointed out that
during the conciliation proceedings, petitioners requested
respondent Sahot to report back for work. However, in the same
proceedings, Sahot stated that he was no longer fit to continue
working, and instead he demanded separation pay. Petitioners then
retorted that if Sahot did not like to work as a driver anymore, then
he could be given a job that was less strenuous, such as working as
a checker. However, Sahot declined that suggestion. Based on the
foregoing recitals, petitioners assert that it is clear that Sahot was
not dismissed but it was of his own volition that he did not report
for work anymore.
2) While it was very obvious that complainant did not have any
intention to report back to work due to his illness which
incapacitated him to perform his job, such intention cannot be
construed to be an abandonment. Instead, the same should have
been considered as one of those falling under the just causes of
terminating an employment. The insistence of respondent in
making complainant work did not change the scenario.
Since the burden of proving the validity of the dismissal of the EE
rests on the ER, the latter should likewise bear the burden of
showing that the requisites for a valid dismissal due to a disease
have been complied with. In the absence of the required
certification by a competent public health authority, this Court has
ruled against the validity of the EEs dismissal. It is therefore

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J.SUAREZ II, 2ND SEM,SY 12-13
incumbent upon the private respondents to prove by the quantum
of evidence required by law that petitioner was not dismissed, or if
dismissed, that the dismissal was not illegal; otherwise, the
dismissal would be unjustified. This Court will not sanction a
dismissal premised on mere conjectures and suspicions, the
evidence must be substantial and not arbitrary and must be
founded on clearly established facts sufficient to warrant his
separation from work.32
procedural due process was not observed in the separation of
private respondent by the management of the trucking company.
The ER is required to furnish an EE with two written notices before
the latter is dismissed: (1) the notice to apprise the EE of the
particular acts or omissions for which his dismissal is sought, which
is the equivalent of a charge; and (2) the notice informing the EE of
his dismissal, to be issued after the EE has been given reasonable
opportunity to answer and to be heard on his defense.33 These, the
petitioners failed to do, even only for record purposes. What
management did was to threaten the EE with dismissal, then
actually implement the threat when the occasion presented itself
because of private respondents painful left thigh.
3)is entitled to separation pay. The law is clear on the matter. An EE
who is terminated because of disease is entitled to "separation pay
equivalent to at least one month salary or to one-half month salary
for every year of service, whichever is greater. To avoid further
delay in the payment due the separated worker, whose claim was
filed way back in 1994, this decision is immediately executory.
Otherwise, six percent (6%) interest per annum should be charged
thereon, for any delay, pursuant to provisions of the Civil Code.
ROMEO VILLARUEL ,vs YEO HAN GUAN
G.R. No. 169191 June 1, 2011
PERALTA, J.:
FACTS: On February 15, 1999, herein petitioner filed with the NLRC,
National Capital Region, Quezon City a Complaint[3] for payment of
separation pay against Yuhans Enterprises. Subsequently, in his
Amended Complaint and Position Paper[4] dated December 6,
1999, petitioner alleged that in June 1963, he was employed as a
machine operator by Ribonette Manufacturing Company, an
enterprise engaged in the business of manufacturing and selling
PVC pipes and is owned and managed by herein respondent Yeo
Han Guan. Over a period of almost twenty (20) years, the company
changed its name four times. Starting in 1993 up to the time of the
filing of petitioner's complaint in 1999, the company was operating
under the name of Yuhans Enterprises. Despite the changes in the
company's name, petitioner remained in the employ of respondent.
Petitioner further alleged that on October 5, 1998, he got sick and
was confined in a hospital; on December 12, 1998, he reported for
work but was no longer permitted to go back because of his illness;
he asked that respondent allow him to continue working but be
assigned a lighter kind of work but his request was denied; instead,
he was offered a sum of P15,000.00 as his separation pay;
however, the said amount corresponds only to the period between
1993 and 1999; petitioner prayed that he be granted separation
pay computed from his first day of employment in June 1963, but
respondent refused. Aside from separation pay, petitioner prayed
for the payment of service incentive leave for three years as well as
attorney's fees.
On the other hand, respondent averred in his Position Paper[5] that
petitioner was hired as machine operator from March 1, 1993 until
he stopped working sometime in February 1999 on the ground that
he was suffering from illness; after his recovery, petitioner was
directed to report for work, but he never showed up. Respondent
was later caught by surprise when petitioner filed the instant case
for recovery of separation pay. Respondent claimed that he never
terminated the services of petitioner and that during their
mandatory conference, he even told the latter that he could go
back to work anytime but petitioner clearly manifested that he was
no longer interested in returning to work and instead asked for
separation pay.
LA: judgment is hereby rendered in favor of the complainant and
against herein respondent. NLRC: dismissed appeal and affirmed
LA's Decision, denied MR.
CA: partially GRANTED. The award of separation pay is hereby
DELETED, but the Decision insofar as it awards private respondent
[herein petitioner] service incentive leave pay stands. MR denied.
ISSUE: whether respondent, in fact, dismissed petitioner from his
employment.
HELD:On the other hand, the Court agrees with the CA in its
observation of the following circumstances as proof that respondent
did not terminate petitioner's employment: first, the only cause of
action in petitioner's original complaint is that he was offered a
very low separation pay; second, there was no allegation of illegal
dismissal, both in petitioner's original and amended complaints and
position paper; and, third, there was no prayer for reinstatement. In
consonance with the above findings, the Court finds that petitioner
was the one who initiated the severance of his employment
relations with respondent. It is evident from the various pleadings
filed by petitioner that he never intended to return to his
employment with respondent on the ground that his health is
failing. Indeed, petitioner did not ask for reinstatement. In fact, he
rejected respondent's offer for him to return to work. This is
tantamount to resignation.
It may not be amiss to point out at this juncture that aside from
Article 284 of the Labor Code, the award of separation pay is also
authorized in the situations where there is illegal dismissal and
reinstatement is no longer feasible. By way of exception, this Court
has allowed grants of separation pay to stand as a measure of
social justice where the EE is validly dismissed for causes other

than serious misconduct or those reflecting on his moral character.

[18] However, there is no provision in the Labor Code which grants
separation pay to voluntarily resigning EEs. In fact, the rule is that
an EE who voluntarily resigns from employment is not entitled to
separation pay, except when it is stipulated in the employment
contract or CBA, or it is sanctioned by established ER practice or
policy.[19] In the present case, neither the abovementioned
provisions of the Labor Code and its implementing rules and
regulations nor the exceptions apply because petitioner was not
dismissed from his employment and there is no evidence to show
that payment of separation pay is stipulated in his employment
contract or sanctioned by established practice or policy of herein
respondent, his ER.
The foregoing notwithstanding, this Court, in a number of cases,
has granted financial assistance to separated EEs as a measure of
social and compassionate justice and as an equitable concession.
Taking into consideration the factual circumstances obtaining in the
present case, the Court finds that petitioner is entitled to this kind
of assistance. respondent had been employed with the petitioner
for almost twelve (12) years. On February 13, 1996, he suffered
from a "fractured left transverse process of fourth lumbar vertebra,"
while their vessel was at the port of Yokohama, Japan. After
consulting a doctor, he was required to rest for a month. When he
was repatriated to Manila and examined by a company doctor, he
was declared fit to continue his work. When he reported for work,
petitioner refused to employ him despite the assurance of its
personnel manager. Respondent patiently waited for more than one
year to embark on the vessel as 2nd Engineer, but the position was
not given to him, as it was occupied by another person known to
one of the stockholders. Consequently, for having been deprived of
continued employment with petitioner's vessel, respondent opted
to apply for optional retirement. In addition, records show that
respondent's seaman's book, as duly noted and signed by the
captain of the vessel was marked "Very Good," and "recommended
for hire." Moreover, respondent had no derogatory record on file
over his long years of service with the petitioner.
Thus, the award of P100,000.00 to respondent as financial
assistance is deemed equitable under the circumstances.the Court
agrees with the findings of the Labor Arbiter and the NLRC that
respondent company is not distinct from its predecessors but, in
fact, merely continued the operation of the latter under the same
owners and the same business venture. The Court further notes
that there is no evidence on record to show that petitioner has any
derogatory record during his long years of service with respondent
and that his employment was severed not by reason of any
infraction on his part but because of his failing physical condition.
Add to this the willingness of respondent to give him financial
assistance. Hence, based on the foregoing, the Court finds that the
award of P50,000.00 to petitioner as financial assistance is deemed
equitable under the circumstances.
GLAXO WELLCOME PHILIPPINES INC v. NAGKAKAISANG
EMPLEYADO NG WELLCOME DFA,
453 SCRA 256 | March 11, 2005
FACTS
Union NAGKAKAISANG EMPLEYADO NG WELLCOME DFA (NEW DFA)
filed a Petition for Certification Election with the DOLE NCR seeking
to represent the bargaining unit comprised of all the regular rank
and file EEs of [petitioner] company GLAXO WELLCOME.
Several days before the election GLAXO WELLCOME issued a
circular relative to the improvement of the companys retirement
policy bringing different EEs to different resorts.
In the meantime, GLAXO WELLCOME adopted a new Car Allocation
Policy. Under the provisions of the said car plan, a prioritization
schedule in the assignment of company vehicles is to be fixed
based on the sales performance of the EEs. Pursuant to the same,
several company cars had to be re assessed and re assigned in
favor of other EEs more qualified under the priority list. Incidentally,
included among the vehicles that had to be re allocated in
accordance with the priority schedule of the new car plan were
[those] of union officers Norman Cerezo and Jossie Roda de
Guzman.
Accordingly, a memorandum was sent by the company to
[Respondent] de Guzman advising her that she would have to
surrender the vehicle assigned to her in light of the new car policy.
De Guzman refused to turn over said car and instead sought
reconsideration from the companys National Sales Manager. The
latter did not accede to de Guzmans request. De Guzman, thru
counsel, wrote the company, asking that the withdrawal of her car
be held in abeyance. The company, however, rejected her petition.
On December 7, 1990, de Guzman received another memorandum
from the company, again instructing her to return the vehicle. The
following day, de Guzman sent a letter to the company reiterating
her plea for the suspension of the withdrawal of her car. On
December 17, 1990, a final warning was sent to de Guzman
instructing her to return her assigned vehicle or else she would be
charged for insubordination and be dismissed. Finally, because of
de Guzmans staunch refusal to comply with the order, through a
letter dated December 20, 1990, she was cited, and at the same
time, terminated for gross insubordination. Norman Cerezo was of
the same case.
The Union alleged undue interference due to a massive
electioneering and manipulative acts of GLAXO WELLCOME prior to
and during the certification election and that the new Car Allocation
Policy adopted by the company was intended to harass, retaliate
and discriminate against union officers and members. Union also
challenged the legality of the suspension and dismissal of two of its
officers, namely: Norman Cerezo and Jossie Roda de Guzman. It
argued that the suspension and dismissal were effected without
any prior hearing (Which was the only sticking issue in this case).
Labor Arbiter dismissed the charges of unfair labor practice, illegal
dismissal and illegal suspension filed against GLAXO WELLCOME by
union. NLRC affirmed the dismissal of the complaint. NLRC likewise

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J.SUAREZ II, 2ND SEM,SY 12-13
denied the motion for reconsideration.The CA affirmed the ruling of
the National Labor Relations Commission (NLRC) adopted the
findings of the labor arbiter. It held that respondents had failed to
proffer convincing evidence to prove that petitioners assailed acts
were ill motivated and deliberately orchestrated to interfere with or
otherwise influence the conduct of the certification elections.
Moreover, the CA ruled that there was nothing objectionable per
se about the programs or incentive schemes that the company had
provided for the EEs. The appellate court said that the grant of
benefits to the EEs, as well as the adoption of the Car Allocation
Policy, constituted a proper exercise of the companys management
prerogatives. This plain company practice had been set up to make
petitioners EE benefits competitive with those of other
pharmaceutical corporations. De Guzman and Cerezo were among
those adversely affected by the policy, because they had failed to
meet the sales performance required thereunder, not because they
were officers of the union.
However, the CA held that the dismissal of De Guzman and the
suspension of Cerezo had not been validly effected. Opining that
their defiant actuation toward management constituted willful
disobedience, which was a just cause for the termination of their
employment, the appellate court conceded the validity of the
dismissal and suspension. Nonetheless, the CA said that those
actions (dismissal and suspension) effected by petitioner could not
be deemed legal, because it had failed to comply with procedural
due process mandated by the Labor Code and with the two notice
requirement under the Implementing Rules. According to the CA,
petitioner did not accord private respondents the benefit of a
proper charge, an opportunity to defend themselves, and a formal
investigation.
The appellate court opined that the Memoranda were merely
demands for respondents to comply with the order to turn over
their assigned cars. Those Memoranda merely intimated the
possibility that De Guzman and Cerezo might be charged and
dismissed if they continued to disobey the order.
ISSUE: WON the Court of Appeals erred in ruling that petitioner did
not observe procedural due process in terminating and suspending
the employment of de Guzman and Cerezo, respectively
HELD: YES, since there was substantial compliance through the
memoranda.
In the present case, petitioner sent respondents a total of three
Memoranda stating that their stubborn refusal to comply with the
car policy and to surrender the subject vehicle constituted gross
insubordination, for which they could be dismissed. The December
5, 1990 Memorandum sent to Respondent De Guzman specified her
acts that constituted gross insubordination.
To each Memorandum, respondents were able to reply and expla
sincein, with the aid of their counsel, why they had refused to
return the vehicles; and, in effect, why they should not be
dismissed for gross insubordination. Initially, they asked petitioner
not to implement the car policy in the light of the Complaint and
the Motion for the Issuance of a Writ of Preliminary Injunction that
they had filed. They explained that they could not work effectively
and efficiently for the company without the cars that had been
assigned to them.
In their written replies to petitioners succeeding Memoranda
which reiterated that their actions constituted gross insubordination
and could result in their termination
respondents, still through
their counsel,reasoned that they were not claiming ownership of
the car. They said that their refusal to surrender the car to the
company could not be denominated as gross insubordination,
because they were merely acting upon the advice of their counsel.
They added that, to enjoin the implementation of the car policy,
they had already lodged with the NLRC a complaint for unfair labor
practice.
Their counsel further alleged that De Guzman was apprehensive
that she might not immediately be given a replacement upon the
return of the car. He stressed that the vehicle was necessary to
prevent adverse effects on the sales performance of respondents.
Ultimately, after petitioner had sent them a final warning, to which
they also ably replied, it served them a letter terminating their
employment.
Neither Section 2 of Book V of Rule XXIII nor Section 2(d) of Rule 1
of Book VI of the Implementing Rules require strict literal
compliance with the stated procedure; only substantial compliance
is needed. On this basis, the Memoranda sent to respondents may
be deemed to have sufficiently conformed to the first notice
required under the Implementing Rules. The Memoranda served
the purpose of informing them of the pending matters beclouding
their employment and of extending to them an opportunity to clear
the air. In fact, not only were respondents duly informed of the
particular acts for which their dismissal was sought; they were, in
truth and in fact, able to defend themselves and to respond to the
charges with the assistance of a counsel of their own
choosing.Respondents were amply informed of the cause of their
dismissal. Their correspondence with petitioner took almost a
month, which was sufficient cooling time within which the parties
could have, and in fact had, tried to settle the problem amicably.
Moreover, petitioners Memoranda amply gave them a distinct,
different and effective first level of remedy (which was to surrender
the vehicles) to protect their jobs. Furthermore, they were still able
to file a Complaint with the labor arbiter, with better knowledge of
the cause of their dismissal, with longer time to prepare their case,
and with greater opportunity to take care of the financial needs of
their family pendente lite.
Agabon v. NLRC effectively reverted to Wenphil and ruled that a
dismissal due to abandonment
a just cause
was not illegal or
ineffectual, even if done without due process; but that the ER
should indemnify the EE with nominal damages for non compliance
with statutory due process.
To stress, if the dismissal is based on a just cause under Article
282 of the Labor Code, the ER must give the EE (1) two written
notices and (2) a hearing (or at least, an opportunity to be heard).

The first notice is intended to inform the EE of the ERs intent to

dismiss and the particular acts or omissions for which the dismissal
is sought. The second notice is intended to inform the EE of the
ERs decision to dismiss. This decision, however, must come only
after the EE has been given a reasonable period, from receipt of the
first notice, within which to answer the charge; and ample
opportunity to be heard with the assistance of counsel, if the EE so
desires.
The twin requirements of (a) two notices and (b) hearing are
necessary to protect the EEs security of tenure, which is enshrined
in the Constitution, the Labor Code and related laws.
Disposition Petition is GRANTED and the challenged Decision
REVERSED. The Decision of the NLRC dated August 28, 1998,
affirming that of the labor arbiter dated August 15, 1995, is
REINSTATED.
KING OF KINGS vs. MAMAC
G.R. No. 166208, June 29, 2007
FACTS: Petitioner KKTI is a corporation engaged in public
transportation and managed by Claire Dela Fuente and Melissa Lim.
Respondent Mamac was hired as bus conductor of Don Mariano
Transit Corporation (DMTC) on April 29, 1999. The DMTC EEs
including respondent formed the Damayan ng mga Manggagawa,
Tsuper at Conductor-Transport Workers Union and registered it with
the Department of Labor and Employment. Pending the holding of a
certification election in DMTC, petitioner KKTI was incorporated with
the Securities and Exchange Commission which acquired new
buses. Many DMTC EEs were subsequently transferred to KKTI and
excluded from the election. The KKTI EEs later organized
the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was
registered with DOLE. Respondent was elected KKKK president.
Respondent was required to accomplish a Conductors Trip Report
and submit it to the company after each trip. As a background, this
report indicates the ticket opening and closing for the particular day
of duty. After submission, the company audits the reports. Once an
irregularity is discovered, the company issues an Irregularity
Report against the EE, indicating the nature and details of the
irregularity. Thereafter, the concerned EE is asked to explain the
incident by making a written statement or counter-affidavit at the
back of the same Irregularity Report. After considering the
explanation of the EE, the company then makes a determination of
whether to accept the explanation or impose upon the EE a penalty
for committing an infraction. That decision shall be stated on said
Irregularity Report and will be furnished to the EE.
Upon audit of the October 28, 2001 Conductors Report of
respondent, KKTI noted an irregularity. It discovered that
respondent declared several sold tickets as returned tickets causing
KKTI to lose an income of eight hundred and ninety pesos. While no
irregularity report was prepared on the October 28, 2001 incident,
KKTI nevertheless asked respondent to explain the discrepancy. In
his letter,[3] respondent said that the erroneous declaration in his
October 28, 2001 Trip Report was unintentional. He explained that
during that days trip, the windshield of the bus assigned to them
was smashed; and they had to cut short the trip in order to
immediately report the matter to the police. As a result of the
incident, he got confused in making the trip report.
On November 26, 2001, respondent received a letter terminating
his employment effective November 29, 2001. The dismissal letter
alleged that the October 28, 2001 irregularity was an act of fraud
against the company. On December 11, 2001, respondent filed a
Complaint for illegal dismissal, illegal deductions, nonpayment of
13th-month pay, service incentive leave, and separation pay. He
denied committing any infraction and alleged that his dismissal was
intended to bust union activities. Moreover, he claimed that his
dismissal was effected without due process.
In its April 3, 2002 Position Paper, KKTI contended that respondent
was legally dismissed after his commission of a series of
misconducts and misdeeds. It claimed that respondent had
violated the trust and confidence reposed upon him by KKTI. Also,
it averred that it had observed due process in dismissing
respondent and maintained that respondent was not entitled to his
money claims such as service incentive leave and 13th-month pay
because he was paid on commission or percentage basis.
On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes
rendered judgment dismissing respondents Complaint for lack of
merit. Aggrieved, respondent appealed to the National Labor
Relations Commission (NLRC). On August 29, 2003, the NLRC
rendered a Decision, respondent King of Kings Transport Inc. is
hereby ordered to indemnify complainant in the amount of ten
thousand pesos (P10, 000) for failure to comply with due process
prior to termination.
CA: held that there was just cause for respondents
dismissal. Moreover, the CA held that respondent is
entitled to the 13th-month pay benefit.
ISSUE: WON CA erred in ruling that KKTI did not comply with the
requirements of procedural due process before dismissing the
services of the complainant/private respondent.
HELD: The petition is partly meritorious.
Non-compliance with the Due Process Requirements: Due
process under the Labor Code involves two aspects: first,
substantivethe valid and authorized causes of termination of
employment under the Labor Code; and second, proceduralthe
manner of dismissal. In the present case, the CA affirmed the
findings of the labor arbiter and the NLRC that the termination of
employment of respondent was based on a just cause. This
ruling is not at issue in this case. The question to be determined is
whether the procedural requirements were complied with.

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J.SUAREZ II, 2ND SEM,SY 12-13
AGABON VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 158693. November 17, 2004
Facts: Private respondent Riviera Home Improvements, Inc. is
engaged in the business of selling and installing ornamental and
construction materials. It employed petitioner Virgilio Agabon and
Jenny Agabon as gypsum board and cornice installers on January 2,
1992 until February 23, 1999 when they were dismissed for
abandonment of work. Petitioners then filed a complaint for illegal
dismissal. The Labor Arbiter rendered a decision declaring the
dismissal illegal. On appeal, the NLRC reversed the decision
because it found that the petitioners had abandoned their work and
were not entitled to backwages and separation pay. The Court of
Appeals in turn ruled that the dismissal of the petitioners was not
illegal because they had abandoned their employment.
Issue: Whether or not petitioners were illegally dismissed.
Held: The dismissal should be upheld because it was established
that the petitioners abandoned their jobs to work for another
company. Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last
known addresses would have been useless because they did not
reside there anymore. Unfortunately for the private respondent, this
is not a valid excuse because the law mandates the twin notice
requirements to the EEs last known address. Thus, it should be
held liable for non-compliance with the procedural requirements of
due process.
When the dismissal is for a just cause, the lack of statutory due
process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the ER should indemnify the EE for the
violation of his statutory rights.
JAKA FOOD PROCESSING CORPORATION, vs. DARWIN PACOT,
ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO,
RHOEL LESCANO and JONATHAN CAGABCAB.
G.R. No. 151378. March 28, 2005
Facts: Respondents were earlier hired by petitioner JAKA Foods
Processing Corporation until the latter terminated their employment
because the corporation was in dire financial straits. It is not
disputed, however, that the termination was effected without JAKA
complying with the requirement under Article 283 of the Labor
Code regarding the service of a written notice upon the EEs and the
Department of Labor and Employment at least one (1) month
before the intended date of termination. Respondents filed
complaints for illegal dismissal, underpayment of wages and
nonpayment of service incentive leave and 13th month pay against
JAKA. The Labor Arbiter rendered a decision declaring the
termination illegal and ordering JAKA to reinstate respondents with
full backwages, and separation pay if reinstatement is not possible.
The Court of Appeals reversed said decision and ordered
respondent JAKA to pay petitioners separation pay equivalent to
one (1) month salary, the proportionate 13th month pay and, in
addition, full backwages from the time their employment was
terminated.
Issue: What are the legal implications of a situation where an EE is
dismissed for cause but such dismissal was effected without the
ERs compliance with the notice requirement under the Labor Code?
Held: It was established that there was ground for respondents
dismissal, i.e., retrenchment, which is one of the authorized causes
enumerated under Article 283 of the Labor Code. Likewise, it is
established that JAKA failed to comply with the notice requirement
under the same Article. Considering the factual circumstances in
the instant case, the Court deem it proper to fix the indemnity at
P50, 000.00. The Court of Appeals have been in error when it
ordered JAKA to pay respondents separation pay equivalent to one
(1) month salary for every year of service. In all cases of business
closure or cessation of operation or undertaking of the ER, the
affected EE is entitled to separation pay. This is consistent with the
state policy of treating labor as a primary social economic force,
affording full protection to its rights as well as its welfare. The
exception is when the closure of business or cessation of operations
is due to serious business losses or financial reverses; duly proved,
in which case, the right of affected EEs to separation pay is lost for
obvious reasons.
WALLEM MARITIME SERVICES INC. vs. NLRC
G.R. No. 108433 | October 15, 1996
FACTS: Private respondent Joselito V. Macatuno was hired by
Wallem Shipmanagement Limited thru its local manning agent,
Wallem Maritime Services, Inc., as an able-bodied seaman on board
the M/T Fortuna, a vessel of Liberian registry. Pursuant to the
contract of employment, private respondent was employed for ten
(10) months covering the period February 26, 1989 until December
26, 1989 with a monthly salary of two hundred seventy-six US
dollars (US $276); hourly overtime rate of one dollar and seventytwo cents (US $1.72), and a monthly tanker allowance of one
hundred twenty-seven dollars and sixty cents (US $127.60), with six
(6) days leave with pay for each month.
On June 24, 1989, while the vessel was berthed at
the port of Kawasaki, Japan, an altercation took place between
private respondent and fellow Filipino crew member, Julius E.
Gurimbao, on the one hand, and a cadet/apprentice officer of the
same nationality as the captain of the vessel on the other
hand. The master entered the incident in the tankers logbook.
As a consequence, private respondent and Gurimbao were
repatriated to the Philippines where they lost no time in lodging
separate complaints for illegal dismissal with the POEA. According
to the affidavit private respondent executed before a POEA
administering officer, the following facts led to the filing of the
complaint.

At about 5:50 a.m. of June 24, 1989, private respondent was on

duty along with Gurimbao, checking the manifold of the vessel and
looking for oil leakages, when a cadet/apprentice who was of the
same nationality as the vessels captain (Singh), approached
them. He ordered Gurimbao to use a shovel in draining the water
which, mixed with oil and dirt, had accumulated at the rear portion
of the upper deck of the vessel.
Gurimbao explained to the cadet/apprentice that throwing dirty and
oily water overboard was prohibited by the laws of Japan; in fact,
port authorities were roaming and checking the sanitary conditions
of the port. The cadet/apprentice got mad and, shouting, ordered
Gurimbao to get a hose and siphon off the water. To avoid trouble,
Gurimbao used a shovel in throwing the dirty water into the sea.
Having finished his job, Gurimbao complained to private respondent
about the improper and unauthorized act of the
cadet/apprentice. The two went to the cadet/apprentice who was
idly standing in a corner. They reminded him that as a mere
apprentice and not an officer of the vessel, he had no right
whatsoever to order around any member of the crew. However, the
cadet/apprentice reacted violently - shouting invectives and
gesturing as if challenging the two to a fight. To prevent him from
intimidating them, private respondent pushed twice the
cadet/apprentices chest while Gurimbao mildly hit his
arm. Frantic and shouting, the cadet/apprentice ran to the captain
who happened to witness the incident from the cabins window.
The captain summoned private respondent and Gurimbao. With
their bosun (head of the deck crew), they went to the captains
cabin. The captain told them to pack up their things as their
services were being terminated. They would disembark at the next
port, the Port of Ube, from where they would be flown home to
the Philippines, the repatriation expenses to be shouldered by
them. The two attempted to explain their side of the incident but
the captain ignored them and firmly told them to go home.
Before disembarking, they were entrusted by the bosun with a
letter of their fellow crew members, addressed to Capt. Dio,
attesting to their innocence. At the Port of Ube, an agent of the
company handed them their plane tickets and accompanied them
the following day to the Fukoka Airport where they boarded a
Cathay Pacific airplane bound for Manila.
A few days after their arrival in Manila or on July 1, 1989, the two
gave the letter to Capt. Dio and conferred with him and Mr. James
Nichols. The latter told private respondent that they could not
secure a reimbursement of their repatriation expenses nor could
they get their salaries for the month of June. Private respondent, in
a letter addressed to Capt. Dio, asked for a reconsideration of their
dismissal but the latter did not respond. Frustrated, private
respondent sought the assistance of a lawyer who wrote Wallem a
demand letter dated August 28, 1989 but the same was ignored.[4]
Petitioners, defending their position, alleged that the incident was
not the first infraction committed by the two. In his aforementioned
decision of September 14, 1990 finding private respondents
dismissal to be illegal.
Granting that the entries in the logbook are true, a perusal thereof
will readily show that complainant was not afforded due
process. The warnings allegedly given to complainant were not
submitted in evidence. Likewise, no investigation report was
presented to prove that complainant was given the opportunity to
air his side of the incident.
It is also noteworthy to mention that complainant was able to
describe with particularity the circumstances which led to his
misunderstanding with the cadet/apprentice and which we believe
is not sufficient to warrant his dismissal. NLRC affirmed the
decision of the POEA, adopting as its own the latters findings and
conclusions.
ISSUE: WON private respondent was validly dismissed. No.
HELD: An ER may dismiss or lay off an EE only for just and
authorized causes enumerated in Articles 282 and 283 of the Labor
Code. However, this basic and normal prerogative of an ER is
subject to regulation by the State in the exercise of its paramount
police power inasmuch as the preservation of lives of citizens, as
well as their means of livelihood, is a basic duty of the State more
vital them the preservation of corporate profits. Ones employment,
profession, trade or calling is a property right within the protection
of the constitutional guaranty of due process of law.
The ship captains logbook is vital evidence as Article 612 of the
Code of Commerce requires him to keep a record of the decisions
he had adopted as the vessels head.
Under the Table of Offenses and Corresponding Administrative
Penalties appended to the contract of employment entered into by
petitioners and private respondent, the offense described by the
logbook entry may well fall under insubordination and may
constitute assaulting a superior officer with the use of deadly
weapon punishable with dismissal if the victim is indeed a
superior officer. However, an apprentice officer cannot be
considered a superior officer. An apprentice is a person bound in
the form of law to a master, to learn from him his art, trade, or
business, and to serve him during the time of his apprenticeship.
Physical violence against anyone at any time and any place is
reprehensible. However, in cases such as this, where a persons
livelihood is at stake, strict interpretation of the contract of
employment in favor of the worker must be observed to affirm the
constitutional provision on protection to labor. Moreover, the
aforequoted entry in the logbook is so sketchy that, unsupported by
other evidence, it leaves so many questions unanswered. Although
private respondent candidly admitted in his affidavit having hit
Sason on the chest twice, he did not admit using a spanner.
Hence, as the typewritten excerpts from the logbook were the
only pieces of evidence presented by petitioners to support the
dismissal of private respondent, have no probative value at all,
petitioners cause must fail. Petitioners failure to substantiate the
grounds for a valid dismissal was aggravated by the manner by

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J.SUAREZ II, 2ND SEM,SY 12-13
which the employment of private respondent was terminated. It
must be borne in mind that the right of an ER to dismiss an EE is to
be distinguished from and should not be confused with the manner
in which such right is exercised. Dismissal from employment must
not be effected abusively and oppressively as it affects ones
person and property.
Neither is the ship captains having witnessed the altercation an
excuse for dispensing with the notice and hearing
requirements. Serving notice to private respondent under the
circumstances cannot be regarded as an absurdity and
superfluity. The petition at bar is DISMISSED.
LOPEZ vs. ALTURAS
GR 191008, April 11, 2011
FACTS: Quirico Lopez was hired by respondent Alturas Group of
Companies in 1997 as truck driver. Ten years later or sometime in
November 2007, he was dismissed after he was allegedly caught by
respondents security guard in the act of attempting to smuggle out
of the company premises 60 kilos of scrap iron worth P840 aboard
respondents Isuzu Cargo Aluminum Van with Plate Number PHP 271
that was then assigned to him. When questioned, petitioner
allegedly admitted to the security guard that he was taking out the
scrap iron consisting of lift springs out of which he would make
axes.
Petitioner, in compliance with the Show Cause Notice dated
December 5, 2007 issued by respondent companys Human
Resource Department Manager, denied the allegations by a
handwritten explanation written in the Visayan dialect.
Finding petitioners explanation unsatisfactory, respondent
company
terminated
his
employment
by
Notice
of
Termination effective December 14, 2007 on the grounds of loss of
trust and confidence, and of violation of company rules and
regulations. In issuing the Notice, respondent company also took
into account the result of an investigation showing that petitioner
had been smuggling out its cartons which he had sold, in
conspiracy with one Maritess Alaba, for his own benefit to thus
prompt it to file a criminal case for Qualified Theft against him
before the Regional Trial Court (RTC) of Bohol. It had in fact earlier
filed another criminal case for Qualified Theft against petitioner
arising from the theft of the scrap iron.
Petitioner thereupon filed a complaint against respondent company
for illegal dismissal and underpayment of wages.Labor Arbiter held
that petitioners dismissal was justified, for he, a truck driver, held a
position of trust and confidence, and his act of stealing company
property was a violation of the trust reposed upon him. NLRC set
aside said decision.
ISSUE: WON there were invalid dismissal and underpayment of
wages
HELD: Dismissals have two facets: the legality of the act of
dismissal, which constitutes substantive due process, and the
legality of the manner of dismissal which constitutes procedural
due process.
As to substantive due process, the Court finds that respondent
companys loss of trust and confidence arising from petitioners
smuggling out of the scrap iron, confounded by his past acts of
unauthorized selling cartons belonging to respondent company,
constituted
just
cause
for
terminating
his
services.
Loss of trust and confidence as a ground for dismissal of EEs covers
EEs occupying a position of trust who are proven to have breached
the trust and confidence reposed on them. Petitioner, a driver
assigned with a specific vehicle, was entrusted with the
transportation of respondent company goods and property, and
consequently with its handling and protection, hence, even if he did
not occupy a managerial position, he can be said to be holding a
position
of
responsibility.
Procedural due process has been defined as giving an opportunity
to be heard before judgment is rendered. Important:After
receiving the first notice apprising him of the charges against him,
the EE may submit a written explanation(which may be in the form
of a letter, memorandum, affidavit or position paper) and offer
evidence in support thereof, like relevant company records (such as
his 201 file and daily time records) and the sworn statements of his
witnesses. For this purpose, he may prepare his explanation
personally or with the assistance of a representative or counsel. He
may also ask the ER to provide him copy of records material to his
defense. His written explanation may also include a request that a
formal hearing or conference be held. In such a case, the conduct
of a formal hearing or conference becomes mandatory, just as it is
where there exist substantial evidentiary disputes or where
company rules or practice requires an actual hearing as part of
employment pretermination procedure.
Petitioner was given the opportunity to explain his side when he
was informed of the charge against him and required to submit his
written explanation with which he complied. Parenthetically, the
Court finds that it was error for the NLRC to opine that petitioner
should have been afforded counsel or advised of the right to
counsel. In petitioners case, there is no showing that he requested
for a formal hearing to be conducted or that he be assisted by
counsel. An EEs acquittal in a criminal case does not automatically
preclude a determination that he has been guilty of acts inimical to
the ERs interest resulting in loss of trust and confidence.
Corollarily, the ground for the dismissal of an EE does not require
proof beyond reasonable doubt; as noted earlier, the quantum of
proof required is merely substantial evidence. Petition is denied.

PHILIPPINE DAILY INQUIRER, INC., v. LEON M. MAGTIBAY, JR.

and PHILIPPINE DAILY INQUIRER EES UNION (PDIEU),
528 SCRA 355, July 24, 2007
FACTS: PDI hired Magtibay, on contractual basis, to assist, for a
period of five months from February 17, 1995, the regular phone
operator. Before the expiration of Magtibays contractual
employment, he and PDI agreed to a fifteen-day contract extension,
or from July 17, 1995 up to July 31, 1995, under the same
conditions as the existing contract.
After the expiration of Magtibays contractual employment, as
extended, PDI announced the creation and availability of a new
position for a second telephone operator who would undergo
probationary employment. Apparently, it was PDIs policy to accord
regular EEs preference for new vacancies in the company. Thus, Ms.
Regina M. Layague, a PDI EE and member of respondent PDI EEs
Union (PDIEU), filed her application for the new position. However,
she later withdrew her application, paving the way for outsiders or
non-PDI EEs, like Magtibay in this case, to apply.
After the usual interview for the second telephone operator slot, PDI
chose to hire Magtibay on a probationary basis for a period of six
(6) months. The signing of a written contract of employment
followed. A week before the end the agreed
6-month
probationary period, PDI officer Benita del Rosario handed Magtibay
his termination paper, grounded on his alleged failure to meet
company standards. Aggrieved, Magtibay immediately filed a
complaint for illegal dismissal and damages before the Labor
Arbiter. PDIEU later joined the fray by filing a supplemental
complaint for unfair labor practice. Magtibay anchored his case
principally on the postulate that he had become a regular EE by
operation of law, considering that he had been employed by and
had worked for PDI for a total period of ten months, i.e., four
months more than the maximum six-month period provided for by
law on probationary employment. He also claimed that he was not
apprised at the beginning of his employment of the performance
standards of the company, hence, there was no basis for his
dismissal. Finally, he described his dismissal as tainted with bad
faith and effected without due process.
PDI, denied all the factual allegations of Magtibay, adding that his
previous contractual employment was validly terminated upon the
expiration of the period stated therein. Pressing the point, PDI
alleged that the period covered by the contractual employment
cannot be counted with or tacked to the period for probation,
inasmuch as there is no basis to consider Magtibay a regular EE.
PDI additionally claimed that Magtibay was dismissed for violation
of company rules and policies, such as allowing his lover to enter
and linger inside the telephone operators booth and for failure to
meet prescribed company standards which were allegedly made
known to him at the start through an orientation seminar conducted
by the company.
LA found for PDI and accordingly dismissed Magtibays complaint
for illegal dismissal. LA further ruled that Magtibays dismissal from
his probationary employment was for a valid reason.
ISSUE: THE COURT OF APPEALS COMMITTED GRAVE
ERROR IN FINDING THAT A PROBATIONARY EES FAILURE
TO FOLLOW AN ERS RULES AND REGULATIONS CANNOT
BE DEEMED FAILURE BY SAID EE TO MEET THE
STANDARDS OF HIS ER THUS EMASCULATING
PETITIONERS RIGHT TO CHOOSE ITS EES.
HELD: We GRANT the petition. This Court, to be sure, has for a
reason, consistently tended to be partial in favor of workers or EEs
in labor cases whenever social legislations are involved.
Management and labor, or the ER and the EE are more often not
situated on the same level playing field, so to speak. Recognizing
this reality, the State has seen fit to adopt measures envisaged to
give those who have less in life more in law. Article 279 of LC which
gives EEs the security of tenure is one playing field leveling
measure:Security of Tenure. In cases of regular employment,
the ER shall not terminate the services of an EE except for a just
cause or when authorized by this Title. x x x.
Within the limited legal six-month probationary period, probationary
EEs are still entitled to security of tenure. It is expressly provided in
the afore-quoted Article 281 that a probationary EE may be
terminated only on two grounds: (a) for just cause, or (b) when he
fails to qualify as a regular EE in accordance with reasonable
standards made known by the ER to the EE at the time of his
engagement.
Magtibay had previously worked for PDI as telephone operator
from February 7, 1995 to July 31, 1995 as a contractual EE. Thus,
the Court entertains no doubt that when PDI took him in on
September 21, 1995, Magtibay was already very much aware of the
level of competency and professionalism PDI wanted out of him for
the entire duration of his probationary employment.
PDI was only exercising its statutory hiring prerogative when it
refused to hire Magtibay on a permanent basis upon the expiration
of the six-month probationary period. This was established during
the proceedings before the labor arbiter and borne out by the
records and the pleadings before the Court. When the NLRC
disregarded the substantial evidence establishing the legal
termination of Magtibays probationary employment and rendered
judgment grossly and directly contradicting such clear
evidence, the NLRC commits grave abuse
of
discretion
amounting to lack or excess of jurisdiction. It was, therefore,
reversible error on the part of the appellate court not to annul and
set aside such void judgment of the NLRC. REVISED and SET ASIDE.

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J.SUAREZ II, 2ND SEM,SY 12-13
AURELIO vs. NLRC
221 SCRA 432
FACTS: Petitioner started as clinical instructor of the College of
Nursing of Northwestern College (NWC) in June 1917 with a basic
salary of P600.00 a month. In October 1979, petitioner was
appointed Dean of the College of Nursing with a starting salary of
P3, 000.00 a month. In September 1981, petitioner was promoted
to College Administrator or Vice-President for Administration,
retaining concurrently her position of Dean of the College of
Nursing, with an increased salary of P3, 500.00 per month. She was
later promoted to Executive Vice-President with the corresponding
salary of P7, 500.00.
On April 10, 1988, petitioner's husband, Oscar Aurelio, a
stockholder of respondent NWC, was elected Auditor. On May 1,
1988, the individual respondents, as Board of Directors, took over
the management of respondent NWC. This new management
unleashed a series of reorganization affecting the petitioner and her
husband, Oscar Aurelio. On May 30, 1988, petitioner's husband,
then in the United States, was removed as Auditor of the college.
Without prior notice, petitioner's office was stripped of its facilities.
Petitioner's salary was reduced from P7, 500.00 to P5,000.00 then
to P2,500.00 a month, among others.
Because of the indignities and humiliation suffered by the
petitioner, she wrote a letter on September 20, 1988 informing the
President of Northwestern College that she was going on an
indefinite leave,
Petitioner sent a copy of the above letter to the Secretary of
Education, Culture and Sports praying for assistance. The
representatives of the Regional Director submitted their official
findings and recommendations confirming the truth of the
allegations of petitioner in her September 20, 1988 letter. The DECS
also confirmed the willingness of petitioner to withdraw her
indefinite leave of absence. The matter of petitioner's resumption of
her position as Dean of the College of Nursing was addressed by
the DECS to the attention of respondents but Private respondents
did not answer. They refused to accept petitioner. On November 16,
1988, petitioner filed her complaint for illegal dismissal against
private respondents and prayed for reinstatement plus backwages,
moral and exemplary damages, and attorney's fees. At the
arbitration level, petitioner and private respondents submitted their
respective position papers. On December 29, 1989, the labor
arbiter issued a decision dismissing the complaint.
On April 30, 1988, the annual regular meeting of stockholders was
held at the principal office of the corporation in Laoag City. Since
their election into office, the Board members have taken effective
control of the management of the college and have regularly
exercised their corporate powers. The new Board conducted a
preliminary audit which revealed that the college was financially
distressed, unable to meet its maturing obligations with its creditor
bank. The new management headed by its President, Ben Nicolas,
embarked on a realignment of positions and functions of the
different department in order to minimize expenditures.
As a result of the audit, NWC was compelled to abolish the
administrative positions held by petitioner, which she did not
contest.
ISSUE: WON the dismissal of the petitioner was for a just and valid
cause
HELD: Respondent had alleged and submitted evidence of
irregularities of complainant during her tenure at the college. The
complainant instead of refuting the charges cited alleged
irregularities committed by the respondents in their respective
offices. It must be emphasized that the rules of dismissal for
managerial EEs are different from those governing ordinary EEs for
it would be unjust and inequitable to compel an ER to continue with
the employment of a person who occupies a managerial and
sensitive position despite loss of trust and confidence. At the very
least, the relationship must be considered seriously strained,
foreclosing the remedy of reinstatement. We find that the
allegations of irregularities were sufficiently substantiated thus
justifying petitioner's separation.
Moreover, and still on the issue of dismissal, the records disclose
that in holding on to the two positions, petitioner violated the
Administrative Manual for Private Schools. Thus, the respondent
had no other recourse but to take away one of the positions from
her or abolish the same. Undoubtedly, the College Board of
Directors has the authority to reorganize and streamline the
operations of the college with the end in view of minimizing
expenditures.
The NLRC found that complainant was a managerial EE who has to
have the complete trust and confidence of respondents. However,
we find that complainant was not accorded notice and investigation
prior to termination. Except for the allegation on constructive
dismissal, this petition is a repetition of what petitioner had already
alleged below and which the labor arbiter and the NLRC dismissed
for lack of merit.
Petitioner's claim of constructive dismissal stems from her alleged
removal from the positions of Administrator, Vice President for
Administration and Executive Vice President. The management of
NWC rests on its Board of Directors including the selection of
members of the faculty who may be allowed to assume other
positions in the college aside from that of teacher or instructor. In
1988, when the then new Board of Directors abolished the
additional positions held by the petitioner, it was merely exercising
its right.
The Board abolished the positions not because the petitioner was
the occupant thereof but because the positions had become
redundant with functions overlapping those of the President of the
college. The Board realized that the college was violating the
Administrative Manual for Private School which requires that all
collegiate departments should have a full-time head.

The Board of Directors of NWC merely exercised rights vested in it

by the Articles of Incorporation. Petitioner failed to refute the
evidence proffered by NWC before the labor arbiter. In her appeal to
the NLRC, petitioner also failed to rebut the findings of the labor
arbiter. In the instant petition, she has again failed to overturn
private respondents' evidence as well as the findings of the labor
arbiter which were affirmed by the NLRC.
Petitioner's application for an indefinite leave of absence was not
approved by the college authorities, but this notwithstanding, she
failed to follow-up her application and did not report for work.
Believing she was dismissed, petitioner filed the complaint for
illegal dismissal, illegal deductions, underpayment, unpaid wages or
commissions and for moral damages and attorney's fees on
November 16, 1988.
As pointed out earlier, the rules on termination of employment,
penalties for infractions, and resort to concerted actions, insofar as
managerial EEs are concerned, are not necessarily the same as
those applicable to termination of employment of ordinary EEs.
Both the labor arbiter and the public respondent NLRC found that
there is some basis for respondent NWC's loss of trust and
confidence on petitioner.
The dismissal of the petitioner was for a just and valid cause. It
appears on record that the investigation of petitioner's alleged
irregularities was conducted after the filing of the complaint for
illegal dismissal.
Public respondent's finding that petitioner was not afforded due
process is correct but the Commission erred when it awarded
separation pay in the amount of P32,750.00. In the Pacific Mills, Inc.
and Wenphil cases, this Court merely awarded P1,000.00 as penalty
for non-observance of due process.
The Board of Directors, composed of the individual private
respondents herein, has the power granted by the Corporation
Code to implement a reorganization of respondent college's offices,
including the abolition of various positions, since it is implied or
incidental to its power to conduct the regular business affairs of the
corporation.
The prerogative of management to conduct its own business affairs
to achieve its purposes cannot be denied. When petitioner was
stripped by the Board of her positions as Executive Vice President
and Vice President for Administration, with a corresponding
reduction in salary, the Board did not act in a capricious, whimsical,
and arbitrary manner, thus negating malice and bad faith.
WHEREFORE, the decision under review is hereby AFFIRMED with
the MODIFICATION that the award of separation pay is DELETED
CABIGTING vs. SAN MIGUEL FOODS
GR 167706, Nov. 5, 2009
FACTS: Petitioner Reynaldo G. Cabigting was hired as a receiver/
issuer at the San Miguel Corporation, Feeds and Livestock Division
(B-Meg) on February 16, 1984 and after years of service, he was
promoted as inventory controller.
On June 26, 2000, respondent San Miguel Foods, Inc., through its
President, Mr. Arnaldo Africa, sent petitioner a letter informing him
that his position as sales office coordinator under its logistic
department has been declared redundant. Simultaneously,
respondent terminated the services of petitioner effective July 31,
2000, and offered him an early retirement package. Thereafter,
petitioner was included in the list of retrenched EEs (for reason of
redundancy) submitted by respondent to the Department of Labor
and Employment.
Petitioner was surprised upon receipt of the letter because he was
not a sales office coordinator, and yet he was being terminated as
such. Accordingly, petitioner refused to avail of the early retirement
package. Prior to petitioners termination on July 31, 2000, he was
an inventory controller, performing at the same time the function of
a warehouseman. Furthermore, petitioner was an active union
officer of respondents union but upon his termination, was only a
member thereof.
With the support of his union, petitioner filed a Complaint
questioning his termination primarily because he was not a sales
office coordinator, but an inventory controller, performing the
functions of both an inventory controller and a warehouseman. In
reply, respondent reiterated its declaration that petitioners position
as sales office coordinator was redundant as a result of
respondents effort to streamline its operations.
Labor Arbiter (LA) rendered a Decision, where it ruled that
petitioner was illegally dismissed. Accordingly, the LA ordered
respondent to pay petitioner backwages, separation pay in lieu of
reinstatement
and attorneys
fees.
NLRC
rendered
a
Decision affirming the LAs finding that petitioner was illegally
dismissed by respondent. CA rendered a Decision partially granting
respondents petition
ISSUE: WON strained relations bar petitioners reinstatement.
HELD: Under the law and prevailing jurisprudence, an illegally
dismissed EE is entitled to reinstatement as a matter of right.
However, if reinstatement would only exacerbate the tension and
strained relations between the parties, or where the relationship
between the ER and the EE has been unduly strained by reason of
their irreconcilable differences, particularly where the illegally
dismissed EE held a managerial or key position in the company, it
would be more prudent to order payment of separation pay instead
of reinstatement.
In Globe-Mackay Cable and Radio Corporation v. National Labor
Relations Commission, this Court discussed the limitations and
qualifications for the application of the strained relations
principle, in this wise:

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J.SUAREZ II, 2ND SEM,SY 12-13
x x x If, in the wisdom of the Court, there
may be a ground or grounds for nonapplication of the above-cited provision, this
should be by way of exception, such as when
the reinstatement may be inadmissible due
to ensuing strained relations between the ER
and the EE.
In such cases, it should be proved
that the EE concerned occupies a position
where he enjoys the trust and confidence of
his ER; and that it is likely that if reinstated,
an atmosphere of antipathy and antagonism
may be generated as to adversely affect the
efficiency and productivity of the EE
concerned.
In order for the doctrine of strained relations to apply, it should be
proved that the EE concerned occupies a position where he enjoys
the trust and confidence of his ER and that it is likely that if
reinstated, an atmosphere of antipathy and antagonism may be
generated as to adversely affect the efficiency and productivity of
the EE concerned.
After a perusal of the LA Decision, this Court finds that the LA had
no hard facts upon which to base the application of the doctrine of
strained relations, as the same was not squarely discussed nor
elaborated on. Also, it is of notice that said issue was addressed by
the LA in just one sentence without indicating factual circumstances
why strained relations exist. The same is also true for the CA
Decision which disposed of the issue in just one sentence without
any elaboration. Accordingly, this Court is of the opinion that both
the LA and the CA based their conclusions on impression alone.
Finally, it is noted that the position of warehouseman and inventory
controller still exists up to date. The nature of the controversy
where the parties to this case were engaged is not of such nature
that would spawn a situation where the relations are severely
strained between them as would bar the complainant to his
continued employment. Neither may it be said that his position
entails a constant communion with the respondent such that
hostilities may bar smooth interactions between them. There is no
basis for an award of separation pay in lieu of reinstatement.
The claim of respondent is not meritorious. This Court shares
petitioners view that the words allegedly imputing malice and bad
faith towards the respondent cannot be made a basis for denying
his reinstatement.
The doctrine of strained relations has been made applicable to
cases where the EE decides not to be reinstated and demands for
separation pay. The same, however, does not apply to herein
petition, as petitioner is asking for his reinstatement despite his
illegal dismissal.
In conclusion, it bears to stress that it is human nature that some
hostility will inevitably arise between parties as a result of litigation,
but the same does not always constitute strained relations in the
absence of proof or explanation that such indeed exists. Petition is
granted.
BUSTAMANTE v. NLRC
265 SCRA 1 | March 15, 1996
FACTS
Petitioners Bustamante, Bantayan, Sumunod and Lamaran were
employed as laborers, harvesters and sprayers in private
respondent companys banana plantation in Davao del Norte. They
all signed contracts of employment for 6 months from Jan.2, 1990
to July 2, 1990 but they had started working in Sept. 1989. They
were previously hired to do the same work for periods lasting a
month or more, from 1985 to 1989. Before the employment
contracts expired on July 2, 1990, petitioners employments were
terminated on the ground of poor performance due to age, as none
of them was allegedly below 40 years old.
Petitioners then filed a complaint for illegal dismissal which the
Labor Arbiter decided in their favor. The judgment declared the
dismissal illegal, and ordered Evergreen Farms to reinstate them
immediately with 6 months backwages. Private respondent
company appealed to the NLRC but the appeal was dismissed for
lack of merit. A subsequent MFR filed by respondent company was
similarly disposed of with the modification that the award for
backwages was deleted, as there was no bad faith on the part of
Evergreen Farms.
The removal of the award of backwages prompted petitioners to
file this case, alleging that public respondent NLRC gravely abused
its discretion.
ISSUE: WON petitioners are entitled to backwages
HELD: YES, because petitioners are regular EEs.
Ratio Regular EEs dismissed for no valid cause are entitled to full
backwages and other benefitsfrom the time their compensation was
withheld from them up to the time of their actual reinstatement.
Reasoning
Petitioners were employed at various periods from 1985 1989 for
the same work they were hired to perform. They were engaged to
perform activities which are necessary in the usual business of the
ER. The contract for probationary employment was utilized by
respondent company as a chicanery to deny petitioners their status
as regular EEs and to evade paying them the benefits attached to
such status. They were hired and re hired in a span of from 2 4
years to do the same type of work which conclusively shows the
necessity of petitioners services to the respondent.
The act of hiring and re hiring the petitioners over a period of time
without considering them as regular EEs evidences bad faith on the
part of private respondent. The public respondent made a finding to

this effect when it stated that the subsequent rehiring of petitioners

on a probationary status clearly appears to be a convenient
subterfuge on the part of management to prevent complainants
(petitioners) from becoming regular EEs.
Disposition Resolution of NLRC is modified, the deletion of the
award for backwages is set aside. LA decision is AFFIRMED, with
modification that backwages shall be paid to petitioners from the
time of their illegal dismissal up to the date of their reinstatement.
PALTENG vs. UCPB
GR 172199, February 27, 2009
FACTS: Palteng was the Senior Assistant Manager/Branch
Operations Officer of UCPB. After conducting a diligence audit, the
Internal Audit and Credit Review Division reported that Palteng
committed several offenses under the EE Discipline Code in
connection with Mercados (a client) Past Due Domestic Bills
Purchased (BP). Palteng explained that at the time the BP
accommodation was extended, she was not aware that Mercados
Omnibus Line has been reduced to P50 Million and that it contained
a P5 Million sublimit on BP. Nevertheless, she accepted full
responsibility for granting the BP accommodation against Mercados
personal checks beyond her authority. While she admitted
committing a major offense that may cause her dismissal, she
claimed that it was an honest mistake. Palteng was dismissed with
forfeiture of all benefits. Palteng filed a complaint for illegal
dismissal.
The Labor Arbiter declared her dismissal illegal, entitling her to,
among others, full backwages from the time of her dismissal until
finality of judgment. The CA modified the decision, declaring that
backwages should be computed until the labor arbiters decision.
ISSUE: Is Palteng entitled to backwages?
HELD: No. An EE who is illegally dismissed from work is entitled to
reinstatement without loss of seniority rights, and other privileges
as well as to full backwages, inclusive of allowances, and to other
benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement. However, in the event that reinstatement is no
longer possible, the EE may be given separation pay instead.
Reinstatement and payment of backwages are distinct and
separate reliefs given to alleviate the economic setback brought
about by the EEs dismissal. The award of one does not bar the
other. Backwages may be awarded without reinstatement, and
reinstatement may be ordered without awarding backwages.
In a number of cases, the Court, despite ordering reinstatement or
payment of separation pay in lieu of reinstatement, has not
awarded backwages as penalty for the misconduct or infraction
committed by the EE.
In the case at bar, petitioner admitted that she granted the BP
accommodation against Mercados personal checks beyond and
outside her authority. The Labor Arbiter, the NLRC and the Court of
Appeals all found her to have committed an "error of judgment,"
"honest mistake," vis--vis a "major offense." Since petitioner was
not faultless in regard to the offenses imputed against her, she is
entitled to separation pay only, without backwages.
PHIL TOBACCO FLUE CURING vs. NLRC
300 SCRA 37
These refer to the consolidated cases for payment of separation
pay lodged by [the] Lubat Group, and for illegal dismissal and
underpayment of separation pay by [the] Luris group, with prayers
for damages and attorneys fees against the above respondents.
FACTS: There are two groups of EEs, namely, the Lubat group and
the Luris group. The Lubat group is composed of petitioners
seasonal EEs who were not rehired for the 1994 tobacco season. At
the start of that season, they were merely informed that their
employment had been terminated at the end of the 1993
season. They claimed that petitioners refusal to allow them to
report for work without mention of any just or authorized cause
constituted illegal dismissal. In their Complaint, they prayed for
separation pay, back wages, attorneys fees and moral damages.
On the other hand, the Luris group is made up of seasonal EEs who
worked during the 1994 season. On August 3, 1994, they received
a notice informing them that, due to serious business losses,
petitioner planned to close its Balintawak plant and transfer its
tobacco processing and redrying operations to Ilocos Sur. Although
the closure was to be effective September 15, 1994, they were no
longer allowed to work starting August 4, 1994. Instead, petitioner
awarded them separation pay computed according to the following
formula:
total no. of days actually worked
----------------------------------------------------- x daily rate x
15 days
total no. of working days in one year
In their Complaint, they claimed that the computation should be
based not on the above mathematical equation, but on the actual
number of years served. In addition, they contended that they
were illegally dismissed, and thus they prayed for back wages.
Against these factual antecedents, the labor arbiter ordered the
petitioner to pay complainants separation pay differential
plus attorneys
fees
in
the
total
amount
of
P3,092,896.76. Dissatisfied with said Decision, Philippine Tobacco
and the complainants filed their respective appeals before the
NLRC.

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J.SUAREZ II, 2ND SEM,SY 12-13
As noted earlier, the NLRC affirmed the labor arbiters Decision.
Before this Court, only Philippine Tobacco filed the present recourse,
as the complainants did not question the NLRC Decision.
ISSUES: In the Courts view, three issues must be tackled: First,
did petitioner prove serious business losses, its justification for
the nonpayment of separation pay? Second, was the dismissal of
the EEs valid? Third, how should the separation pay of illegally
dismissed seasonal EEs be computed?
HELD: First Issue: Serious Business Losses Not Proven
Article 283 of the Labor Code prescribes the requisites and the
procedure for an EEs dismissal arising from the closure or cessation
of operation of the establishment.
It must be noted that the present case involves the closure of
merely a unit or division, not the whole business of an otherwise
viable enterprise. Although Article 283 uses the phrase closure or
cessation of operation of an establishment or undertaking, this
Court previously ruled in Coca-Cola Bottlers (Phils.), Inc.
v. NLRC that said statutory provision applies in cases of both
complete and partial cessation of the business operation.
Petitioner did not actually close its entire business. It merely
transferred or relocated its tobacco processing and redrying
operations. Moreover, it was also engaged in, among others, corn
and rental operations, which were unaffected by the closure of its
Balintawak plant.
Tested against the aforecited standards, we hold that herein
petitioner was not able to prove serious financial losses arising from
its tobacco operations. A close examination of its Statement of
Income and Expenses and its recasted version thereof, which were
presented in support of its contention, suggests its failure to show
business losses.
On the contrary, the Statement of Income and Expenses shows that
the selling and administrative expenses pertain not only to the
tobacco business of petitioner, but also to its corn and rental
operations, and that the interest expenses pertain to all of its
business operations. In fact, the aforementioned Statement shows
that there was a net gain from operations in each year covered by
the report. In other words, the recasted financial statement
effectively modified the Statement of Income and Expenses by
deducting from the tobacco operations alone the operating costs
pertaining to all businesses of petitioner. The contention of
petitioner that tobacco was its main business does not justify the
devious contents of the recasted financial statement. It is difficult
to accept that it could not have incurred any expense in its other
operations. Common sense revolts against such proposition.
Second Issue: Lubat Group Illegally Dismissed
Petitioner illegally dismissed the members of the Lubat group when
it refused to allow them to work during the 1994 season. It follows
that the ER-EE relationship between herein petitioner and members
of the Lubat group was not terminated at the end of the 1993
season. From the end of the 1993 season until the beginning of the
1994 season, they were considered only on leave but nevertheless
still in the employ of petitioner.
Petitioner is liable for illegal dismissal and should be responsible for
the reinstatement of the Lubat group and the payment of their back
wages. However, since reinstatement is no longer possible as
petitioner has already closed its Balintawak plant, respondent
members of the said group should instead be awarded normal
separation pay (in lieu of reinstatement) equivalent to at least
one month pay, or one month pay for every year of service,
whichever is higher. It must be stressed that the separation pay
being awarded to the Lubat group is due to illegal dismissal; hence,
it is different from the amount of separation pay provided for in
Article 283 in case of retrenchment to prevent losses or in case of
closure or cessation of the ERs business, in either of which the
separation pay is equivalent to at least one (1) month or one-half
(1/2) month pay for every year of service, whichever is higher.
Third Issue: Amount of Separation Pay
The amount of separation pay is based on two factors: the amount
of monthly salary and the number of years of service. Although the
Labor Code provides different definitions as to what constitutes
one year of service, Book Sixdoes not specifically define one year
of
service
for
purposes
of
computing
separation
pay. However, Articles 283 and 284 both state in connection with
separation pay that a fraction of at least six months shall be
considered one whole year. Applying this to the case at bar, we
hold that the amount of separation pay which respondent members
of the Lubat and Luris groups should receive is one-half (1/2) their
respective average monthly pay during the last season they worked
multiplied by the number of years they actually rendered service,
provided that they worked for at least six months during a given
year.
The formula that petitioner proposes, wherein a year of work is
equivalent to actual work rendered for 303 days, is both unfair and
inapplicable, considering that Articles 283 and 284 provide that in
connection with separation pay, a fraction of at least six months
shall be considered one whole year. Under these provisions, an EE
who worked for only six months in a given year -- which is certainly
less than 303 days -- is considered to have worked for one whole
year. NLRC Decision is affirmed with modifications.
E. RAZON, INC. [formerly known as Metro Services, Inc.], vs. THE
HONORABLE SECRETARY OF LABOR AND EMPLOYMENT (DOLE) and
MARINA PORT SERVICES, INC. (MARINA), G.R. No. 85867 May 13,
1993
FACTS: ERI became Metro Port Services, Inc. (MPSI) in 1978 when
parties close to then Presient Marcos, specifically his brother-in-law,
Alfredo "Bejo" Romualdez, allegedly coerced Enrique Razon, who
owned 93% of ERI's equity, into endorsing in blank stock

certificates covering 60% of such equity. Upon the expiration of the

management contract in 1978, it was extented to June 30, 1980.
The PPA then executed a new contract with ERI/MPSI for a term of
eight (8) years beginning July 1, 1980 two years before the
expiration of the eight-year term, the PPA cancelled the
management contract for alleged violations thereof. PPA took over
the cargo-handling operations as well as all the equipment of MPSI.
PPA issued a Permit. The permit, which was to take effect for oneyear period or until July 20, 1987, 1 contained the following
pertinent paragraph as part of the additional terms and conditions:
Labor and personnel of previous operator, except those positions of
trust and confidence, shall be absorbed by grantee. Labor or EEs
benefits provided for under existing CBA shall likewise be honored.
MARINA began the arrastre services and required all workers of
ERI/MPSI to accomplish individual information sheets. Weeks later,
the bulk of the 2,700 EEs concerned discovered that they had been
hired by MARINA as new EEs effective July 21, 1986. Hence, they
clamored for the payment of their separation pay but both the
MARINA and ERI/MPSI refused to be liable therefor. In a bid to
prevent disruption of work, PPA authorized MARINA to deduct
P2,000,000.00 from the amount due the MPSI as MARINA's rentals
for MPSI equipment, as partial payment of the EEs' separation pay
The EEs who were members of the Associated Workers Union (AWU)
filed a notice of strike on October 12, 1987. This move prompted
the PPA, MARINA, ERI, and representatives of the AWU, Associated
Port Checkers Workers Union (ASTEU), and Marina Management EEs
(MARINE ME) to meet and forge an Agreement on November 3,
1987 for the "immediate and reasonable resolution of the long
standing claim of separation benefits which resulted in impending
labor strikes". The agreement provided that the separation benefits
would be computed at "one (1) month for every year of service".
MPSI then requested the Secretary of Labor and Employment to
immediately assume jurisdiction over the dispute to prevent
paralyzation of the vital operations of the Port of Manila. Invoking
Article 263(g) of the Labor Code, then Secretary of Labor Franklin
M. Drilon issued the order of December 23, 1987 holding that the
labor dispute was "imbued with national interest" and ordering the
striking workers to return to work within 24 hours and the
management to accept them back. He also directed the parties to
comply faithfully with the Agreement of November 3, 1987 and,
pending the appraisal of the reasonable rental and market value of
the MPSI equipment, the amount of P5 million which the
Presidential Commission on Good Government (PCGG) had
committed to unfreeze from the account of MPSI was made
available. He also directed the National Conciliation and Mediation
Board to form a committee to monitor and assist in the
implementation of the November 3, 1987 Agreement.
The separation pay of the workers was later taken from the
proceeds of the sale to PPA of ERI cargo-handling equipment and
the rentals from July 21, 1986 to January 29,1988 of MARINA for the
said equipment.
ISSUE: whether or not separation pay should be paid to the
workers of ERI/MPSI. The controversy actually is: which of the
contending corporations, petitioner ERI/MPSI or private respondent
MARINA, should pay such benefit to the EEs concerned.
HELD: Separation or severance pay is an allowance usually based
on length or service that is payable to an EE on severance except
usually in case of disciplinary discharge, or as compensation due an
EE upon the severance of his employment status with the ER
(Marcopper Mining Corporation vs. NLRC , 200 SCRA 167 [1991]).
Under Article 283 of the Labor Code, separation pay is required
where the termination of employment relationship is occasioned by
the "cessation of operations" of an establishment. The said article,
therefore, puts the burden of paying separation pay on ERI/MPSI,
the ER for whom services had been rendered by the EEs who were
separated from employment in view of the cessation of its business
operations by the cancellation of its management contract with the
PPA. Petitioner, however, argues otherwise and would shift liability
for separation pay to MARINA on the strength of Paragraph 7 of the
additional terms and conditions appended to the permit to operate
granted to MARINA.
By absorbing ERI/MPSI EEs and honoring the terms and conditions
in the collective bargaining agreement between ERI/MPSI and the
EEs, MARINA did not assume the responsibility of ERI/MPSI to pay
separation pay to its EEs. As correctly put by public respondent,
Paragraph 7, insofar as it refers to EEs' benefits, should be applied
prospectively with respect to MARINA. This conclusion is supported
by Paragraph 14 of Permit No. 104286 granted to MARINA which
states: 14. Grantee shall be responsible for all obligations, liabilities
or claims arising out of any transactions or undertakings in
connections with their cargo handling operations as of the actual
date of transfer thereof to grantee.
MARINA might have been impelled not only by compassion for the
EEs but also by their tested skills in hiring them back upon their
separation from the employment of ERI/MPSI.
The situation in this case is completely different from that obtaining
in Filipinas Port Services, Inc. vs. NLRC (200 SCRA 773 [1991]),
where the petitioner was obligated "not only to absorb the workers
of the dissolved companies but also to include the length of service
earned by the absorbed EEs with their former ERs as well" because
said case involved a merger of different companies into a single
company as a result of the PPA's integration of stevedoring/arastre
services. On the other hand, in the case at bar, there is no privity of
contract between ERI/MPSI and MARINA so as to make the latter a
common or even substitute ER that it should be burdened with the
obligations of the former. DISMISSED.
NATIONAL FEDERATION OF LABOR vs. NLRC
G.R. No. 127718 (March 2, 2000)
FACTS: Petitioners are EEs of the Patalon Coconut Estate in
Zamboanga. With the advent of the RA No. 6657 or the
Comprehensive Agrarian Reform Law, the government sought the
compulsory acquisition of the land for agrarian reform. Because of
this, the private respondents who are owners of the estate decided

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J.SUAREZ II, 2ND SEM,SY 12-13
to shut down its operation. Petitioners did not receive any
separation pay. Now, the petitioners pray, with the representation
of their labor group, claiming that they were illegally dismissed.
They cite Article 283 of the Labor code where an ER may
terminate the employment of any EE due to the installation of labor
saving devices, redundancy, and retrenchment to prevent losses or
the closing or cessation of operation. Petitioners became co-owners
of the land and subsequently filed complaints for illegal dismissal.
The Regional Arbitration Branch of the NLRC dismissed the charge
for illegal dismissal but ordered the payment of separation pay. The
NLRC reversed the decision.
ISSUES:

a.

Whether or not the Court should apply the legal maxim

verbal legis in construing Article 283 of the Labor Code as
regards its applicability to the case at bar.

b.

W/N an ER that was compelled to cease its operation

because of compulsory acquisition by the government of its
land purposes of agrarian reform is liable to pay separation
pay its affected EEs.
HELD:a. Yes, the legal maxim is applicable in this case. The use of
the word May, in its plain meaning, denotes that it is directory in
nature and generally permissive only. Also, Article 283 of the Labor
Code does not contemplate a situation where the closure of the
business establishment is forced upon the ER and ultimately for the
benefit of the EEs. The Patalon Coconut Estate was closed down
because a large portion of the said estate was acquired by the DAR
pursuant to the CARP. The severance of ER-EE relationship between
the parties came about involuntarily, as a result of an act of the
State. Consequently, complainants are not entitled to any
separation pay. Reasoning: Where the words of a statute are clear,
plain and free from ambiguity, it must be given its literal meaning
and applied without attempted interpretation.
Policy: Article 283 of the Labor Code applies in cases of closures of
establishment and reduction of personnel. The peculiar
circumstances in the case at bar, however, involves neither the
closure of an establishment nor a reduction of personnel as
contemplated under the article.
b. 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 ER as may be gleaned for the
wording, the ER MAY also terminate, denoting that it is directory
in nature. The Labor Code does not contemplate a situation where
the closure is forced upon the ER. As such, petitioners are not
entitled to separation pay as private respondents did not voluntary
shut down operation as they even sought to be exempted from the
coverage of RA 6657.
JO CINEMA vs. NLRC
June 28, 2001
FACTS: Petitioner is in the movie business. Respondent was a
theater porter. A memo wasissued saying that no checks should be
encashed but respondent, for her friend, encashedwithout
permission 4 checks with the ticket seller. The checks bounced so
she was asked toshow cause why she shouldnt be disciplined but
she didnt answer so she was preventivelysuspended. An
investigation was held where she participated in. During the
investigation shefiled a case for illegal dismissal bec when she was
suspended, she was allegedly terminatedalso. The LA and NLRC
ruled that there was illegal dismissal or at least constructive
dismissaland ordered separation pay and full backwages. The LA
ruled that since the company insisted on making her pay the
amount she couldnt come back to work even if she wanted to. The
NLRC ruled that even though respondent had no cause of action
against the company as shewas merely placed on preventive
suspension she was still illegally dismissed.
ISSUE: W/N respondent was illegally dismissed
HELD: It is clear that respondent was not dismissed but merely
placed under preventivesuspension. It cannot be construed as
dismissal since the cessation from work is onlytemporary. She could
not have been dismissed because a formal investigation was still
beingconducted. She even attended the investigation admitted the
allegations. If she was indeeddismissed the investigation wouldnt
have continued. There was also no constructive dismissal.
Constructive discharge is quitting because continued employment
is rendered impossible,unreasonable or unlikely. This does not hold.
The demand for payment out of her own pocketswas reasonable as
it was attributed to her. As she was not illegally dismissed,
separation payand backwages are not in order.
HYATT TAXI SERVICES INC. vs. CATINOY
June 26, 2001
FACTS: Catinoy was a taxi driver of Hyatt Taxi Services, Inc. He is
also a member and officer ofHyatt Taxi EEs Association, a legitimate
labor organization registered with the DOLE andis the exclusive
bargaining representative of all taxi drivers of the company. One
day he foundout that his desk was forcibly opened and he found out
that it was the acting union presidentwho opened it so an argument
began that ended in blows where he was injured so he filed
acriminal complaint against the president. The union asked the
company to suspend them bothfor fighting and a memo was issued.
It said that company rules and the unions by-laws hadbeen
violated so they were put on indefinite suspension. Catinoy then
filed a complaint for illegalsuspension. After 30 days of suspension,
he reported for work but he was not allowed to bec ofthe 2 cases he

filed. He then amended his complaint to constructive dismissal. The

LA ruled thatthere was illegal dismissal and the NLRC affirmed it but
did not award backwages bec therewas no concrete showing of
illegal dismissal and it was only constructive illegal dismissal.
TheCA reversed it and ruled that there was illegal dismissal and
awarded full backwages.
ISSUE: W/N there was illegal dismissal or constructive dismissal.
HELD: The SC ruled that there was illegal dismissal, not merely
constructive dismissal. Therewas no justification for the deletion of
the award of backwages. The factual findings of the LA,which the
NLRC initially adopted, show that respondent was not taken back
after the 30-daysuspension. The LA appreciated the events as
badges of constructive dismissal. Constructivedismissal is when the
EE wants to work but cannot due to the prevailing conditions.
Buthere, what made it impossible or unacceptable for respondent to
resume work was aninsistence that he first desist from filing his
complaints before he be allowed to return. Herefused and amended
his complaint to include constructive dismissal. His refusal to yield
isunderstandable for he has every right not to bargain away his
right to prosecute his complaintsin exchange for the employment to
which he was in the first place rightfully entitled.
SIEMENS PHILIPPINES, INC. AND MR. ERNST H. BEHRENS,
VS. ENRICO A. DOMINGO
[G.R. No. 150488, July 28, 2008]
FACTS: Domingo signed an Employment Contract with Maschinen
& Technik, Inc. (MATEC) as a consultant, with a compensation
package of Php8,000.00/month salary and an allowance of
Php400.00/month. MATEC is a subsidiary of Siemens Philippines.
[4]
Thereafter, Domingo was given additional work by MATEC, in
which he was paid DM1,800.00/month on top of his original salary.
The extra work was the result of a contract entered into by MATEC
and Siemens Aktiengesellschaft[5] (Siemens Germany), whereby
MATEC, at the request of Siemens Germany, hired Domingo to
handle the operation of OEN OEV TD. [6] Siemens Germany is a
German company which has an investment in Siemens Philippines.
Electronic Telephone System Industries, Inc. (ETSI) availed of
Domingo's services as assistant manager. ETSI, like MATEC is a
subsidiary
of
Siemens
Philippines. [8] The
Contract
of
Employment[9] of Domingo with ETSI provides that the latter shall
have the right to assign the said contract in favor of Siemens
Philippines, which is a corporation to be incorporated under the
laws of the Philippines. While still an assistant manager of ETSI,
Domingo was hired as a consultant by Siemens Germany in the
field of text and data networks for a period of twelve (12) months.
[11]
As compensation, he received DM20,000.00, payable once for
every twelve-month period. Siemens Germany sent a letter to ETSI
guaranteeing the consultancy agreement between Siemens
Germany and Domingo.
Domingo filed a complaint for illegal dismissal and prayed for the
payment of salaries, 13 th month pay, backwages, damages,
separation pay and attorney's fees. [22] Domingo alleged that he was
forced to resign because of the act of Siemens Philippines of not
renewing the consultancy agreement. [23] Siemens Philippines
countered that Domingo's resignation was voluntary and that they
were not privy to the consultancy agreement between Domingo and
Siemens Germany. LA: illegal dismissal. NLRC: affirmed.
ISSUE: whether there was constructive dismissal that would entitle
Domingo to his monetary claims.
VHELD: We believe, and so hold, that Domingo was constructively
dismissed from employment.A diminution of pay is prejudicial to the
EE and amounts to constructive dismissal. [35] The gauge for
constructive dismissal is whether a reasonable person in the EE's
position would feel compelled to give up his employment under the
prevailing circumstances. Constructive dismissal is defined as
quitting when continued employment is rendered impossible,
unreasonable or unlikely as the offer of employment involves a
demotion in rank or diminution in pay. [36] It exists when the
resignation on the part of the EE was involuntary due to the harsh,
hostile and unfavorable conditions set by the ER. It is brought about
by the clear discrimination, insensibility or disdain shown by an ER
which becomes unbearable to the EE. An EE who is forced to
surrender his position through the ER's unfair or unreasonable acts
is deemed to have been illegally terminated and such termination is
deemed to be involuntary. [37]
We have, under the law's mandate, consistently resolved this
situation in favor of the EE in order to protect his rights and
interests from the coercive acts of the ER.
While admittedly, Siemens Philippines is not a party to the
arrangement between Siemens Germany, ETSI and Domingo,
knowledge of and acquiescence to - if not actual concurrence in the arrangement can be imputed to Siemens Philippines as to bind
it to the arrangement. This conclusion finds support in the
following:
First, based on the findings of facts of the LA, NLRC and CA
MATEC, ETSI, Siemens Philippines and Siemens Germany are
related companies, the first three being subsidiaries of the parent
company, and the fourth, Siemens Germany, having an investment
in Siemens Philippines. Short of piercing the veil of corporate
fiction, we note the intimate corporate relationship of Siemens
Germany and Siemens Philippines, including the practice of the two
companies of integrating their workforce.
Second, in Domingo's contract of employment with Siemens
Philippines, it is provided that Domingo shall not be connected in
any other work capacity or employment or be otherwise involved,
directly or indirectly, with any other business or concern without
first having obtained the written consent of the company. Yet,

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J.SUAREZ II, 2ND SEM,SY 12-13
Siemens Philippines never questioned the continued consultancy
work of Domingo with Siemens Germany, not even when the
consultancy agreement was renewed twice during the lifetime of
Domingo's contract of employment with Siemens Philippines.
Third, the guarantee letter issued by Siemens Germany in favor of
Domingo was never questioned, much less revoked by Siemens
Philippines when it assumed the employment of Domingo. The
Guarantee Letter was a security given to Domingo by Siemens
Germany assuring Domingo that Siemens Philippines would ensure
that Siemens Germany would extend the consultancy agreement as
long as Domingo was under its employ.
Fourth, the consultancy agreement was a form of benefit or
privilege given to Domingo by ETSI, a privilege that was allowed by
Siemens Philippines to continue when it took over the majority of
the business activities of ETSI and, consequently, became
Domingo's ER. The outright removal of the privilege contravenes
the law, because it resulted in the effective diminution of
Domingo's salary.
Domingo's constructive dismissal entitles him to his monetary
claims, subject to the following modifications:
First, we are not in accord with the Decision of the LA finding
Behrens, the President and Chief Executive Officer of Siemens
Philippines, solidarily liable with the company. A corporation, being
a juridical entity, may act only through its directors, officers and
EEs. Obligations incurred by them, while acting as corporate
agents, are not their personal liability but the direct accountability
of the corporation they represent. As a rule, they are only solidarily
liable with the corporation for the termination of EEs if they acted
with malice or bad faith. [38] In the case at bar, malice or bad faith on
the part of Behrens in the constructive dismissal of Domingo was
not sufficiently proven to justify a ruling holding him solidarily liable
with
Siemens
Philippines.
Second, an illegally or constructively dismissed EE is entitled to: (1)
either reinstatement, if viable, or separation pay if reinstatement is
no longer viable; and (2) backwages. These two reliefs are separate
and distinct from each other and are awarded conjunctively
As a rule, separation pay is awarded to an illegally dismissed EE,
computed at the rate of one month pay per year of service.
Accordingly, the LA decision granting separation pay equivalent to
two months salary per year of service must be modified. There is
nothing on record that even remotely suggests that it is the
company policy of Siemens Philippines to grant its EEs separation
pay of two months' salary for every year of service. Thus, in
consonance with our previous rulings, [40] Domingo shall be awarded
separation pay in the amount of one month pay for every year of
service, but consultancy fees shall not be included in the
computation of his separation pay. As discussed above, the
evidence presented by Domingo is not sufficient to pierce the veil
of corporate fiction between Siemens Philippines and Siemens AG,
which would make Siemens Philippines liable for the monetary
obligations
of
Siemens
AG.
Third, the backwages that should be awarded to Domingo shall be
reckoned from the time his constructive dismissal took effect until
the finality of this decision. This is in conformity with Article 279 of
the Labor Code which provides that an EE who is unjustly dismissed
from work shall be entitled to full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent,
computed from the time his compensation was withheld from him
up to the time of his actual reinstatement. Since reinstatement of
Domingo is no longer possible due to his strained relations with the
management of Siemens Philippines, and considering the position
he held in the company, he is lawfully entitled to receive
backwages. For the same reason cited above, consultancy fees
shall be excluded in the computation of Domingo's backwages.
Finally, moral damages may be recovered when the dismissal of the
EE was tainted by bad faith or fraud; or when it constituted an act
oppressive to labor or done in a manner contrary to morals, good
customs or public policy. Exemplary damages are recoverable if the
dismissal was done in a wanton, oppressive, or malevolent manner.
[41]
In this case, we have found that there was bad faith in the failure
or refusal of Siemens Philippines to work for the renewal of
Domingo's consultancy contract with Siemens Germany. But while
we affirm Domingo's entitlement to these damages, they are not
intended to enrich the dismissed EE. Consequently, we find the
amount of P50,000.00 for moral damages and P50,000.00 for
exemplary damages sufficient to allay the sufferings experienced
by Domingo and by way of example or correction for public good,
respectively.
FEDERITO B. PIDO v. NLRC et al.
G.R. No. 169812, 23 February 2007
CARPIO MORALES, J.:
FACTS:Federito B. Pido (petitioner) was hired on October 1, 1995 by
Cherubim Security and General Services, Inc. (respondent) as a
security guard. He was assigned at the Ayala Museum, but was
later transferred on December 1, 1995 to the Tower and Exchange
Plaza of Ayala Center where he worked as a computer operator at
the Console Room, responsible for observing occurrences that
transpire inside elevators and other areas in buildings which are
recorded by surveillance cameras and relayed to monitors.
Like the other guards deployed by respondent at the Ayala Center,
petitioner was under the operational control and supervision of the
Ayala Security Force (ASF) of the Ayala Group of Companies.
On January 21, 2000, petitioner had an altercation with Richard
Alcantara (Alcantara) of the ASF, arising from a statement of
Alcantara that petitioners security license for his .38 caliber
revolver service firearm and duty detail order had already expired.
On even date, Alcantara filed a complaint for Gross Misconduct,
claiming that when he directed petitioner to present his security
license, petitioner angrily and on top of his voice questioned his

authority. And Alcantara recommended that petitioner be relieved

from his post, and that immediate disciplinary action against him be
taken.
On January 23, 2000, petitioner reported for work at the Ayala
Center but he was not allowed to stay in the premises, a Recall
Order having been issued by respondent through its Operations
Manager. Petitioner thus filed an information report wherein he
narrated that Alcantara confronted him on January 21, 2000 about
his right to carry a firearm and afterwards tried to grab it from its
holster, resulting in a heated argument between them.
As more than nine months had elapsed since the investigation was
conducted by respondent with no categorical findings thereon
made, petitioner filed on October 23, 2000 a complaint for illegal
constructive dismissal, illegal suspension, and non-payment and
underpayment of salaries, holiday pay, rest day, service incentive
leave, 13th month pay, meal and travel allowance and night shift
differential against respondent, along with its EE Rosario K. Balais
(Rosario) who was allegedly responsible for running the day to day
affairs of respondents business. Petitioner likewise prayed for
reinstatement and payment of full backwages, attorneys fees and
other money claims.
In its position paper, respondent denied that it dismissed petitioner
from the service, it claiming that while it was still in the process of
investigating the January 21, 2000 incident, it offered petitioner
another assignment which he declined, saying pahinga muna ako
[I will in the meantime take a rest].
The Labor Arbiter ruled that petitioners suspension for more than
nine months had ripened into constructive termination, on account
of which he ordered the payment of separation pay equivalent to
one month salary of P8,000 for every year of service, or for the
total amount of P32,000. The Arbiter, however, found that there
was insufficient evidence to support petitioners assertion that he
was entitled to his money claims.
Both parties appealed to the National Labor Relations Commission
(NLRC).
The NLRC modified the decision of the Labor Arbiter. While it found
that petitioner was indeed constructively dismissed, it set aside the
award of separation pay, given respondents willingness to assign
petitioner to another post which he declined. On the same ground,
the NLRC denied petitioners claim for backwages. It merely
ordered his reinstatement.
Petitioners motion for reconsideration having been denied by the
NLRC by Resolution, he filed a petition for certiorari with the Court
of Appeals, maintaining that his suspension for more than nine
months amounted to constructive dismissal to entitle him to
separation pay and backwages.
The appellate court upheld the NLRC decision and accordingly
dismissed petitioners appeal. The appellate court sustained the
findings of the Labor Arbiter and the NLRC that while a security
guard, like petitioner, may be lawfully placed on a floating status,
the same should continue only for six months, otherwise the
security agency could be liable for constructive dismissal under
Article 286 of the Labor Code, viz:
ART. 286. When employment not deemed terminated. - The bona
fide suspension of the operation of a business or undertaking for a
period not exceeding six (6) months, or the fulfillment of the EE of a
military or civic duty shall not terminate employment. In all such
cases, the ER shall reinstate the EE to his former position without
loss of seniority rights if he indicates his desire to resume his work
not later than one (1) month from the resumption of operations of
his ER or from his relief from the military or civic duty.
ISSUE: Whether or not petitioners nine-month suspension is
tantamount to constructive dismissal.
HELD: The Supreme Court finds that, indeed, petitioner was
constructively dismissed, but not on the grounds advanced by the
appellate court, which echoed those of the NLRC and the Labor
Arbiter.
Article 286 applies only when there is a bona fide suspension of the
ER's operation of a business or undertaking for a period not
exceeding six (6) months. In such a case, there is no termination of
employment but only a temporary displacement of EEs, albeit the
displacement should not exceed six (6) months. The paramount
consideration should be the dire exigency of the business of the ER
that compels it to put some of its EEs temporarily out of work. In
security services, the temporary "off-detail" of guards takes place
when the security agency's clients decide not to renew their
contracts with the security agency, resulting in a situation where
the available posts under its existing contracts are less than the
number of guards in its roster.
Verily, a floating status requires the dire exigency of the ER's bona
fide suspension of operation of a business or undertaking. In
security services, this happens when the security agencys clients
which do not renew their contracts are more than those that do and
the new ones that the agency gets. Also, in instances when
contracts for security services stipulate that the client may request
the agency for the replacement of the guards assigned to it even
for want of cause, the replaced security guard may be placed on
temporary off-detail if there are no available posts under
respondents existing contracts.

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J.SUAREZ II, 2ND SEM,SY 12-13
When a security guard is placed on a floating status, he does not
receive any salary or financial benefit provided by law. Due to the
grim economic consequences to the EE, the ER should bear the
burden of proving that there are no posts available to which the EE
temporarily out of work can be assigned. This, respondent failed to
discharge.
As per the Recall Order, it can be gathered that respondent
intended to put petitioner under preventive suspension for an
indefinite period of time pending the investigation of the complaint
against him. The allowable period of suspension in such a case is
not six months but only 30 days, following Sections 8 and 9 of Rule
XXIII, Book V of the Omnibus Rules Implementing the Labor Code
(Implementing Rules). Hence, in the event the ER chooses to
extend the period of suspension, he is required to pay the wages
and other benefits due the worker and the worker is not bound to
reimburse the amount paid to him during the extended period of
suspension even if, after the completion of the hearing or
investigation, the ER decides to dismiss him.
Respondent did not inform petitioner that it was extending its
investigation, nor did it pay him his wages and other benefits after
the lapse of the 30-day period of suspension. Neither did
respondent issue an order lifting petitioners suspension, or any
official assignment, memorandum or detail order for him to assume
his post or another post. Respondent merely chose to dawdle with
the investigation, in absolute disregard of petitioners welfare.
At the time petitioner filed the complaint for illegal suspension
and/or constructive dismissal on October 23, 2000, petitioner had
already been placed under preventive suspension for nine months.
To date, there is no showing or information that, if at all, respondent
still intends to conclude its investigation.
This Court thus rules that petitioners prolonged suspension, owing
to respondents neglect to conclude the investigation, had ripened
to constructive dismissal.
UNIVERSAL ROBINA SUGAR MILLING CORP. vs. CABALLEDA
FACTS:Agripino Caballeda was a welder for URSUMCO from
March1989 until June 23, 1997 with a salary of P124 per day while
Alejandro Cadalin was a crane operator from 1976 to June 15, 1997,
with a salary of P209.30 per day. John Gokongwei Jr., President of
URSUMCO, issued aMemorandum establishing the age of
compulsory retirement at 60. Subsequently, RA 7641 set the
compulsory retirement age, in the absence of a retirement plan or
agreement, at 65and that an EE may retire upon reaching 60.
The National Labor Federation, the labor union of the workers of
URSUMCO, of which Alejandro Cadalin was a member entered into a
CBA with URSUMCO. Article XV of said CBA particularly provided
that the retirement benefits of the members of the collective
bargaining unit shall be in accordance with law. Agripino and
Alejandro subsequently reached the age of 60 and were allegedly
forced to retire. They accepted their separation pays and applied
for retirement benefits with the SSS. Alejandro also executed a
quitclaim in favor of URSUMCO. They subsequently filed Complaints
for illegal dismissal with the LA of Dumaguete City.
URSUMCO claimed that Agripino and Alejandro voluntarily retired,
that the Memorandum was no longer in effect when they did so,
and that RA 7641 cannot be given retroactive effect since there was
an existing CBA that covered the retirement benefits of the EEs.
It further alleged that Agripino was merely a seasonal or project
worker and not a casual worker since the sugar millingbusiness is
seasonal in nature. Thus, he was not actually forced to retire. The
termination of his employment was essentially based on the fact
that the period in his contract had expired.
ISSUE&RULING: WON RA 7641 has retroactive effect: Yes. The
issue of the retroactive effect of RA 7641 has long been settled. It is
a curative statute. It is evident from the records that when
respondents were compulsorily retired from the service, R.A. 7641
was already in full force and effect. The petitioners failed to prove
that the respondents did not comply with the requirements for
eligibility under the law for such retirement benefits. In sum, the
aforementioned requisites were adequately satisfied, thus,
warranting the retroactive application of R.A. 7641 in this case.
WON Agripino is a seasonal or project EE: No. He is a regular EE.
WON the Agripino and Alejandro voluntarily retired: No. Retirement
is the result of a bilateral act of the parties, a voluntary agreement
between the ER and the EE whereby the latter, after reaching a
certain age, agrees to sever his or her employment with the former.
[29]
The age of retirement is primarily determined by the existing
agreement between the ER and the EEs. However, in the absence
of such agreement, the retirement age shall be fixed by law. Under
Art. 287 of the Labor Code as amended; the legally mandated age
for compulsory retirement is 65 years, while the set minimum age
for optional retirement is 60 years. The law generally looks with
disfavor on quitclaims and releases of EEs who have been inveigled
or pressured into signing them by unscrupulous ERs seeking to
evade their responsibilities.
Ratio: (On nature of issue to the best of my understanding)
Whether or not Agripino was a seasonal/project EE or a regular EE is
a question of fact. Time and again, we have held that the Court is
not a trier of facts. In this case, it is noteworthy that the LA, the
NLRC and the CA are one in ruling that Agripino was not a casual
EE, much less a seasonal or project EE. In their findings, Agripino
was considered a regular EE of URSUMCO. Consequently, such
uniform finding of the LA, the NLRC, and the CA binds this Court.
Petition DENIED.

CAINTA CATHOLIC SCHOOL V. CAINTA CATHOLIC SCHOOL EES

UNION
FACTS: On March 6, 1986, a Collective Bargaining Agreement
(CBA) was entered into between Cainta Catholic School and the
Cainta Catholic EEs Union effective January 1, 1986 to May 31,
1989. This CBA provided, among others that:This CBA shall become
effective and binding upon the parties from January 1, 1986 up to
May 31, 1989. At least 60 days before the expiration of this
agreement, the parties hereto shall submit written proposals which
shall be made the basis of negotiations for the execution of new
agreement.
If no new agreement is reached by the parties at the expiration of
this agreement, all the provisions of this agreement shall remain
full force and in effect, up to the time a new agreement shall be
executed. Msgr. Mariano Balbago was appointed School Director in
April 1987. The Union became inactive.
September 10, 1993, the union held an election of officers and Mrs.
RosalindaLlagas was elected as President; Paz Javier, VicePresident;
Fe Villegas,Treasurer; and Maria Luisa Santos, Secretary. The other
elected officers wereRizalina Fernandez, Ester Amigo, secretaries;
Nena Marvilla, treasurer; GuildaGalange and Jimmy del Rosario,
auditors; Filomeno Dacanay and AdelinaAndres, P.R.O.s; and Danilo
Amigo and Arturo Guevarra, business managers.
Llagas was the Dean of of Student Affairs while Villegas and Santos
were Year- Level Chairmen. October 15, 1993, the school retired
Llagas and Javier who had rendered more than twenty years of
continous service. Three days later, the Union filed a notice of
strike with the National Concillation and Mediation Board (NCMB)
docketed as NCMB-RB-12-NS-10-124-93. On November 8, 1993, the
Union struck and picketed the schools entrances. On November 11,
1993, the Secretary of Labor Ma. Nieves R. Confesor issued an order
certifying the labor dispute to the NLRC.
ISSUE: Whether the forced retirement of Llagas and Javier was a
valid exercise of management prerogative. Whether the strike was
legal is highly dependent on whether the retirement was valid.
HELD: We are impelled to reverse the CA and affirm the validity of
the termination of employment of Llagas and Javier, arising as it did
from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union.
Pursuant to the existing CBA, the School has the option to retire an
EE upon reaching the age limit of sixty (60) or after having
rendered at least twenty (20) years of service to the School, the last
three (3) years of which must be continuous. Retirement is different
species of termination of employment from dismissal for just or
authorized causes under Articles 282 and 283 of the Labor Code.
While in all three cases, the EE to be terminated may be unwilling
to part from service, there are eminently higher standards to be
met by the ER validly exercising the prerogative to dismiss for just
or authorized causes. In those two instances, it is indispensable
that the ER establish the existence of just or authorized causes for
dismissal as spelled out in the Labor Code. Retirement, on the other
hand, is the result of a bilateral act of the parties, a voluntary
agreement between the ER and the EE whereby the latter after
reaching a certain age agrees and/or consents to sever his
employment with the former.
The CBA in the case at bar established 60 as the compulsory
retirement age. However, it is not alleged that either Javier or
Llagas had reached the compulsory retirement age of 60 years, but
instead that they had rendered at least 20 years of service in the
School, the last three (3) years continuous. Clearly, the CBA
provision allows the EE to be retired by the School even before
reaching the age of 60, provided that he/she had rendered 20 years
of service. Would such a stipulation be valid? Jurisprudence affirms
the position of the School.
Llagas and Javier were indeed managerial and supervisory
EEs.Having established that Llagas is a managerial EE, she is
proscribed from joining a labor union, 38 more so being elected as
union officer. In the case of Javier, a supervisory EE, she may join a
labor union composed only of supervisory EEs. 39 Finding both union
officers to be EEs not belonging to the rank-and-file, their
membership in the Union has become questionable, rendering the
Union inutile to represent their cause.
Since the strike has been declared as illegal based on the foregoing
discussion, we need not dwell on its legality with respect to the
means employed by the Union. There is neither legal nor factual
justification in awarding backwages to some union officers who
have lost their employment status, in light of our finding that the
strike is illegal. The ruling of the NLRC is thus upheld on this point.
We are also satisfied with the disposition of the NLRC that
mandates that Llagas and Javier (or her heirs) receive their
retirement benefits.
RODOLFO J. SERRANO vs.SEVERINO SANTOS TRANSIT
G.R. No. 187698, August 9, 2010
FACTS: Petitioner Rodolfo Serrano has been an EE of Severino
Santos Transit for 14 years. Petitioner applied for optional
retirement from the company whose representative advised him
that he must first sign the already prepared Quitclaim before his
retirement pay could be released. As petitioners request to first go
over the computation of his retirement pay was denied, he signed
the Quitclaim on which he wrote "U.P." (under protest) after his
signature, indicating his protest to the amount of P75,277.45 which
he received, computed by the company at 15 days per year of
service. Petitioner soon after filed a complaint before the Labor
Arbiter, alleging that the company erred in its computation since
under Republic Act No. 7641, otherwise known as the Retirement
Pay Law, his retirement pay should have been computed at 22.5

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J.SUAREZ II, 2ND SEM,SY 12-13
days per year of service to include the cash equivalent of the 5-day
service incentive leave (SIL) and 1/12 of the 13th month pay which
the company did not. The company maintained, however, that the
Quitclaim signed by petitioner barred his claim and, in any event,
its computation was correct since petitioner was not entitled to the
5-day SIL and pro-rated 13th month pay for, as a bus conductor, he
was paid on commission basis.
The Labor Arbiter ruled in favor of Serrano. In the same Labor
Advisory on Retirement Pay Law, it was likewise decisively made
clear that "the law expanded the concept of "one-half month
salary" from the usual one-month salary divided by two. However,
the National Labor Relations Commission (NLRC) to which
respondents appealed reversed the Labor Arbiters ruling and
dismissed petitioners complaint.
ISSUE: Whether or not petitioner is entitled to the computation of
retirement pay as given by RA 7641
HELD: Yes. Admittedly, petitioner worked for 14 years for the bus
company which did not adopt any retirement scheme. Even if
petitioner as bus conductor was paid on commission basis then, he
falls within the coverage of R.A. 7641 and its implementing rules.
As thus correctly ruled by the Labor Arbiter, petitioners retirement
pay should include the cash equivalent of the 5-day SIL and 1/12 of
the 13th month pay.
For purposes, however, of applying the law on SIL, as well as on
retirement, the Court notes that there is a difference between
drivers paid under the "boundary system" and conductors who are
paid on commission basis.
In practice, taxi drivers do not receive fixed wages. They retain only
those sums in excess of the "boundary" or fee they pay to the
owners or operators of the vehicles.7 Conductors, on the other
hand, are paid a certain percentage of the bus earnings for the day.
A careful perusal of said provisions of law will result in the
conclusion that the grant of service incentive leave has been
delimited by the Implementing Rules and Regulations of the Labor
Code to apply only to those EEs not explicitly excluded by Section 1
of Rule V. According to the Implementing Rules, Service Incentive
Leave shall not apply to EEs classified as "field personnel." The
phrase "other EEs whose performance is unsupervised by the ER"
must not be understood as a separate classification of EEs to which
service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel
under the Labor Code as those "whose actual hours of work in the
field cannot be determined with reasonable certainty." The same is
true with respect to the phrase "those who are engaged on task or
contract basis, purely commission basis." Said phrase should be
related with "field personnel," applying the rule on ejusdem generis
that general and unlimited terms are restrained and limited by the
particular terms that they follow. Hence, EEs engaged on task or
contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave,
unless, they fall under the classification of field personnel.
As a general rule, [field personnel] are those whose performance of
their job/service is not supervised by the ER or his representative,
the workplace being away from the principal office and whose hours
and days of work cannot be determined with reasonable certainty;
hence, they are paid specific amount for rendering specific service
or performing specific work. If required to be at specific places at
specific times, EEs including drivers cannot be said to be field
personnel despite the fact that they are performing work away from
the principal office of the EE.

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