Labor Cases

1
Table of Contents
THE APPLICABLE LAWS......................................................................................................................................................................1
GENERAL PRINCIPLES........................................................................................................................................................................1
1. Singer Sewing Machine vs. NLRC, 193 SCRA 271.......................................................................................................................1
2. Manila Golf Club vs. IAC, 237 SCRA 207......................................................................................................................................1
3. Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [1996].................................................................................................................2
4. Carungcong vs. Sunlife, 283 SCRA 319........................................................................................................................................2
5. Ramos vs CA, 380 SCRA 467.......................................................................................................................................................3
6. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004................................................................................................................3
7. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]....................................................................................................4
8. Phil. Global Communications v. De Vera, 459 SCRA 260 [2005]..................................................................................................5
9. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006..........................................................................................................6
10. Francisco vs. NLRC, 500 SCRA 690 [2006]................................................................................................................................6
11. Nogales et. al., vs. Capitol Medical Center et al., G.R. No. 142625, December 19, 2006...........................................................7
12. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007......................................................................8
13. Consolidated Broadcasting System vs. Oberio, G.R. No. 168424, June 8, 2007........................................................................9
14. Dumpit-Morillo vs. CA, G.R. No. 164652, June 8, 2007, citing 2004 Sonza..............................................................................10
15. Lopez vs. Bodega City, G.R. No. 155731, Sept. 3, 2007, citing 2004 Abante & 2005 Consulta...............................................10
16. Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008.............................................................................11
17. Escasinas et al., vs. Shangri-las Mactan Island Resort et al., G.R. No. 178827, March 4, 2009..............................................12
18. Tongko v. Manufacturer Life Insurance Co. (MANULIFE) Inc., et al., G.R. No 167622, January 25, 2011...............................14
19. Caong, Jr. v. Begualos, G.R. No. 179428, January 26, 2011....................................................................................................15
20. Atok Big Wedge Company vs. Gison, G.R. No. 169510, August 8, 2011..................................................................................16
21. Semblante vs. CA, G.R. No. 196426, August 15, 2011.............................................................................................................18
22. Bernarte vs. Phil. Basketball Assoc., G.R. No. 192084, September 14, 2011...........................................................................19
23. Lirio vs. Genovia, G.R. No. 169757, November 23, 2011..........................................................................................................20
24. Jao vs. BCC Product Sales Inc., G.R. No. 163700, April 18, 2012............................................................................................22
RIGHT TO SECURITY OF TENURE....................................................................................................................................................24
1. ALU-TUCP vs. NLRC, 234 SCRA 678 [1994]..............................................................................................................................24
2. Cosmos Bottling Corp., vs NLRC, 255 SCRA 358 [1996]............................................................................................................24
3. Purefoods v. NLRC 283 SCRA 136 [1997]..................................................................................................................................25
4. Phil. Fruit and Vegetable Industries v. NLRC, 310 SCRA 680 [1999]..........................................................................................26
5. Philips Semiconductor vs. Fardiquela, G.R. No. 141717, April 14, 2004.....................................................................................27
6. Alcira vs. NLRC, G.R. No. 149859, June 9, 2004........................................................................................................................29
7. Mitsubishi Motors Phils. vs. Chrysler Phil Labor Union, G.R. No. 148738, June 29, 2004..........................................................30
8. Pangilinan vs. General Milling Co., G.R. No. 149329, July 2, 2004............................................................................................30
9. Ravago vs. Esso Eastern Marine Ltd., G.R. No. 158324, March 14, 2005.................................................................................31
10. Hacienda Bino/Hortencia Stark vs. Cuenca, G.R. No. 150478, April 15, 2005, citing 2003 Hacienda Fatima..........................32
11. Phil Global Communication v. De Vera, G.R. No. 157214, June 7, 2005..................................................................................33
12. Integrated Contractor and Plumbing Works, Inc. vs. National Labor Relations Commission and Glen Solon, G.R. No. 152427.
August 9, 2005.................................................................................................................................................................................36
13. Lacuesta vs. Ateneo de Manila, G.R. No. 152777, December 9, 2005.....................................................................................37
14. Poseidon Fishing/Terry De Jesus v. NLRC, G.R. No. 168052, February 20. 2006...................................................................38
15. Abesco Construction vs. Ramirez, G.R. No. 141168, April 10, 2006.........................................................................................39
16. Cebu Metal Corp., vs. Saliling, G.R. No. 154463, September 5, 2006......................................................................................39
17. Liganza v. RBL Shipyard Corp., G.R. No. 159682, October 17, 2006.......................................................................................40
18. Fabeza v. San Miguel Corp., G.R. No. 150658, February 9, 2007............................................................................................42
19. Soriano vs. NLRC, G.R. No. 165594, April 23, 2007, citing 2005 Filipina Pre-fabricated Bldg. System (Filisystem)................43
20. Caseres vs. Universal Robina Sugar Milling Corp., et al., G.R. No. 159343, September 28, 2007..........................................43
21. Pier 8 Arrastre & Stevedoring Services, Inc. vs Boclot, G.R. No. 173849, September 28, 2007..............................................45
22. Pacquing vs. Coca-Cola Bottlers Phils., Inc., G.R. No. 157966, January 31, 2008, citing Magsalin vs. National Organization of
Workingmen, G.R. No. 148492, May 9, 2003..................................................................................................................................47
23. Cocomangas Hotel Beach Resort v. Visca, G.R. No. 167045, August 29, 2008.......................................................................49
1
24. Price, et al., v Innodata Phils., G.R. No. 178505, September 30, 2008.....................................................................................51
25. Agusan del Norte Electric Cooperative v. Cagampang, G.R. No. 167627, October 10, 2008...................................................53
26. William Uy Construction et. al vs. Trinidad, GR No. 183250, March 10, 2010..........................................................................54
27. Dacuital vs. L.M. Camus Engineering Corp.,G.R. No. 176748, September 1, 2010.................................................................55
28. Millenium Erectors Corp. vs. Magallanes, G.R. No. 184362, November 15, 2010....................................................................56
29. EXODUS INTERNATIONAL CONSTRUCTION CORPORATION vs. GUILLERMO BISCOCHO et. al.G.R. No. 166109,
February 23, 2011............................................................................................................................................................................57
30. Leyte Geothermal Power Progressive Employees Union v. Phil National Oil Co., G.R. No. 176351, March 30, 2011.............58
31. St. Paul College Quezon City vs. Ancheta II, G.R. No. 169905, September 7, 2011................................................................60
32. Lynvil Fishing Enterprises vs. Ariola, G.R. No. 181974, February 1, 2012................................................................................62
33. D.M. Consunji Inc. vs. Jamin, G.R. No. 192514, April 18, 2012 citing Maraguinot....................................................................63
MANAGEMENT PREROGATIVE.........................................................................................................................................................66
1. Dosch vs. NLRC, 123 SCRA 296 [1983]......................................................................................................................................66
2. PT&T v. Court of Appeals, G.R. No. 152057, September 23, 2003.............................................................................................67
3. Mendoza vs. Rural Bank of Lucban, G.R. No. 155421, July 7, 2004..........................................................................................68
4. Duncan Assn. of Detailman-PTFWO vs Glaxo Wellcome Phils. G.R. 162994............................................................................69
5. Norkis Trading Co., vs. NLRC, G.R. No. 168159, August 19, 2005.............................................................................................69
6. PLDT vs. Paquio, G.R. No. 152689, October 12, 2005...............................................................................................................71
7. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006..................................................................................................72
8. Rivera vs. Solidbank, G.R. No. 163269, April 19, 2006...............................................................................................................73
9. Tiu v. Platinum Plans, Inc., G.R. No. 163512, February 28, 2007...............................................................................................74
10. Duldulao vs. Court of Appeals, G.R. No. 164893, March 1, 2007.............................................................................................75
11. Almario v. Philippine Airlines, G.R. No. 170928, September 11, 2007.......................................................................................76
12. San Miguel Corp. v. Pontillas, G.R. No. 155178, May 07, 2008................................................................................................77
13. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008.................................................................................78
14. Coca-Cola Bottlers Philippines, Inc. v. Del Villar, G.R. No. 163091, October 6, 2010..............................................................79
15. Manila Electric Co. vs. Lim, G.R. No. 184769, October 5, 2010................................................................................................82
16. Bello vs. Bonifacio Security Services, G.R. No. 188086, August 3, 2011..................................................................................82
17. Alert Security and Investigation Agency vs. Pasawilan, G.R. No. 182397, September 14, 2011..............................................83
18. Manila Pavilion Hotel vs. Delada, G.R. No. 189947, January 25, 2012....................................................................................84
TERMINATION OF EMPLOYMENT.....................................................................................................................................................87
1. Retuya v. NLRC, G.R. No. 148848, August 5, 2003, citing Bustamante.....................................................................................87
2. Agabon vs. NLRC, G.R. No. 158693, November 17, 2004..........................................................................................................88
3. Jaka Food Processing vs. Pacot, G.R. No. 151378, March 28, 2005.........................................................................................90
4. Mauricio v. NLRC, G.R. No. 164635, November 17, 2005..........................................................................................................91
5. Industrial Timber Corp. vs. Ababon, G.R. No. 164518, Janury 25, 2006 and March 28, 2007....................................................92
6. Equitable Bank vs Sadac, G.R. No. 164772, June 8, 2006.........................................................................................................93
7. Heirs of Sara Lee vs. Rey, G.R. No. 1499013, August 31, 2006.................................................................................................94
8. Galaxi Steel Workers Union vs. NLRC, G.R. No. 165757, October 17, 2006, citing North Davao Mining..................................95
9. Sy vs. Metro Bank, G.R. No. 160618, November 2, 2006..........................................................................................................96
10. King of Kings Transport vs. NLRC, G.R. No. 166208, June 29, 2007.......................................................................................97
11. Johnson & Johnson v. Johnson Office & Sales Union, G.R. No. 172799, July 6, 2007.............................................................99
12. Asian Terminal vs. NLRC, G.R. No. 158458, December 19, 2007, citing Standard Electric Mfg. vs. Standard Electric
Employees Union, G.R. No. 166111, August 25, 2005..................................................................................................................100
13. Smart Communications v. Astorga, G.R. No. 148142, January 28, 2008................................................................................101
14. Enriquez v. Bank of the Philippine Islands, G.R. No. 172812, February 12, 2008..................................................................103
15. RB Michael Press vs. Galit, G.R. No. 153510, February 13, 2008..........................................................................................105
16. Cosmos Bottling Corporation v. Nagrama, G.R. No 164403, March 4, 2008..........................................................................107
17. School of the Holy Spirit of Q.C. vs. Taguiam, G.R. No. 165565, July 14, 2008.....................................................................108
18. Universal Staffing Services Inc. v. NLRC, G.R. No. 177576, July 21, 2008............................................................................109
19. Flight Attendants and Steward Association of the Philippines (FASAP) v. Philippine Airlines, G.R. No. 178083, G.R. No.
178083, July 22, 2008....................................................................................................................................................................110
20. John Hancock Life Insurance Corp. vs. Davis, G.R. No. 169549, Sept. 3, 2008.....................................................................114
2
21. Merin vs. NLRC, G.R. No. 171790, October 17, 2008.............................................................................................................115
22. Yrasuegui vs. Phil Airlines, G.R. No. 168081, Oct. 17, 2008...................................................................................................117
23. Sagales v. Rustans Commercial Corporation, G.R. No. 166554, November 27, 2008............................................................118
24. Garcia vs. PAL, G.R. No. 164856, Jan. 20, 2009, En Banc, citing Genuino vs. NLRC, G.R. No. 142732-33, December 4,
2007...............................................................................................................................................................................................120
25. La Union Cement Workers Union et al., vs NLRC et al., G.R. No. 174621, January 30, 2009...............................................121
26. Mendros, Jr. vs. Mitsubishi Motors Phils Corp., G.R. No. 169780, Feb. 16, 2009...................................................................123
27. Rosa vs. Ambassador Hotel, G.R. No. 177059, March 13, 2009............................................................................................124
28. Motorola Phils. v. Ambrocio, G.R. No. 173279, March 30, 2009..............................................................................................125
29. Perez et al., vs. Phil Telegraph & Telephone Company et al., G.R. No. 152048, April 7, 2009...............................................126
30. Telecommunications Distributors Specialists Inc. et al., vs. Garriel, G.R. No. 174981, May 25, 2009, citing 2009 Perez......127
31. Triumph International Philippines v. Apostol, G.R. No. 164423, June 16, 2009......................................................................128
32. Technological Institute of the Phils Teachers and Employees Organization vs. Court of Appeals, et al., G.R. No. 158703, June
26, 2009.........................................................................................................................................................................................130
33. Llamas v. Ocean Gateway Maritime and Management Services Inc., G.R. No. 179293, August 14, 2009............................131
34. Lowe Inc., v. CA, G.R. 164813 & 174590, August 14, 2009....................................................................................................132
35. Estacio v. Pampanga I Electric Cooperative, G.R. No. 183196, August 19, 2009...................................................................133
36. Maralit v. PNB, G.R. No. 163788, August 24, 2009.................................................................................................................134
37. Quevedo v. Benguet Electric Cooperative, G.R. No. 168927, September 11, 2009................................................................136
38. Placido et al. v. NLRC, G.R. No. 180888, September 18, 2009..............................................................................................137
39. Martinez v. B&B Fish Broker, G.R. No. 179985, September 18, 2009....................................................................................138
40. Flight Attendants and Steward Association of the Phils vs. Phil Airlines, G.R. No. 178083, October 2, 2009, see July 22, 2008,
main decision.................................................................................................................................................................................139
41. Eats-Cetera Food Services Outlet v. Letran, G.R. No. 179507, October 2, 2009...................................................................140
42. Plantation Bay Resort and Spa, et al. vs. Dubrico, G.R. No. 182216, December 4, 2009......................................................142
43. Fulache v. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010...........................................................143
44. Ancheta vs. Destiny Financial Plans Inc. et al., G.R. No. 179702, Feb. 16, 2010...................................................................144
45. Javellana, Jr. vs. Belen, G.R. Nos. 181913 & 182158, March 5, 2010....................................................................................145
46. WPP Marketing Communications Inc., et al., vs. Galera, G.R. No. 169207, March 25, 2010.................................................146
47. Mercado v. AMA Computer College, G.R. No. 183572, April 13, 2010....................................................................................147
48. Pantoja vs. SCA Hygiene Products Corp., G.R. No. 163554, April 23, 2010...........................................................................148
49. BPI v. NLRC, G.R. No. 179801, June 18, 2010.......................................................................................................................149
50. Phil. Rural Reconstruction Movement vs. Pulgar, G.R. No. 169227, July 5, 2010..................................................................150
51. Maribago Bluewater Beach Resort v. Dual, G.R. No. 180660, July 20, 2010..........................................................................152
52. New Puerto Commercial vs. Lopez, G.R. No. 169999, July 26, 2010.....................................................................................154
53. Artificio vs. NLRC, G.R. No. 172988, July 26, 2010................................................................................................................156
54. Calipay vs. NLRC, G.R. No. 166411, August 3, 2010..............................................................................................................157
55. Nacague v. Sulpicio Lines, G.R. No. 172589, August 8, 2010.................................................................................................158
56. Century Canning Corp. vs. Ramil, G.R. No. 171630, August 8, 2010.....................................................................................159
57. D.M Consunji vs. Gobres, G.R. No. 169170, August 8, 2010..................................................................................................161
58. Nagkaka-sang Lakas ng Manggagawa sa Keihin vs. Keihin Phils. Corp., G.R. No. 171115, August 9, 2010.........................162
59. Garcia v. Molina, G.R. No. 157383, August 18, 2010..............................................................................................................163
60. Escario v. NLRC, G.R. No. 160302, September 27, 2010.......................................................................................................164
61. Simizu Phils Contractors v. Callanta, G.R. No. 165923, September 29, 2010........................................................................166
62. Solidbank Corporation v. Gamier, G.R. No. 159461, November 15, 2010..............................................................................168
63. Coca-Cola Export Corp. v. Gacayan, G.R. No. 149433, December 15, 2010.........................................................................169
64. Robinsons Galleria/Robinsons Supermarket v. Ranchez, G.R. No. 177937, January 19, 2011.............................................171
65. Hospital Management Services v. HMSI-Medical Center Manila Employees Asso., G.R. No. 176287, January 31, 2011....172
66. Culili v. Eastern Telecommunications Phils., G.R. No. 165381, February 9, 2011...................................................................174
67. Plastimer Industrial Corp. v. Gopo, G.R. No. 183390, February 16, 2011...............................................................................175
68. St. Marys Academy of Dipolog City vs. Palacio, G.R. No. 164913, September 8, 2010.........................................................177
69. PLDT vs. Teves, G.R. No. 143511, November 15, 2010.........................................................................................................178
70. University of the Immaculate Concepcion vs. NLRC, G.R. No. 181146, January 26, 2011.....................................................179
71. Simizu Phils Contractors v. Callanta, G.R. No. 165923, September 29, 2010........................................................................180
72. Manila Mining Corp. Employees Association-FFW vs. Manila Mining Corp., G.R. No. 178222-23, September 29, 2010......182
3
73. Lopez vs. Alturas Group of Companies, G.R. No. 191008, April 11, 2011...............................................................................183
74. Apacible vs. Multimed Industries Inc., G.R. No. 178903, May 30, 2011..................................................................................184
75. Barroga vs. Data Center College, G.R. No. 174158, June 27, 2011.......................................................................................185
76. Lopez vs. Keppel Bank Phils., G.R. No. 176800, September 5, 2011.....................................................................................186
77. St. Paul College Quezon City vs. Ancheta II, G.R. No. 169905, September 7, 2011..............................................................187
78. Jumuad vs. Hi-Flyer Food, G.R. No. 187887, September 7, 2011..........................................................................................188
79. Nissan Motor Phils. Angelo, G.R. No. 164181, September 14, 2011......................................................................................189
80. Phil. National Bank vs. Padao, G.R. No. 180849, November 16, 2011...................................................................................190
81. Tamsons Enterprises Inc. vs. CA, G.R. No. 192881, November 16, 2011...............................................................................191
82. Concepcion vs. Minex Import Corp., G.R. No. 153569, January 24, 2012..............................................................................192
83. Morales vs. Harbour Centre Port Terminal Inc., G.R. No. 174208, January 25, 2012.............................................................194
84. Mansion Printing Center vs. Bitara, G.R. No. 168120, January 25, 2012...............................................................................194
85. Manila Electric Co. vs. Beltran, G.R. No. 173774, January 30, 2012......................................................................................196
86. Bank of Lubao vs. Manabat, G.R. No. 188722, February 1, 2012...........................................................................................197
87. Canadian Opportunities Unlimited vs. Dalangin, G.R. No. 172223, February 6, 2012............................................................198
88. Manila Electric Co. vs. Gala, G.R. No. 191288 & 191304, March 7, 2012..............................................................................199
89. Aro vs. NLRC, G.R. No. 174792, March 7, 2012.....................................................................................................................200
90. Ymbong vs. ABS-CBN Broadcasting Corp., G.R. No. 184885, March 7, 2012.......................................................................201
91. Blue Sky Trading Co. vs. Blas, G.R. No. 190559, March 7, 2012...........................................................................................203
92. Internation management Services vs. Logarta, G.R. No. 163657, April 18, 2012...................................................................204
93. Jiao vs. NLRC, G.R. No. 182331, April 18, 2012.....................................................................................................................206
94. Realda vs. New Age Graphics Inc., G.R. No. 192190, April 25, 2012.....................................................................................207
95. Kakampi and Its Members Panuelos vs. Kingspoint Express & Logistics, G.R. No. 194813, April 25, 2012..........................208
SUSPENSION OF BUSINESS OPERATIONS..................................................................................................................................211
1. JPL Marketing Promotion vs. Court of Appeals, G.R. No. 151966, July 8, 2005.......................................................................211
2. Pido vs NLRC, G.R. No. 169812, February 23, 2007................................................................................................................211
3. Megaforce Security & Allied Services vs. Lactao, G.R. No. 160940, July 21, 2008..................................................................212
4. National Mines and Allied Workers Union vs. Marcopper Mining Corp., G.R. No. 174641, Nov. 11, 2008...............................214
5. Eagle Star Security Services Inc. vs. Mirando et al., G.R. No. 179512, July 30, 2009..............................................................215
6. Nationwide Security & Allied Services v. Valderama, G.R. No. 186614, February 23, 2011.....................................................216
7. Nippon Housing Phils. vs. Leynes, G.R. No. 177816, August 3, 2011......................................................................................218
DISEASE AS A GROUND FOR TERMINATION................................................................................................................................221
1. Sy vs. Court of Appeals, G.R. No. 142293, February 27, 2003.................................................................................................221
2. Manly Express vs. Payong, G.R. No. 167462, October 25, 2005..............................................................................................221
3. Duterte vs. Kingswood Trading Co., G.R. No. 160325, October 4, 2007..................................................................................222
4. Villaruel vs. Yeo Han Guan, G.R. No. 169191, June 1, 2011.....................................................................................................223
OTHER CAUSES OF SEVERANCE OF EMPLOYMENT RELATION...............................................................................................226
1. Pantranco North Express vs. NLRC, 259 SCRA 161 [1996].....................................................................................................226
2. Phil. Airlines vs. Airline Pilots Asso. Of Phils., G.R. No. 143686, January 15, 2002..................................................................227
3. Cainta Catholic School vs. Cainta Catholic School Employees Union, G.R. No. 151021, May 4, 2006 citing 1996 Pantranco
North Express................................................................................................................................................................................227
4. Jaculbe vs. Silliman University, G.R. No. 156934, March 16, 2007...........................................................................................229
5. Globe Telecom vs. Crisologo, G.R. No. 17644, August 10, 2007..............................................................................................232
6. BMG Records Phils et al., vs. Aparecio, et al., G.R. No. 153290, September 5, 2007, citing Phil Today vs. NLRC, 267 SCRA
202 [1996]......................................................................................................................................................................................233
7. Blue Angel Manpower and Security Services vs. CA, G.R. No. 161196, July 28, 2008............................................................234
8. Guerzon Jr et al vs. Pasig Industries Inc., et al., G.R. No. 170266, Sept. 12, 2008..................................................................235
9. Suarez Jr. et al., vs. National Steel Corp., G.R. No. 150180, Oct. 17, 2008.............................................................................236
10. Goodrich Mfg Corp vs. Ativo et al., G.R. No. 188002, Feb. 1, 2010........................................................................................237
11. Korean Air Co. Ltd. v. Yuson, G.R. No. 170369, June 16, 2010..............................................................................................238
12. Cercado v. Uniprom Inc., G.R. No. 188154, October 13, 2010................................................................................................239
13. Bilbao vs. Saudi Arabian Airlines, G.R. No. 183915, December 14, 2011...............................................................................240
4
14. San Miguel Properties vs. Gucaban, G.R. No. 153982, July 18, 2011....................................................................................241
15. Skippers United Pacific vs. Doza, G.R. No. 175558, February 8, 2012..................................................................................243
PRESCRIPTION OF CLAIMS............................................................................................................................................................245
1. Ludo & Luym Corp. vs Saornido, G.R. No. 140960, January 20, 2003.....................................................................................245
2. Degamo vs. Avantgarde Shipping corp., G.R. no. 154460, November 22, 2005......................................................................246
3. Intercontinental Broadcasting Corp. vs. Panganiban, G.R. No. 151407, February 6, 2007.....................................................246
4. Far East Agricultural Supply vs. Lebatique, G.R. No. 162813, February 12, 2007...................................................................247
5. Victory Liner, Inc. vs. Race, G.R. No. 164820, March 28, 2007................................................................................................248
6. J.K. Mercado & Sons Agricultural Enterprises vs. Sto. Tomas, G.R. No. 158084, August 29, 2008.........................................249
7. Reyes vs. Nlrc, G.R. No. 180551, February 10, 2009...............................................................................................................250
8. LWV Construction Corp. vs. Dupo, G.R. No. 172342, July 13, 2009.........................................................................................251
9. PLDT v. Pingol, G.R. No. 182622, September 8, 2010..............................................................................................................252
10. Medline Management Inc. vs. Roslinda, G.R. No. 168715, September 15, 2010...................................................................254
11. University of East vs. University of East Employees Assoc., G.R. No. 179593, September 14, 2011.....................................255
LABOR RELATIONS
Atty. Jefferson M. Marquez

THE APPLICABLE LAWS
GENERAL PRINCIPLES
CASES:
1. Singer Sewing Machine vs. NLRC, 193 SCRA 271
Facts:
Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of
Singer Sewing Machine. The company opposed the petition mainly because the union members are not employees but independent contractors
as evidenced by the collection agency agreement which they signed.
Med-Arbiter ruled that there exists an employee-employer relationship and granted the certification election which was affirmed by Sec. Drilon.
The company files the present petition on the determination of the relationship. The union insists that the provisions of the Collection Agreement
belie the companys position that the union members are independent contractors.
Ruling:
The present case calls for the application of the control test, which if not satisfied, would lead to the conclusion that no employee-employer
relationship exists. If the union members are not employees, no right to organize for the purpose of bargaining or as a bargaining agent cannot
be recognized. The following elements are generally considered in the determination of the relationship: the selection and engagement of the
employee, payment of wages, power of dismissal and the power to control the employees conduct which is the most important element. The
nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all
collecting agents are employees and neither are all collecting agents independent contractors. The agreement confirms the status of the
collecting agents as independent contractor. The requirement that collection agents utilize only receipt forms and report forms issued by the
company and that reports shall be submitted at least once a week is not necessarily an indication of control over the means by which the job
collection is to be performed. Even if report requirements are to be called control measures, any control is only with respect to the end result of
the collection since the requirements regulate the things to be done after the performance of the collection job or the rendition of service.
The plain language of the agreement reveals that the designation as collection agent does not create an employment relationship and that the
applicant is to be considered at all times as an independent contractor. The court finds that since private respondents are not employees of the
company, they are not entitled to the constitutional right to form or join a labor organization for the purposes of collective bargaining. There is no
constitutional and legal basis for their union to be granted their petition for direct certification.
2. Manila Golf Club vs. IAC, 237 SCRA 207

Facts:
This is originally filed with the Social Security Commission (SSC) via petition of 17 persons who styled themselves as Caddies of Manila Golf
and Country Club-PTCCEA for the coverage and availment of benefits of the Social Security Act as amended, PTCCEA (Philippine Technical,
Clerical, Commercial Employees Association) a labor organization where which they claim for membership. The same time two other
proceedings were filed and pending. These are certification election case filed by PTCCEA on behalf of the same caddies of Manila Golf and
Country club which was in favor of the caddies and compulsory arbitration case involving PTCCEA and Manila Golf and Country Club which was
dismissed and ruled that there was no employer-employee relationship between the caddies and the club.
The question involved in the case is whether or not rendering caddying services for members of golf clubs and their guests in said clubs
courses or premises are the employees of such clubs and therefore within the compulsory coverage of the Social Security System (SSS).
Ruling:
The Court does not agree that the facts logically point to the employer-employee relationship. In the very nature of things, caddies must submit
to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club
Page 1
LABOR RELATIONS

they do work in. They work for the club to which they attach themselves on sufferance but, on the other hand, also without having to observe any
working hours, free to leave anytime they please, to stay away for as long they like.
These considerations clash frontally with the concept of employment.
It can happen that a caddy who has rendered services to a player on one day may still find sufficient time to work elsewhere. Under such
circumstances, the caddy may leave the premises and to go to such other place of work that he wishes. These are things beyond the control of
the petitioner. The caddy (LLamar) is not an employee of petitioner Manila Golf and Country Club and the petitioner is under no obligation to
report him for compulsory coverage of SSS.
3. Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [1996]

Facts:
Limjoco was a Sales Divison of Encyclopaedia Britannica and was in charge of selling the products through some sales representatives. As
compensation, he would receive commissions from the products sold by his agents. He was also allowed to use the petitioners name, goodwill
and logo. It was agreed that office expenses would be deducted from Limjocos commissions. In 1974, Limjoco resigned to pursue his private
business and filed a complaint against petitioner for alleged non-payment of separation pay and other benefits and also illegal deduction from
sales commissions. Petitioner alleged that Limjoco was not an employee of the company but an independent dealer authorized to promote and
sell its products and in return, received commissions therein. Petitioner also claims that it had no control and supervision over the complainant
as to the manners and means he conducted his business operations. Limjoco maintained otherwise. He alleged he was hired by the petitioner
and was assigned in the sales department.
The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also affirmed the decision and opined that there was no evidence
supporting allegation that Limjoco was an independent contractor or dealer. On appeal, petitioner assails that there was no employee-employer
relationship.
Ruling:
There was no employee-employer relationship. In determining the relationship, the following elements must be present: selection and
engagement of the employee, payment of wages, power of dismissal and power to control the employees conduct. The power of control is
commonly regarded as the most crucial and determinative indicator of the presence or absence of an employee-employer relationship. Under
the control test, an employee-employer relationship exists where the person for whom the services are performed reserves a right to control not
only the end to be achieved, but also the manner and means to be employed in reaching that end. The issuance of guidelines by the petitioner
was merely guidelines on company policies which sales managers follow and impose on their respective agents. Limjoco was not an employee
of the company since he had the free rein in the means and methods for conducting the marketing operations. He was merely an agent or an
independent dealer of the petitioner. He was free to conduct his work and he was free to engage in other means of livelihood.
In ascertaining the employee-employer relationship, the factual circumstances must be considered. The element of control is absent where a
person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is
compensated in according to the result of his efforts and not the amount thereof. Hence, there was no employee-employer relationship.
4. Carungcong vs. Sunlife, 283 SCRA 319

Facts:
Susan Carungcong began her career in the insurance industry in 1974 as an agent of Sun Life Assurance Company of Canada. She signed an
Agent Agreement with Sun Life. In virtue of which she was designated the latters agent to solicit applications for its insurance and annuity
policies. This contract was superseded some five years later when she signed two (2) new agreements. The first, denominated Career Agents
or Unit Managers Agreement, dealt with such matters as the agents commissions, his obligations, limitations on his authority, and termination of
the agreement by death, or by written notice with or without cause. The second was titled, Managers Supplementary Agreement. It explicitly
described as a further agreement. Carungcong and Sun Life executed another Agreement named New Business Manager with the function
generally to manage a New Business Office established. This latest Agreement stressed that the New Business Manager in performance of his
Page 2
LABOR RELATIONS

duties defined herein, shall be considered an independent contractor and not an employee of Sun Life, and that under no circumstance shall the
New Business Manager and/or his employees be considered employees of Sun Life.
Ms. Eleizer Sibayan, Manager of Sun Lifes Internal Audit Department, commenced an inquiry into the special fund availments of Carungcong
and other New Business Managers. Respondent Lance Kemp, had been receiving reports of anomalies in relation thereto from unit managers
and agents. Thereafter, on January 1990, Carungcong was confronted with and asked to explain the discrepancies set out in Sibayans report.
She was given a letter signed by Metron V. Deveza, CLU, Director, Marketing, which advised of the termination of her relationship with Sun Life.
Carungcong promptly instituted proceedings for vindication in the Arbitration Branch of the National Labor Relations Commissions on January
16, 1990. There she succeeded in obtaining a favorable judgment. Labor Arbiter found that there existed an employer-employee relationship
between her and Sun Life. On appeal, the National Labor Relations Commission reversed the Arbiters judgment. It affirmed that no
employment relationship existed between Carungcong and Sun Life. She contented that she was an employee subject to control and
supervision by Sun Life.
Ruling:
Noteworthy is that this last agreement which emphasized, like the Career Agents or Unit Managers Agreement first signed by her, that in
performance of her duties defined herein. Carungcong would be considered an independent contractor and not an employee of Sun Life, and
that under no circumstance shall the New Business Manager and/or his employees be considered employees of Sun Life. Carungcong is an
independent contractor. It was indicated in the very face of the contract. The rules and regulations of the company is not sufficient to establish
an employer-employee relationship. It does not necessarily create any employer-employee relationship where the employers controls have to
interfere in the methods and means by which employee would like employ to arrive at the desired results.
Carungcong admitted that she was free to work as she pleases, at the place and time she felt convenient for her to do so. She was not paid to a
fixed salary and was mainly paid by commissions depending on the volume of her performance. She was not an employee of Sun Life Co.
5. Ramos vs CA, 380 SCRA 467

Facts:
Petitioner Erlinda Ramos was advised to undergo an operation for the removal of her stone in the gall bladder. She was referred to Dr. Hosaka,
a surgeon, who agreed to do the operation. The operation was scheduled on June 17, 1985 in the De los Santos Medical Center. Erlinda was
admitted to the medical center the day before the operation. On the following day, she was ready for operation as early as 7:30 am. Around
9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio wanted to pull out his wife from the operating room. Dr. Hosaka finally arrived at 12:10
pm more than 3 hours of the scheduled operation. Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish discoloration in her
left hand. At 3 pm, Erlinda was being wheeled to the Intensive care Unit and stayed there for a month. Since the ill-fated operation, Erlinda
remained in comatose condition until she died. The family of Ramos sued them for damages.
One of the issues involved was that there was an employee-employer relationship that existed between the medical center and Drs. Hosaka and
Guiterrez.
Ruling:
Private Hospitals hire, fire and exercise real control over their attending and visiting consultant staff. While consultants are not technically
employees, the control exercised, the hiring and the right to terminate consultants fulfill the hallmarks of an employer-employee relationship with
the exception of payment of wages. The control test is determining. In applying the four fold test, DLSMC cannot be considered an employer of
the respondent doctors. It has been consistently held that in determining whether an employer-employee relationship exists between the parties,
the following elements must be present: (1) selection and engagement of services; (2) payment of wages; (3) the power to hire and fire; and (4)
the power to control not only the end to be achieved, but the means to be used in reaching such an end. The hospital does not hire consultants
but it accredits and grants him the privilege of maintaining a clinic and/or admitting patients. It is the patient who pays the consultants. The
hospital cannot dismiss the consultant but he may lose his privileges granted by the hospital. The hospitals obligation is limited to providing the
patient with the preferred room accommodation and other things that will ensure that the doctors orders are carried out. The court finds that
there is no employer-employee relationship between the doctors and the hospital.
Page 3
LABOR RELATIONS

6. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004
Facts:
In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while MJMDC was represented by Sonza, as President and general manager, and Tiangco as its EVP and
treasurer. Referred to in the agreement as agent, MJMDC agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio and
television. ABS-CBN agreed to pay Sonza a monthly talent fee of P310, 000 for the first year and P317, 000 for the second and third year. On
April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the recent events concerning his program and career.
After the said letter, Sonza filed with the Department of Labor and Employment a complaint alleging that ABS-CBN did not pay his salaries,
separation pay, service incentive pay,13th month pay, signing bonus, travel allowance and amounts under the Employees Stock Option Plan
(ESOP). ABS-CBN contended that no employee-employer relationship existed between the parties. However, ABS-CBN continued to remit
Sonzas monthly talent fees but opened another account for the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no employee-employer relationship. NLRC affirmed the decision of the Labor
Arbiter. CA also affirmed the decision of NLRC.
Ruling:
Case law has consistently held that the elements of an employee-employer relationship are selection and engagement of the employee, the
payment of wages, the power of dismissal and the employers power to control the employee on the means and methods by which the work is
accomplished. The last element, the so-called "control test", is the most important element. Sonzas services to co-host its television and radio
programs are because of his peculiar talents, skills and celebrity status. Independent contractors often present themselves to possess unique
skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills,
talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual
relationship. All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. For violation of any
provision of the Agreement, either party may terminate their relationship. Applying the control test to the present case, we find that SONZA is not
an employee but an independent contractor.
The control test is the most important test our courts apply in distinguishing an employee from an independent contractor. This test is based on
the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely the worker is considered an
independent contractor. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television,
and sounded on radio were outside ABS-CBNs control. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the
right to modify the program format and airtime schedule "for more effective programming." ABS-CBNs sole concern was the quality of the shows
and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonzas work. A
radio broadcast specialist who works under minimal supervision is an independent contractor. Sonzas work as television and radio program
host required special skills and talent, which SONZA admittedly possesses. ABS-CBN claims that there exists a prevailing practice in the
broadcast and entertainment industries to treat talents like Sonza as independent contractors. The right of labor to security of tenure as
guaranteed in the Constitution arises only if there is an employer-employee relationship under labor laws. Individuals with special skills,
expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to
contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special
skills, expertise and talent, of his right to contract as an independent contractor.
7. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]

Facts:
Respondent Rosalina M. Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security
contributions against her three (3) employers. Among the respondents was herein petitioner Angelito L. Lazaro, proprietor of Royal Star
Marketing (Royal Star), which is engaged in the business of selling home appliances. Lazaro denied that Laudato was an employee but
instead claimed that she was an agent of the company. Lazaro also maintained that she was not mandated to work of definite work hours and
thus not deemed to be a regular employee of Royal Star Marketing, the company of Lazaro.
SSC promulgated a decision rendering that Laudato is a regular employee of Royal Star Marketing and entitled to social security contributions.
Lazaro filed a petition for review before the CA where CA ruled that Laudato was an employee of Royal Star Marketing. This petition before the
Page 4
LABOR RELATIONS

Court assails same arguments raised by Lazaro in SSC. She raised that Laudato was not an employee of Royal Star Marketing since Royal Star
had no control over the activities of Laudato. For the purpose of determining whether the respondent is entitled to social security contributions, it
must be shown that Laudato was a regular employee of Royal Star Marketing.
Ruling:
It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship
warrants the application of the control test, that is, whether the employer controls or has reserved the right to control the employee, not only as
to the result of the work done, but also as to the means and methods by which the same is accomplished. The SSC, applying the control test
found that Laudato was an employee of Royal Star. The Court agrees with the findings of the SSC and the CA. The fact that Laudato was paid
by way of commission does not preclude the establishment of an employer-employee relationship.
In the case of Grepalife v. Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its
agents, despite the fact that the compensation that the agents on commission received was not paid by the company but by the investor or the
person insured. The relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the
"employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished.
Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee.
In the case of Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer similarly denied the existence of an employer-employee relationship,
as the claimant according to it, was a supervisor on commission basis who did not observe normal hours of work. This Court declared that
there was an employer-employee relationship, noting that [the] supervisor, although compensated on commission basis, [is] exempt from the
observance of normal hours of work for his compensation is measured by the number of sales he makes.
8. Phil. Global Communications v. De Vera, 459 SCRA 260 [2005]

Facts:
Philippine Global Communications inc. is a corporation engaged in the business of communication services and allied activities while Ricardo de
Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. The controversy rose when petitioner
terminated his engagement.
In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized the respondents proposal in a document denominated
as retainership contract which will be for a period of one year, subject to renewal and clearly stated that respondent will cover the retainership
the company previously with Dr. Eulau. The agreement went until 1994, in the years 1995-1996, it was renewed verbally. The turning point of the
parties relationship was when petitioner, thru a letter bearing the subject TERMINATION RETAINERSHIP CONTRACT, informed Dr. de Vera
of its decision to discontinue the latters retainer contract because the management has decided that it would be more practical to provide
medical services to its employees through accredited hospitals near the company premises.
On January 1997, de Vera fileda complaint for illegal dismissal before the NLRC, alleging that he had been actually employed by the company
as its company physician since 1991. The commission rendered decision in favor of Philcom and dismissed the complaint saying that de Vera
was an independent contractor. On appeal to NLRC, it reversed the decision of the Labor Arbiter stating that de Vera is a regular employee and
directed the company to reinstate him. Philcom appealed to the CA where it rendered decision deleting the award but reinstating de Vera.
Philcom filed this petition involving the difference of a job contracting agreements from employee-employer relationship.
Issue:
Whether or not there is an employer-employee relationship between the parties.
SC Ruling:
The elements of an employer-employee relationship is wanting in this case. The record are replete with evidence showing that respondent had
to bill petitioner for his monthly professional fees. It simply runs against the grain of common experience to imagine that an ordinary employee
has yet to bill his employer to receive his salary.
The power to terminate the parties relationship was mutually vested on both. Either may terminate the arrangement at will, with or without
cause.
Page 5
LABOR RELATIONS

Remarkably absent is the element of control whereby the employer has reserved the right to control the employee not only as to the result of the
work done but also as to the means and methods by which the same is to be accomplished.
Petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. In fine,
the parties themselves practically agreed on every terms and conditions of the engagement, which thereby negates the element of control in
their relationship.
9. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006

Facts:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of television and radio
stations, whose operations revolve around the broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise
utilizes the airtime it generates from its radio and television operations. It has a franchise as a broadcasting company, and was likewise issued a
license and authority to operate by the National Telecommunications Commission. Petitioner employed respondents Nazareno, Gerzon,
Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio
programs in the Cebu Broadcasting Station. On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a
Collective Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to December 11, 1999. However, since
petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA. On October 12, 2000,
respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay,
Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC.
The Labor Arbiter rendered judgment in favor of the respondents, and declared that they were regular employees of petitioner as such, they
were awarded monetary benefits. NLRC affirmed the decision of the Labor Arbiter. Petitioner filed a motion for reconsideration but CA dismissed
it. The issue involved is whether the respondents were considered regular employees of ABS-CBN.
Ruling:
The respondents are regular employees of ABS-CBN. It was held that where a person has rendered at least one year of service, regardless of
the nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity
exists, the reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular
status. In Universal Robina Corporation v. Catapang, the Court states that the primary standard, therefore, of determining regular employment is
the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer.
The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be
determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if
the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business.
Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.
Additionally, respondents cannot be considered as project or program employees because no evidence was presented to show that the duration
and scope of the project were determined or specified at the time of their engagement. In the case at bar, however, the employer-employee
relationship between petitioner and respondents has been proven. In the selection and engagement of respondents, no peculiar or unique skill,
talent or celebrity status was required from them because they were merely hired through petitioners personnel department just like any
ordinary employee. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual
relationship. Respondents are highly dependent on the petitioner for continued work. The degree of control and supervision exercised by
petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the
employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an
independent contractor. As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner
under the CBA . Besides, only talent-artists were excluded from the CBA and not production assistants who are regular employees of the
respondents. Moreover, under Article 1702 of the New Civil Code: In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living of the laborer.
Page 6
LABOR RELATIONS

10. Francisco vs. NLRC, 500 SCRA 690 [2006]
Facts:
Petitoner was hired by Kasei Corporation during the incorporation stage. She was designated as accountant and corporate secretary and was
assigned to handle all the accounting needs of the company. She was also designated as Liason Officer to the City of Manila to secure permits
for the operation of the company.In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of all
employees and perform management administration functions. In 2001, she was replaced by Liza Fuentes as Manager. Kasei Corporation
reduced her salary to P2,500 per month which was until September. She asked for her salary but was informed that she was no longer
connected to the company. She did not anymore report to work since she was not paid for her salary. She filed an action for constructive
dismissal with the Labor Arbiter. The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision while CA
reversed it.
The following issue is to be discussed, whether there was an employer-employee relationship.
Ruling:
The court held that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally,
courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only
the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic
conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an
employer-employee relationship. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power
to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic
realities of the activity or relationship. In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic conditions
prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer
picture in determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the
worker.
Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity,
such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment
in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration
of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued
employment in that line of business. The proper standard of economic dependence is whether the worker is dependent on the alleged employer
for his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and
supervision of Seiji Kamura, the corporations Technical Consultant. It is therefore apparent that petitioner is economically dependent on
Respondent Corporation for her continued employment in the latters line of business. There can be no other conclusion that petitioner is an
employee of respondent Kasei Corporation. She was selected and engaged by the company for compensation, and is economically dependent
upon respondent for her continued employment in that line of business. Her main job function involved accounting and tax services rendered to
Respondent Corporation on a regular basis over an indefinite period of engagement. Respondent Corporation hired and engaged petitioner for
compensation, with the power to dismiss her for cause. More importantly, Respondent Corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.
11. Nogales et. al., vs. Capitol Medical Center et al., G.R. No. 142625, December 19, 2006
Facts:
Pregnant with her fourth child, Corazon Nogales, who was then 37 years old, was under the exclusive prenatal care of Dr. Oscar Estrada. While
Corazon was on her last trimester of pregnancy, Dr. Estrada noted an increase in her blood pressure and development of leg edema indicating
preeclampsia, which is a dangerous complication of pregnancy. Around midnight of 25 May 1976, Corazon started to experience mild labor
pains prompting Corazon and Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada
advised her immediate admission to the Capitol Medical Center ("CMC"). Due to the inclement weather then, Dr. Espinola, who was fetched
from his residence by an ambulance, arrived at the CMC about an hour later or at 9:00 a.m. He examined the patient and ordered some
resuscitative measures to be administered. Despite Dr. Espinola's efforts, Corazon died at 9:15 a.m. The cause of death was "hemorrhage, post
partum." Issue in this case is whether CMC is vicariously liable for the negligence of Dr. Estrada.
Page 7
LABOR RELATIONS

Ruling:
The resolution of this issue rests, on the other hand, on the ascertainment of the relationship between Dr. Estrada and CMC. The Court also
believes that a determination of the extent of liability of the other respondents is inevitable to finally and completely dispose of the present
controversy. After a thorough examination of the voluminous records of this case, the Court finds no single evidence pointing to CMC's exercise
of control over Dr. Estrada's treatment and management of Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she was
under the exclusive prenatal care of Dr. Estrada. At the time of Corazon's admission at CMC and during her delivery, it was Dr. Estrada, assisted
by Dr. Villaflor, who attended to Corazon. There was no showing that CMC had a part in diagnosing Corazon's condition. While Dr. Estrada
enjoyed staff privileges at CMC, such fact alone did not make him an employee of CMC. CMC merely allowed Dr. Estrada to use its facilities
when Corazon was about to give birth, which CMC considered an emergency. Considering these circumstances, Dr. Estrada is not an employee
of CMC, but an independent contractor. The question now is whether CMC is automatically exempt from liability considering that Dr. Estrada is
an independent contractor-physician. In general, a hospital is not liable for the negligence of an independent contractor-physician. There is,
however, an exception to this principle. The hospital may be liable if the physician is the "ostensible" agent of the hospital. This exception is also
known as the "doctrine of apparent authority."In the instant case, CMC impliedly held out Dr. Estrada as a member of its medical staff. Through
CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to believe that Dr. Estrada was an employee
or agent of CMC. CMC cannot now repudiate such authority. In the present case, there is no evidence of Nurse Dumlao's alleged failure to
follow Dr. Estrada's specific instructions. Even assuming Nurse Dumlao defied Dr. Estrada's order, there is no showing that side-drip
administration of hemacel proximately caused Corazon's death. No evidence linking Corazon's death and the alleged wrongful hemacel
administration was introduced. Therefore, there is no basis to hold Nurse Dumlao liable for negligence. The Court finds respondent CMC
vicariously liable for the negligence of Dr. Oscar Estrada.
12. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007
Facts:
Dr. Dean N. Climaco is a medical doctor who was hired by 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 letter dated March
9, 1995 from the company concluding their retainership agreement effective 30 days from receipt thereof. Dr. Climaco inquired from the
management of the company whether it was agreeable to recognizing him as a regular employee. The management refused to do so. On
February 24, 1994, respondent filed a Complaint before the NLRC, Bacolod City, seeking recognition as a regular employee of the company and
prayed for the payment of all benefits of a regular employee. 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.
Issue:
Whether or not there exists an employer-employee relationship.
Ruling:
The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct, or the
so-called "control test," considered to be the most important element. No employer-employee relationship exists between the parties. The
company lacked the power of control over the performance by respondent of his duties. TheComprehensive 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, employees of [petitioner] company, in each case."
Neri v. National Labor Relations Commission
It is admitted that FEBTC issued a job description which detailed her functions as a radio/telex operator. However, a cursory reading of the
job description shows that what was sought to be controlled by FEBTC was actually the end result of the task, e.g., that the daily incoming and
outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the register. The guidelines were laid down
merely to ensure that the desired end result was achieved. It did not, however, tell Neri how the radio/telex machine should be operated.
Through the Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control the means
and methods by which respondent performed his assigned tasks. Likewise, the allegation of complainant that since he is on call at anytime of
Page 8
LABOR RELATIONS

the day and night makes him a regular employee 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 employee 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 employee is required to stay in the employers 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. 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.
Considering that there is no employer-employee relationship between the parties, the termination of the Retainership Agreement, which is in
accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent. 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.
13. Consolidated Broadcasting System vs. Oberio, G.R. No. 168424, June 8, 2007
Facts:
Respondents alleged that they were employed as drama talents by DYWB-Bombo Radyo, a radio station owned and operated by petitioner
Consolidated Broadcasting System, Inc. They reported for work daily for six days in a week and were required to record their drama production
in advance. Some of them were employed by petitioner since 1974, while the latest one was hired in 1997. Their drama programs were aired not
only in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas. Sometime in August 1998, petitioner reduced
the number of its drama productions from 14 to 11, but was opposed by respondents. After the negotiations failed, the latter sought the
intervention of the Department of Labor and Employment (DOLE), which on November 12, 1998, conducted through its Regional Office, an
inspection of DWYB station. The results thereof revealed that petitioner is guilty of violation of labor standard laws. Petitioner contended that
respondents are not its employees and refused to submit the payroll and daily time records despite the subpoena duces tecum issued by the
DOLE Regional Director. Petitioner further argued that the case should be referred to the NLRC because the Regional Director has no
jurisdiction over the determination of the existence of employer-employee relationship which involves evidentiary matters that are not verifiable
in the normal course of inspection. Vexed by the respondents' complaint, petitioner allegedly pressured and intimidated respondents.
Respondents Oberio and Delta were suspended for minor lapses and the payment of their salaries were purportedly delayed. Eventually, on
February 3, 1999, pending the outcome of the inspection case with the Regional Director, respondents were barred by petitioner from reporting
for work; thus, the former claimed constructive dismissal.
Issues:
1. Whether respondents were employees of petitioner.
2. Whether respondents dismissal was illegal.
Ruling:
1. Yes, respondents employment with petitioner passed the "four-fold test" on employer-employee relations, namely: (1) the selection and
engagement of the employee, or the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the
employee. Petitioner failed to controvert with substantial evidence the allegation of respondents that they were hired by the former on various
dates from 1974 to 1997. If petitioner did not hire respondents and if it was the director alone who chose the talents, petitioner could have easily
shown, being in possession of the records, a contract to such effect. However, petitioner merely relied on its contention that respondents were
piece rate contractors who were paid by results.Note that under Policy Instruction No. 40, petitioner is obliged to execute the necessary contract
specifying the nature of the work to be performed, rates of pay, and the programs in which they will work. Moreover, project or contractual
employees are required to be apprised of the project they will undertake under a written contract. This was not complied with by the petitioner,
justifying the reasonable conclusion that no such contracts exist and that respondents were in fact regular employees. Moreover, the
engagement of respondents for a period ranging from 2 to 25 years and the fact that their drama programs were aired not only in Bacolod City
but also in the sister stations of DYWB in the Visayas and Mindanao areas, undoubtedly show that their work is necessary and indispensable to
the usual business or trade of petitioner. The test to determine whether employment is regular or not is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer.
2. Finally, we find that respondents were illegally dismissed. In labor cases, the employer has the burden of proving that the dismissal was for a
just cause; failure to show this would necessarily mean that the dismissal was unjustified and, therefore, illegal. In this case, petitioner merely
contended that it was respondents who ceased to report to work, and never presented any substantial evidence to support said allegation.
Furthermore, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of
the latter -the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. It is a time-honored
Page 9
LABOR RELATIONS
10

rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence should be resolved in the former's
favor. The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in consonance
with the avowed policy of the State to give maximum aid and protection of labor.
14. Dumpit-Morillo vs. CA, G.R. No. 164652, June 8, 2007, citing 2004 Sonza
Facts:
Associated Broadcasting Company (ABC) hired Thelma Dumpit-Murillo under a talent contract as a newscaster and co-anchor for BalitangBalita, an early evening news program. The contract was for a period of three months. After four years of repeated renewals, petitioners talent
contract expired. Two weeks after the expiration of the last contract, petitioner sent a letter to Mr. Jose Javier, Vice President for News and
Public Affairs of ABC, informing the latter that she was still interested in renewing her contract subject to a salary increase. Thereafter, petitioner
stopped reporting for work. She sent a demand letter to ABC, demanding reinstatement, payment of unpaid wages and full backwages,
payment of 13th month pay, vacation/sick/service incentive leaves and other monetary benefits due to a regular employee. ABC replied that a
check covering petitioners talent fees had been processed and prepared, but that the other claims of petitioner had no basis in fact or in law.
The Labor Arbiter dismissed the complaint for illegal constructive dismissal. NLRC reversed.
Issue:
Whether or not Murillo is an employee of Associated Broadcasting Company.
Ruling:
Thelma Dumpit-Murillo was a regular employee under contemplation of law. The practice of having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor law. The assertion that a talent contract exists does not necessarily prevent
a regular employment status. Further, the Sonza case is not applicable. In Sonza, the television station did not exercise control over the means
and methods of the performance of Sonzas work. In the case at bar, ABC had control over the performance of petitioners work. Noteworthy too,
is the comparatively low P28,000 monthly pay of petitioner vis the P300,000 a month salary of Sonza, that all the more bolsters the conclusion
that petitioner was not in the same situation as Sonza. The duties of petitioner as enumerated in her employment contract indicate that ABC had
control over the work of petitioner. Aside from control, ABC also dictated the work assignments and payment of petitioners wages. ABC also
had power to dismiss her. All these being present, clearly, there existed an employment relationship between petitioner and ABC.
Concerning regular employment, the requisites for regularity of employment have been met in the instant case. Petitioners work was necessary
or desirable in the usual business or trade of the employer which includes, as a pre-condition for its enfranchisement, its participation in the
governments news and public information dissemination. In addition, her work was continuous for a period of four years. This repeated
engagement under contract of hire is indicative of the necessity and desirability of the petitioners work in private respondent ABCs business.
As a regular employee, petitioner is entitled to security of tenure and can be dismissed only for just cause and after due compliance with procedural due
process. Since private respondents did not observe due process in constructively dismissing the petitioner, there was an illegal dismissal.
15. Lopez vs. Bodega City, G.R. No. 155731, Sept. 3, 2007, citing 2004 Abante & 2005 Consulta
Facts:
Petitioner was the "lady keeper" of Bodega City tasked with manning its ladies' comfort room. In a letter signed by Yap dated February 10, 1995,
petitioner was made to explain why the concessionaire agreement between her and respondents should not be terminated or suspended in view
of an incident that happened on February 3, 1995, wherein petitioner was seen to have acted in a hostile manner against a lady customer of
Bodega City who informed the management that she saw petitioner sleeping while on duty. In a subsequent letter dated February 25, 1995, Yap
informed petitioner that because of the incident that happened on February 3, 1995, respondents had decided to terminate the concessionaire
agreement between them.
Issue:
Whether or not employer-employee relationship exists
Page 10
LABOR RELATIONS
11

Ruling:
The Court applies the four-fold test expounded in Abante v. Lamadrid Bearing and Parts Corp.,to wit:
To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the manner
of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or
absence of the power of control. Of these four, the last one is the most important. The so-called "control test" is commonly regarded as the most
crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employeremployee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but
also the manner and means to be used in reaching that end.
Petitioner failed to cite a single instance to prove that she was subject to the control of respondents insofar as the manner in which she should
perform her job as a "lady keeper" was concerned. It is true that petitioner was required to follow rules and regulations prescribing appropriate
conduct while within the premises of Bodega City. However, this was imposed upon petitioner as part of the terms and conditions in the
concessionaire agreement.
Petitioner is likewise estopped from denying the existence of the subject concessionaire agreement. She should not, after enjoying the benefits
of the concessionaire agreement with respondents, be allowed to later disown the same through her allegation that she was an employee of the
respondents when the said agreement was terminated by reason of her violation of the terms and conditions thereof. The principle of estoppel in
pais applies wherein -- by one's acts, representations or admissions, or silence when one ought to speak out -- intentionally or through culpable
negligence, induces another to believe certain facts to exist and to rightfully rely and act on such belief, so as to be prejudiced if the former is
permitted to deny the existence of those facts. Petitioner insists that her ID card is sufficient proof of her employment. In Domasig v. National
Labor Relations Commission, this Court held that the complainant's ID card and the cash vouchers covering his salaries for the months indicated
therein were substantial evidence that he was an employee of respondents, especially in light of the fact that the latter failed to deny said
evidence. This is not the situation in the present caseAs to the ID card, it is true that the words "EMPLOYEE'S NAME" appear printed below
petitioner's name. However, she failed to dispute respondents' evidence consisting of Habitan's testimony, that he and the other "contractors" of
Bodega City such as the singers and band performers, were also issued the same ID cards for the purpose of enabling them to enter the
premises of Bodega City.
Hence, going back to the element of control, the concessionaire agreement merely stated that petitioner shall maintain the cleanliness of the
ladies' comfort room and observe courtesy guidelines that would help her obtain the results they wanted to achieve. There is nothing in the
agreement which specifies the methods by which petitioner should achieve these results. Respondents did not indicate the manner in which she
should go about in maintaining the cleanliness of the ladies' comfort room. Neither did respondents determine the means and methods by which
petitioner could ensure the satisfaction of respondent company's customers. In fact, the last paragraph of the concessionaire agreement even
allowed petitioner to engage persons to work with or assist her in the discharge of her functions. Moreover, petitioner was not subjected to
definite hours or conditions of work. The fact that she was expected to maintain the cleanliness of respondent company's ladies' comfort room
during Bodega City's operating hours does not indicate that her performance of her job was subject to the control of respondents as to make her
an employee of the latter. Instead, the requirement that she had to render her services while Bodega City was open for business was dictated
simply by the very nature of her undertaking, which was to give assistance to the users of the ladies' comfort room. Lastly, the Court finds that
the elements of selection and engagement as well as the power of dismissal are not present in the instant case. It has been established that
there has been no employer-employee relationship between respondents and petitioner. Their contractual relationship was governed by the
concessionaire agreement embodied in the 1992 letter. Thus, petitioner was not dismissed by respondents. Instead, as shown by the letter of
Yap to her dated February 15, 1995, their contractual relationship was terminated by reason of respondents' termination of the subject
concessionaire agreement, which was in accordance with the provisions of the agreement in case of violation of its terms and conditions.
16. Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008
Facts:
The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of medical doctors-spouses Ronaldo Lanzanas (Dr.
Lanzanas) and Merceditha Lanzanas (Dr. Merceditha) in March 1992 and August 1995, respectively, as part of its team of resident physicians.
On March 7, 1998, Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital, inadvertently overheard a telephone conversation
of respondent Dr. Lanzanas with a fellow employee, Diosdado Miscala, through an extension telephone line. Apparently, Dr. Lanzanas and
Miscala were discussing the low "census" or admission of patients to the hospital. Dr. Desipeda whose attention was called to the above-said
telephone conversation issued to Dr. Lanzanas a Memorandum of March 7, 1998. In the meantime, then Sec. Cresenciano Trajano of the
Department of Labor and Employment (DOLE) certified the labor dispute to the NLRC for compulsory arbitration and issued on April 21, 1998
Page 11
LABOR RELATIONS
12

return-to-work Order to the striking union officers and employees of petitioner pending resolution of the labor dispute. Petitioner later sent Dr.
Lanzanas a notice of termination which he received on April 25, 1998, indicating as grounds therefor his failure to report back to work despite
the DOLE order and his supposed role in the striking union, thus: On April 23, 1998, you still did not report for work despite memorandum issued
by the CMC Medical Director implementing the Labor Secretary's ORDERYou are likewise aware that you were observed (re: signatories [ sic]
to the Saligang Batas of BMCMC-UWP) to be unlawfully participating as member in the rank-and-file union's concerted activities despite
knowledge that your position in the hospital is managerial in nature (Nurses, Orderlies, and staff of the Emergency Room carry out your orders
using your independent judgment) which participation is expressly prohibited by the New Labor Code
For these reasons as grounds for termination, you are hereby terminated for cause from employment effective today, April 25, 1998 , without
prejudice to further action for revocation of your license before the Philippine [sic] Regulations [sic] Commission. Dr. Lanzanas thus amended his
original complaint to include illegal dismissal.
Issue:
Ruling:
YES. Under the "control test," an employment relationship exists between a physician and a hospital if the hospital controls both the means and
the details of the process by which the physician is to accomplish his task. As priorly stated, private respondents maintained specific workschedules, as determined by petitioner through its medical director, which consisted of 24-hour shifts totaling forty-eight hours each week and
which were strictly to be observed under pain of administrative sanctions.That petitioner exercised control over respondents gains light from the
undisputed fact that in the emergency room, the operating room, or any department or ward for that matter, respondents' work is monitored
through its nursing supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its medical director, no operations
can be undertaken in those areas. For control test to apply, it is not essential for the employer to actually supervise the performance of duties of
the employee, it being enough that it has the right to wield the power. With respect to respondents' sharing in some hospital fees, this scheme
does not sever the employment tie between them and petitioner as this merely mirrors additional form or another form of compensation or
incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of the Labor Code, thus: whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of calculating the same Respondents were in fact made subject to
petitioner-hospital's Code of Ethics, the provisions of which cover administrative and disciplinary measures on negligence of duties, personnel
conduct and behavior, and offenses against persons, property and the hospital's interest. More importantly, petitioner itself provided
incontrovertible proof of the employment status of respondents, namely, the identification cards it issued them, the payslips and BIR W-2 (now
2316) Forms which reflect their status as employees, and the classification as "salary" of their remuneration. Moreover, it enrolled respondents
in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage under the SSS Law is premised on the
existence of an employer-employee relationship, except in cases of compulsory coverage of the self-employed. Finally, under Section 15, Rule
X of Book III of the Implementing Rules of the Labor Code, an employer-employee relationship exists between the resident physicians and the
training hospitals, unless there is a training agreement between them, and the training program is duly accredited or approved by the
appropriate government agency. In respondents' case, they were not undergoing any specialization training. They were considered non-training
general practitioners, assigned at the emergency rooms and ward sections. Turning now to the issue of dismissal, the Court upholds the
appellate court's conclusion that private respondents were illegally dismissed. Dr. Lanzanas was neither a managerial nor supervisory employee
but part of the rank-and-file. This is the import of the Secretary of Labor's Resolution of May 22, 1998 in OS A-05-15-98 which reads: In the
motion to dismiss it filed before the Med-Arbiter, the employer (CMC) alleged that 24 members of petitioner are supervisors, namely Rolando
Lanzonas. A close scrutiny of the job descriptions of the alleged supervisors narrated by the employer only proves that except for the contention
that these employees allegedly supervise, they do not however recommend any managerial action. At most, their job is merely routinary in
nature and consequently, they cannot be considered supervisory employees. They are not therefore barred from membership in the union of
rank[-]and[-]file, which the petitioner [the union] is seeking to represent in the instant case. Participation in a strike and intransigence to a returnto-work order must, however, be duly proved in order to justify immediate dismissal in a "national interest" case. Mere membership in a labor
union does not ipso facto mean participation in a strike. As for the case of Dr. Merceditha, her dismissal was worse, it having been effected
without any just or authorized cause and without observance of due process. In fact, petitioner never proferred any valid cause for her dismissal
except its view that "her marriage to [Dr. Lanzanas] has given rise to the presumption that her sympath[y] [is] with her husband; [and that when
[Dr. Lanzanas] declared that he was going to boycott the scheduling of their workload by the medical doctor, he was presumed to be speaking
for himself [and] for his wife Merceditha."
17. Escasinas et al., vs. Shangri-las Mactan Island Resort et al., G.R. No. 178827, March 4, 2009
Facts:
Page 12
LABOR RELATIONS
13

Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica
Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was
a retained physician. In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) Regional Arbitration Branch No. VII
(NLRC-RAB No. VII) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month
pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were
not its employees but of respondent doctor whom it retained via Memorandum of Agreement (MOA) pursuant to Article 157 of the Labor Code,
as amended. Respondent doctor for her part claimed that petitioners were already working for the previous retained physicians of Shangri-la
before she was retained by Shangri-la; and that she maintained petitioners services upon their request.
Issue:
Ruling:
The resolution of the case hinges, in the main, on the correct interpretation of Art. 157 vis a vis Art. 280 and the provisions on permissible job
contracting of the Labor Code, as amended. The Court holds that, contrary to petitioners postulation, Art. 157 does not require the engagement
of full-time nurses as regular employees of a company employing not less than 50 workers. Thus, the Article provides:
ART. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his employees in any locality with free
medical and dental attendance and facilities consisting of:
(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number of employees
exceeds two hundred (200) but not more than three hundred (300); and
Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to "furnish" its employees with the services of a
full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide or make available such
medical and allied services to its employees, not necessarily to hire or employ a service provider. As held in Philippine Global Communications
vs. De Vera:
x x x while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on
the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees,
adding that the law, as written, only requires the employer "to retain", not employ, a part-time physician who needed to stay in the premises of
the non-hazardous workplace for two (2) hours. 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 in order to vest employer-employee relationship on
the employer and the person so engaged. So De Vera teaches:
x x x For, we take it that any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary
for the latters business, even without being hired as an employee. This set-up is precisely true in the case of an independent contractorship as
well as in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the
existence of an employment relationship. As it is, the provision merely distinguishes between two (2) kinds of employees, i.e., regular and
casual. x x x The phrase "services of a full-time registered nurse" should thus be taken to refer to the kind of services that the nurse will render
in the companys premises and to its employees, not the manner of his engagement.
As to whether respondent doctor can be considered a legitimate independent contractor, the pertinent sections of DOLE Department Order No.
10, series of 1997, illuminate:
Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met:
(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which
are necessary in the conduct of his business.
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only
contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are directly related to the principal business or operations
of the employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by
him
Page 13
LABOR RELATIONS
14

The existence of an independent and permissible contractor relationship is generally established by considering the following determinants:
whether the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employer's
power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises,
tools, appliances, materials and labor; and the mode, manner and terms of payment. On the other hand, existence of an employer- employee
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. Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor.
That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests do not necessarily prove that respondent
doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its employees is
required under Art. 157, which are not directly related to Shangri-las principal business operation of hotels and restaurants. As to payment of
wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and other benefits of the staff; group life, group
personal accident insurance and life/death insurance for the staff with minimum benefit payable at 12 times the employees last drawn salary, as
well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from
Shangri-las guests who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their SSS
premium as well as their wages if they were not indeed her employees. With respect to the supervision and control of the nurses and clinic staff,
it is not disputed that a document, "Clinic Policies and Employee Manual" claimed to have been prepared by respondent doctor exists, to which
petitioners gave their conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said document,
and not the employee manual being followed by Shangri-las regular workers, governs how they perform their respective tasks and
responsibilities. Contrary to petitioners contention, the various office directives issued by Shangri-las officers do not imply that it is Shangri-las
management and not respondent doctor who exercises control over them or that Shangri-la has control over how the doctor and the nurses
perform their work. The letter addressed to respondent doctor dated February 7, 2003 from a certain Tata L. Reyes giving instructions regarding
the replenishment of emergency kits is, at most, administrative in nature, related as it is to safety matters; while the letter dated May 17, 2004
from Shangri-las Assistant Financial Controller, Lotlot Dagat, forbidding the clinic from receiving cash payments from the resorts guests is a
matter of financial policy in order to ensure proper sharing of the proceeds, considering that Shangri-la and respondent doctor share in the
guests payments for medical services rendered. In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not
petitioners employer.
18. Tongko v. Manufacturer Life Insurance Co. (MANULIFE) Inc., et al., G.R. No 167622, January 25, 2011
Facts:
Tongko was, initially an insurance agent of Manulife who was promoted to the role of a manager. The contractual relationship between Tongko
and Manulife had two basic phases. The initial phase began on July 1, 1977under a Career Agents Agreement which regarded him as an
independent contractor, not an employee. As an agent, his tasks were to canvass for applications for insurance products and collect money due
to the Company. The second phase started in 1983 when Tongko was named Unit Manager. In 1990, he became a Branch Manager. In 1996,
Tongko became a Regional Sales Manager, where he earned commissions, persistency income and management overrides. Since the
beginning, Tongko consistently declared himself self-employed in his income tax returns.
However, in 2001, Manulife instituted manpower development programs which directed the managers to increase the number of agents to at
least 1,000 strong for a start. It was found that Tongkos region was the lowest performer in terms of recruiting in 2000. Subsequently, Tongko
received another letter, dated December 18, 2001, terminating his services. Tongko then filed an illegal dismissal complaint with the NLRC
Arbitration Branch. He alleged the existence of an employment relationship. In support of this he asserted that as Unit Manager, he was paid an
annual over-rider, a travel and entertainment allowance in addition to his overriding commissions. He was tasked with numerous administrative
functions and supervisory authority over Manulifes employees. He was required to follow at least three codes of conduct. On the other hand,
Manulife contended that what existed between them was a mere agency relationship.
Decisions of the Judicial Tribunals
LA:
No employer-employee relationship existed between the parties.
NLRC: It found the existence of an employer-employee relationship. There was illegal dismissal.
CA:
It reverted to the labor arbiters decision that no employer-employee relationship existed between them.
SC:
In reversing the CA ruling, it declared that an employment relationship existed between them. First, there exists the possibility of an
insurance agent becoming an employee of an insurance company if evidence shows that the company promulgated rules or regulations that
effectively controlled or restricted an insurance agents choice of methods or the methods themselves in selling insurance.
Page 14
LABOR RELATIONS
15

Second, Manulife had the power of control over Tongko, sufficient to characterize him as an employee, as shown by the fact that he complied
with 3 different codes of conduct and that he performed administrative duties. Also, Tongko was tasked to recruit some agents in addition to his
other administrative functions.
Hence, a Motion for Reconsideration was filed by Manulife and was granted by the SC.
Issue:
Whether or not there exists an employer-employee relationship.
SC Ruling:
Rules regarding the desired results (e.g., the required volume to continue to qualify as a company agent & legal/ ethical rules to be followed) are
built-in elements of control specific to an insurance agency and should not and cannot be read as elements of control that attend an employment
relationship governed by the Labor Code.
Based on decided cases, a determination of the presence of the Labor Code element of control was made on the basis of the stipulations of the
subsequent contracts. In this case, while Tongko was later on designated unit manager in 1983, Branch Manager in 1990, and Regional Sales
Manager in 1996, no formal contract regarding these undertakings appears in the records of the case. Any such contract or agreement, had
there been any, could have at the very least provided the bases for properly ascertaining the juridical relationship established between the
parties.
For this reason, we can take judicial notice that as a matter of Insurance Code-based business practice, an agency relationship prevails in the
insurance industry for the purpose of selling insurance. Significantly, evidence shows that Tongkos role as an insurance agent never changed
during his relationship with Manulife. Tongko essentially remained an agent, but moved up in this role through Manulifes recognition that he
could use other agents approved by Manulife but operating under his guidance. For want of a better term, Tongko perhaps could be labeled as a
"lead agent" who guided under his wing other Manulife agents.
Evidence indicates that Tongko consistently clung to the view that he was an independent agent since he invariably declared himself a business
or self-employed person in his income tax returns. The concept of estoppel a legal and equitable concept necessarily must come into play.
Tongkos previous admissions in several years of tax returns as an independent agent, as against his belated claim that he was all along an
employee, are too diametrically opposed to be simply dismissed or ignored.
There was, indeed, lack of evidence on record showing that Manulife ever exercised means-and-manner control, even to a limited extent, over
Tongko during his ascent in Manulifes sales ladder. The reality is, prior to the directives sent by De Dios, Manulife had practically left Tongko
alone not only in doing the business of selling insurance, but also in guiding the agents under his wing. In addition, the mere presentation of
codes or of rules and regulations is not per se indicative of labor law control. The codes of conduct do not intrude into the insurance agents
means and manner of conducting their sales and only control them as to the desired results.
Guidelines indicative of labor law "control," based on the case of Insular Life, should not merely relate to the mutually desirable result intended
by the contractual relationship; they must have the nature of dictating the means or methods to be employed in attaining the result, or of fixing
the methodology and of binding or restricting the party hired to the use of these means.
Hence, the failure of Tongko to comply with the guidelines & directives of Manulife is recruiting more agents, as a ground for termination of
Tongkos agency, is a matter that the labor tribunals cannot rule upon in the absence of an employer-employee relationship. Jurisdiction over the
matter belongs to the courts applying the laws of insurance, agency and contracts.
SC:
Tongko is just an AGENT. In effect, the SC is telling us that, first, there must be an evidence of a contract that shows that the
relationship has been converted from contract of agency to that of employment, which is absent in the case at bar. Secondly, adherence to a
code of conduct is not, per se, indicative of control when it merely controls the desired results and not the means and the manner by which
agents are to conduct their sales. The directive of De Dios to Tongko (in increasing the number of agents) was merely suggestive. Hence, not
indicative of control
19. Caong, Jr. v. Begualos, G.R. No. 179428, January 26, 2011
Facts:
Page 15
LABOR RELATIONS
16
Petitioners Primo E. Caong, Jr. (Caong), Alexander J. Tresquio (Tresquio), and Loriano D.
Daluyon (Daluyon) were employed by respondent Avelino Regualos under a boundary
agreement, as drivers of his jeepneys. In November 2001, they filed separate
complaintshttp://sc.judiciary.gov.ph/jurisprudence/2011/january2011/179428.htm - _ftn2 for illegal dismissal
against respondent who barred them from driving the vehicles due to deficiencies in
their boundary payments.
Issue:
Whether or not the policy of suspending drivers pending payment of arrears in their
boundary obligations is reasonable.
Ruling:
It is already settled that the relationship between jeepney owners/operators
and jeepney drivers under the boundary system is that of employer-employee and not
of lessor-lessee. The fact that the drivers do not receive fixed wages but only get the
amount in excess of the so-called boundary that they pay to the owner/operator is
not sufficient to negate the relationship between them as employer and employee.
Petitioners suspension cannot be categorized as dismissal, considering that there was
no intent on the part of respondent to sever the employer-employee relationship
between him and petitioners. In fact, it was made clear that petitioners could put an
end to the suspension if they only pay their recent arrears. As it was, the suspension
dragged on for years because of petitioners stubborn refusal to pay. It would have
been different if petitioners complied with the condition and respondent still refused to
readmit them to work. Then there would have been a clear act of dismissal. But such
was not the case. Instead of paying, petitioners even filed a complaint for illegal
dismissal against respondent.
Respondents policy of suspending drivers who fail to remit the full amount of the
boundary was fair and reasonable under the circumstances. Respondent explained
that he noticed that his drivers were getting lax in remitting their boundary payments
and, in fact, herein petitioners had already incurred a considerable amount of arrears.
He had to put a stop to it as he also relied on these boundary payments to raise the
full amount of his monthly amortizations on the jeepneys. Demonstrating their
obstinacy, petitioners, on the days immediately following the implementation of the
policy, incurred deficiencies in their boundary remittances.
It is acknowledged that an employer has free rein and enjoys a wide latitude of
discretion to regulate all aspects of employment, including the prerogative to
instill discipline on his employees and to impose penalties, including dismissal, if
warranted, upon erring employees. This is a management prerogative. Indeed, the
manner in which management conducts its own affairs to achieve its purpose is
within the managements discretion. The only limitation on the exercise of
management prerogative is that the policies, rules, and regulations on work-related
activities of the employees must always be fair and reasonable, and the corresponding
Page 16
LABOR RELATIONS
17
penalties, when prescribed, commensurate to the offense involved and to the degree
of the infraction.
A company policy must be implemented in such manner as will accord social justice
and compassion to the employee. In case of noncompliance with the company policy,
the employer must consider the surrounding circumstances and the reasons why the
employee failed to comply. When the circumstances merit the relaxation of the
application of the policy, then its noncompliance must be excused.
In the present case, petitioners merely alleged that there were only few passengers
during the dates in question. Such excuse is not acceptable without any proof or, at
least, an explanation as to why passengers were scarce at that time. It is simply a
bare allegation, not worthy of belief. We also find the excuse unbelievable considering
that petitioners incurred the shortages on separate days, and it appears that only
petitioners failed to remit the full boundary payment on said dates.
20. Atok Big Wedge Company vs. Gison, G.R. No. 169510, August 8, 2011
Facts:
The respondent in this case, Jesus P. Gison, was engaged as part-time consultant of the petitioner, Atok Big Wedge Company thorugh its then
Asst. VP and Acting Resident Manager, Rutillo A. Torres. As a consultant on retainer basis, the former assisted the petitioners retained legal
counsel with matters pertaining to the prosecution of cases against illegal surface occupants within the area covered by the companys mineral
claims. He also tasked to perform liason work with government agencies which he said his expertise. Respondent is not required to report to its
office on a regular basis, except when occassionally requested by the management to discuss the matters which needs of his expertise as a
consultant. He is paid a retainer fee of 3,000Php a month and delivered to him either in his residence or in a local restaurant. They have also
executed a retainer agreement however was misplaced and can no longer be found. This kind of arrangement continued on for the next 11
years. Since respondent was getting old, he requested petitioner to cause his registration with the Social Security System but petitioner did not
accede to his request considering the former only a retainer/consultant.
Respondent herein, filed a complaint with SSS against petitioners refusal to cause his registration with the SSS. The Resident Manager of the
petitioner issued then a Memorandum advising respondent that within 30 days from receipt thereof, petitioners services as a retainer/consultant
will be terminated since his services are no longer necessary. As a result, respondent filed a complaint for illegal dismissal, unfair labor practice,
underpayment of wages, non-payment of 13th Month pay, vacation pay and sick leave with the NLRC, Regional Arbitration Branch and
Cordillera Administrative Region against the petitioner.
The Labor Arbiter rendered a decision in favor of the petitioner ruling that there is no employer-employee relationship and dismissed the
complaint for lack of merit. An appeal was made before the NLRC but same was dismissed and affirmed the decision of the Labor Arbiter. A
petition for review was filed under Rule 65 before the Court of Appeals. The Court of Appeals annuled and has set aside the decision of NLRC.
The CA opined that, both the Labor Arbiter and NLRC overlooked Article 280 of the Labor Code, which distinguishes between the two kinds of
employees, i.e., regular and casual employees. The respondent is deemed a regular employee of the petitioner after the lapse of one year from
his employment. Considering also that the respondent had been performing services for the petitioner for the last 11 years entitling him to the
rights and privileges of a regular employee. The CA added that although there was an agreement between the parties that the employment of
the respondent will be only temporary, it clearly disregarded the same by repeatedly giving petitioner several tasks to perform. Moreover,
although the respondent may have waived his right to attain a regular status when he agreed to perform these tasks on a temporary
employment status, still it was the law that recognized and considered him a regular employee after his first year of rendering service to
petitioner. As such, the waiver is ineffective.
Petitioner herein posits that CA erred in applying Article 280 of the Labor Code in determining whether there exists an employer-employee
relationship. Petitioner contends that where the existence of an employer-employee relationship is in dispute, Article 280 of the Labor Code is
inapplicable. The said article only set the distinction between a casual employee from a regular employee for purposes of determining the rights
of an employee to be entitled to certain benefits.
Page 17
LABOR RELATIONS
18

Issue:
Whether or not CA erred in applying Article 280?
Ruling:
Well-entrenched is the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that the findings
thereon by the Labor Arbiter and the NLRC shall be accorded not only respect but even finality when supported by substantial evidence. Being a
question of fact, the determination whether such a relationship exists between petitioner and respondent was well within the province of the
Labor Arbiter and the NLRC. Being supported by substantial evidence, such determination should have been accorded great weight by the CA in
resolving the issue. To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold test,
to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct, or the so-called "control test." The so-called "control test" is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-employee relationship
Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at bar. Among other things, respondent
was not required to report everyday during regular office hours of petitioner. Respondent's monthly retainer fees were paid to him either at his
residence or a local restaurant. More importantly, petitioner did not prescribe the manner in which respondent would accomplish any of the tasks
in which his expertise as a liaison officer was needed; respondent was left alone and given the freedom to accomplish the tasks using his own
means and method. Respondent was assigned tasks to perform, but petitioner did not control the manner and methods by which respondent
performed these tasks. Verily, the absence of the element of control on the part of the petitioner engenders a conclusion that he is not an
employee of the petitioner. Moreover, the absence of the parties' retainership agreement notwithstanding, respondent clearly admitted that
petitioner hired him in a limited capacity only and that there will be no employer-employee relationship between them.
Respondent was well aware of the agreement that he was hired merely as a liaison or consultant of the petitioner and he agreed to perform
tasks for the petitioner on a temporary employment status only. However, respondent anchors his claim that he became a regular employee of
the petitioner based on his contention that the "temporary" aspect of his job and its "limited" nature could not have lasted for eleven years unless
some time during that period, he became a regular employee of the petitioner by continually performing services for the company.
Respondent is not an employee, much more a regular employee of petitioner. The appellate court's premise that regular employees are those
who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. In fact, any
agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latter's business, even
without being hired as an employee. Hence,respondent's length of service and petitioner's repeated act of assigning respondent some tasks to
be performed did not result to respondent's entitlement to the rights and privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for eleven years, he still cannot be considered as a regular
employee of petitioner. Article 280 of the Labor Code, in which the lower court used to buttress its findings that respondent became a regular
employee of the petitioner, is not applicable in the case at bar. Indeed, the Court has ruled that said provision is not the yardstick for determining
the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and
casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure; it
does not apply where the existence of an employment relationship is in dispute.It is, therefore, erroneous on the part of the Court of Appeals to
rely on Article 280 in determining whether an employer-employee relationship exists between respondent and the petitioner.
Considering that there is no employer-employee relationship between the parties, the termination of respondent's services by the petitioner after
due notice did not constitute illegal dismissal warranting his reinstatement and the payment of full backwages, allowances and other benefits.
21. Semblante vs. CA, G.R. No. 196426, August 15, 2011
Facts:
Petitioners Marticio Semblante and Dubrick Pilar worked in the Gallera de Mandaue owned by the respondents-spouses Vicente and Maria
Luisa Loot. The petitioners rendered their services as the official massiador and sentenciador in 1993. As the masiador, Semblante calls and
takes the bets from the gamecock owners and other bettors and orders the start of the cockfight. He also distributes the winnings after deducting
the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of fighting cocks, determines the
fighting cocks' physical condition and capabilities to continue the cockfight, and eventually declares the result of the
cockfight. As masiador and sentenciador, Semblante receives PhP2,000 per week or a total of PhP8,000 per month, while Pilar gets PhP3,500 a
week or PhP14,000 per month. They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies and
cockfights held on special holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the morning
depending on the needs of the cockpit. Petitioners had both been issued employees' identification cards that they wear every time they report
Page 18
LABOR RELATIONS
19

for duty. However on November 14,1993, petitioners were denied entry into the cockpit upon the instructions of respondents and were informed
of the termination of their employment effective that date.
Respondents denied that petitioners were their employees and alleged that they were associates of respondents independent contractor, Tomas
Vega. They claimed that petitioners have no regular working time or day and they are free to decide for themselves whether to report for work or
not on any cockfighting day. And the identification card issued was only to free them from the normal entrance fees and to differentiate them
from the general public.
The Labor Arbiter found that there exist an employer-employee relationship between the petitioner and the respondents because the latter
performed the works necessary and indispensable to the usual trade or business of the respondents for a number of years. It has ruled that
petitioners were illegally dismissed and are entitled to their backwages and separation pay. However, the NLRC reversed the Labor Arbiters
decision. It held that respondents having no power on the selection and engagement of petitioners and that no separate individual contract with
respondents was ever executed by petitioners. In its appeal to the CA, the latter ruled in favor for the respondents and held that referees and
bet-takers in a cockfight need to have the kind of expertise that is characteristic of the game to interpret messages conveyed by mere gestures.
Hence, petitioners are akin to independent contractors who possess unique skills , expertise and talent to distinguish them from ordinary
employees. Further, petitioners were not provided by tools and instrumentalities they needed to perform their work. They only need their unique
skills and talents in the performance of their job as masiador and sentenciador.
Issue:
Whether or not the dismissal of the petitioners is illegal on the ground that that they are regular employees of the respondents?
Ruling:
Respondents had no part in petitioners' selection and management; petitioners' compensation was paid out of the arriba (which is a percentage
deducted from the total bets), not by petitioners; and petitioners performed their functions as masiador and sentenciador free from the direction
and control of respondents. In the conduct of their work, petitioners relied mainly on their "expertise that is characteristic of the cockfight
gambling," and were never given by respondents any tool needed for the performance of their work. Respondents, not being petitioners'
employers, could never have dismissed, legally or illegally, petitioners, since respondents were without power or prerogative to do so in the first
place. The rule on the posting of an appeal bond cannot defeat the substantive rights of respondents to be free from an unwarranted burden of
answering for an illegal dismissal for which they were never responsible.
22. Bernarte vs. Phil. Basketball Assoc., G.R. No. 192084, September 14, 2011
Facts:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to
join the PBA as referees. During the leadership of Commissioner Emilio Bernardino,
they were made to sign contracts on a year-to-year basis. During the term of
Commissioner Eala, however, changes were made on the terms of their employment.
Complainant Bernarte, for instance, was not made to sign a contract during the first
conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It
was only during the second conference when he was made to sign a one and a half
month contract for the period July 1 to August 5, 2003.
On January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory
performance on and off the court. It was a total shock for Bernarte who was awarded
Referee of the year in 2003. He felt that the dismissal was caused by his refusal to fix
a game upon order of Ernie De Leon.
Page 19
LABOR RELATIONS
20
On the other hand, complainant Guevarra alleges that he was invited to join the PBA
pool of referees in February 2001. On March 1, 2001, he signed a contract as trainee.
Beginning 2002, he signed a yearly contract as Regular Class C referee. On May 6,
2003, respondent Martinez issued a memorandum to Guevarra expressing
dissatisfaction over his questioning on the assignment of referees officiating out-oftown games. Beginning February 2004, he was no longer made to sign a contract.
Respondents aver, on the other hand, that complainants entered into two contracts of
retainer with the PBA in the year 2003. The first contract was for the period January 1,
2003 to July 15, 2003; and the second was for September 1 to December 2003. After
the lapse of the latter period, PBA decided not to renew their contracts.
Complainants were not illegally dismissed because they were not employees of the
PBA. Their respective contracts of retainer were simply not renewed. PBA had the
prerogative of whether or not to renew their contracts, which they knew were fixed.
Both the Labor Arbiter and NLRC decided that the petitioners were employees whose
dismissals by respondents were illegal.
However, the Court of Appeals overturned the decisions of the NLRC and Labor Arbiter
on the ground that the petitioner is an independent contractor since respondents did
not exercise any form of control over the means and methods by which petitioner
performed his work as a basketball referee.
Issue:
Whether petitioner is an employee of respondents, which in turn determines whether
petitioner was illegally dismissed.
Ruling
The Supreme Court affirmed the assailed decision of the Court of Appeals.
To determine the existence of an employer-employee relationship, case law has
consistently applied the four-fold test, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee on the means and methods by which the
work is accomplished. The so-called "control test" is the most important indicator of
the presence or absence of an employer-employee relationship.
In this case, PBA admits repeatedly engaging petitioner's services, as shown in the
retainer contracts. PBA pays petitioner a retainer fee, exclusive of per diem or
allowances, as stipulated in the retainer contract. PBA can terminate the retainer
contract for petitioner's violation of its terms and conditions.
However, respondents argue that the all-important element of control is lacking in this
case, making petitioner an independent contractor and not an employee of
respondents.
Page 20
LABOR RELATIONS
21
We agree with respondents that once in the playing court, the referees exercise their
own independent judgment, based on the rules of the game, as to when and how a
call or decision is to be made. The referees decide whether an infraction was
committed, and the PBA cannot overrule them once the decision is made on the
playing court. The referees are the only, absolute, and final authority on the playing
court. Respondents or any of the PBA officers cannot and do not determine which calls
to make or not to make and cannot control the referee when he blows the whistle
because such authority exclusively belongs to the referees. The very nature of
petitioner's job of officiating a professional basketball game undoubtedly calls for
freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an independent
contractor: (1) the referees are required to report for work only when PBA games are
scheduled, which is three times a week spread over an average of only 105 playing
days a year, and they officiate games at an average of two hours per game; and (2)
the only deductions from the fees received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours
per day for five days a week, petitioner is required to report for work only when PBA
games are scheduled or three times a week at two hours per game. In addition, there
are no deductions for contributions to the Social Security System, Philhealth or PagIbig, which are the usual deductions from employees' salaries. These undisputed
circumstances buttress the fact that petitioner is an independent contractor, and not
an employee of respondents.
Furthermore, the applicable foreign case law declares that a referee is an independent
contractor, whose special skills and independent judgment is required specifically for
such position and cannot possibly be controlled by the hiring party.
In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that
petitioner is an employee of the former. For a hired party to be considered an
employee, the hiring party must have control over the means and methods by which
the hired party is to perform his work, which is absent in this case. The continuous
rehiring by PBA of petitioner simply signifies the renewal of the contract between PBA
and petitioner, and highlights the satisfactory services rendered by petitioner
warranting such contract renewal. Conversely, if PBA decides to discontinue
petitioner's services at the end of the term fixed in the contract, whether for
unsatisfactory services, or violation of the terms and conditions of the contract, or for
whatever other reason, the same merely results in the non-renewal of the contract, as
in the present case. The non-renewal of the contract between the parties does not
constitute illegal dismissal of petitioner by respondents.
23. Lirio vs. Genovia, G.R. No. 169757, November 23, 2011
Facts:
Page 21
LABOR RELATIONS
22
Respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or
Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-payment of commission
and award of moral and exemplary damages.
Respondent Genovia alleged in his position paper that on August 15, 2001, he was
hired as studio manager by petitioner Lirio, owner of Celkor Ad Sonicmix Recording
Studio (Celkor). He was employed to manage and operate Celkor and to promote and
sell the recording studio's services to music enthusiasts and other prospective clients.
He received a monthly salary of P7,000.00. They also agreed that he was entitled to
an additional commission of P100.00 per hour as recording technician whenever a
client uses the studio for recording, editing or any related work. He was made to
report for work from Monday to Friday from 9:00 a.m. to 6 p.m. On Saturdays, he was
required to work half-day only, but most of the time, he still rendered eight hours of
work or more. All the employees of petitioner, including respondent, rendered
overtime work almost everyday, but petitioner never kept a daily time record to avoid
paying the employees overtime pay.
He also alleged that petitioner approached him and told him about his project to
produce an album for his daughter, Celine Mei Lirio. Petitioner asked respondent to
compose and arrange songs for Celine and promised that he (Lirio) would draft a
contract to assure respondent of his compensation for such services. As agreed upon,
the additional services that respondent would render included composing and
arranging musical scores only, while the technical aspect in producing the album, such
as digital editing, mixing and sound engineering would be performed by respondent in
his capacity as studio manager for which he was paid on a monthly basis. Petitioner
instructed respondent that his work on the album as composer and arranger would
only be done during his spare time, since his other work as studio manager was the
priority. Respondent then started working on the album.
After the album was completed and released, respondent again reminded petitioner
about the contract on his compensation as composer and arranger of the album.
Petitioner told respondent that since he was practically a nobody and had proven
nothing yet in the music industry, respondent did not deserve a high compensation,
and he should be thankful that he was given a job to feed his family. Petitioner
informed respondent that he was entitled only to 20% of the net profit, and not of the
gross sales of the album, and that the salaries he received and would continue to
receive as studio manager of Celkor would be deducted from the said 20% net profit
share. Respondent objected and insisted that he be properly compensated. On March
14, 2002, petitioner verbally terminated respondents services, and he was instructed
not to report for work.
Respondent asserts that he was illegally dismissed as he was terminated without any
valid grounds, and no hearing was conducted before he was terminated, in violation of
his constitutional right to due process. Having worked for more than six months, he
was already a regular employee. Although he was a so called studio manager, he
had no managerial powers, but was merely an ordinary employee.
Page 22
LABOR RELATIONS
23
Respondent prayed for his reinstatement without loss of seniority rights, or, in the
alternative, that he be paid separation pay, backwages and overtime pay; and that he
be awarded unpaid commission for services rendered as a studio technician as well as
moral and exemplary damages.
Respondents evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002,
which was certified correct by petitioner, and Petty Cash Voucher evidencing receipt of
payroll payments by respondent from Celkor.
In defense, petitioner stated in his Position Paper that respondent was not hired as
studio manager, composer, technician or as an employee in any other capacity of
Celkor. Respondent could not have been hired as a studio manager, since the
recording studio has no personnel except petitioner.
According to petitioner, respondent had no track record as a composer, and he was
not known in the field of music. Nevertheless, after some discussion, respondent
verbally agreed with petitioner to co-produce the album.
Petitioner asserted that his relationship with respondent is one of an informal
partnership and that he had no control over the time and manner by which
respondent composed or arranged the songs, except on the result
thereof. Respondent reported to the recording studio between 10:00 a.m. and 12:00
noon. Hence, petitioner contended that no employer-employee relationship existed
between him and the respondent, and there was no illegal dismissal to speak of.
The Labor Arbiter rendered a decision finding that an employer-employee relationship
existed between petitioner and respondent, and that respondent was illegally
dismissed.
However, the NLRC reversed and set aside the decision of the Labor Arbiter on the
ground that respondent failed to prove his employment tale with substantial evidence.
It held that respondent failed to proved with substantial evidence that he was
selected and engaged by petitioner, that petitioner had the power to dismiss him, and
that they had the power to control him not only as to the result of his work, but also as
to the means and methods of accomplishing his work.
The Court of Appeals rendered a decision reversing and setting aside the resolution of
the NLRC, and reinstating the decision of the Labor Arbiter.
Hence, petitioner Lirio filed this petition.
Issue:
Whether respondent is an employee of the petitioner, which in turn determines

whether respondent was illegally dismissed.
Ruling:
The Supreme Court affirmed the assailed decision of the Court of Appeals.
Page 23
LABOR RELATIONS
24
Before a case for illegal dismissal can prosper, it must first be established that an
employer-employee relationship existed between petitioner and respondent.
The elements to determine the existence of an employment relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employers power to control the employees conduct. The
most important element is the employers control of the employees conduct, not only
as to the result of the work to be done, but also as to the means and methods to
accomplish it.
It is settled that no particular form of evidence is required to prove the existence of an
employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted.
In this case, the documentary evidence presented by respondent to prove that he was
an employee of petitioner are as follows: (a) a document denominated as "payroll"
(dated July 31, 2001 to March 15, 2002) certified correct by petitioner, which showed
that respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th of the
month and another P3,500.00 every 30th of the month) with the corresponding
deductions due to absences incurred by respondent; and (2) copies of petty cash
vouchers, showing the amounts he received and signed for in the payrolls.
The said documents showed that petitioner hired respondent as an employee and he
was paid monthly wages of P7,000.00. Petitioner wielded the power to dismiss as
respondent stated that he was verbally dismissed by petitioner, and respondent,
thereafter, filed an action for illegal dismissal against petitioner. The power of control
refers merely to the existence of the power. It is not essential for the employer to
actually supervise the performance of duties of the employee, as it is sufficient that
the former has a right to wield the power. Nevertheless, petitioner stated in his
Position Paper that it was agreed that he would help and teach respondent how to use
the studio equipment. In such case, petitioner certainly had the power to check on the
progress and work of respondent.
On the other hand, petitioner failed to prove that his relationship with respondent was
one of partnership. Such claim was not supported by any written agreement. The
Court notes that in the payroll dated July 31, 2001 to March 15, 2002, there were
deductions from the wages of respondent for his absence from work, which negates
petitioners claim that the wages paid were advances for respondents work in the
partnership.
The Court agrees with the Court of Appeals that the evidence presented by the parties
showed that an employer-employee relationship existed between petitioner and
respondent.
In termination cases, the burden is upon the employer to show by substantial
evidence that the termination was for lawful cause and validly made.Article 277 (b) of
the Labor Code puts the burden of proving that the dismissal of an employee was for a
Page 24
LABOR RELATIONS
25
valid or authorized cause on the employer, without distinction whether the employer
admits or does not admit the dismissal. For an employees dismissal to be valid, (a)
the dismissal must be for a valid cause, and (b) the employee must be afforded due
process. Procedural due process requires the employer to furnish an employee with
two written notices before the latter is dismissed: (1) the notice to apprise the
employee of the particular acts or omissions for which his sought, which is the
equivalent of a charge; and (2) the notice informing the employee of his dismissal, to
be issued after the employee has been given reasonable opportunity to answer and to
be heard on his defense. Petitioner failed to comply with these legal requirements;
hence, the Court of Appeals correctly affirmed the Labor Arbiters finding that
respondent was illegally dismissed, and entitled to the payment of backwages, and
separation pay in lieu of reinstatement.
24. Jao vs. BCC Product Sales Inc., G.R. No. 163700, April 18, 2012
Facts:
Petitioner maintained that respondent BCC Product Sales Inc. (BCC) and its President, Terrance Ty, employed him as comptroller
starting from September 1995 with a monthly salary of P20,000.00 to handle the financial aspect of BCCs business. On October 19,1995, the
security guards of BCC, acting upon the instruction of Ty, barred him from entering the premises of BCC where he then worked. His attempts to
report to work in November and December 12, 1995 were frustrated because he continued to be barred from entering the premises of BCC. He
then filed a complaint for illegal dismissal, reinstatement with full backwages, non-payment of wages, damages and attorneys fees.
Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation (SFC), the major creditor
and supplier of BCC; and that SFC had posted him as its comptroller in BCC to oversee BCCs finances and business operations and to look
after SFCs interests or investments in BCC.
Issue:
Whether or not an employer-employee relationship existed between petitioner Jao and BCC
Ruling:
The Supreme Court speaking through Justice Bersamin declared that the court cannot side with petitioner.
In determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the following
incidents, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employee on the means and methods by which the work is accomplished. The last element, the so-called
control test, is the most important element.
Hereunder are some of the circumstances and incidents occurring while petitioner was supposedly employed by BCC that debunked his claim
against respondents. It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his authority to deliver some 158
checks to SFC. Considering that he contested respondents challenge by pointing to the existing arrangements between BCC and SFC, it
should be clear that respondents did not exercise the power of control over him, because he thereby acted for the benefit and in the interest of
SFC more than of BCC.
Page 25
LABOR RELATIONS
26

RIGHT TO SECURITY OF TENURE
CASES:
1. ALU-TUCP vs. NLRC, 234 SCRA 678 [1994]
Facts:
National Steel Corporation (NSC) employed petitioners in connection with its Five Year Expansion Program. It undertook this program with the
end in view of expanding the volume and increasing the kinds of products that it may offer for sale to the public. Petitioners were then
terminated. They filed a complaint for unfair labor practice, regularization and monetary benefits. Their contention was that they should be
considered regular employees because their jobs are necessary, desirable and work related to NSCs main business which is steel making and
that they have rendered service for more than six years.
Issue:
Whether or not petitioners were properly characterized as regular employees rather than project employees.
Ruling:
Petitioners are project employees. Project employees are those employed for a fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee. On the other hand, regular employees are legally
entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes or termination of
service under the Labor Code. The principal test for determining whether an employee is properly characterized as project employees is
whether or not the project employees were carrying out a specific project or undertaking, the duration and the scope of which were specified at
the time the employees were engaged for that project. There are two types of project activities. First is that a project could refer to a particular
job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate and identifiable as
such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Second is a
particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably
separate and distinct from the ordinary or regular business operations of the employer. It must also begin and end at determined or determinable
times. The case at bar falls on the second type of project activity. The carrying out of the Five Year Expansion Program constitutes a distinct
undertaking identifiable from the ordinary business and activity of NSC. Each component project, of course, begins and ends at specified times
which had already been determined by the time petitioners were engaged. During the time petitioners rendered services to NSC, their work was
limited to one or another of the specific component projects which made up the Five Year Expansion Program. They were not hired or assigned
to any other purpose.
The services of these project employees may be lawfully terminated at the completion of the project. It is dependent and coterminous with the
completion or termination of the specific undertaking or activity for which the employee was hired which has been pre-determined at the time of
the engagement. Furthermore, the length of service of a project employee is not the controlling test of employment of tenure. The simple fact
that the employment of petitioners as project employees had gone beyond one year does not detract from or legally dissolve their status as
project employees. Whichever type of project employment is found in a particular case, a common basic requisite is that the designation of
named employees as "project employees" and their assignment to a specific project, are effected and implemented in good faith, and not merely
as a means of evading otherwise applicable requirements of labor laws.
2. Cosmos Bottling Corp., vs NLRC, 255 SCRA 358 [1996]

Facts:
Gil C. Castro was employed by Cosmos Bottling Corporation for a specific period. Having satisfactorily served the company for two (2) terms,
Castro was recommended for reemployment with the companys Maintenance Team for the Davao Project, he was re-hired and assigned to the
Maintenance Division of the Davao Project tasked to install the private respondents annex plant machines in its Davao plant. Castros
employment was terminated due to the completion of the special project. Cosmos Bottling Corporation in valid exercise of its management
prerogative terminated the services of some 228 regular employees by reason of retrenchment. For obvious reasons, Castro was not among the
list of those regular employees whose services were terminated by reason of retrenchment or those who voluntarily resigned. Castro filed a
Page 26
LABOR RELATIONS
27

complaint for illegal dismissal against Cosmos Bottling Corporation with the Labor Arbiter contending that being a regular employee, he could
not be dismissed without a just and valid cause. The company alleged that Castro was a mere project employee whose employment was coterminous with the project for which he was hired.
Issue:
Whether or not private respondent Gil C. Castro is a regular employee or was a mere project employee of petitioner Cosmos Bottling
Corporation.
Ruling:
Private respondent being a project employee, or to use the correct term, seasonal employee, considering that his employment was limited to the
installation and dismantling of petitioners annex plant machines after which there was no more work to do, his employment legally ended upon
completion of the project. That being so, the termination of his employment cannot and should not constitute an illegal dismissal. Neither should
it constitute retrenchment as private respondent was a seasonal employee whose services were already terminated on May 21, 1990 prior to the
termination of the other regular employees of Cosmos by reason of retrenchment.
3. Purefoods v. NLRC 283 SCRA 136 [1997]

Facts:
The private respondents (numbering 906) were hired by petitioner Pure Foods Corporation to work for a fixed period of five months at its tuna
cannery plant. After the expiration of their respective contracts of employment, their services were terminated. They thenexecuted a Release
and Quitclaim stating that they had no claim whatsoever against Pure Foods. The private respondents filed before the NLRC Sub-Regional
Arbitration Branch, a complaint for illegal dismissal against the petitioner and its plant manager.
Pure Foods Corp submits that the private respondents are now estopped from questioning their separation from petitioners employ in view of
their express conformity with the five-month duration of their employment contracts. Besides, they fell within the exception provided in Article
280 of the Labor Code which reads: [E]xcept where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee.
Moreover, the first paragraph of the said article must be read and interpreted in conjunction with the proviso in the second paragraph, which
reads: Provided that any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed.... In the instant case, the private respondents were
employed for a period of five months only. In any event, private respondents' prayer for reinstatement is well within the purview of the Release
and Quitclaim they had executed wherein they unconditionally released the petitioner from any and all other claims which might have arisen
from their past employment with the petitioner.
The private respondents, on the other hand, argue that contracts with a specific period of employment may be given legal effect provided,
however, that they are not intended to circumvent the constitutional guarantee on security of tenure. They submit that the practice of the
petitioner in hiring workers to work for a fixed duration of five months only to replace them with other workers of the same employment duration
was apparently to prevent the regularization of these so-called casuals, which is a clear circumvention of the law on security of tenure.
Issue:
Whether employees hired for a definite period and whose services are necessary and desirable in the usual business or trade of the employer
are regular employees.
Ruling: We find the petition devoid of merit.
Article 280 of the Labor Code defines regular and casual employment as follows:
ART. 280. Regular and Casual Employment.-- The provisions of written agreement to the contrary notwithstanding and regardless of the oral
argument of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project
or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season.
Page 27
LABOR RELATIONS
28

An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided, That, any employee who has rendered
at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such activity exists.
Thus, the two kinds of regular employees are (1) those who are engaged to perform activities which are necessary or desirable in the usual
business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or
broken, with respect to the activity in which they are employed.
In the instant case, the private respondents activities consisted in the receiving, skinning, loining, packing, and casing-up of tuna fish which
were then exported by the petitioner. Indisputably, they were performing activities which were necessary and desirable in petitioners business
or trade.
xxx
Contrary to petitioner's submission, the private respondents could not be regarded as having been hired for a specific project or
undertaking. The term specific project or undertaking under Article 280 of the Labor Code contemplates an activity which is not commonly or
habitually performed or such type of work which is not done on a daily basis but only for a specific duration of time or until completion; the
services employed are then necessary and desirable in the employers usual business only for the period of time it takes to complete the
project.
The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work as that performed by those whose contracts
had expired negates petitioners contention that those workers were hired for a specific project or undertaking only.
xxx
Where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee,
they should be struck down or disregarded as contrary to public policy and morals.
xxx
criteria under which term employment cannot be said to be in circumvention of the law on security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure
being brought to bear upon the employee and absent any other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance
exercised by the former or the latter.
None of these criteria had been met in the present case.
This scheme of the petitioner was apparently designed to prevent the private respondents and the other casual employees from attaining the
status of a regular employee. It was a clear circumvention of the employees right to security of tenure and to other benefits like minimum wage,
cost-of-living allowance, sick leave, holiday pay, and 13th month pay. Indeed, the petitioner succeeded in evading the application of labor
laws. Also, it saved itself from the trouble or burden of establishing a just cause for terminating employees by the simple expedient of refusing
to renew the employment contracts.
The five-month period specified in private respondents employment contracts having been imposed precisely to circumvent the constitutional
guarantee on security of tenure should, therefore, be struck down or disregarded as contrary to public policy or morals
4. Phil. Fruit and Vegetable Industries v. NLRC, 310 SCRA 680 [1999]
Facts:
Private respondent Philippine Fruit and Vegetable Workers Union-Tupas Local Chapter, for and in behalf of 127 of its members, filed a complaint
for unfair labor practice and/or illegal dismissal with damages against Petitioner Corporation.
They alleged that the dismissals were due to complainants' involvement in union activities and were without just cause.
Page 28
LABOR RELATIONS
29

Labor Arbiter rendered judgment that Philippine Fruit & Vegetable Industries, Inc (PFVII) were indeed guilty of Illegal Dismissal.
On appeal, NLRC set aside the Labor Arbiters decision and remanded the said case to the Arbitration Branch for further proceedings.
Arbitration Branch rendered a decision finding PFVII liable for illegal dismissal.
On appeal, NLRC affirmed the Arbitration Branchs decision but modified the awards of attorneys fees.
PFVII filed a motion for reconsideration which was denied by NLRC
Issue:
Whether or not the complainants were illegal dismissed by PFVII
One of PFVIIs contentions is that the complainants are seasonal workers. According to them, its
operation starts only in February with the processing of tomatoes into tomato paste and ceases
by the end of the same month when the supply is consumed. It then resumes operations at the
end of April or early May, depending on the availability of supply with the processing of mangoes
into purees and ceases operation in June. The severance of complainants' employment from
petitioner corporation was a necessary consequence of the nature of seasonal employment; and
since complainants are seasonal workers as defined by the Labor Code, they cannot invoke any
tenurial benefit
Ruling:
By the very nature of things in a business enterprise like PFVII, the services of the complainants are, indeed, more than six (6) months a year.
The company did not confine itself just to the processing of tomatoes and mangoes. It also processed guyabano, calamansi, papaya, pineapple,
etc. Besides, they have the office of administrative functions, cleaning and upkeeping of machines and other duties and tasks to keep up a big
food processing corporation. Considering, therefore, that under Article 280 of the Labor Code "the provisions of written agreement to the
contrary notwithstanding and considering further that the tasks which complainants performed were usually necessary and desirable in the
employers usual business or trade, Supreme Court held that complainants are regular seasonal employees, thus, entitled to security of tenure.
The Labor Code provides an employment shall be deemed to be regular where the employee has been engaged to perform activities that are
usually necessary or desirable in the usual business or trade of the employers, except where the employment has been fixed for a specific
project. An employment shall be deemed to be casual if it is not covered by the preceding paragraph; provided, that, any employee who has
rendered at least one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.
In the case at bar, the work of complainants as seeders, operators, sorters, slicers, janitors, drivers, truck helpers, mechanics and office
personnel is without doubt necessary in the usual business of a food processing company like petitioner PFVII.
It should be noted that complainants' employment has not been fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of their appointment or hiring. Neither is their employment seasonal in nature. While it may be true that some
phases of petitioner company's processing operations is dependent on the supply of fruits for a particular season, the other equally important
aspects of its business, such as manufacturing and marketing are not seasonal. The fact is that large-scale food processing companies such as
Petitioner Company continue to operate and do business throughout the year even if the availability of fruits and vegetables is seasonal.
PETITION DENIED. COMPLAINANTS ARE REGULAR EMPLOYEES BY VIRTUE OF THE FACT THAT THEY PERFORMED FUNCTIONS
WHICH ARE NECESSARY AND DESIRABLE IN THE USUAL BUSINESS OF PFVII.
5. Philips Semiconductor vs. Fardiquela, G.R. No. 141717, April 14, 2004
Facts:
Page 29
LABOR RELATIONS
30

The petitioner Philips Semiconductors (Phils.), Inc. is a domestic corporation engaged in the production and assembly of semiconductors such
as power devices, RF modules, CATV modules, RF and metal transistors and glass diods. It caters to domestic and foreign corporations that
manufacture computers, telecommunications equipment and cars. Aside from contractual employees, the petitioner employed 1,029 regular
workers. The employees were subjected to periodic performance appraisal based on output, quality, attendance and work attitude. One was
required to obtain a performance rating of at least 3.0 for the period covered by the performance appraisal to maintain good standing as an
employee. On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of Employment with the petitioner in which she was hired as a
production operator with a daily salary of P118. Her initial contract was for a period of three months up to August 8, 1992, but was extended for
two months when she garnered a performance rating of 3.15. Her contract was again renewed for two months or up to December 16, 1992,
when she received a performance rating of 3.8.After the expiration of her third contract, it was extended anew, for three months, that is, from
January 4, 1993 to April 4, 1993. After garnering a performance rating of 3.4, the respondents contract was extended for another three months,
that is, from April 5, 1993 to June 4, 1993. She, however, incurred five absences in the month of April, three absences in the month of May and
four absences in the month of June. Line supervisor Shirley F. Velayo asked the respondent why she incurred the said absences, but the latter
failed to explain her side. The respondent was warned that if she offered no valid justification for her absences, Velayo would have no other
recourse but to recommend the non-renewal of her contract. The respondent still failed to respond, as a consequence of which her performance
rating declined to 2.8. Velayo recommended to the petitioner that the respondents employment be terminated due to habitual absenteeism, in
accordance with the Company Rules and Regulations. Thus, the respondents contract of employment was no longer renewed.
Issues and Rulings:
(a) whether or not the respondent was still a contractual employee of the petitioner as of June 4, 1993;
The two kinds of regular employees under the law are (1) those engaged to perform activities which are necessary or desirable in the usual
business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or
broken, with respect to the activities in which they are employed. The primary standard to determine a regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the business or trade of the employer. The test is whether
the former is usually necessary or desirable in the usual business or trade of the employer. If the employee has been performing the job for at
least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability of that activity to the business of the employer. Hence, the
employment is also considered regular, but only with respect to such activity and while such activity exists.[22] The law does not provide the
qualification that the employee must first be issued a regular appointment or must be declared as such before he can acquire a regular
employee status.In this case, the respondent was employed by the petitioner on May 8, 1992 as production operator. She was assigned to
wirebuilding at the transistor division. There is no dispute that the work of the respondent was necessary or desirable in the business or trade of
the petitioner. She remained under the employ of the petitioner without any interruption since May 8, 1992 to June 4, 1993 or for one (1) year
and twenty-eight (28) days. The original contract of employment had been extended or renewed for four times, to the same position, with the
same chores. Such a continuing need for the services of the respondent is sufficient evidence of the necessity and indispensability of her
services to the petitioners business. By operation of law, then, the respondent had attained the regular status of her employment with the
petitioner, and is thus entitled to security of tenure as provided for in Article 279 of the Labor Code which reads:
(b) whether or not the petitioner dismissed the respondent from her employment;
if so, whether or not she was accorded the requisite notice and investigation prior to her dismissal; and
On the second and third issues, we agree with the appellate court that the respondent was dismissed by the petitioner without the requisite
notice and without any formal investigation. Given the factual milieu in this case, the respondents dismissal from employment for incurring five
(5) absences in April 1993, three (3) absences in May 1993 and four (4) absences in June 1993, even if true, is too harsh a penalty. We do
agree that an employee may be dismissed for violation of reasonable regulations/rules promulgated by the employer. Dismissal is the ultimate
penalty that can be meted to an employee. Where a penalty less punitive would suffice, whatever missteps may have been committed by the
worker ought not to be visited with a consequence so severe such as dismissal from employment. For, the Constitution guarantees the right of
workers to security of tenure. The misery and pain attendant to the loss of jobs then could be avoided if there be acceptance of the view that
under certain circumstances of the case the workers should not be deprived of their means of livelihood.
(c)whether or not the respondent is entitled to reinstatement and full payment of backwages as well as attorneys fees.
The court concludes that petitioners dismissal is illegal because, first, she was dismissed in the absence of a just cause, and second, she was
not afforded procedural due process. In pursuance of Article 279 of the Labor Code, we deem it proper to order the reinstatement of petitioner to
her former job and the payment of her full backwages.Also, having been compelled to come to court to protect her rights, we grant petitioners
prayer for attorneys fees.
Page 30
LABOR RELATIONS
31

6. Alcira vs. NLRC, G.R. No. 149859, June 9, 2004
Facts:
Middleby Philippines Corp. hired petitioner as engineering support services supervisor on a probationary basis for six months. On 20 November
1996, a senior officer of Middleby withheld his time card and did not allow him to work. Alcira filed with the NLRC a complaint for illegal dismissal
on the contention that he had become a regular employee when he was illegally dismissed. In their defense, respondents claim that, during
petitioners probationary employment, he showed poor performance in his assigned tasks, incurred ten absences, was late several times and
violated company rules on the wearing of uniform. Since he failed to meet company standards, petitioners application to become a regular
employee was disapproved and his employment was terminated.
Issues and Rulings:
(1) Whether petitioner was allowed to work beyond his probationary period and was therefore already a regular employee at the time of his
alleged dismissal.
Petitioner insists that he already attained the status of a regular employee when he was dismissed on November 20, 1996 because, having
started work on May 20, 1996, the six-month probationary period ended on November 16, 1996. According to petitioners computation, since
Article 13 of the Civil Code provides that one month is composed of thirty days, six months total one hundred eighty days. As the appointment
provided that petitioners status was probationary (6 mos.) without any specific date of termination, the 180 th day fell on November 16, 1996.
Thus, when he was dismissed on November 20, 1996, he was already a regular employee. Petitioners contention is incorrect. Our computation
of the 6-month probationary period is reckoned from the date of appointment up to the same calendar date of the 6th month following. In short,
since the number of days in each particular month was irrelevant, petitioner was still a probationary employee when respondent Middleby opted
not to regularize him on November 20, 1996.
(2) Whether respondent Middleby informed petitioner of the standards for regularization at the start of his employment.
Section 6 (d) of Rule 1 of the Implementing Rules of Book VI of the Labor Code (Department Order No. 10, Series of 1997) provides that: In all
cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular
employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular
employee. We hold that respondent Middleby substantially notified petitioner of the standards to qualify as a regular employee when it apprised
him, at the start of his employment, that it would evaluate his supervisory skills after five months. an employer is deemed to substantially comply
with the rule on notification of standards if he apprises the employee that he will be subjected to a performance evaluation on a particular date
after his hiring. We agree with the labor arbiter when he ruled that: In the instant case, petitioner cannot successfully say that he was never
informed by private respondent of the standards that he must satisfy in order to be converted into regular status. This runs counter to the
agreement between the parties that after five months of service the petitioners performance would be evaluated. It is only but natural that the
evaluation should be made vis--vis the performance standards for the job. Private respondent Trifona Mamaradlo speaks of such standard in
her affidavit referring to the fact that petitioner did not perform well in his assigned work and his attitude was below par compared to the
companys standard required of him.
(3) Whether petitioner was illegally dismissed when respondent Middleby opted not to renew his contract on the last day of his probationary
employment.
It is settled that even if probationary employees do not enjoy permanent status, they are accorded the constitutional protection of security of
tenure. This means they may only be terminated for just cause or when they otherwise fail to qualify as regular employees in accordance with
reasonable standards made known to them by the employer at the time of their engagement. But this constitutional protection ends on the
expiration of the probationary period. On that date, the parties are free to either renew or terminate their contract of employment. This
development has rendered moot the question of whether there was a just cause for the dismissal of the petitioners. Middleby exercised its
option not to renew the contract when it informed petitioner on the last day of his probationary employment that it did not intend to grant him a
regular status.
Although we can regard petitioners severance from work as dismissal, the same cannot be deemed illegal. As found by the labor arbiter, the
NLRC and the Court of Appeals, petitioner (1) incurred ten absences (2) was tardy several times (3) failed to wear the proper uniform many
times and (4) showed inferior supervisory skills. Petitioner failed to satisfactorily refute these substantiated allegations. Taking all this in its
entirety, respondent Middleby was clearly justified to end its employment relationship with petitioner.
Page 31
LABOR RELATIONS
32

7. Mitsubishi Motors Phils. vs. Chrysler Phil Labor Union, G.R. No. 148738, June 29, 2004
Facts:
Nelson Paras first worked for Mitsubishi Motors Philippines Corporation (MMPC) as a shuttle bus driver from March 19, 1976 to June 16, 1982,
when he resigned to work abroad. After working in Saudi Arabia from 1982 to 1993, he was re-hired as a welder-fabricator at the MMPC tooling
shop from October 3, 1994 to October 31, 1994. On October 29, 1994, his contract was renewed from November 1, 1994 up to March 3, 1995.
Paras was later re-hired on a probationary basis as a manufacturing trainee at the Plant Engineering Maintenance Department sometime in May
of 1996. He and the new and re-hired employees were then given an orientation about the companys history, corporate philosophy,
organizational structure, and company rules and regulations, including the company standards for regularization, code of conduct and companyprovided benefits. On May 27, 1996, Paras started reporting for work. He was assigned at the paint ovens, air make-up and conveyors. As part
of the MMPCs policy, Paras was evaluated by his immediate supervisors after six (6) months, and received an average rating. Later, the
supervisors informed Paras that based on his performance rating, he would be regularized. However, the Department and Division Managers
reviewed the performance evaluation made on Paras. They unanimously agreed, along with Paras immediate supervisors, that his performance
was unsatisfactory. As a consequence, Paras was not considered for regularization. On November 26, 1996, he received a Notice of Termination
dated November 25, 1996, informing him that his services were terminated effective the said date since he failed to meet the required company
standards for regularization.
CPLU, a legitimate labor organization and the duly certified bargaining agent of the hourly-paid regular rank and file employees of MMPC in
which Paras was a member, argued that Paras was dismissed on his one hundred eighty third (183rd) day of employment, or three (3) days
after the expiration of the probationary period of six (6) months, hence, he was already a regular employee on the date of the termination of his
probationary employment. Meanwhile, MMPC argued that under Article 13 of the New Civil Code, Paras probationary employment which
commenced on May 27, 1996 would expire on November 27, 1996. Since he received the notice of termination of his employment on November
25, 1996, the same should be considered to have been served within the six-month probationary period.
Issue:
Whether or not Paras was already a regular employee when he was terminated.
Ruling:
Yes. Indeed, an employer, in the exercise of its management prerogative, may hire an employee on a probationary basis in order to determine
his fitness to perform work. Under Article 281 of the Labor Code, the employer must inform the employee of the standards for which his
employment may be considered for regularization. Such probationary period, unless covered by an apprenticeship agreement, shall not exceed
six (6) months from the date the employee started working. The employees services may be terminated for just cause or for his failure to qualify
as a regular employee based on reasonable standards made known to him. Respondent Paras was employed as a management trainee on a
probationary basis. During the orientation conducted on May 15, 1996, he was apprised of the standards upon which his regularization would be
based. He reported for work on May 27, 1996. As per the companys policy, the probationary period was from three (3) months to a maximum of
six (6) months. Applying Article 13 of the Civil Code, the probationary period of six (6) months consists of one hundred eighty (180) days.This is
in conformity with paragraph one, Article 13 of the Civil Code, which provides that the months which are not designated by their names shall be
understood as consisting of thirty (30) days each. The number of months in the probationary period, six (6), should then be multiplied by the
number of days within a month, thirty (30); hence, the period of one hundred eighty (180) days. As clearly provided for in the last paragraph of
Article 13, in computing a period, the first day shall be excluded and the last day included. Thus, the one hundred eighty (180) days commenced
on May 27, 1996, and ended on November 23, 1996. The termination letter dated November 25, 1996 was served on respondent Paras only at
3:00 a.m. of November 26, 1996. He was, by then, already a regular employee of the petitioner under Article 281 of the Labor Code.
8. Pangilinan vs. General Milling Co., G.R. No. 149329, July 2, 2004
Facts:
The respondent General Milling Corporation is a domestic corporation engaged in the production and sale of livestock and poultry. It is, likewise,
the distributor of dressed chicken to various restaurants and establishments nationwide. As such, it employs hundreds of employees, some on a
regular basis and others on a casual basis, as "emergency workers."
The petitioners were employed by the respondent on different dates as emergency workers at its poultry plant under separate "temporary/casual
contracts of employment" for a period of five months. Most of them worked as chicken dressers, while the others served as packers or helpers.
Page 32
LABOR RELATIONS
33

Upon the expiration of their respective contracts, their services were terminated. They later filed separate complaints for illegal dismissal and
non-payment of holiday pay, 13th month pay, night-shift differential and service incentive leave pay against the respondent.
The petitioners alleged that their work as chicken dressers was necessary and desirable in the usual business of the respondent. They stressed
that based on the nature of their work, they were regular employees of the respondent; hence, could not be dismissed from their employment
unless for just cause and after due notice.
Issue:
Whether or not petitioners are regular employees and, thus, cannot be dismissed without just cause and the required due process.
Ruling:
Article 280 of the Labor Code comprehends three kinds of employees: (a) regular employees or those whose work is necessary or desirable to
the usual business of the employer; (b) project employees or those whose employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season; and, (c) casual employees or those who are neither
regular nor project employees. A regular employee is one who is engaged to perform activities which are necessary and desirable in the usual
business or trade of the employer as against those which are undertaken for a specific project or are seasonal. There are two separate
instances whereby it can be determined that an employment is regular: (1) if the particular activity performed by the employee is necessary or
desirable in the usual business or trade of the employer; and, (2) if the employee has been performing the job for at least a year.
IT IS CLEARLY STIPULATED THAT THE CONDITION OF THE EMPLOYMENT CONTRACT SHALL BE AS FOLLOWS:
1. This employment contract shall be on a DAY-TO-DAY BASIS and shall not extend beyond the period specified therein;
2. The employee aforementioned may be laid off or separated from the Firm, EVEN BEFORE THE EXPIRY DATE OF THIS CONTRACT, if
his/her services are no longer needed, or if such services are found to be unsatisfactory, or if she/he has violated any of the established rules
and regulations of the Company;
3. In any case, the period of employment shall not go beyond the duration of the work or purpose for which the aforementioned employee has
been engaged;
4. That the employee hereby agrees to work in any work shift schedule that may be assigned to him by the Firm during the period of this
contract; and
This Temporary/Casual Employment contract, unless sooner terminated for any of the causes above-cited, shall then automatically cease on its
expiry date, without the necessity of any prior notice to the employee concerned.
The records reveal that the stipulations in the employment contracts were knowingly and voluntarily agreed to by the petitioners without force,
duress or improper pressure, or any circumstances that vitiated their consent. Similarly, nothing therein shows that these contracts were used as
a subterfuge by the respondent GMC to evade the provisions of Articles 279 and 280 of the Labor Code. The petitioners were hired as
"emergency workers" and assigned as chicken dressers, packers and helpers at the Cainta Processing Plant. The respondent GMC is a
domestic corporation engaged in the production and sale of livestock and poultry, and is a distributor of dressed chicken. While the petitioners'
employment as chicken dressers is necessary and desirable in the usual business of the respondent, they were employed on a mere temporary
basis, since their employment was limited to a fixed period. As such, they cannot be said to be regular employees, but are merely "contractual
employees." Consequently, there was no illegal dismissal when the petitioners' services were terminated by reason of the expiration of their
contracts. Lack of notice of termination is of no consequence, because when the contract specifies the period of its duration, it terminates on the
expiration of such period. A contract for employment for a definite period terminates by its own term at the end of such period.
9. Ravago vs. Esso Eastern Marine Ltd., G.R. No. 158324, March 14, 2005
Facts:
Roberto Ravago was hired by Trans-Global to work as a seaman on board various Esso vessels. On February 13, 1970, Ravago commenced
his duty as S/N wiper on board the Esso Bataan under a contract that lasted until February 10, 1971. Thereafter, he was assigned to work in
different Esso vessels where he was designated diverse tasks, such as oiler, then assistant engineer. He was employed under a total of 34
separate and unconnected contracts, each for a fixed period, by three different companies, namely, Esso Tankers, Inc. (ETI), EEM and Esso
International Shipping (Bahamas) Co., Ltd. (EIS), Singapore Branch. Ravago worked with Esso vessels until August 22, 1992, a period spanning
more than 22 years. Shortly after completing his latest contract with EIS, Ravago was granted a vacation leave with pay. One the night, a stray
bullet hit Ravago on the left leg while he was waiting for a bus ride in Cubao, Quezon City. He fractured his left proximal tibia and was
Page 33
LABOR RELATIONS
34

hospitalized at the Philippine Orthopedic Hospital. As a result of his injury, Ravago's doctor opined that he would not be able to cope with the job
of a seaman and suggested that he be given a desk job. Ravago's left leg had become apparently shorter, making him walk with a limp. For this
reason, the company physician, Dr. Virginia G. Manzo, found him to have lost his dexterity, making him unfit to work once again as a seaman.
Consequently, instead of rehiring Ravago, EIS paid him his Career Employment Incentive Plan (CEIP) and his final tax refund for 1992. After
deducting his Social Security System and medical contributions, EIS remitted the net amount of P162,232.65, following Ravago's execution of a
Deed of Quitclaim and/or Release. However, Ravago filed a complaint for illegal dismissal with prayer for reinstatement, backwages, damages
and attorney's fees against Trans-Global and EIS with the Philippine Overseas Employment Administration Adjudication Office. Respondents
denied that Ravago was dismissed without notice and just cause. Rather, his services were no longer engaged in view of the disability he
suffered which rendered him unfit to work as a seafarer. They averred that Ravago was a contractual employee and was hired under 34
separate contracts by different companies. In his position paper, Ravago insisted that he was fit to resume pre-injury activities as evidenced by
the certification issued by Dr. Marciano Foronda M.D., one of his attending physicians at the Philippine Orthopedic Hospital, that "at present,
fracture of tibia has completely healed and patient is fit to resume pre-injury activities anytime." Ravago, likewise, asserted that he was not a
mere contractual employee because the respondents regularly and continuously rehired him for 23 years and, for his continuous service, was
awarded a CEIP payment upon his termination from employment.
The Court of Appeals decided that the employment status of seafarers has been established with finality by the Court's reconsideration of its
decision in Millares v. National Labor Relations Commission, wherein it was ruled that seamen are contractual employees. According to the CA,
the fact that Ravago was not rehired upon the completion of his contract did not result in his illegal dismissal; hence, he was not entitled to
reinstatement or payment of separation pay.
Issue:
Whether or not the Court of Appeals gravely erred, blatantly disregarded the constitutional mandate on protection to Filipino overseas workers,
and countenanced unwarranted discrimination when it ruled that petitioner cannot become a regular employee.
Ruling:
In a catena of cases, this Court has consistently ruled that seafarers are contractual, not regular, employees. In Brent School, Inc. v. Zamora,
the Court ruled that seamen and overseas contract workers are not covered by the term "regular employment" as defined in Article 280 of the
Labor Code. As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing Overseas Employment and the said Rules do
not provide for separation or termination pay. 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.
Their employment is governed by the contracts they sign every time 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
employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
10. Hacienda Bino/Hortencia Stark vs. Cuenca, G.R. No. 150478, April 15, 2005, citing 2003 Hacienda Fatima
Facts:
Hortencia L. Starke, herein petitioner, is the owner and operator of the Hacienda Bino. During the off milling season of 1996 he issued an Order
or Notice which stated, that all Hacienda Employees who signed in favor of CARP are expressing their desire to get out of employment on their
own volition and wherefore, only those who did not sign for CARP will be given employment by the hacienda.
Herein respondents are employees of the hacienda performing various works, such as cultivation, planting of cane points, fertilization, watering,
weeding, harvesting and loading of harvested sugarcanes to cargo trucks are those who signed in favor of CARP. They allege that they are
regular and permanent workers of the hacienda and that they were dismissed without just and lawful cause. They further alleged that they were
dismissed because they applied as beneficiaries under the Comprehensive Agrarian Reform Program (CARP) over the land owned by petitioner
Page 34
LABOR RELATIONS
35

Starke. Petitioner Starke alleged that in there was little work in the plantation as it was off-season; and so, on account of the seasonal nature of
the work, she issued the order giving preference to those who supported the re-classification. She pointed out that when the milling season
began, the work was plentiful again and she issued notices to all workers, including the respondents, informing them of the availability of work.
However, the respondents refused to report back to work.
Issue:
Whether or not the respondents are regular employee?
Ruling:
It held that the ruling in Mercado, Sr. v. NLRC does not operate to abandon the settled doctrine that sugar workers are considered regular and
permanent farm workers of a sugar plantation owner, considering that there are facts peculiar in that case which are not present in the case at
bar. In the Mercado case, the farm laborers worked only for a definite period for a farm owner since the area of the land was comparatively
small, after which they offer their services to other farm owners. In this case, the area of the hacienda, which is 236 hectares, simply does not
allow for the respondents to work for a definite period only. The petitioners did not present any evidence that the respondents were required to
perform certain phases of agricultural work for a definite period of time. Although the petitioners assert that the respondents made their services
available to the neighboring haciendas, the records do not, however, support such assertion. The primary standard for determining regular
employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of
the employer. There is no doubt that the respondents were performing work necessary and desirable in the usual trade or business of an
employer. Hence, they can properly be classified as regular employees. For respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that are seasonal in nature. They must have been employed only for the
duration of one season. While the records sufficiently show that the respondents work in the hacienda was seasonal in nature, there was,
however, no proof that they were hired for the duration of one season only. In fact, the payrolls, submitted in evidence by the petitioners, show
that they availed the services of the respondents since 1991. Absent any proof to the contrary, the general rule of regular employment should,
therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness of his employees dismissal.
11. Phil Global Communication v. De Vera, G.R. No. 157214, June 7, 2005
Facts:
Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of communication services and allied
activities, while respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its
employees. On 15 May 1981, De Vera, via a letter offered his services to the petitioner, therein proposing his plan of works required of a
practitioner in industrial medicine, to include [CERTAIN TASKS]. The parties agreed and formalized respondents proposal in a document
denominated as RETAINERSHIP CONTRACTwhich will be for a period of one year subject to renewal, and that respondents retainer fee will
be at P4,000.00 a month. Said contract was renewed yearly. The retainership arrangement went on from 1981 to 1994 with changes in the
retainers fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally. In December 1996 Philcom, thru a letter
bearing on the subject boldly written as TERMINATION RETAINERSHIP CONTRACT, informed De Vera of its decision to discontinue the
latters retainers contract with the Company effective at the close of business hours of December 31, 1996 because management has decided
that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises.
De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC), alleging
that he had been actually employed by Philcom as its company physician since 1981 and was dismissed without due process.
He averred that he was designated as a company physician on retainer basis for reasons allegedly known only to Philcom.
He likewise professed that since he was not conversant with labor laws, he did not give much attention to the designation as anyway he worked
on a full-time basis and was paid a basic monthly salary plus fringe benefits, like any other regular employees of Philcom.
Labor Arbiter dismissed De Veras complaint for lack of merit, on the rationale that as a retained physician under a valid contract mutually
agreed upon by the parties, De Vera was an independent contractor and that he was not dismissed but rather his contract with [PHILCOM]
ended when said contract was not renewed after December 31, 1996.
NLRC reversed on a finding that - De Vera is Philcoms regular employee and accordingly directed the company to reinstate him to his former
position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual reinstatement.
Page 35
LABOR RELATIONS
36

Philcom then went to the Court of Appeals which rendered a decision, modifying that of the NLRC by deleting the award of traveling allowance,
and ordering payment of separation pay to De Vera in lieu of reinstatement.
Issue:
Whether the case is one of a LEGITIMATE JOB CONTRACTING AGREEMENT
or an EMPLOYER-EMPLOYEE RELATIONSHIP.
Ruling:
The primordial issue of whether an employer-employee relationship exists between petitioner and respondent, the existence of which is, in
itself, a question of fact well within the province of the NLRC. Nonetheless, given the reality that the NLRCs findings are at odds with those of
the labor arbiter, the Court is constrained to look deeper into the attendant circumstances obtaining in this case, as appearing on record.
APPLYING THE FOUR-FOLD TEST TO THIS CASE,
it was respondent himself who sets the parameters of what his duties would be in offering his services to petitioner, as borne by no less than his
own letter which was substantially the basis of the labor arbiters finding that there existed no employer-employee relationship between
petitioner and respondent in addition to the following factual settings:
[AS TO SELECTION OR HIRING]
The fact that the complainant was not considered an employee
was recognized by the complainant himself in a signed LETTER to the respondent. The tenor of this letter indicates that the complainant was
proposing to extend his time with the respondent and seeking additional compensation for said extension. This shows that the respondent
PHILCOM did not have control over the schedule of the complainant as it [is] the complainant who is proposing his own schedule and asking to
be paid for the same. This is proof that the complainant understood that his relationship with the respondent PHILCOM was a retained
physician and not as an employee. If he were an employee he could not negotiate as to his hours of work.
The complainant is a Doctor of Medicine, and presumably, a well-educated person.
The retainer fee is indicated on the RETAINERSHIP CONTRACT, and the duration of the contract for one year is also clearly indicated in
paragraph 5 of the Retainership Contract. The complainant cannot claim that he was unaware that the contract was good only for one year, as
he signed the same without any objections. The complainant also accepted its renewal every year thereafter until 1994. As a literate person and
educated person, the complainant cannot claim that he does not know what contract he signed and that it was renewed on a year to year basis.
[AS TO WAGES]
from the time he started to work with petitioner,
he never was included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); and was in fact
subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance with the National Internal Revenue Code,
matters which are simply inconsistent with an employer-employee relationship.
But he never raised those issues.
An ordinary employee would consider the SSS payments important and thus make sure they would be paid. The complainant never bothered to
ask the respondent to remit his SSS contributions. This clearly shows that the complainant never considered himself an employee of PHILCOM
and thus, respondent need not remit anything to the SSS in favor of the complainant. Clearly, the elements of an employer-employee
relationship are wanting in this case.
the records are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees. It simply runs against the
grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary.
[AS TO DISMISSAL]
the power to terminate the parties relationship was mutually vested on both.
Either may terminate the arrangement at will, with or without cause.
Finally, remarkably absent from the parties arrangement is the ELEMENT OF CONTROL,
whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and
methods by which the same is to be accomplished.
Here, petitioner had no control over the means and methods by which respondent went about performing his work at the company premises.
He could even embark in the private practice of his profession, not to mention the fact that respondents work hours and the additional
compensation therefor were negotiated upon by the parties.
Page 36
LABOR RELATIONS
37

In fine, the parties themselves practically agreed on every terms and conditions of respondents engagement, which thereby negates the
element of control in their relationship. For sure, respondent has never cited even a single instance when petitioner interfered with his work.
ARTICLE 280 OF THE LABOR CODE (sic) provides:
The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall
be deemed to be REGULAR where the employee has been engaged to perform in the usual business or trade of the employer,
EXCEPT where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be CASUAL if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one (1) year of service,
whether such is continuous or broken, shall be considered a REGULAR with respect to the activity in which he is employed and his employment
shall continue while such activity exists.
Parenthetically, the position of company physician, in the case of petitioner,
is usually necessary and desirable
because the need for medical attention of employees cannot be foreseen,
hence, it is necessary to have a physician at hand.
In fact, the importance and desirability of a physician in a company premises is recognized by
ART. 157 OF THE LABOR CODE, which requires the presence of a physician depending on the number of employees and in the case at bench,
in petitioners case, as found by public respondent, petitioner employs more than 500 employees.
The appellate courts premise that REGULAR EMPLOYEES are those who perform activities which are desirable and necessary for the
business of the employer is not determinative in this case. For, we take it that any agreement may provide that one party shall render
services for and in behalf of another, no matter how necessary for the latters business, even without being hired as an employee.
This set-up is precisely true in the case of an INDEPENDENT CONTRACTORSHIP
as well as in an AGENCY AGREEMENT.
ARTICLE 280 OF THE LABOR CODE, is not the yardstick for determining the existence of an employment relationship. As it is, the provision
merely distinguishes between two (2) kinds of employees, i.e., regular and casual. It does not apply where, as here, the very existence of an
employment relationship is in dispute.
ART. 157 OF THE LABOR CODE
while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the
number of their employees,
nothing is there in the law which says that medical practitioners so engaged be actually hired as employees, adding that the law, as written,
only requires the employer to retain, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for
two (2) hours.
what applies here is the last paragraph of Article 157 which, to stress, provides that
the employer may engage the services of a physician and dentist on retained basis, subject to such regulations as the Secretary of Labor may
prescribe. The successive retainership agreements of the parties definitely hue to the very statutory provision relied upon by respondent.
ARTICLE 157 OF THE LABOR CODE clearly and unequivocally allows employers in non-hazardous establishments to engage on retained
basis the service of a dentist or physician. Nowhere does the law provide that the physician or dentist so engaged thereby becomes a regular
employee. The very phrase that they may be engaged on retained basis, revolts against the idea that this engagement gives rise to an
employer-employee relationship.
With the recognition of the fact that petitioner consistently engaged the services of respondent on a retainer basis, as shown by their various
retainership contracts, so can petitioner put an end, with or without cause, to their retainership agreement as therein provided.
[MOOT AND ACADEMIC]
We note, however, that - even as the contracts entered into by the parties invariably provide for a 60-DAY NOTICE REQUIREMENT prior to
termination, the same was not complied with by petitioner when it terminated the verbally-renewed retainership agreement.
Page 37
LABOR RELATIONS
38

Be that as it may, the record shows, and this is admitted by both parties, that execution of the NLRC decision had already been made at the
NLRC despite the pendency of the present recourse. For sure, accounts of petitioner had already been garnished and released to respondent
despite the previous Status Quo Order[29] issued by this Court.
To all intents and purposes, therefore, the 60-day notice requirement has become moot and academic if not waived by the respondent himself.
WHEREFORE, the petition is GRANTED and the challenged decision of the Court of Appeals REVERSED and SET ASIDE. The 21
December 1998 decision of the labor arbiter is REINSTATED.
12. Integrated Contractor and Plumbing Works, Inc. vs. National Labor Relations Commission and Glen Solon, G.R. No. 152427.
August 9, 2005
Facts:
Petitioner is a plumbing contractor. Its business depends on the number and frequency of the projects it is able to contract with its clients. On
February 23, 1998, while private respondent was about to log out from work, he was informed by the warehouseman that the main office had
instructed them to tell him it was his last day of work as he had been terminated. When private respondent went to the petitioner's office on
February 24, 1998 to verify his status, he found out that indeed, he had been terminated. He filed a complaint alleging that he was illegally
dismissed without just cause and without due process. the Labor Arbiter ruled that private respondent was a regular employee and could only be
removed for cause. Petitioner was ordered to reinstate private respondent to his former position with full backwages from the time his salary was
withheld until his actual reinstatement, and pay him service incentive leave pay, and 13th month pay for three years. Petitioner further filed a
motion for reconsideration which was denied. It filed an appeal before the CA but it was subsequently dismissed for lack of merit.
Issue:
Whether the respondent is a project employee of the petitioner or a regular employee.
HELD
No. He was considered as a regular employee.
We held in Tomas Lao Construction v. NLRC 12 that the principal test in determining whether an employee is a "project employee" or "regular
employee," is, whether he is assigned to carry out a "specific project or undertaking," the duration (and scope) of which are specified at the time
the employee is engaged in the project. 13 "Project" refers to a particular job or undertaking that is within the regular or usual business of the
employer, but which is distinct and separate and identifiable from the undertakings of the company. Such job or undertaking begins and ends at
determined or determinable times.
A review of private respondent's work assignments patently showed he belonged to a work pool tapped from where workers are and assigned
whenever their services were needed. In a work pool, the workers do not receive salaries and are free to seek other employment during
temporary breaks in the business. They are like regular seasonal workers insofar as the effect of temporary cessation of work is concerned. This
arrangement is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and
at the same time enables the workers to attain the status of regular employees. 15 Nonetheless, the pattern of re-hiring and the recurring need
for his services are sufficient evidence of the necessity and indispensability of such services to petitioner's business or trade.
In Maraguinot, Jr. v. NLRC we ruled that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired
by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or
trade of the employer, then the employee must be deemed a regular employee.
The test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. Also, if the employee has been performing the job for at least one year, even
if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient
evidence of the necessity, if not indispensability of that activity to the business. Thus, we held that where the employment of project employees
is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and are
considered regular employees.
Page 38
LABOR RELATIONS
39

While length of time may not be the controlling test for project employment, it is vital in determining if the employee was hired for a specific
undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, private
respondent had been a project employee several times over. His employment ceased to be coterminous with specific projects when he was
repeatedly re-hired due to the demands of petitioner's business. 20 Where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good
customs or public order.
Further, Policy Instructions No. 20 requires employers to submit a report of an employee's termination to the nearest public employment office
every time his employment was terminated due to a completion of a project. The failure of the employer to file termination reports is an indication
that the employee is not a project employee. 22 Department Order No. 19 superseding Policy Instructions No. 20 also expressly provides that
the report of termination is one of the indications of project employment. 23 In the case at bar, there was only one list of terminated workers
submitted to the Department of Labor and Employment. 24 If private respondent was a project employee, petitioner should have submitted a
termination report for every completion of a project to which the former was assigned.
13. Lacuesta vs. Ateneo de Manila, G.R. No. 152777, December 9, 2005
Facts:
Respondent Ateneo de Manila University (Ateneo) hired, on a contractual basis, petitioner Lolita R. Lacuesta as a part-time lecturer in its English
Department for the second semester of school year 1988-1989. She was re-hired, still on a contractual basis, for the first and second semesters
of school year 1989-1990. On July 13, 1990, the petitioner was first appointed as full-time instructor on probation, in the same department
effective June 1, 1990 until March 31, 1991. Thereafter, her contract as faculty on probation was renewed effective April 1, 1991 until March 31,
1992. She was again hired for a third year effective April 1, 1992 until March 31, 1993. During these three years she was on probation status.
Respondent Dr. Leovino Ma. Garcia, Dean of Ateneos Graduate School and College of Arts and Sciences, notified petitioner that her contract
would no longer be renewed because she did not integrate well with the English Department.Petitioner filed a complaint for illegal dismissal with
prayer for reinstatement, back wages, and moral and exemplary damages. She contends that Articles 280 and 281 of the Labor Code, not the
Manual of Regulations for Private Schools, is the applicable law to determine whether or not an employee in an educational institution has
acquired regular or permanent status. She argues that (1) under Article 281, probationary employment shall not exceed six (6) months from
date of employment unless a longer period had been stipulated by an apprenticeship agreement; (2) under Article 280, if the apprenticeship
agreement stipulates a period longer than one year and the employee rendered at least one year of service, whether continuous or broken, the
employee shall be considered as regular employee with respect to the activity in which he is employed while such activity exists; and (3) it is
with more reason that petitioner be made regular since she had rendered services as part-time and full-time English teacher for four and a half
years, services which are necessary and desirable to the usual business of Ateneo.
Issues:
1. Whether or not the Court of Appeals erred in ruling that it is the Manual of Regulations For Private Schools, not the Labor Code, that
determines the acquisition of regular or permanent status of faculty members in an educational institution;
2. Whether or not after completing the three-year probation with an above-average performance, petitioner already acquired permanent status.
Rulings:
1. The Manual of Regulations for Private Schools, and not the Labor Code, determines whether or not a faculty member in an educational
institution has attained regular or permanent status. Under Policy Instructions No. 11 issued by the Department of Labor and Employment, the
probationary employment of professors, instructors and teachers shall be subject to the standards established by the Department of Education
and Culture.
Section 93of the 1992 Manual of Regulations for Private Schools provides that full-time teachers who have satisfactorily completed their
probationary period shall be considered regular or permanent. Moreover, for those teaching in the tertiary level, the probationary period shall not
be more than six consecutive regular semesters of satisfactory service.The requisites to acquire permanent employment, or security of tenure,
are (1) the teacher is a full-time teacher; (2) the teacher must have rendered three consecutive years of service; and (3) such service must have
been satisfactory.
2. A part-time teacher cannot acquire permanent status. Only when one has served as a full-time teacher can he acquire permanent or regular
status. The petitioner was a part-time lecturer before she was appointed as a full-time instructor on probation. As a part-time lecturer, her
employment as such had ended when her contract expired. Thus, the three semesters she served as part-time lecturer could not be credited to
Page 39
LABOR RELATIONS
40

her in computing the number of years she has served to qualify her for permanent status. And completing the probation period does not
automatically qualify her to become a permanent employee of the university. Petitioner could only qualify to become a permanent employee
upon fulfilling the reasonable standards for permanent employment as faculty member.
Consistent with academic freedom and constitutional autonomy, an institution of higher learning has the prerogative to provide standards for its
teachers and determine whether these standards have been met.At the end of the probation period, the decision to re-hire an employee on
probation, belongs to the university as the employer alone.
14. Poseidon Fishing/Terry De Jesus v. NLRC, G.R. No. 168052, February 20. 2006
Facts:
Petitioner Poseidon Fishing is a fishing company engaged in the deep-sea fishing industry with Terry de Jesus as the manager.
Jimmy S. Estoquia was employed as Chief Mate in January 1988 and after five years. The contract with Eustoqia per the "Kasunduan", there
was a provision stating that he was being employed only on a por viaje basis and that his employment would be terminated at the end of the
trip for which he was being hired.
He was promoted to Boat Captain but was later demoted to Radio Operator. As a Radio Operator, he monitored the daily activities in their office
and recorded in the duty logbook the names of the callers and time of their calls.
On 3 July 2000, Estoquia failed to record a 7:25 a.m. call in one of the logbooks. When he reviewed the two logbooks, he noticed that he was
not able to record the said call in one of the logbooks so he immediately recorded the 7:25 a.m. call after the 7:30 a.m. entry.
In the morning of 4 July 2000, petitioner detected the error in the entry in the logbook. Estoquia was asked to prepare an incident report to
explain the reason for the said oversight. On the same day, Poseidons secretary summoned Estoquia to get his separation pay
Estoquia filed a complaint for illegal dismissal with the Labor Arbiter.
Poseidon and Terry de Jesus asserted that Estoquia was a contractual or a casual employee employed only on a "por viaje" or per trip basis and
that his employment would be terminated at the end of the trip for which he was being hired.
Issue:S:
WON Eustoqia was a regular employee
WON deep -sea fishing is a seasonal industry
WON Eustoqia was illegally dismissed
Ruling:
Yes, Eustoquia was a regular employee.
Article 280 draws a line between regular and casual employment. The provision enumerates two (2) kinds of employees, the regular employees
and the casual employees. The regular employees consist of the following:
1) those engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and
2) those who have rendered at least one year of service whether such service is continuous or broken.
In a span of 12 years, Eustoquia worked for petitioner first as a Chief Mate, then Boat Captain, and later as Radio Operator. His job was directly
related to the deep-sea fishing business of petitioner Poseidon. His work was, therefore, necessary and important to the business of his
employer. Such being the scenario involved, Eustoquia is considered a regular employee.
There is nothing in the contract that says complainant is a casual, seasonal or a project worker. The date July 1 to 31, 1998 under the heading
"Pagdating" had been placed there merely to indicate the possible date of arrival of the vessel and is not an indication of the status of
employment of the crew of the vessel.
employee in relation to the usual business or trade of the employer. And, if the employee has been performing the job for at least one year, even
evidence of the necessity, if not indispensability of that activity to the business.
In the case at bar, the act of hiring and re-hiring in various capacities is a mere gambit employed by petitioner to thwart the tenurial protection of
private respondent. Such pattern of re-hiring and the recurring need for his services are testament to the necessity and indispensability of such
services to petitioners business or trade.
No, the activity of catching fish is a continuous process and could hardly be considered as seasonal in nature.
Page 40
LABOR RELATIONS
41

Project employees is defined as those workers hired:
(1) for a specific project or undertaking, and
(2) the completion or termination of such project has been determined at the time of the engagement of the employee.
The principal test for determining whether particular employees are "project employees" as distinguished from "regular employees," is whether
or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at
the time the employees were engaged for that project.
In this case, Eustoquia was never informed that he will be assigned to a "specific project or undertaking at the time of their engagement.
Once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same
tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee.
Eustoquias functions were usually necessary or desirable in the usual business or trade of petitioner fishing company and he was hired
continuously for 12 years for the same nature of tasks. Hence, he was of regular employee.
Yes, Eustoqia was illegally dismissed.
There is no sufficient evidence on record to prove Eustoqias negligence, gross or simple, in the performance of his duties to warrant a reduction
of six months salary and be summarily dismissed. At best, the simple negligence is punishable only with admonition or suspension for a day or
two.
His dismissal was without valid cause and where illegal dismissal is proven, the worker is entitled to back wages and other similar benefits
without deductions or conditions.
15. Abesco Construction vs. Ramirez, G.R. No. 141168, April 10, 2006
Facts:
Petitioner company was engaged in a construction business where respondents where hired on different dates from 1976 to 1992 either as
laborers, road roller operators, painters or drivers. Respondents filed two separate complaints for illegal dismissal against the company and its
General Manager before Labor Arbiter. The complaints included claims for non-payment of 13 th month pay, 5-days service incentive leave pay,
premium pay for holidays, rest days, and moral and exemplary damages. Petitioners alleged that respondents were only project employees
whose employment was coterminous with the project they are assigned. They were not regular employees, who would enjoy security of tenure
and entitlement of separation pay. LA declared judgment declaring respondents as regular employees belonged to a workpool and where hired
and rehired over a period of 18 years and petitioners are guilty of illegal dismissal. Petitioner appealed to NLRC which affirmed LAs decision.
Petitioner then file petition for review to CA alleging that they were not guilty of illegal dismissal since respondents services were merely put on
hold until the resumption of their business operations. CA dismissed the petition for petitioner is barred from raising a new defense at this stage
of the case.
Issue:
Whether or not respondents are project employees or regular employees.
Ruling:
Respondents are regular employees. Duration as well as particular work/service to be performed must be defined in an Employment Agreement
and is made clear to the employees at the time of hiring. Petitioners failed to comply with this requirement. Petitioners inconsistent and
conflicting position on their true relation with the respondents made it all the more evident that the latter were indeed their regular employees.
Petitioner failed to adhere the two-notice rule: (1) a notice informing them of the particular acts for which they are being dismissed and; (2) a
notice advising them of the decision to terminate the employment. Respondents were never given such notices. Petition is denied.
16. Cebu Metal Corp., vs. Saliling, G.R. No. 154463, September 5, 2006
Page 41
LABOR RELATIONS
42

Facts:
Cebu Metal Corporation is a corporation engaged in buying and selling of scrap iron. In the Bacolod branch it has (3) regular employees holding
such positions as Officer-in-Charge, a scaler, and a yardman, whose salaries are paid directly by its main office in Cebu. The complainants,
Gregorio Saliling, Elias Bolido, Manuel Alquiza, Benjie Amparado are the one who undertakes pakiao work in the unloading of scrap iron. The
Bacolod buying station is mainly a stockyard where scrap metal delivered by its suppliers are stockpiled. The supply of scrap metal is not
steady as it depends upon many factors, such as availability of supplies, price, competition and demand among others. There are weeks were
there are no delivery while there are weeks were a quite of number of trucks are delivered to the stockyard. The arrivals of these trucks and the
deliveries of scrap metal iron are not regular and the schedules of deliveries to the stockyard are not known before hand by the respondent
Cebu Metal Corporation. These trucks have their own driver and truck boys employed by the different suppliers. Sometimes, these trucks do not
have any truck boys, and in these instances, the corporation hires the services of people for the unloading of the scrap metal from these trucks.
It is for this reason that the unloaders hired by the respondent to unload are basically seasonal workers. They are hired whenever there are
trucks of suppliers do not have any accompanying truck boys. Whoever is available and whoever are willing to help unload on a particular
occasion are hired to unload. Usually, there is a leader for a particular group who is tasked to unload the scrap metal from a particular truck. It is
this leader who distributes the individual takes of each member of the particular group unloading the scrap metal from a particular work The
complainants maintained that they are hired by Cebu Metal Corparation as employees and filed on January 10, 1997 a complaint with the
regional arbitration in Bacolod City for underpayment of wages and non-payment of the following benefits 1. 13 th month pay; 2. holiday pay; 3.
service incentive leave pay. On March 6, 1998 includes the claim for illegal dismissal because they were dismissed after the filing of the
complaint. The Labor Arbiter rendered a decision in favor of the complainants. Aggrieved, Cebu Metal Corporation filed an appeal with the
NLRC. The NLRC reversed and set aside the decision of the Labor Arbiter and held that the complainants were not regular employees, thus,
they could not have been illegally dismissed. The order of the reversal was based on the Commissions finding that the petty cash vouchers
submitted by Cebu Metal Corporation confirmed the fact that unloaders were paid on pakiao or task basis at Php 15.00 per metric ton. The
Commission further rationalized that with the irregular nature of the work involved in the stoppage and resumption of which depended solely on
the availability or supply of scrap metal, it necessarily follows that after the job of unloading was completed and unloaders are paid the contract
price, the latters working relationship with Cebu Metal Corporation legally ended. They were then free to offer their services to others.
The complainants challenged the decision of the NLRC with the Court of Appeals, and it rendered the decision annulling the decision of the
NLRC and reinstated the decision made by the Labor Arbiter. Hence, this petition.
Issue:
Whether or not the complainant respondents are regular employees.
Ruling:
The Supreme Court ruled there can be no illegal dismissal to speak of. Besides, the complainants cannot claim regularity in the hiring every time
a truck comes loaded with scrap metal. This is confirmed in the Petty Cash Vouchers which are in the names of different leaders who are
apportion the amount earned among its members. And, quite telling is the fact that not every truck delivery of scrap metal requires the services
of respondent complainants when particular truck is accompanied by its own unloader. And whenever required, respondent complainants were
not always the ones contracted to undertake the unloading of the trucks since the work was offered to whomever were available at a given time.
It should be remembered that the Philippine Constitution, while inexorably committed towards the protection of the working class from
exploitation and unfair treatment, nevertheless mandates the policy of social justice so as to strike a balance between an avowed predilection for
labor, on the one hand, and the maintenance of the legal rights of capital, the proverbial hen that lays the golden egg, on the other. Indeed we
should not be mindful of the legal norm that justice is in every case for the deserving, to be dispensed with in the light of established facts, the
applicable law, an existing jurisprudence.
17. Liganza v. RBL Shipyard Corp., G.R. No. 159682, October 17, 2006
Facts:
After working as a carpenter for respondent since August 1991, petitioner's employment was terminated on 30 October 1999. Such event
prompted petitioner to file a complaint for illegal dismissal, alleging that on said date he was verbally informed that he was already terminated
from employment and barred from entering the premises. On the same occasion, he was told to look for another job. Thus, he claimed that he
was unceremoniously terminated from employment without any valid or authorized cause. On the other hand, respondent insisted that petitioner
was a mere project employee who was terminated upon completion of the project for which he was hired.
Page 42
LABOR RELATIONS
43

Issue:
1. Whether or not the Court of Appeals seriously erred in concluding that "petitioner is a
project employee, not a regular employee?
Ruling:
Petitioner is a regular employee.
A project employee is one whose "employment has been fixed for a specific project or undertaking, the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season." Before an employee hired on a per project basis can be dismissed, a report must be made to the
nearest employment office of the termination of the services of the workers every time it completed a project, pursuant to Policy Instruction No.
20.
While the appropriate evidence to show that a person is a project employee is the employment contract specifying the project and the duration
of such project, the existence of such contract is not always conclusive of the nature of one's employment. In the instant case, respondent seeks
to prove the status of petitioner's employment through four (4) employment contracts covering a period of only two (2) years to declare petitioner
as a project employee.
Respondent failed to present the contracts purportedly covering petitioner's employment from 1991 to July 1997, spanning six (6) years of the
total eight (8) years of his employment. To explain its failure in this regard, respondent claims that the records and contracts covering said period
were destroyed by rains and flashfloods that hit the company's office. Such contention is clearly unconvincing.
Even assuming that petitioner is a project employee, respondent failed to prove that his termination was for a just and valid cause. While it is
true that the employment contract states that the contract ends upon a specific date, or upon completion of the project, respondent failed to
prove that the last project was indeed completed so as to justify petitioner's termination from employment.
In termination cases, the burden of proof rests on the employer to show that the dismissal is for a just cause. Respondent could have easily
proved that the project or phase for which petitioner was hired has already been completed. A certificate from the owner of the vessel serviced
by the company, pictures perhaps, of the work accomplished, and other proof of completion could have been procured by respondent. However,
all that we have is respondent's self-serving assertion that the project has been completed.
This Court has held that an employment ceases to be co-terminous with specific projects when the employee is continuously rehired due to the
demands of employer's business and re-engaged for many more projects without interruption. In Maraguinot, Jr. v. NLRC (Second Division), the
Court ruled that "once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same employer
for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer,
then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence."
Petitioner, as carpenter, was tasked to "make and repair cabinet, flooring, quarters, ceiling, windows, doors, kitchen and other parts of the vessel
that needs to be repaired." As such, petitioner's work was necessary or desirable to respondent's business. Assuming, without granting that
petitioner was initially hired for specific projects or undertakings, the repeated re-hiring and continuing need for his services for over eight (8)
years have undeniably made him a regular employee.
Respondent capitalizes on our ruling in D.M. Consunji, Inc. v. NLRC 27 which reiterates the rule that the length of service of a project employee
is not the controlling test of employment tenure but whether or not "the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee."
Surely, length of time is not the controlling test for project employment. Nevertheless, it is vital in determining if the employee was hired for a
specific undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer.
In the case at bar, respondent had been a project employee several times over. His employment ceased to be coterminous with specific
projects when he was repeatedly re-hired due to the demands of petitioner's business. Where from the circumstances it is apparent that periods
have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy,
morals, good customs or public order.
All considered, there are serious doubts in the evidence on record that petitioner is a project employee, or that he was terminated for just cause.
These doubts shall be resolved in favor of petitioner, in line with the policy of the law to afford protection to labor and construe doubts in favor of
labor.
Page 43
LABOR RELATIONS
44

WHEREFORE, the petition is GRANTED and the challenged decision of the Court of Appeals is REVERSED and SET ASIDE. The 22 February
2001 Decision of the Labor Arbiter is REINSTATED.
18. Fabeza v. San Miguel Corp., G.R. No. 150658, February 9, 2007
Facts:
Petitioners were hired by respondent San Miguel Corporation (SMC) as "Relief Salesmen" for the Greater Manila Area (GMA) under separate
but almost similarly worded "Contracts of Employment With Fixed Period." After having entered into successive contracts of the same nature
with SMC, the services of petitioners, as well as de Lara and Alovera, were terminated after SMC no longer agreed to forge another contract
with them.
SMC and its co-respondent Arman Hicarte, who was its Human Resources Manager, claimed that the hiring of petitioners was not intended to
be permanent, as the same was merely occasioned by the need to fill in a vacuum arising from SMCs gradual transition to a new system of
selling and delivering its products.
While some of the qualified regular salesmen were readily upgraded to the position of Accounts Specialist, respondents claimed that SMC still
had to sell its beer products using the conventional routing system during the transition stage, thus giving rise to the need for temporary
employees; and the members of the regular Route Crew then existing were required to undergo a training program to determine whether they
possessed or could be trained for the necessary attitude and aptitude required of an Accounts Specialist, hence, the hiring of petitioners and
others for a fixed period, co-terminus with the completion of the transition period and Training Program for all prospective Accounts Specialists
The petitioners alleged that they were illegally dismissed by SMC.
The Labor Arbiter held petitioners were illegally dismissed. The Decision of the Labor Arbiter was affirmed on appeal by the NLRC. Court of
Appeals reversed the decision of the Labor Arbiter and of the NLRC
Issue:
WON the termination of the petitioners is valid.
Ruling:
Article 280 of the Labor Code defines regular employment as follows:
ART. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are
In Pure Foods Corp. v. NLRC, Supreme Court held that under the above-quoted provision, there are two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, and (2)
those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they
are employed.
In Brent School, Inc. v. Zamora, the Supreme Court laid out that Article 280 of the Labor Code appears to prevent circumvention of the
employees right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral
agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the
Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where
a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer
and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the
latter.
Page 44
LABOR RELATIONS
45

Since respondents attribute the termination of petitioners employment to the expiration of their respective contracts, a determination of whether
petitioners were hired as project or seasonal employees, or as fixed-term employees without any force, duress or improper pressure having
been exerted against them is in order. If petitioners fall under any of these categories, then indeed their termination follows from the expiration of
their contracts.
The NLRC had sufficient basis to believe that the shift of SMC to the Pre-Selling System was not the real basis for the forging of fixed-term
contracts of employment with petitioners and that the periods were fixed only as a means to preclude petitioners from acquiring security of
tenure.
That petitioners themselves insisted on the one-year fixed-term is not even alleged by respondents. In fact, the sustained desire of each of the
petitioners to enter into another employment contract upon the termination of the earlier ones clearly indicates their interest in continuing to work
for SMC.
Moreover, respondents have not established that the engagement of petitioners services, which is not in the nature of a project employment,
required a definite date of termination as a sine qua non.
19. Soriano vs. NLRC, G.R. No. 165594, April 23, 2007, citing 2005 Filipina Pre-fabricated Bldg. System (Filisystem)
Facts:
Petitioner and certain individuals namely Sergio Benjamin (Benjamin), Maximino Gonzales (Gonzales), and Noel Apostol (Apostol) were
employed by the respondent as Switchman Helpers in its Tondo Exchange Office (TEO). After participating in several trainings and seminars,
petitioner, Benjamin, and Gonzales were promoted as Switchmen. Apostol, on the other hand, was elevated to the position of Frameman. One
of their duties as Switchmen and Frameman was the manual operation and maintenance of the Electronic Mechanical Device (EMD) of the
TEO. In November 1995, respondent PLDT implemented a company-wide redundancy program. Subsequently, the respondent PLDT gave
separate letters dated 15 July 1996 to petitioner, Benjamin, Gonzales, and Apostol informing them that their respective positions were deemed
redundant due to the above-cited reasons and that their services will be terminated on 16 August 1996. 10 They requested the respondent
PLDT for transfer to some vacant positions but their requests were denied since all positions were already filled up. Hence, on 16 August 1996,
respondent PLDT dismissed the four from employment.
Ruling:
The Labor Arbiter, the NLRC, and the Court of Appeals all found that substantial evidence supports the absence of illegal dismissal in the
present case. Article 283 of the Labor Code provides that an employer may dismiss from work an employee by reason of redundancy. The same
provision also states the procedural requirements for the validity of the dismissal. It is clear that the foregoing documentary evidence constituted
substantial evidence to support the findings of Labor Arbiter Lustria and the NLRC that petitioners employment was terminated by respondent
PLDT due to a valid or legal redundancy program since substantial evidence merely refers to that amount of evidence which a reasonable mind
might accept as adequate to support a conclusion. The records show that respondent PLDT had sufficiently established the existence of
redundancy in the position of Switchman. It is evident from the foregoing facts that respondent PLDTs utilization of high technology equipment
in its operation such as computers and digital switches necessarily resulted in the reduction of the demand for the services of a Switchman since
computers and digital switches can aptly perform the function of several Switchmen. Indubitably, the position of Switchman has become
redundant. As to whether Lazam was competent to testify on the effects of respondent PLDTs adoption of new technology vis--vis the
petitioners position of Switchman, the records show that Lazam was highly qualified to do so. He is a licensed electrical engineer and has been
employed by the respondent PLDT since 1971. He was a Senior Manager for Switching Division in several offices of the respondent PLDT, and
had attended multiple training programs on Electronic Switching Systems in progressive countries. He was also a training instructor of
Switchmen in the respondents office. The fact that respondent PLDT hired contractual employees after implementing its redundancy program
does not necessarily negate the existence of redundancy. As amply stated by the respondent PLDT, such hiring was intended solely for winding
up operations using the old system. Since the respondent PLDT determined that petitioners services are no longer necessary either as a
Switchman or in any other position, and such determination was made in good faith and in furtherance of its business interest, the petitioners
contention that he should be the last switchman to be laid-off by reason of his qualifications and outstanding work must fail.
WHEREFORE, the petition is DENIED. SO ORDERED.
20. Caseres vs. Universal Robina Sugar Milling Corp., et al., G.R. No. 159343, September 28, 2007
Page 45
LABOR RELATIONS
46

Facts:
Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the cane sugar milling business. Pedy Caseres (petitioner
Caseres) started working for respondent in 1989, while Andito Pael (petitioner Pael) in 1993. At the start of their respective employments, they
were made to sign a Contract of Employment for Specific Project or Undertaking. Petitioners' contracts were renewed from time to time; until
May 1999 when they were informed that their contracts will not be renewed anymore. Petitioners filed a complaint for illegal dismissal,
regularization, incentive leave pay, 13th month pay, damages and attorneys fees.
Issue:
Whether or not the petitioners are seasonal/project/term employees and not regular employees of respondents
Ruling:
Article 280 of the Labor Code provides:
ART. 280. Regular and Casual Employees. The provision of written agreement to the contrary notwithstanding and regardless of the oral
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered
which he is employed and his employment shall continue while such actually exists.
The foregoing provision provides for three kinds of employees: (a) regular employees or those who have been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer; (b) project employees or those whose employment
has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement
of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and
(c) casual employees or those who are neither regular nor project employees. The principal test for determining whether an employee is a
project employee or a regular employee is whether the employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee. A project employee is one whose employment has
been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of
the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. A true
project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at the
time of hiring. Petitioners contend that respondent's repeated hiring of their services qualifies them to the status of regular employees.
On this score, the LA ruled:
This is further buttressed by the fact that the relationship between complainants and the respondent URSUMCO, would clearly reveal that the
very nature of the terms and conditions of their hiring would show that complainants were required to perform phases of special projects which
are not related to the main operation of the respondent for a definite period, after which their services are available to any farm owner.
The NLRC, agreeing with the LA, further ruled that:
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.
Finally, the CA noted:
Petitioner Pedy Caseres first applied with private respondent URSUMCO on January 9, 1989 as a worker assisting the crane operator at the
transloading station. Upon 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 would be co-terminus with the work to which he
Page 46
LABOR RELATIONS
47

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.
The nature and terms and conditions of employment of petitioner Andito Pael were the same as that of his co-petitioner Caseres. It must be
noted that there were intervals in petitioners' respective employment contracts, and that their work depended on the availability of such contracts
or projects. Consequently, the employment of URSUMCO's work force was not permanent but co-terminous with the projects to which the
employees were assigned and from whose payrolls they were paid (Palomares vs. NLRC, 277 SCRA 439).
Petitioners' repeated and successive re-employment on the basis of a contract of employment for more than one year cannot and does not
make them regular employees. Length of service is not the controlling determinant of the employment tenure of a project employee (Rada vs.
NLRC, 205 SCRA 69). It should be stressed that contracts for project employment are valid under the law. In Villa v. National Labor Relations
Commission,[16] the Court stated that: by entering into such contract, an employee is deemed to understand that his employment is
coterminous with the project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that
project employees engaged for manual services or those for special skills like those of carpenters or masons, are, as a rule, unschooled.
However, this fact alone is not a valid reason for bestowing special treatment on them or for invalidating a contract of employment. Project
employment contracts are not lopsided agreements in favor of only one party thereto. The employers interest is equally important as that of the
employees for theirs is the interest that propels economic activity. While it may be true that it is the employer who drafts project employment
contracts with its business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the
employee left helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount.
The fact that petitioners were constantly re-hired does not ipso facto establish that they became regular employees. Their respective contracts
with respondent show that there were intervals in their employment. In petitioner Caseres's case, while his employment lasted from August
1989 to May 1999, the duration of his employment ranged from one day to several months at a time, and such successive employments were
not continuous. With regard to petitioner Pael, his employment never lasted for more than a month at a time. These support the conclusion that
they were indeed project employees, and since their work depended on the availability of such contracts or projects, necessarily the
employment of 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, it would be extremely burdensome for their employer to
retain them as permanent employees and pay them wages even if there were no projects to work on.
Moreover, even if petitioners were repeatedly and successively re-hired, still it did not qualify them as regular employees, as length of service is
not the controlling determinant of the employment tenure of a project employee, 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 employee. Further, the proviso in Article 280,
stating that an employee who has rendered service for at least one (1) year shall be considered a regular employee, pertains to casual
employees and not to project employees. 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.
21. Pier 8 Arrastre & Stevedoring Services, Inc. vs Boclot, G.R. No. 173849, September 28, 2007
Facts:
Petitioner Pier 8 Arrastre and Stevedoring Services, Inc. (PASSI) is a domestic corporation engaged in the business of providing arrastre and
stevedoring services[5] at Pier 8 in the Manila North Harbor. PASSI has been rendering arrastre and stevedoring services at the port area since
1974 and employs stevedores who assist in the loading and unloading of cargoes to and from the vessels. Petitioner Eliodoro C. Cruz is its
Vice-President and General Manager. Respondent Jeff B. Boclot was hired by PASSI to perform the functions of a stevedore starting 20
September 1999. The facts show that respondent rendered actual services to PASSI during the following periods:
Period Duration
September - December 1999
(4 months)
21 days
January - April 2000
(4 months)
20 days
March - December 2001
(10 months)
85 days
January - December 2002
(12 months)
70.5 days
January - June 2003
(6 months)
32 days
Total
36 months 228.5 days
On 15 April 2000, the Philippine Ports Authority (PPA) seized the facilities and took over the operations of PASSI through its Special Takeover
Unit, absorbing PASSI workers as well as their relievers. By virtue of a Decision dated 9 January 2001 of the Court of Appeals, petitioners were
Page 47
LABOR RELATIONS
48

able to regain control of their arrastre and stevedoring operations at Pier 8 on 12 March 2001. On 9 May 2003, respondent filed a Complaint with
the Labor Arbiter of the NLRC, claiming regularization; payment of service incentive leave and 13th month pays; moral, exemplary and actual
damages; and attorneys fees. Respondent alleged that he was hired by PASSI in October 1999 and was issued company ID No. 304, a
PPA Pass and SSS documents. In fact, respondent contended that he became a regular employee by April 2000, since it was his sixth
continuous month in service in PASSIs regular course of business. He argued on the basis of Articles 280[9] and 281 of the Labor Code.
He maintains that under paragraph 2 of Article 280, he should be deemed a regular employee having rendered at least one year of service with
the company. According to respondent, he remained a casual employee from the time he was first hired to perform the services of a stevedore.
Thus, respondent claimed he was denied the rights and privileges of a regular employee, including those granted under the Collective
Bargaining Agreement (CBA) such as wage increase; medical, dental and hospitalization benefits; vacation and sick leaves; uniforms, Christmas
gifts, productivity bonus, accident insurance, special separation pays, and others.
In the instant petition, petitioners are vehemently denying that respondent has become PASSI regular employee. Petitioners insist that
respondent was hired as a mere stevedore and, thus, could not become a regular stevedore. Petitioners presented a list of the days when
respondents services as stevedore were engaged, to support its claim that respondent is a reliever. Petitioners aver that the employment
of the stevedores is governed by a system of rotation. Based on this system of rotation, the work available to reliever stevedores is dependent
on the actual stevedoring and arrastre requirements at a current given time. Petitioners posit that respondent, as a reliever stevedore, is a mere
extra worker whose work is dependent on the absence of regular stevedores during any given shift. During rotation proper as petitioners term it,
all regular employees are first called and given work before any reliever is assigned. Petitioners assert that while the regular stevedores work
an average of 4 days a week (or 16 days a month), respondent performed services for a total of 228.5 days (or only for an average of 6.34 days
a month) from September 1999 to June 2003. In defense of the Court of Appeals ruling grounded on Articles 280 and 281 of the Labor Code,
petitioners maintain that the foregoing provisions are inapplicable on the postulation that respondent is neither a probationary nor a casual
employee. For the same reasons, petitioners argue that Article XXV of the CBA cannot be used to support respondents contention that he is a
regular employee since the CBA provision he invokes refers to all incumbent probationary or casual employees and workers in the company and
not to respondent who is neither a casual nor a probationary employee.
Ruling:
De Leon v. National Labor Relations Commission succinctly explains the delineation of the foregoing employee classification, to wit:
The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to
the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence
of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to
such activity and while such activity exists. (Emphasis supplied.) PASSI is engaged in providing stevedoring and arrastre services in the port
area in Manila. Stevedoring, dock and arrastre operations include, but are not limited to, the opening and closing of a vessels hatches;
discharging of cargoes from ship to truck or dock, lighters and barges, and vice-versa; movement of cargoes inside vessels, warehouses,
terminals and docks; and other related work. In line with this, petitioners hire stevedores who assist in the loading and unloading of cargoes to
and from the vessels. Petitioners concede that whenever respondent worked as a reliever stevedore due to the absence of a regular stevedore,
he performed tasks that are usually necessary and desirable to their business. Petitioners, however, contend that this in itself does not make
him a regular stevedore, postulating that the hiring of respondent as a reliever is akin to a situation in which a worker goes on vacation leave,
sick leave, maternity leave or paternity leave; and the employer is constrained to hire another worker from outside the establishment to ensure
the smooth flow of its operations.
Based on the circumstances of the instant case, this Court agrees. It takes judicial notice that it is an industry practice in port services to hire
reliever stevedores in order to ensure smooth-flowing 24-hour stevedoring and arrastre operations in the port area. No doubt, serving as a
stevedore, respondent performs tasks necessary or desirable to the usual business of petitioners. However, it should be deemed part of the
nature of his work that he can only work as a stevedore in the absence of the employee regularly employed for the very same function. Bearing
in mind that respondent performed services from September 1999 until June 2003 for a period of only 228.5 days in 36 months, or roughly an
average of 6.34 days a month; while a regular stevedore working for petitioners, on the other hand, renders service for an average of 16 days a
month, demonstrates that respondents employment is subject to the availability of work, depending on the absences of the regular stevedores.
Moreover, respondent does not contest that he was well aware that he would only be given work when there are absent or unavailable
employees. Respondent also does not allege, nor is there any showing, that he was disallowed or prevented from offering his services to other
cargo handlers in the other piers at the North Harbor other than petitioners. As aforestated, the situation of respondent is akin to that of a
seasonal or project or term employee, albeit on a daily basis.
Anent petitioners contention that respondent is neither a probationary nor a casual employee, this Court again refers to Article 280 of the Labor
Code. The second paragraph thereof stipulates in unequivocal terms that all other employees who do not fall under the definitions in the first
Page 48
LABOR RELATIONS
49

paragraph of regular, project and seasonal employees, are deemed casual employees.[25] Not qualifying under any of the kinds of employees
covered by the first paragraph of Article 280 of the Labor Code, then respondent is a casual employee under the second paragraph of the same
provision. The same provision, however, provides that a casual employee can be considered as regular employee if said casual employee has
rendered at least one year of service regardless of the fact that such service may be continuous or broken. Section 3, Rule V, Book II of the
Implementing Rules and Regulations of the Labor Code clearly defines the term at least one year of service to mean service within 12 months,
whether continuous or broken, reckoned from the date the employee started working, including authorized absences and paid regular holidays,
unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract, is less than 12
months, in which case said period shall be considered one year. If the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence
of the necessity, if not indispensability, of that activity to the business of the employer. Applying the foregoing, respondent, who has performed
actual stevedoring services for petitioners only for an accumulated period of 228.5 days does not fall under the classification of a casual turned
regular employee after rendering at least one year of service, whether continuous or intermittent.
NONETHELESS, this Court still finds respondent to be a regular employee on the basis of pertinent provisions under the CBA between PASSI
and its Workers union, which was effective from 4 March 1998 to 3 March 2003:
The Company agrees to convert to regular status all incumbent probationary or casual employees and workers in the Company who have
served the Company for an accumulated service term of employment of not less than six (6) months from his original date of hiring.
The probationary period for all future workers or employees shall be the following:
(a) All skilled workers such as crane operator, mechanic, carpenter, winchman, signalman and checkers shall become regular after three (3)
months continuous employment;
(b) All semi-skilled personnel shall become regular after four (4) months of continuous employment;
(c) All non-skilled personnel shall be regular after six (6) months continuous employment.
Petitioners were crucified on this argument raised by respondent. The union which negotiated the existing CBA is the sole and exclusive
bargaining representative of all the stevedores, dock workers, gang bosses, rank and file employees working at Pier 8, and its offices. The
NLRC ruled that respondents reliance on the CBA to show that he has become a regular employee is misplaced for the reason that the CBA
applies only to regular workers of the company. Respondent assents that he is not a member of the union, as he was not recognized by PASSI
as its regular employee, but this Court notes that PASSI adopts a union-shop agreement, culling from Article II of the CBA which stipulates:
The Union and the Company (PASSI) hereby agree to adopt the Union Shop as a condition of employment to the position (sic) covered by this
Agreement. Under a union-shop agreement, although nonmembers may be hired, an employee is required to become a union member after a
certain period, in order to retain employment. This requirement applies to present and future employees.[36] The same article of the CBA
stipulates that employment in PASSI cannot be obtained without prior membership in the union. Apropos, applying the foregoing provisions of
the CBA, respondent should be considered a regular employee after six months of accumulated service. It is clearly stipulated therein that
petitioners shall agree to convert to regular status all incumbent probationary or casual employees and workers in PASSI who have served
PASSI for an accumulated service term of employment of not less than six months from the original date of hiring. Having rendered 228.5 days,
or eight months of service to petitioners since 1999, then respondent is entitled to regularization by virtue of the said CBA provisions.
In light of the foregoing, petitioners must accord respondent the status of a regular employee.
22. Pacquing vs. Coca-Cola Bottlers Phils., Inc., G.R. No. 157966, January 31, 2008, citing Magsalin vs. National Organization of
Workingmen, G.R. No. 148492, May 9, 2003
Facts:
Eddie Pacquing, Roderick Centeno, Juanito M. Guerra, Claro Dupilad, Jr., Louie Centeno, David Reblora, Raymundo Andrade (petitioners) were
sales route helpers or cargadores-pahinantes of Coca-Cola Bottlers Philippines, Inc., (respondent), with the length of employment as follows:
Name
Date Hired
Date Dismissed
Eddie P. Pacquing
Roderick Centeno
Juanito M. Guerra
Claro Dupilad, Jr.
David R. Reblora
June 14, 1987

November 15, 1985
June 16, 1980
March 1, 1992
September 15, 1988
Page 49
January 30, 1988

January 15, 1995
February 20, 1995
June 30, 1995
December 15, 1995
LABOR RELATIONS
50

Louie Centeno
Raymundo Andrade
September 15, 1988

January 15, 1988
March 15, 1996

October 15, 1995
Petitioners were part of a complement of three personnel comprised of a driver, a salesman and a regular route helper, for every delivery truck.
They worked exclusively at respondent's plants, sales offices, and company premises. On October 22, 1996, petitioners filed a Complaint
against respondent for unfair labor practice and illegal dismissal with claims for regularization, recovery of benefits under the Collective
Bargaining Agreement (CBA), moral and exemplary damages, and attorney's fees. In their Position Paper, petitioners alleged that they should
be declared regular employees of respondent since the nature of their work as cargadores-pahinantes was necessary or desirable to
respondent's usual business and was directly related to respondent's business and trade. In its Position Paper, respondent denied liability to
petitioners and countered that petitioners were temporary workers who were engaged for a five-month period to act as substitutes for an absent
regular employee.
Issue:
What is their status as employees?
Ruling:
The pivotal question of whether respondent's sales route helpers or cargadores or pahinantes are regular workers of respondent has already
been resolved in Magsalin v. National Organization of Working Men, thus:
The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral
Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the country. Respondent workers have long been
in the service of petitioner company. Respondent workers, when hired, would go with route salesmen on board delivery trucks and undertake
the laborious task of loading and unloading softdrink products of Petitioner Company to its various delivery points. Even while the language of
law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a regular workers security of tenure, however, can hardly be
doubted. In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by
the law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be
assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued
in the usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular
business or trade. But, although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been
performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and
continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the
employer. The employment of such person is also then deemed to be regular with respect to such activity and while such activity exists. The
argument of petitioner that its usual business or trade is softdrink manufacturing and that the work assigned to respondent workers as sales
route helpers so involves merely post production activities, one which is not indispensable in the manufacture of its products, scarcely
can be persuasive. If, as so argued by petitioner company, only those whose work are directly involved in the production of softdrinks may be
held performing functions necessary and desirable in its usual business or trade, there would have then been no need for it to even maintain
regular truck sales route helpers. The nature of the work performed must be viewed from a perspective of the business or trade in its entirety
and not on a confined scope.
The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or desirability of their
services in the regular conduct of the business or trade of petitioner company. The Court of Appeals has found each of respondents to have
worked for at least one year with petitioner company. While this Court, in Brent School, Inc. vs. Zamora,has upheld the legality of a fixed-term
employment, it has done so, however, with a stern admonition that where from the circumstances it is apparent that the period has been
imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good
customs, public order and public policy. The pernicious practice of having employees, workers and laborers, engaged for a fixed period of few
months, short of the normal six-month probationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocks the law.
Page 50
51
LABOR RELATIONS
Any obvious circumvention of the law cannot be countenanced. The fact that respondent workers have agreed to be employed on such basis
and to forego the protection given to them on their security of tenure, demonstrate nothing more than the serious problem of impoverishment of
so many of our people and the resulting unevenness between labor and capital. A contract of employment is impressed with public interest.
The provisions of applicable statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each other.
23. Cocomangas Hotel Beach Resort v. Visca, G.R. No. 167045, August 29, 2008
Facts:
The present controversy stemmed from five individual complaints for illegal dismissal filed on by Federico F. Visca (Visca), Johnny G. Barredo,
Ronald Q. Tibus, Richard G. Visca and Raffie G. Visca (respondents) against Cocomangas Hotel Beach Resort and/or its owner-manager,
Susan Munro (petitioners) before Sub-Regional Arbitration Branch No. VI of the National Labor Relations Commission (NLRC) in Kalibo, Aklan.
In their consolidated Position Paper respondents alleged that they were regular employees of petitioners, with designations and dates of
employment as follows:
Name
Designation
Date Employed
Federico F. Visa
Foreman
Johnny G. Barredo
Carpenter
Ronald Q. Tibus
Mason
Richard G. Visca
Carpenter
Raffie G. Visca
Mason/Carpenter
tasked with the maintenance and repair of the resort facilities.
October 1, 1987
April 23, 1993
November 9, 1996
April 1998
March 27, 1993
Maria Nida Iigo-Taala, the Front Desk Officer/Sales Manager, informed them not to report for work since the ongoing constructions and
repairs would be temporarily suspended because they caused irritation and annoyance to the resort's guests; as instructed, they did not report
for work the succeeding days.
John Munro, husband of petitioner Susan Munro, subsequently visited respondent foreman Visca and informed him that the work suspension
was due to budgetary constraints.
When respondent Visca later discovered that four new workers were hired to do respondents' tasks, he confronted petitioner Munro who
explained that respondents' resumption of work was not possible due to budgetary constraints. Hence, they filed their individual complaints for
illegal dismissal. In addition to reinstatement with payment of full backwages, respondents prayed for payment of premium pay for rest day,
service incentive leave pay, 13th month pay, and cost-of-living allowance, plus moral and exemplary damages and attorney's fees.
In their Position Paper, petitioners denied any employer-employee relationship with respondents and countered that respondent Visca was an
independent contractor who was called upon from time to time when some repairs in the resort facilities were needed and the other respondents
were selected and hired by him.
Labor Arbiter: dismissed the complaint, holding that respondent Visca was an independent contractor and the other respondents were hired by
him to help him with his contracted works at the resort; that there was no illegal dismissal but completion of projects; that respondents were
project workers, not regular employees.
NLRC: set aside the Decision of the LA and ordering the payment to respondents of backwages, 13 th month pay and service incentive leave pay
for three years, in addition to 10% attorney's fees.
The NLRC held that respondents were regular employees of petitioners since all the factors determinative of employer-employee relationship
were present and the work done by respondents was clearly related to petitioners' resort business. It took into account the following:
(a) respondent Visca was reported by petitioners as an employee in the Quarterly Social Security System (SSS) report;
(b) all of the respondents were certified to by petitioner Munro as workers and even commended for their satisfactory performance;
(c) respondents were paid their holiday and overtime pay; and
(d) respondents had been continuously in petitioners' employ from three to twelve years and were all paid by daily wage given weekly.
Petitioners then filed a Motion for Reconsideration, arguing that respondents were project employees.
Page 51
LABOR RELATIONS
52

NLRC (Motion for Reconsideration): Acting upon the petitioners motion, the NLRC made a complete turnabout from its original decision and
issued a Resolution dismissing the complaint, holding that respondents were not regular employees but project employees, hired for a short
period of time to do some repair jobs in petitioners' resort business. Nonetheless, it ordered payment of P10,000.00 to each complainant as
financial assistance.
CA: The CA held respondents were regular employees, not project workers, since in the years that petitioners repeatedly hired respondents'
services, the former failed to set, even once, specific periods when the employment relationship would be terminated; that the repeated hiring of
respondents established that the services rendered by them were necessary and desirable to petitioners' resort business; at the least,
respondents were regular seasonal employees, hired depending on the tourist season and when the need arose in maintaining petitioners'
resort for the benefit of guests.
In addition, the CA awarded respondents P50,000.00 as damages, since their termination was attended by bad faith, in that petitioners not only
gave respondents the run-around but also blatantly hired others to take respondents' place despite their claim that the so-called temporary
stoppage of work was due to budgetary constraints.
Issue:
Whether respondents are regular employees or project employees.
Ruling:
Respondents are regular employees and not project employees.
The petitioners were ambivalent in categorizing respondents. In their Position Paper filed before the LA, petitioners classified respondent Visca
as an independent contractor and the other respondents as his employees; while in their Motion for Reconsideration before the NLRC,
petitioners treated respondents as project employees.
Further, petitioners' position in their Motion for Reconsideration before the NLRC runs contrary to their earlier submission in their Position Paper
before the LA. While initially advancing the absence of an employer-employee relationship, petitioners on appeal, sang a different tune, so to
speak, essentially invoking the termination of the period of their employer-employee relationship.
The NLRC should not have considered the new theory offered by the petitioners in their Motion for Reconsideration. It is a matter of law that
when a party adopts a particular theory and the case is tried and decided upon that theory in the court below, he will not be permitted to change
his theory on appeal. To permit a party to change his theory on appeal will be unfair to the adverse party.
At any rate, after a careful examination of the records, the Court finds that the CA did not err in finding that respondents were regular
employees, not project employees.
A project employee is one whose "employment has been fixed for a specific project or undertaking, the completion or termination of which has
employment is for the duration of the season." Before an employee hired on a per-project basis can be dismissed, a report must be made to the
nearest employment office, of the termination of the services of the workers every time completes a project, pursuant to Policy Instruction No.
20.
In the present case, respondents cannot be classified as project employees, since they worked continuously for petitioners from three to twelve
years without any mention of a "project" to which they were specifically assigned. While they had designations as "foreman," "carpenter" and
"mason," they performed work other than carpentry or masonry. They were tasked with the maintenance and repair of the furniture, motor boats,
cottages, and windbreakers and other resort facilities.
There is likewise no evidence of the project employment contracts covering respondents' alleged periods of employment. More importantly,
there is no evidence that petitioners reported the termination of respondents' supposed project employment to the DOLE as project employees.
Department Order No. 19, as well as the old Policy Instructions No. 20, requires employers to submit a report of an employee's termination to
the nearest public employment office every time his employment is terminated due to a completion of a project. Petitioners' failure to file
termination reports is an indication that the respondents were not project employees but regular employees.
This Court has held that an employment ceases to be coterminous with specific projects when the employee is continuously rehired due to the
demands of employer's business and re-engaged for many more projects without interruption.
Page 52
LABOR RELATIONS
53

The Court is not persuaded by petitioners' submission that respondents' services are not necessary or desirable to the usual trade or business
of the resort. The repeated and continuing need for their services is sufficient evidence of the necessity, if not indispensability, of their services to
petitioners' resort business.
In Maraguinot, Jr. v. National Labor Relations Commission, the Court ruled that "once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant
to Article 280 of the Labor Code and jurisprudence.
That respondents were regular employees is further bolstered by the following evidence:
(a) the SSS Quarterly Summary of Contribution Payments listing respondents as employees of petitioners;
(b) the Service Record Certificates stating that respondents were employees of petitioners for periods ranging from three to twelve years and all
have given "very satisfactory performance"; (c) petty cash vouchers showing payment of respondents' salaries and holiday and overtime pays.
Thus, substantial evidence supported the CA finding that respondents were regular employees. Being regular employees, they were entitled to
security of tenure, and their services may not be terminated except for causes provided by law.
Article 279 of the Labor Code, as amended, provides that an illegally dismissed employee shall be entitled to reinstatement, full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him
up to the time of his actual reinstatement.
The Court notes that the NLRC, in its earlier Decision which was affirmed by the CA, computed the award for backwages from May 8, 1999 to
July 31, 2002 only. It is evident that respondents' backwages should not be limited to said period. The backwages due respondents must be
computed from the time they were unjustly dismissed until actual reinstatement to their former positions. Thus, until petitioners implement the
reinstatement aspect, its obligation to respondents, insofar as accrued backwages and other benefits are concerned, continues to accumulate.
24. Price, et al., v Innodata Phils., G.R. No. 178505, September 30, 2008
Facts:
INNODATA had since ceased operations due to business losses in June 2002. Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita
Arbilera were employed as formatters by INNODATA. The parties executed an employment contract denominated as a Contract of Employment
for a Fixed Period, stipulating that the contract shall be effective from FEB. 16, 1999 to FEB. 16, 2000 a period of ONE YEAR. On 16 February
2000, the HRAD Manager of INNODATA wrote petitioners informing them of their last day of work, at the end of the close of business hours
onFebruary 16, 2000. According to INNODATA, petitioners employment already ceased due to the end of their contract.
On 22 May 2000, petitioners filed a Complaint for illegal dismissal and damages against respondents. Petitioners claimed that they should be
considered regular employees since their positions as formatters were necessary and desirable to the usual business of INNODATA as an
encoding, conversion and data processing company. Petitioners finally argued that they could not be considered project employees considering
that their employment was not coterminous with any project or undertaking, the termination of which was predetermined.
Respondents asserted that petitioners were not illegally dismissed, for their employment was terminated due to the expiration of their terms of
employment.
The Labor Arbiter issued its Decision finding petitioners complaint for illegal dismissal and damages meritorious.
Respondent INNODATA appealed the Labor Arbiters Decision to the NLRC. The NLRC reversed the Labor Arbiters Decision dated 17 October
2000, and absolved INNODATA of the charge of illegal dismissal.
On 25 September 2006, the Court of Appeals promulgated its Decision sustaining the ruling of the NLRC that petitioners were not illegally
dismissed. Hence, this petition.
Issues:
Whether petitioners were illegally dismissed by respondents
Whether petitioners were hired by INNODATA under valid fixed-term employment contracts
Page 53
LABOR RELATIONS
54

Ruling:
The Court finds merit in the present Petition. There were no valid fixed-term contracts and petitioners were regular employees of the INNODATA
who could not be dismissed except for just or authorized cause.
The employment status of a person is defined and prescribed by law and not by what the parties say it should be. Equally important to consider
is that a contract of employment is impressed with public interest such that labor contracts must yield to the common good. Thus, 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. Regular employment has been defined by Article 280 of the Labor
Code, as amended, which reads:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral
or undertaking the completion or termination of which has been determined at the time of engagement of the employee or where the work or
services to be performed is seasonal in nature and employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, That, any employee who has rendered
which he is employed and his employment shall continue while such activity exists. (Underscoring ours).
Based on the afore-quoted provision, the following employees are accorded regular status: (1) those who are engaged to perform activities
which are necessary or desirable in the usual business or trade of the employer, regardless of the length of their employment; and (2) those who
were initially hired as casual employees, but have rendered at least one year of service, whether continuous or broken, with respect to the
activity in which they are employed.
Undoubtedly, petitioners belong to the first type of regular employees.
Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be considered regular or non-regular is the
reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer.
In the case at bar, petitioners were employed by INNODATA on 17 February 1999 as formatters. The primary business of INNODATA is data
encoding, and the formatting of the data entered into the computers is an essential part of the process of data encoding. Formatting organizes
the data encoded, making it easier to understand for the clients and/or the intended end users thereof. Undeniably, the work performed by
petitioners was necessary or desirable in the business or trade of INNODATA.
However, it is also true that while certain forms of employment require the performance of usual or desirable functions and exceed one year,
these do not necessarily result in regular employment under Article 280 of the Labor Code. Under the Civil Code, fixed-term employment
contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with predetermined
dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination.
The decisive determinant in term employment is the day certain agreed upon by the parties for the commencement and termination of their
employment relationship, a day certain being understood to be that which must necessarily come, although it may not be known when. Seasonal
employment and employment for a particular project are instances of employment in which a period, where not expressly set down, is
necessarily implied.
While this Court has recognized the validity of fixed-term employment contracts, it has consistently held that this is the exception rather than the
general rule. More importantly, a fixed-term employment is valid only under certain circumstances. In Brent, the very same case invoked by
respondents, the Court identified several circumstances wherein a fixed-term is an essential and natural appurtenance, to wit:
Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a
fixed term is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement,
the concept of regular employment with all that it implies does not appear ever to have been applied, Article 280 of the Labor Code
notwithstanding; also appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in
educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity without
which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy Instructions No. 8 of the Minister of Labor
implicitly recognize that certain company officials may be elected for what would amount to fixed periods, at the expiration of which they would
have to stand down, in providing that these officials, "x x may lose their jobs as president, executive vice-president or vice president, etc.
because the stockholders or the board of directors for one reason or another did not reelect them."
Page 54
LABOR RELATIONS
55

After considering petitioners contracts in their entirety, as well as the circumstances surrounding petitioners employment at INNODATA, the
Court is convinced that the terms fixed therein were meant only to circumvent petitioners right to security of tenure and are, therefore, invalid.
The contracts of employment submitted by respondents are highly suspect for not only being ambiguous, but also for appearing to be tampered
with.They later on admitted in their Memorandum filed with this Court that petitioners were originally hired on 16 February 1999 but the project
for which they were employed was completed before the expiration of one year. Petitioners were merely rehired on 6 September 1999 for a new
project. While respondents submitted employment contracts with 6 September 1999 as beginning date of effectivity, it is obvious that in one of
them, the original beginning date of effectivity, 16 February 1999, was merely crossed out and replaced with 6 September 1999.
Such modification and denial by respondents as to the real beginning date of petitioners employment contracts render the said contracts
ambiguous. The contracts themselves state that they would be effective until 16 February 2000 for a period of one year. If the contracts took
effect only on 6 September 1999, then its period of effectivity would obviously be less than one year, or for a period of only about five months.
Obviously, respondents wanted to make it appear that petitioners worked for INNODATA for a period of less than one year. The only reason the
Court can discern from such a move on respondents part is so that they can preclude petitioners from acquiring regular status based on their
employment for one year. Nonetheless, the Court emphasizes that it has already found that petitioners should be considered regular employees
of INNODATA by the nature of the work they performed as formatters, which was necessary in the business or trade of INNODATA.Hence, the
total period of their employment becomes irrelevant.
Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends that petitioners were project employees whose
employment ceased at the end of a specific project or undertaking. This contention is specious and devoid of merit.
Scrutinizing petitioners employment contracts with INNODATA, however, failed to reveal any mention therein of what specific project or
undertaking petitioners were hired for. Although the contracts made general references to a project, such project was neither named nor
described at all therein. The conclusion by the Court of Appeals that petitioners were hired for the Earthweb project is not supported by any
evidence on record. The one-year period for which petitioners were hired was simply fixed in the employment contracts without reference or
connection to the period required for the completion of a project. More importantly, there is also a dearth of evidence that such project or
undertaking had already been completed or terminated to justify the dismissal of petitioners. In fact, petitioners alleged - and respondents failed
to dispute that petitioners did not work on just one project, but continuously worked for a series of projects for various clients of INNODATA.
Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of security of tenure and free them from the
bondage of uncertainty of tenure woven by some employers into their contracts of employment. This was exactly the purpose of the legislators
in drafting Article 280 of the Labor Code to prevent the circumvention by unscrupulous employers of the employees right to be secure in his
tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment.
cralaIn all, respondents insistence that it can legally dismiss petitioners on the ground that their term of employment has expired is untenable. To
reiterate, petitioners, being regular employees of INNODATA, are entitled to security of tenure. In the words of Article 279 of the Labor Code:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
The Petition for Review on Certiorari is GRANTED.
25. Agusan del Norte Electric Cooperative v. Cagampang, G.R. No. 167627, October 10, 2008
Facts:
Respondents Joel Cagampang and Glenn Garzon started working as linemen for petitioner Agusan del Norte Electric Cooperative, Inc.
(ANECO) on October 1, 1990, under an employment contract which was for a period not exceeding three months. They were both allegedly
required to work eight hours a day and sometimes on Sundays, getting a daily salary of P122.00. When the contract expired, the two were laidoff for one to five days and then ordered to report back to work but on the basis of job orders. After several renewals of their job contracts in the
form of job orders for similar employment periods of about three months each, the said contracts eventually expired on April 31, 1998 and July
30, 1999. Respondents' contracts were no longer renewed, resulting in their loss of employment. Thus, on January 11, 2001, respondents filed
an illegal dismissal case against petitioners before the LA. They prayed for payment of backwages, salary differential, allowances, premium for
Page 55
LABOR RELATIONS
56

alleged work during holidays and rest days, service incentive leave, and separation pay. LA ruled that there was illegal dismissal. However,
NLRC reversed the LAs decision. CA however set aside NLRCs decision.
Issue:
WON Cagampang and Garzon are regular employees/workers of the petitioner.
Ruling:
SC denied the petition.
It held that respondents Cagampang and Garzon are deemed regular workers, and as such were illegally dismissed.
There is no dispute that the respondents' work as linemen was necessary or desirable in the usual business of ANECO. Additionally, the
respondents have been performing the job for at least one year. The law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity, if not indispensability, of that activity to the business. As held in Integrated Contractor and Plumbing Works,
Inc. v. National Labor Relations Commission: [11]
employee in relation to the usual business or trade of the employer. Also, if the employee has been performing the job for at least one year, even
evidence of the necessity, if not indispensability of that activity to the business. Thus, we held that where the employment of project employees
is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and are
considered regular employees.
While length of time may not be the controlling test for project employment, it is vital in determining if the employee was hired for a specific
undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, private
respondent had been a project employee several times over. His employment ceased to be coterminous with specific projects when he was
repeatedly re-hired due to the demands of petitioner's business. Where from the circumstances it is apparent that periods have been imposed to
preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good customs or
public order. [12]
Respondents in the present case being regular employees, ANECO as the employer had the burden of proof to show that the respondents'
termination was for a just cause. Unfortunately, however, what petitioners did was merely to refuse, without justifiable reason, to renew
respondents' work contracts for the performance of what would otherwise be regular jobs in relation to the trade or business of the
former. [13]Such conduct dismally falls short of the requirements of our labor laws regarding dismissals. No twin notices of termination were
issued to the employees, hence the employer did not observe due process in dismissing them from their employment. Their dismissals were
patently illegal.
Employer is burdened to prove just cause for terminating the employment of its employee with clear and convincing evidence. The weakness of
the employee's defense should not operate to relieve nor discharge the employer of its burden to prove its charges pursuant to the guaranty of
tenure granted by the Constitution to employees under the Labor Code. The case of the employer must stand or fall on its own merits.
26. William Uy Construction et. al vs. Trinidad, GR No. 183250, March 10, 2010
Facts:
Respondent Jorge R. Trinidad filed a complaint for illegal dismissal and unpaid benefits against petitioner William Uy Construction Corporation.
Trinidad claimed that he had been working with the latter company for 16 years since 1988 as driver of its service vehicle, dump truck, and
transit mixer. He had signed several employment contracts with the company that identified him as a project employee although he had always
been assigned to work on one project after another with some intervals. Respondent Trinidad further alleged that petitioner company terminated
him from work after it shut down operations because of lack of projects. He learned later, however, that although it opened up a project in
Batangas,
it
did
not
hire
him
back
for
that
project.
Petitioner
company
counteredhttp://sc.judiciary.gov.ph/jurisprudence/2010/march2010/183250.htm - _ftn1 that it was in the construction business. By the
nature of such business, it had to hire and engage the services of project construction workers, including respondent Trinidad, whose
employments had to be co-terminous with the completion of specific company projects. For this reason, every time the company employed
Page 56
LABOR RELATIONS
57

Trinidad, he had to execute an employment contract with it, called Appointment as Project Worker. Petitioner company stressed that
employment intervals or gaps were inherent in the construction business. In compliance with labor rules, the company submitted an
establishment termination report to the Department of Labor and Employment (DOLE). The Labor Arbiter rendered a decision, dismissing
respondent Trinidads complaint for unjust dismissal. The Labor Arbiter, however, ordered petitioner company to pay Trinidad P1,500.00 in
unpaid
service
incentive
leave,
taking
into
consideration
the
three-year
prescriptive
period
for
money
claims.http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/183250.htm - _ftn2 The Labor Arbiter held that, since Trinidad was a
project employee and since his company submitted the appropriate establishment termination report to DOLE, his loss of work cannot be
regarded as unjust dismissal.
Issue:
Whether or not petitioner companys repeated rehiring of respondent Trinidad over several years as project employee for its various projects
automatically entitled him to the status of a regular employee.
Ruling:
The test for distinguishing a project employee from a regular employee is whether or not he has been assigned to carry out a specific project
or undertaking, with the duration and scope of his engagement specified at the time his service is
contracted.http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/183250.htm - _ftn5 Here, it is not disputed that petitioner company
contracted respondent Trinidads service by specific projects with the duration of his work clearly set out in his employment
contracts.http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/183250.htm - _ftn6 He remained a project employee regardless of the
number
of
years
and
the
various
projects
he
worked
for
the
company.http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/183250.htm - _ftn7 Generally, length of service provides a fair
yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits
of regularization. But this standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee
work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course. Construction companies have no
control over the decisions and resources of project proponents or owners. There is no construction company that does not wish it has such
control but the reality, understood by construction workers, is that work depended on decisions and developments over which construction
companies have no say. Respondent Trinidads series of employments with petitioner company were co-terminous with its projects. When its
Boni Serrano-Katipunan Interchange Project was finished, Trinidads employment ended with it. He was not dismissed. His employment
contract simply ended with the project for which he had signed up. His employment history belies the claim that he continuously worked for the
company. Intervals or gaps separated one contract from another. http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/183250.htm _ftn9 Petitioner company needed only to show the last status of Trinidads employment, namely, that of a project employee under a contract
that had ended and the companys compliance with the reporting requirement for the termination of that employment. Indeed, both the Labor
Arbiter and the NLRC were satisfied that the fact of petitioner companys compliance with DOLE Order 19 had been proved in this case.
WHEREFORE, the Court GRANTS the petition, and REINSTATES the decision of the National Labor Relations Commission which affirmed the
decision of the Labor Arbiter.
27. Dacuital vs. L.M. Camus Engineering Corp.,G.R. No. 176748, September 1, 2010
Facts:
Petitioners (LMCEC Employees) filed a complaint for illegal dismissal and non-payment of monetary benefits against respondent LM Camus
Engineering Corp. before the National Labor Relations Commission (NLRC). The employees alleged that they were illegally dismissed from
employment and that their employer failed to pay them their holiday pay, premium pay for holiday, rest day, service incentive leave pay, and 13th
month pay during the existence and duration of their employment. They also averred that they were not provided with sick and vacation leaves.
Respondents denied that petitioners were illegally dismissed from employment. They claimed that petitioners were project employees and, upon
the completion of each project, they were served notices of project completion. They clarified that the termination of petitioners employment was
due to the completion of the projects for which they were hired.
Petitioners, however, countered that they were regular employees as they had been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of LMCEC. They denied that they were project or contractual employees because their employment
was continuous and uninterrupted for more than one (1) year. Finally, they maintained that they were part of a work pool from which LMCEC
drew its workers for its various projects.
Page 57
LABOR RELATIONS
58

The Labor Arbiter rendered a decision declaring the dismissal of the complainant-employees as ILLEGAL and the complainants are entitled to
reinstatement without back wages. The NLRC modified the decision of the Labor Arbiter and ordered the reinstatement of the complainants with
limited backwages. The respondents appealed the decision to the Court of Appeals and the appellate court held that the complainants are
PROJECT EMPLOYEES and hence, there was no illegal dismissal.
ISSUE:
Whether or not the Court of Appeals is correct in concluding that the petitioners are PROJECT EMPLOYEES and that their dismissal from
employment was legal
RULING:
The Supreme Court speaking through Justice Nachura answered in the NEGATIVE. Article 280 of the Labor Code distinguishes a
"project employee" from a "regular employee" in this wise:
Article 280. Regular and casual employment.The provisions of written agreement to the contrary notwithstanding and regardless of the oral
services to be performed is seasonal in nature and the employment is for the duration of the season...xxx
The principal test used to determine whether employees are project employees is whether or not the employees were assigned to carry out a
specific project or undertaking, the duration or scope of which was specified at the time the employees were engaged for that project.
Even though the absence of a written contract does not by itself grant regular status to petitioners, such a contract is evidence that petitioners
were informed of the duration and scope of their work and their status as project employees . In this case, where no other evidence was offered,
the absence of the employment contracts raises a serious question of whether the employees were properly informed at the onset of their
employment of their status as project employees.
While it is true that respondents presented the employment contract of Dacuital, the contract does not show that he was informed of the nature,
as well as the duration of his employment. In fact, the duration of the project for which he was allegedly hired was not specified in the contract.
Hence, the Dismissal of the petitioners are declared ILLEGAL.
28. Millenium Erectors Corp. vs. Magallanes, G.R. No. 184362, November 15, 2010
Facts:
Respondent Virgilio Magallanes started working in 1988 as a utility man for Laurencito Tiu (Tiu), Chief Executive Officer of Millennium Erectors
Corporation (petitioner), Tiu's family, and Kenneth Construction Corporation. He was assigned to different construction projects undertaken by
petitioner in Metro Manila, the last of which was for a building in Libis, Quezon City. In July of 2004 he was told not to report for work anymore
allegedly due to old age, prompting him to file on August 6, 2004 an illegal dismissal complaint 1 before the Labor Arbiter.
Issue:
Whether or not Magallanes dismissal violates security of tenure.
Arguments:
MEC
Respondent was a project employee whom it hired for a building project in Libis on January 30 and which was in near completion on August 3,
2004, when services were terminated. Said all DOLE requirements were complied.
Petitioner moved for reconsideration of the NLRC decision, contending that respondent's motion for reconsideration which it treated as an
appeal was not perfected, it having been belatedly filed; that there was no statement of the date of receipt of the appealed decision; and that it
lacked verification and copies thereof were not furnished the adverse parties
RULING:
Page 58
LABOR RELATIONS
59

1. A project employee is one whose "employment has been fixed for a specific project or undertaking, the completion or termination of which has
employment is for the duration of the season."
As the Court has consistently held, the service of project employees are coterminus [sic] with the project and may be terminated upon the end or
completion of that project or project phase for which they were hired. Regular employees, in contrast, enjoy security of tenure and are entitled to
hold on to their work or position until their services are terminated by any of the modes recognized under the Labor Code. (emphasis and
underscoring supplied)
Assuming arguendo that petitioner hired respondent initially on a per project basis, his continued rehiring, as shown by the sample payrolls
converted his status to that of a regular employee
2. In labor cases, rules of procedure should not be applied in a very rigid and technical sense. Technicalities should not be permitted to stand in
the way of equitably and completely resolving the rights and obligations of the parties. Where the ends of substantial justice shall be better
served, the application of technical rules of procedure may be relaxed.
As to the defective verification in the appeal memorandum before the NLRC, the same liberality applies. After all, the requirement regarding
verification of a pleading is formal, not jurisdictional.
WHEREFORE, the petition is DENIED.
29. EXODUS INTERNATIONAL CONSTRUCTION CORPORATION vs. GUILLERMO BISCOCHO et. al.G.R. No. 166109, February 23, 2011
Facts:
Exodus International Construction Corporation obtained a contract from Dutch Boy Philippines, Inc. for the painting of the Imperial Sky Garden
located in Binondo, Manila. Dutch Boy awarded another contract to Exodus for the painting of Pacific Plaza, Towers in Fort Bonifacio, Taguig
City. In the furtherance of its business, Exodus hired respondents as painters on different dates.
On November 27, 2000, respondents filed a complaint for illegal dismissal and non-payment of holiday pay, service incentive leave pay, 13th
month pay and night-shift differential pay.
Petitioners denied respondents' allegations. As regards Gregorio, petitioners averred that he absented himself from work and applied as a
painter with SAEI-EEI which is the general building contractor of Pacific Plaza Towers. Since then, he never reported back to work.
Guillermo absented himself from work without leave. When he reported for work the following day, he was reprimanded so he worked only halfday and thereafter was unheard of until the filing of the instant complaint.
Fernando, Ferdinand, and Miguel were caught eating during working hours for which they were reprimanded by their foreman. Since then they
no longer reported for work.
The Labor Arbiter exonerated Exodus from the charge of illegal dismissal as respondents chose not to report for work. Since there is neither
illegal dismissal nor abandonment of job, respondents were ordered be reinstated but without any backwages.
Issues:
WON respondents were illegally dismissed for abandonment of work
WON they are regular employees, thus entitled to reinstatement
Ruling:
(1) No. There was no dismissal, much less illegal, and there was also no abandonment of job to speak of.
As found by the Labor Arbiter, there was no evidence that respondents were dismissed nor were they prevented from returning to their work. It
was only respondents' unsubstantiated conclusion that they were dismissed. As a matter of fact, respondents could not name the particular
person who effected their dismissal and under what particular circumstances. Absent any showing of an overt or positive act proving that
petitioners had dismissed respondents, the latters' claim of illegal dismissal cannot be sustained. Indeed, a cursory examination of the records
reveal no illegal dismissal to speak of.
The Labor Arbiter is also correct in ruling that there was no abandonment on the part of respondents that would justify their dismissal from their
employment.
Page 59
LABOR RELATIONS
60

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a settled rule that mere absence or failure
to report for work is not enough to amount to abandonment of work. To constitute abandonment of work, two elements must concur:
the employee must have failed to report for work or must have been absent without valid or justifiable reason and
there must have been a clear intention on the part of the employee to sever the employer-employee relationship manifested by some overt act.
It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without
any intention of returning." It is therefore incumbent upon petitioners to ascertain the respondents' interest or non-interest in the continuance of
their employment. However, petitioners failed to do so.
Petitioners posit that the reinstatement of respondents to their former positions, which were no longer existing, is impossible, highly unfair and
unjust. The project was already completed by petitioners, having completed their tasks, their positions automatically ceased to exist.
Consequently, there were no more positions where they can be reinstated as painters.
(2) Respondents are regular employees of petitioners.
It is clear from the records that when one project is completed, respondents were automatically transferred to the next project awarded to
petitioners. There was no employment agreement given to respondents which clearly spelled out the duration of their employment, the specific
work to be performed and that such is made clear to them at the time of hiring . It is now too late for petitioners to claim that respondents are
project employees whose employment is coterminous with each project or phase of the project to which they are assigned.
Nonetheless, assuming that respondents were initially hired as project employees, a project employee may acquire the status of a regular
employee.
The evidence on record shows that respondents were employed and assigned continuously to the various projects of petitioners. As painters,
they performed activities which were necessary and desirable in the usual business of petitioners, who are engaged in subcontracting jobs for
painting of residential units, condominium and commercial buildings. As regular employees, respondents are entitled to be reinstated without
loss of seniority rights.
Respondents are also entitled to their money claims such as the payment of holiday pay, service incentive leave pay, and 13th month pay.
However, they cannot be entitled to backwages. In cases where there is no evidence of dismissal, the remedy is reinstatement but without
backwages.
30. Leyte Geothermal Power Progressive Employees Union v. Phil National Oil Co., G.R. No. 176351, March 30, 2011
Facts:
[Respondent Philippine National Oil Corporation]-Energy Development Corporation [PNOC-EDC] is a government-owned and controlled
corporation engaged in exploration, development, utilization, generation and distribution of energy resources like geothermal energy. Petitioner
is a legitimate labor organization, duly registered with the Department of Labor and Employment (DOLE) Regional Office No. VIII, Tacloban City.
Among [respondent's] geothermal projects is the Leyte Geothermal Power Project located at the Greater Tongonan Geothermal Reservation in
Leyte. The said Project is composed of the Tongonan 1 Geothermal Project (T1GP) and the Leyte Geothermal Production Field Project (LGPF)
which provide the power and electricity needed not only in the provinces and cities of Central and Eastern Visayas (Region VII and VIII), but also
in the island of Luzon as well. Thus, the [respondent] hired and employed hundreds of employees on a contractual basis, whereby, their
employment was only good up to the completion or termination of the project and would automatically expire upon the completion of such
project. Majority of the employees hired by [respondent] in its Leyte Geothermal Power Projects had become members of petitioner. In view of
that circumstance, the petitioner demands from the [respondent] for recognition of it as the collective bargaining agent of said employees and for
a CBA negotiation with it. However, the [respondent] did not heed such demands of the petitioner. Sometime in 1998 when the project was about
to be completed, the [respondent] proceeded to serve Notices of Termination of Employment upon the employees who are members of the
petitioner. On December 28, 1998, the petitioner filed a Notice of Strike with DOLE against the [respondent] on the ground of purported
commission by the latter of unfair labor practice for "refusal to bargain collectively, union busting and mass termination." On the same day, the
petitioner declared a strike and staged such strike. To avert any work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened
and issued the Order, dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration. Accordingly, all the striking
workers were directed to return to work within twelve (12) hours from receipt of the Order and for the [respondent] to accept them back under
the same terms and conditions of employment prior to the strike. Further, the parties were directed to cease and desist from committing any act
that would exacerbate the situation. However, despite earnest efforts on the part of the Secretary of Labor and Employment to settle the dispute
Page 60
LABOR RELATIONS
61

amicably, the petitioner remained adamant and unreasonable in its position, causing the failure of the negotiation towards a peaceful
compromise. In effect, the petitioner did not abide by [the] assumption order issued by the Secretary of Labor. Consequently, on January 15,
1999, the [respondent] filed a Complaint for Strike Illegality, Declaration of Loss of Employment and Damages at the NLRC-RAB VIII in Tacloban
City and at the same time, filed a Petition for Cancellation of Petitioner's Certificate of Registration with DOLE, Regional Office No. VIII. The two
cases were later on consolidated pursuant to the New NLRC Rules of Procedure. The consolidated case was docketed as NLRC Certified Case
No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99). The said certified case was indorsed to the NLRC 4 th Division in
Cebu City on June 21, 1999 for the proper disposition thereof.
Issue:S
Whether the officers and members of petitioner Union are project employees of respondent; and
Whether the officers and members of petitioner Union engaged in an illegal strike.
Ruling:
On the first issue, petitioner Union contends that its officers and members performed activities that were usually necessary and desirable to
respondent's usual business. In fact, petitioner Union reiterates that its officers and members were assigned to the Construction Department of
respondent as carpenters and masons, and to other jobs pursuant to civil works, which are usually necessary and desirable to the department.
Petitioner Union likewise points out that there was no interval in the employment contract of its officers and members, who were all employees
of respondent, which lack of interval, for petitioner Union, "manifests that the `undertaking' is usually necessary and desirable to the usual trade
or business of the employer."
We cannot subscribe to the view taken by petitioner Union.
The distinction between a regular and a project employment is provided in Article 280, paragraph 1, of the Labor Code:
ART. 280. Regular and Casual Employment.-- The provisions of written agreement to the contrary notwithstanding and regardless of the oral
service to be performed is seasonal in nature and the employment is for the duration of the season.
which he is employed and his employment shall continue while such actually exists.
The foregoing contemplates four (4) kinds of employees: (a) regular employees or those who have been "engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer"; (b) project employees or those "whose employment has been
fixed for a specific project or undertaking[,] the completion or termination of which has been determined at the time of the engagement of the
employee"; (c) seasonal employees or those who work or perform services which are seasonal in nature, and the employment is for the
duration of the season; and (d) casual employees or those who are not regular, project, or seasonal employees. Jurisprudence has added a fifth
kind-- a fixed-term employee.
Article 280 of the Labor Code, as worded, establishes that the nature of the employment is determined by law, regardless of any contract
expressing otherwise. The supremacy of the law over the nomenclature of the contract and the stipulations contained therein is to bring to life
the policy enshrined in the Constitution to "afford full protection to labor." Thus, labor contracts are placed on a higher plane than ordinary
contracts; these are imbued with public interest and therefore subject to the police power of the State.
However, notwithstanding the foregoing iterations, project employment contracts which fix the employment for a specific project or undertaking
remain valid under the law: x x x By entering into such a contract, an employee is deemed to understand that his employment is coterminous
with the project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that project
employees engaged for manual services or those for special skills like those of carpenters or masons, are, as a rule, unschooled. However, this
fact alone is not a valid reason for bestowing special treatment on them or for invalidating a contract of employment. Project employment
contracts are not lopsided agreements in favor of only one party thereto. The employer's interest is equally important as that of the employee[s']
for theirs is the interest that propels economic activity. While it may be true that it is the employer who drafts project employment contracts with
its business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left
helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount.
In the case at bar, the records reveal that the officers and the members of petitioner Union signed employment contracts indicating the specific
project or phase of work for which they were hired, with a fixed period of employment. The NLRC correctly disposed of this issue: A deeper
examination also shows that [the individual members of petitioner Union] indeed signed and accepted the [employment contracts] freely and
voluntarily. No evidence was presented by [petitioner] Union to prove improper pressure or undue influence when they entered, perfected and
Page 61
LABOR RELATIONS
62

consummated [the employment] contracts. In fact, it was clearly established in the course of the trial of this case, as explained by no less than
the President of [petitioner] Union, that the contracts of employment were read, comprehended, and voluntarily accepted by them. x x x.
As clearly shown by [petitioner] Union's own admission, both parties had executed the contracts freely and voluntarily without force, duress or
acts tending to vitiate the worker[s'] consent. Thus, we see no reason not to honor and give effect to the terms and conditions stipulated therein.
x x x.
Thus, we are hard pressed to find cause to disturb the findings of the NLRC which are supported by substantial evidence.
It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial bodies, which are deemed to have acquired expertise in
matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by
substantial evidence. Rule 133, Section 5 defines substantial evidence as "that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion."
Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly adhered to in labor cases. We may take cognizance of
and resolve factual issues, only when the findings of fact and conclusions of law of the Labor Arbiter or the NLRC are inconsistent with those of
the CA.
In the case at bar, both the NLRC and the CA were one in the conclusion that the officers and the members of petitioner Union were project
employees. Nonetheless, petitioner Union insists that they were regular employees since they performed work which was usually necessary or
desirable to the usual business or trade of the Construction Department of respondent.
Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual employees was designed
to put an end to casual employment in regular jobs, which has been abused by many employers to prevent so - called casuals from enjoying the
benefits of regular employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of
Art. 280 was not designed to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether
agricultural or industrial. What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us
believe, to prevent small-scale businesses from engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to the
employees who are deemed "casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon
completion of the project or the [end of the] season. The termination of their employment cannot and should not constitute an illegal dismissal.
31. St. Paul College Quezon City vs. Ancheta II, G.R. No. 169905, September 7, 2011
Facts:
Remigio Michael Ancheta was a full-time probationary teacher in the School Year 1996-1997 which was renewed in the following SY 1997-1998.
His wife, Cynthia was hired as a part time teacher of the Mass Communication Department in the second semester of SY 1996-1997 and her
appointment was renewed for SY 1997-1998.
On February 13, 1998, respondents signified their intentions to renew their contracts for SY 1998-1999. They were later sent two letters
informing them that the school is extending to them new contracts for SY 1998-1999.
Thereafter, a letter was written to Remigio Michael, enumerating the departmental and instructional policies that spouses failed to comply with,
such as the late submission of final grades, failure to submit final test questions to the Program Coordinator, the giving of tests in the essay form
instead of the multiple choice format as mandated by the school, failure to report to work on time; the high number of students with failing grades
in the classes that they handled, and not being open to suggestions to improve themselves as teachers, among others.
Thereafter, Sr. Bernadette (Department Coordinator) endorsed the immediate termination of the teaching services of the spouses. Respondent
spouses were given an opportunity to comment on the letter-recommendation. Subsequently however, they received their respective letters of
termination. Thus, spouses filed a Complaint for illegal dismissal.
St. Paul contends that it did not extend the contracts of respondent spouses. Although, it has sent letters to the spouses informing them that the
school is extending to them new contracts for the coming school year, the letters do not constitute as actual employment contracts but merely
offers to teach on the said school year.
Issues:
Page 62
LABOR RELATIONS
63

WON respondents were considered regular employees
WON they were illegally dismissed
Ruling:
(1) Employment on probationary status of teaching personnel is that they are not governed purely by the Labor Code. The Labor Code is
supplemented with respect to the period of probation by special rules found in the Manual of Regulations for Private Schools. On the matter of
probationary period, Section 92 of these regulations provides:
Section 92.Probationary Period. Subject in all instances to compliance with the Department and school requirements, the probationary period
for academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary
levels, six (6) consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of
satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis.
A probationary employee or probationer is one who is on trial for an employer, during which the latter determines whether or not he is qualified
for permanent employment. The probationary employment is intended to afford the employer an opportunity to observe the fitness of a
probationary employee while at work, and to ascertain whether he will become an efficient and productive employee. While the employer
observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on
the other hand, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment.
Thus, the word probationary, as used to describe the period of employment, implies the purpose of the term or period, not its length.
The common practice is for the employer and the teacher to enter into a contract, effective for one school year. At the end of the school year,
the employer has the option not to renew the contract, particularly considering the teacher's performance. If the contract is not renewed, the
employment relationship terminates. If the contract is renewed, usually for another school year, the probationary employment continues. Again,
at the end of that period, the parties may opt to renew or not to renew the contract. If renewed, this second renewal of the contract for another
school year would then be the last year since it would be the third school year of probationary employment. At the end of this third year,
the employer may now decide whether to extend a permanent appointment to the employee, primarily on the basis of the employee having met
the reasonable standards of competence and efficiency set by the employer. For the entire duration of this three-year period, the teacher
remains under probation. Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security
of tenure and compel the employer to renew his employment contract.
(2) No.
Section 91 of the Manual of Regulations for Private Schools, states that:
Section 91.Employment Contract. Every contract of employment shall specify the designation, qualification, salary rate, the period and nature
of service and its date of effectivity, and such other terms and condition of employment as may be consistent with laws and rules, regulations
and standards of the school. A copy of the contract shall be furnished the personnel concerned.
It is important that the contract of probationary employment specify the period or term of its effectivity. The failure to stipulate its precise duration
could lead to the inference that the contract is binding for the full three-year probationary period. Therefore, the letters sent by petitioner Sr.
Bernadette, which were void of any specifics cannot be considered as contracts. The closest they can resemble to are that of informal
correspondence among the said individuals. As such, petitioner school has the right not to renew the contracts of the respondents, the old ones
having been expired at the end of their terms.
Assuming, arguendo, that the employment contracts between the school and the spouses were renewed, this Court finds that there was a valid
and just cause for their dismissal. The Labor Code commands that before an employer may legally dismiss an employee from the service, the
requirement of substantial and procedural due process must be complied with. Under the requirement of substantial due process, the grounds
for termination of employment must be based on just or authorized causes.
Of the charges against Remigio Michael, his spouse also shared the same defenses and admissions as to the charges against her.
The plain admissions of the charges against them were the considerations taken into account by the petitioner school in their decision not to
renew the respondent spouses' employment contracts. This is a right of the school that is mandated by law and jurisprudence. It is the
prerogative of the school to set high standards of efficiency for its teachers since quality education is a mandate of the Constitution. As long as
the standards fixed are reasonable and not arbitrary, courts are not at liberty to set them aside. Schools cannot be required to adopt standards
which barely satisfy criteria set for government recognition. The same academic freedom grants the school the autonomy to decide for itself the
terms and conditions for hiring its teacher, subject of course to the overarching limitations under the Labor Code. The authority to hire is likewise
covered and protected by its management prerogative the right of an employer to regulate all aspects of employment, such as hiring, the
freedom to prescribe work assignments, working methods, process to be followed, regulation regarding transfer of employees, supervision of
their work, lay-off and discipline, and dismissal and recall of workers.
Page 63
LABOR RELATIONS
64
32. Lynvil Fishing Enterprises vs. Ariola, G.R. No. 181974, February 1, 2012
Facts:
Petitioner Lynvil Fishing Enterprises, Inc. (Lynvil) is engaged in deep-sea fishing. Respondents services were engaged in various capacities:
Andres G. Ariola, captain; Jessie D. Alcovendas, chief mate; Jimmy B. Calinao, chief engineer; Ismael G. Nubla, cook; Elorde Baez, oiler; and
Leopoldo G. Sebullen, bodegero.
On Aug. 1, 1998, Lynvil received a report from Ramonito Clarido, one of its employees, that on July 31, 1998, he witnessed that while on board
the company vessel Analyn VIII, respondents conspired with one another and stole eight tubs of pampano and tangigue fish and delivered
them to another vessel.
Petitioner filed a criminal complaint against respondents before the office of the City Prosecutor of Malabon City which found probable cause for
indictment of respondents for the crime of qualified theft. Relying on the finding and Nasipit Lumber Company v. NLRC, 257 Phil. 937 (1989),
Lynvil asserted there was sufficient basis for valid termination of employment of respondents based on serious misconduct and/or loss of trust
and confidence.
Issues:
Whether a finding of the city prosecutor of probable cause to indict employees of qualified theft is sufficient basis for valid termination for serious
misconduct and/or loss of trust or confidence?
Whether the employees were validly terminated?
Ruling:
On the first issue, the Supreme Court ruled in the negative. We ruled that proof beyond reasonable doubt of an employees misconduct is not
required when loss of confidence is the ground for dismissal. It is sufficient if the employer has some basis to lose confidence or that the
employer has reasonable ground to believe or to entertain the moral conviction that the employee concerned is responsible for the misconduct
and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position.
Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft the Labor Arbiter must follow the finding as a valid
reason for the termination of respondents employment. The proof required for purposes that differ from one and the other are likewise different.
On the second question, the Court stated that nonetheless, even without reliance on the prosecutors finding, we find that there was valid cause
for respondents dismissal.
Just cause is required for a valid dismissal. The Labor Code provides that an employer may terminate an employment based on fraud or willful
breach of the trust reposed on the employee. Such breach is considered willful if it is done intentionally, knowingly, and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must also be based on substantial
evidence and not on the employers whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the
employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee
was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee
concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised
on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with
confidence with respect to delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal
of this trust is the essence of the offense for which an employee is penalized. Breach of trust is present in this case.
However, Lynvil contends that it cannot be guilty of illegal dismissal because the private respondents were employed under a fixed-term contract
which expired at the end of the voyage. Contrarily, the private respondents (employees) contend that they became regular employees by reason
of their continuous hiring and performance of tasks necessary and desirable in the usual trade and business of Lynvil.
Jurisprudence, laid two conditions for the validity of a fixed-contract agreement between the employer and employee: first, the fixed period of
employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear
Page 64
LABOR RELATIONS
65

upon the employee and absent any other circumstances vitiating his consent; or second, it satisfactorily appears that the employer and the
employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.
In the context of the facts that: (1) the respondents were doing tasks necessarily to Lynvils fishing business with positions ranging from captain
of the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement
continued for more than ten years, the clear intention is to go around the security of tenure of the respondents as regular employees. And
respondents are so by the express provisions of the second paragraph of Article 280, thus: xxx Provided, That any employee who has rendered
Having found that respondents are regular employees who may be, however, dismissed for cause as we have so found in this case, there is a
need to look into the procedural requirement of due process in Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code. It is
required that the employer furnish the employee with two written notices: (1) a written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; and (2) a written notice of
termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his
termination. In this case, it is clear that the employees were not given the final written notices of dismissal.
The Court ruled that since employees were dismissed for just cause, they were not entitle to separation pay and backwages. However, they
were to be granted nominal damages for failure of the employer to comply with statutory due process.
33. D.M. Consunji Inc. vs. Jamin, G.R. No. 192514, April 18, 2012 citing Maraguinot
Facts:
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired respondent Estelito L. Jamin as a laborer.
Sometime in 1975, Jamin became a helper carpenter. Since his initial hiring, Jamins employment contract had been renewed a number of
times. On March 20, 1999, his work at DMCI was terminated due to the completion of the SM Manila project. This termination marked the end of
his employment with DMCI as he was not rehired again.
On April 5, 1999, Jamin filed a complaint for illegal dismissal, with several money claims (including attorneys fees), against DMCI and its
President/General Manager, David M. Consunji. Jamin alleged that DMCI terminated his employment without a just and authorized cause at a
time when he was already 55 years old and had no independent source of livelihood. He claimed that he rendered service to DMCI continuously
for almost 31 years. In addition to the schedule of projects (where he was assigned) submitted by DMCI to the labor arbiter, he alleged that he
worked for three other DMCI projects: Twin Towers, Ritz Towers, from July 29, 1980 to June 12, 1982; New Istana Project, B.S.B. Brunei, from
June 23, 1982 to February 16, 1984; and New Istana Project, B.S.B. Brunei, from January 24, 1986 to May 25, 1986.
DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from the start of his engagement in 1968 until the completion of
its SM Manila project on March 20, 1999 where Jamin last worked. With the completion of the project, it terminated Jamins employment. It
alleged that it submitted a report to the Department of Labor and Employment (DOLE) everytime it terminated Jamins services.
ISSUE
Whether there was violation of security of tenure.
RULING
Jamin worked for DMCI for almost 31 years, initially as a laborer and, for the most part, as a carpenter. Through all those years, DMCI treated
him as a project employee, so that he never obtained tenure. On the surface and at first glance, DMCI appears to be correct. Jamin entered into
a contract of employment (actually an appointment paper to which he signified his conformity) with DMCI either as a field worker, a temporary
worker, a casual employee, or a project employee everytime DMCI needed his services and a termination of employment paper was served on
him upon completion of every project or phase of the project where he worked.
The CA pierced the cover of Jamins project employment contract and declared him a regular employee who had been dismissed without cause
and without notice. To reiterate, the CAs findings were based on: (1) Jamins repeated and successive engagements in DMCIs construction
projects, and (2) Jamins performance of activities necessary or desirable in DMCIs usual trade or business.
Page 65
LABOR RELATIONS
66

We agree with the CA. In Liganza v. RBL Shipyard Corporation, the Court held that "[a]ssuming, without granting[,] that [the] petitioner was
initially hired for specific projects or undertakings, the repeated re-hiring and continuing need for his services for over eight (8) years have
undeniably made him a regular employee." We find the Liganza ruling squarely applicable to this case, considering that for almost 31 years,
DMCI had repeatedly, continuously and successively engaged Jamins services since he was hired on December 17, 1968 or for a total of 38
times 35 as shown by the schedule of projects submitted by DMCI to the labor arbiter and three more projects or engagements added by
Jamin, which he claimed DMCI intentionally did not include in its schedule so as to make it appear that there were wide gaps in his
engagements.
We reviewed Jamins employment contracts as the CA did and we noted that while the contracts indeed show that Jamin had been engaged as
a project employee, there was an almost unbroken string of Jamins rehiring from December 17, 1968 up to the termination of his employment
on March 20, 1999. While the history of Jamins employment (schedule of projects) relied upon by DMCI shows a gap of almost four years in his
employment for the period between July 28, 1980 (the supposed completion date of the Midtown Plaza project) and June 13, 1984 (the start of
the IRRI Dorm IV project), the gap was caused by the companys omission of the three projects.
For not disclosing that there had been other projects where DMCI engaged his services, Jamin accuses the company of suppressing vital
evidence that supports his contention that he rendered service in the companys construction projects continuously and repeatedly for more than
three decades. The non-disclosure might not have constituted suppression of evidence it could just have been overlooked by the company
but the oversight is unfair to Jamin as the non-inclusion of the three projects gives the impression that there were substantial gaps not only of
several months but years in his employment with DMCI.
To reiterate, Jamins employment history with DMCI stands out for his continuous, repeated and successive rehiring in the companys
construction projects. In all the 38 projects where DMCI engaged Jamins services, the tasks he performed as a carpenter were indisputably
necessary and desirable in DMCIs construction business. He might not have been a member of a work pool as DMCI insisted that it does not
maintain a work pool, but his continuous rehiring and the nature of his work unmistakably made him a regular employee. In Maraguinot, Jr. v.
NLRC, the Court held that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same
employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee.
Further, as we stressed in Liganza, "[r]espondent capitalizes on our ruling in D.M. Consunji, Inc. v. NLRC which reiterates the rule that the length
of service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee."
"Surely, length of time is not the controlling test for project employment. Nevertheless, it is vital in determining if the employee was hired for a
specific undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here,
[private] respondent had been a project employee several times over. His employment ceased to be coterminous with specific projects when he
was repeatedly re-hired due to the demands of petitioners business." Without doubt, Jamins case fits squarely into the employment situation
just quoted.
Page 66
LABOR RELATIONS
67

MANAGEMENT PREROGATIVE
1. Dosch vs. NLRC, 123 SCRA 296 [1983]

Facts:
Helmut Dosch, an American citizen, married to a Filipina, was the resident Manager of Northwest Airlines, Inc. in the Philippines. He has to his
credit eleven (11) years of continuous service with the company, including nine (9) years as Northwest Manager with station at Manila. He
received an inter-office communication from R.C. Jenkins, Northwest's Vice President for Orient Region based in Tokyo, promoting him to the
position of Director of International Sales and transferring him to Northwest's General Office in Minneapolis, U.S.A., effective immediately. Dosch
in his letter, expressed appreciation for the promotion and at the same time regretted that "for personal reasons and reasons involving his family,
he is unable to accept a transfer from the Philippines and that he would, therefore, prefer to remain in his position, of Manager-Philippines until
such time that his services in that capacity are no longer required by the company. Petitioner tried to resume his duties as Manager after an
authorized vacation but the Vice-President for the Orient Region of Northwest advised petitioner that in view of his letter, his status as an
employee of the company ceased on the close of business and the company therefore considers his letter to be a resignation without notice.
Issues:
Does the employers letter constitute a transfer as a valid exercise of a management prerogative?
Assuming arguendo that the communication or letter of Mr. Jenkins was basically a transfer, under the particular and peculiar facts obtaining in
the case at bar, does Dosch's inability or refusal to be transferred a valid cause for dismissal?
Rulings:
No, Jenkins letter is a letter directing the promotion of Dosch from his position as Philippine manager to Director of International Sales in
Minneapolis, U.S.A. It is not merely a transfer order alone but as the Solicitor General correctly observes, "it is more in the nature of a promotion
that a transfer, the latter being merely incidental to such promotion." The inter-office communication of Vice President Jenkins is captioned
"Transfer" but it is basically and essentially a promotion for the nature of an instrument is characterized not by the title given to it but by its body
and contents. The communication informed the petitioner that effective August 18, 1975, he was to be promoted to the position of Director of
International Sales, and his compensation would be upgraded and the payroll accordingly adjusted. Petitioner was, therefore, advanced to a
higher position and rank and his salary was increased and that is a promotion. It has been held that promotion denotes a scalar ascent of an
officer or an employee to another position, higher either in rank or salary. In the Millares case above, the Supreme Court, speaking thru Acting
Chief Justice J.B.L. Reyes, distinguished between transfer and promotion as follows: "A transfer is a movement from one position to another of
equivalent rank, level or salary, without break in the service. Promotion, on the other hand, is the advancement from one position to another with
an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. Whereas, promotion denotes
a scalar ascent of a senior officer or employee to another position, higher either in rank or salary, transfer refers to lateral movement from one
position to another, of equivalent rank, level or salary." There is no law that compels an employee to accept a promotion, as a promotion is in the
nature of a gift or a reward, which a person has a right to refuse. When petitioner refused to accept his promotion to Director of International
Sales, he was exercising a right and he cannot be punished for it as qui jure suo utitur neminem laedit. He who uses his own legal right injures
no one.
No, assuming for the sake of argument that the communication or letter of Mr. Jenkins was basically a transfer, under the particular and peculiar
facts obtaining in the case at bar, petitioner's inability or his refusal to be transferred was not a valid cause for dismissal. While it may be true
that the right to transfer or reassign an employee is an employer's exclusive right and the prerogative of management, such right is not absolute.
The right of an employer to freely select or discharge his employee is limited by the paramount police power for the relations between capital
and labor are not merely contractual but impressed with public interest (Article 1700, New Civil Code). And neither capital nor labor shall act
oppressively against each other (Article 1701, New Civil Code). There can be no dispute that the constitutional guarantee of security of tenure
mandated under Section 9, Article 2, 1973 Constitution applies to all employees and laborers, whether in the government service or in the
private sector. The fact that petitioner is a managerial employee does not by itself exclude him from the protection of the constitutional guarantee
of security of tenure. Even a manager in a private concern has the right to be secure in his position, to decline a promotion where, although the
promotion carries an increase in his salary and rank but results in his transfer to a new place of assignment or station and away from his family.
Such an order constitutes removal without just cause and is illegal. Indeed, the outright dismissal of petitioner from his position as ManagerPhilippines of Northwest Airlines is much too severe, considering the length of service that petitioner has rendered for eleven (11) fruitful and
loyal years, a strong and vital factor that must be taken into account in labor law determinations which this Court, speaking thru Chief Justice
Fernando in Meracap vs. International Ceramics Manufacturing Co., Inc., L-48235-36, July 30, 1979, 92 SCRA 412 emphasized should not only
be secundum rationem but also secundum caritatem, to wit: "It would imply at the very least that where a penalty less punitive would suffice,
Page 67
LABOR RELATIONS
68

whatever missteps may be committed by labor ought not to be visited with a consequence so severe. It is not only because of the law's concern
for the workingman. There is, in addition his family to consider. Unemployment brings untold hardships and sorrows on those dependent on the
wage-earner. The misery and pain attendant on the loss of jobs then could be avoided if there be acceptance of the view that under all the
circumstances of this case, petitioners should not be deprived of their means of livelihood. Nor is this to condone what had been done by them.
For all this to condone what had been done by them. For all this while, since private respondent considered them separated from the service,
they had not been paid. For the strictly juridical standpoint, it cannot be too strongly stressed, to follow Davis in his masterly work, Discretionary
Justice, that where a decision may be made to rest on informed judgment rather than rigid rules, all the equities of the case must be accorded
their due weight. Finally, labor law determinations, to quote from Bultmann, should be not only secundum rationem but also secundum
caritatem." (This excerpt was cited in Almira vs. B.F. Goodrich Philippines, Inc., 58 SCRA 120, 131.)
2. PT&T v. Court of Appeals, G.R. No. 152057, September 23, 2003

Facts:
The petitioner is a domestic corporation engaged in the business of providing telegraph and communication services thru its branches all over
the country. It employed various employees, among whom were herein private respondents.
Sometime in 1997, after conducting a series of studies regarding the profitability of its retail operations, its existing branches and the number of
employees, the petitioner came up with a Relocation and Restructuring Program designed to (a) sustain its (PT&Ts) retail operations; (b)
decongest surplus workforce in some branches, to promote efficiency and productivity; (c) lower expenses incidental to hiring and training new
personnel; and (d) avoid retrenchment of employees occupying redundant positions.
On August 11, 1997, private respondents received separate letters from the petitioner, giving them the option to choose the branch to which they
could be transferred. Thereafter, the private respondents and other petitioners employees were directed to relocate to their new PT&T
Branches. The affected employees were directed to report to their respective relocation assignments in a Letter dated September 16, 1997. The
petitioner offered benefits/allowances to those employees who would agree to be transferred under its new program.
The private respondents rejected the petitioners offer. Their main concern is the proximity of their transfer; that it would be burdensome for them
to leave their families and relocate to those areas. Dissatisfied with this explanation, the petitioner considered the private respondents refusal as
insubordination and willful disobedience to a lawful order; hence, the private respondents were dismissed from work. They forthwith filed their
respective complaints against the petitioner before the appropriate sub-regional branches of the NLRC.
Subsequently, the private respondents bargaining agent, PT&T Workers Union-NAFLU-KMU, filed a complaint against the petitioner for illegal
dismissal and unfair labor practice before the arbitration branch of the NLRC.
In their position paper, the complainants (herein private respondents) declared that their refusal to transfer could not possibly give rise to a valid
dismissal on the ground of willful disobedience, as their transfer was prejudicial and inconvenient; thus unreasonable. For its part, the petitioner
(respondent therein) alleged that the private respondents transfers were made in the lawful exercise of its management prerogative and were
done in good faith. The transfers were aimed at decongesting surplus employees and detailing them to a more demanding branch.
Issue:
WON the transfer was tantamount to a promotion. And if it is, WON private respondents committed insubordination in refusing such
promotion/transfer which would then justify PT&Ts act of dismissing them in exercise of management prerogative.
Ruling: The petition is denied due course.
YES, the transfer was indeed in a nature of a promotion. Hence, there can be no insubordination in refusing such promotion and subsequently,
there can be no valid justification in dismissing the private respondents.
In its position with the labor arbiter, the petitioner adverted that when the private respondents were transferred, they were also promoted, thus:
Clearly, the transfer of the complainants is not unreasonable nor does it involve demotion in rank. They are being moved to branches where the
complainants will function with maximum benefit to the company and they were in fact promoted not demoted from a lower job-grade to a higher
job-grade and receive even higher salaries than before. Thus, transfer of the complainants would not also result in diminution in pay benefit and
privilege since the salaries of the complainant would be receiving a bigger salary if not the same salary plus additional special relocation
Page 68
LABOR RELATIONS
69

package. Although the increase in the pay is not significant this however would be translated into an increase rather than decrease in their
salary because the complainants who were transferred from the city to the province would greatly benefit because it is of judicial notice that the
cost of living in the province is much lower than in the city. This would mean a higher purchasing power of the same salary previously being
received by the complainants.
Indeed, the increase in the respondents responsibility can be ascertained from the scalar ascent of their job grades. With or without a
corresponding increase in salary, the respective transfer of the private respondents was in fact promotions, following the ruling enunciated
in Homeowners Savings and Loan Association, Inc. v. NLRC:
[P]romotion, as we defined in Millares v, Subido, is the advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an increase in salary. Apparently, the indispensable element for there to be a
promotion is that there must be an advancement from one position to another or an upward vertical movement of the employees rank or
position.
Any increase in salary should only be considered incidental but never determinative of whether or not a promotion is bestowed upon an
employee. This can be likened to the upgrading of salaries of government employees without conferring upon the, the concomitant elevation to
the higher positions.
The admissions of the petitioner are conclusive on it. An employee cannot be promoted, even if merely as a result of a transfer, without his
consent. A transfer that results in promotion or demotion, advancement or reduction or a transfer that aims to lure the employee away from his
permanent position cannot be done without the employees consent.
There is no law that compels an employee to accept a promotion for the reason that a promotion is in the nature of a gift or reward, which a
person has a right to refuse.
Hence, the exercise by the private respondents of their right cannot be considered in law as insubordination, or willful disobedience of a lawful
order of the employer. As such, there was no valid cause for the private respondents dismissal.
As the questioned dismissal is not based on any of the just or valid grounds under Article 282 of the Labor Code, the NLRC correctly ordered the
private respondents reinstatement without loss of seniority rights and the payment of backwages from the time of their dismissal up to their
actual reinstatement.
IN LIGHT OF THE ALL THE FOREGOING, the Decision of the Court of Appeals dated June 15, 2001 is hereby AFFIRMED.
SO ORDERED.
3. Mendoza vs. Rural Bank of Lucban, G.R. No. 155421, July 7, 2004
Facts:
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board Resolution Nos. 99-52 and 99-53, which read:
Board Res. No. 99-52
RESOLVED AS IT IS HEREBY RESOLVED that in line with the policy of the bank to familiarize bank employees with the various phases of
bank operations and further strengthen the existing internal control system[,] all officers and employees are subject to reshuffle of assignments.
Moreover, this resolution does not preclude the transfer of assignment of bank officers and employees from the branch office to the head office
and vice-versa.
Petitioner Elmer Mendoza expressed his opinion on the reshuffle in an undated letter addressed to Daya, bank board chairman, that the
reshuffling deemed to be a demotion without any legal basis and is a blatant harassment on from the employer as a prelude petitioners
termination in due time. That it resulted to unfair labor practice. Daya replied that it was never the intention (of management) to downgrade
petitioners position, and that the reshuffle will also afford management an effective tool in providing the bank a sound internal control
system/check and balance and a basis in evaluating the performance of each employee. Petitioner availed 30 days in total leave of absence and
on June 24, 1999 petitioner filed a Complaint for illegal dismissal, underpayment, separation pay and damages against the Rural Bank of
Lucban and/or its president, Alejo B. Daya; and its Tayabas branch manager, Briccio V. Cada.
Issue:
Page 69
LABOR RELATIONS
70

Whether or not the reshuffling or transfer is deemed to be a demotion on petitioners position.
Ruling:
Management Prerogative to Transfer Employees. Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts
often decline to interfere in legitimate business decisions of employers. Indeed, labor laws discourage interference in employers judgments
concerning the conduct of their business. The law must protect not only the welfare of employees, but also the right of employers. In the pursuit
of its legitimate business interest, management has the prerogative to transfer or assign employees from one office or area of operation to
another -- provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. This privilege is inherent in the right
of employers to control and manage their enterprise effectively. The right of employees to security of tenure does not give them vested rights to
their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them.
Petitioners Transfer Lawful. Petitioners transfer was made in pursuit of respondents policy to familiarize bank employees with the various
phases of bank operations and further strengthen the existing internal control system of all officers and employees. We have previously held
that employees may be transferred -- based on their qualifications, aptitudes and competencies -- to positions in which they can function with
maximum benefit to the company. There appears no justification for denying an employer the right to transfer employees to expand their
competence and maximize their full potential for the advancement of the establishment. Petitioner was not singled out; other employees were
also reassigned without their express consent. Neither was there any demotion in the rank of petitioner; or any diminution of his salary,
privileges and other benefits. This fact is clear in respondents Board Resolutions, the April 30, 1999 letter of Bank President Daya to Branch
Manager Cada, and the May 10, 1999 letter of Daya to petitioner.
4. Duncan Assn. of Detailman-PTFWO vs Glaxo Wellcome Phils. G.R. 162994

Facts:
Petitioner Tecson was hired by respondent Glaxo Wellcome Phils. as medical representative. Tecson signed a contract of employment, which
stipulates among others, that he agrees to disclose existing or future relationship with co-employees and employees of competing companies
that should such relationship poses a conflict of interest, to resign from the company. Despite repeated warnings, Tecson and Bettsy, an
employee of a competing company, got married. Glaxo transferred Tecson to Butuan, but he defied such orders and continued acting as medical
representative in Camarines area. The National Conciliation and Mediation board rendered as valid the policy and the right to transfer.
Issue:
Whether or not the policy constitutes a prohibition against marriage.
Ruling:
No. Glaxos policy prohibiting an employee from having a relationship is a valid exercise of management prerogatives as relationships of that
nature might compromise the interests of the company. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information for competitors. The right to protect its economic interests is recognized by the
constitution which recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments
and for expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of
labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognized that management has rights
which are also entitled to respect and enforcement in the interest of fair play. The challenged company policy does not violate the equal
protection clause of the constitution as such clause is addressed only to the state or those acting under color of its authority. The policy being
questioned is not a policy against marriage. An employee of the company remains free to marry anyone of his or her choosing. The policy is
aimed at restricting a personal prerogative that belongs only to the individual. However, an employees personal decision does not detract the
employer from exercising management prerogatives to ensure maximum profit and business success.
5. Norkis Trading Co., vs. NLRC, G.R. No. 168159, August 19, 2005
Facts:
Page 70
LABOR RELATIONS
71

Petitioner Norkis Trading Co., Inc. employed private respondent Ma. Arlene C. Gnilo on March 8, 1990, initially trained as administration and
finance officer assigned to the companys branch at Calamba, Laguna. On January 24, 2001, she was promoted as Acting Senior Branch
Control Officer for Bicol Region. As such, she was instructed by her immediate superior to confirm transactions pertaining to collections and
deposits of BCO Marivic Faura at Polangui. In a memorandum dated May 22, 2002, private respondent was informed about a recent company
audit which disclosed that she had disregarded the detailed instructions of her superior and failed to perform her duties as a Senior Branch
Control Officer. An investigation by the companys Internal Audit Group ensued and private respondent was formally charged with Negligence
Resulting to Material Loss. After the hearing of the IAP was concluded, private respondent made a written Request for Re-assignment to be
assigned as Cashier of the Naga Branch which is vacant and considering that she is a resident of Naga City and a mother of three growing kids.
On July 29, 2002, she reiterated this request to be assigned anew in Naga City while waiting for the resolution of her case. In August and
September 2002, private respondent also requested to be furnished a copy of the minutes and audit report of the IAP investigation. The
company did not accede to her requests and she continued reporting at the main office performing whatever work assigned to her, such as
monitoring of collections at Cubao Branch. For the period March 18-April 1, 2003, the company withheld the Transportation and Travel
Allowance (TNT) being received by private respondent amounting to P7,555.00, prompting her to formally protest her questionable assignment
at the Home Office in Mandaluyong City which she insisted is against her appointment as Senior BCO for Bicol Region and Samar. She wrote a
letter to the management criticizing them for wanting to ease her out of the company due to a labor case filed by her husband, who also worked
at Norkis for more than 13 years, and such withdrawal of her travel allowances is calculated to cause suffering on her part. She expressed that
the situation has become unbearable for her so that she is forced to report back to Naga City effective March 24, 2003, there being no written
order issued by the management for her to stay in the main office. Upon returning to Naga City, however, private respondent learned that the
management instructed to deny her entry to the branch premises and access to company records. She was ordered to report back to the main
office and to explain why no disciplinary action should be taken against her for abandonment of work, which under existing company policy,
carries the penalty of dismissal. Private respondent, however, maintained her position that she could no longer report to the Home Office after
the company withdrew her monthly TNT. She asserted that considering her difficult situation, she had no choice but to stick to her appointment
as Senior BCO-Bicol Region and Samar there being no superseding memo changing her assignment. On April 14, 2003, private respondent
received a memo from the IAP for an investigation on the charges of abandonment of work, insubordination and refusal to report back to the
place of work, and directing her to attend a hearing set on April 16, 2003 at the main office, which she failed to attend because the company did
not act on her request to allow her cash advances to defray her travel expenses. Her salary then was withheld, prompting her to file a case with
the NLRC on April 21, 2003 for the reason that the situation had become unbearable for her tantamount to constructive dismissal, with claims for
nonpayment of salaries, service incentive leave pay, 13th month pay, and praying for reinstatement with full back wages, and moral and
exemplary damages, and attorneys fees. On April 30, 2003, the company terminated her services effective May 2, 2003. The Labor Arbiter
found Norkis guilty of illegal dismissal and the NLRC and the Court of Appeals, on appeal, affirmed the decision. Petitioner contends that its acts
were legitimate exercises of the corporations management prerogative and that the private respondent was guilty of insubordination and willful
disobedience justifying her the termination.
Issues:
What are the scope and the limitations on the exercise of management prerogatives, particularly on the transfer of employees?
What is the test to determine the validity of the transfer of employees?
Ruling:
Concededly, employers are allowed, under the broad concept of management prerogative, to regulate all aspects of personnel administration
including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay-off of workers, and the dismissal and recall of workers. It is the
employers prerogative, based on its assessment and perception of its employees qualifications, aptitudes, and competence, to move them
around in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company. An
employees right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to
change his assignment or transfer him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to
him, and it does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may not complain that
it amounts to a constructive dismissal.
The managements right to transfer or re-assign its personnel, however, is not absolute as it is subject to limitations imposed by law, collective
bargaining agreements, and general principles of fair play and justice. The managerial prerogative to transfer personnel must be exercised
without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the
manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In
particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of
proof, the employees transfer shall be tantamount to constructive dismissal.
Page 71
LABOR RELATIONS
72

6. PLDT vs. Paquio, G.R. No. 152689, October 12, 2005
Facts:
Petitioner Philippine Long Distance Telephone Company, Inc. (PLDT) has 27 Exchanges in its Greater Metro Manila (GMM) Network. Alfredo S.
Paguio was the Head of the Garnet Exchange who sent a letter to his immediate supervisor and Asst. VP criticizing the PLDT criteria for
performance rating as unfair because they depended on manpower after receiving its appraisal rating. He also suggested that the criteria failed
to recognize that exchanges with new plants could easily meet the objectives of GMM compared to those with old plants. Despite Paguios
criticism, Garnet Exchange, the oldest plant in GMM, obtained the top rating in the GMM. Nevertheless, Paguio reiterated his letter to Santos
and objected to the performance rating as it was based only on the attainment of objectives, without considering other relevant factors. Two
years later on June 1996, PLDT rebalanced the manpower of the East Center. Paguio wrote Santos and requested reconsideration of the
manpower rebalancing, claiming it was unfair to Garnet Exchange because as the oldest exchange in the East Center, it was disallowed to use
contractors for new installations and was not made beneficiary of the cut-over bonus. He was then was reassigned as Head for Special
Assignment at the Office of the GMM East Center and asked to turn over his functions as Garnet Exchange Head to Tessie Go. Believing that
his transfer was a disciplinary action, Paguio requested the first VP for a formal hearing of the charges against him and asked that his
reassignment be deferred. He also filed a complaint against his supervisor for grave abuse of authority and manipulation of the East Center
performance. Findings were that the memo was in order as it was based on the finding that Paguio was not a team player and cannot accept
decisions of management, which is short of insubordination. He was then advised to transfer to any group in the company that may avail of his
services. Likewise, another memo informed Paguio that his transfer was not in the nature of a disciplinary action that required investigation and
that he agreed with the reasons of the transfer. Aggrieved, Paguio files a complaint for illegal dismissal with prayer for reinstatement and
damages which was later amended to illegal demotion with prayer for reversion to old position, damages and attorneys fees.
Issue:
In brief, the petitioner asks this Court to resolve now the legality of Paguios transfer.
Ruling:
PLDT alleges that the NLRC ruling would allow a change of cause of action since the complaint alleged illegal demotion while the decision
involved illegal transfer. Prefatorily, we note from the records that there has been no change of cause of action from illegal demotion to illegal
transfer. Illegal demotion is a type of illegal transfer. Moreover, it is familiar and fundamental doctrine that it is not the title of the action but the
allegations in the pleading that determines the nature of the action. An employer is free to regulate, according to his own discretion and
judgment, all aspects of employment, including the transfer of employees. It is the employers prerogative, based on its assessment and
perception of its employees qualifications, aptitudes, and competence, to deploy its employees in the various areas of its business operations in
order to ascertain where they will function with maximum benefit to the company. An employees right to security of tenure does not give him
such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be
most useful.
Nonetheless, there are limits to the management prerogative. While it may be conceded that management is in the best position to know its
operational needs, the exercise of management prerogative cannot be utilized to circumvent the law and public policy on labor and social
justice. That prerogative accorded management should not defeat the very purpose for which our labor laws exist: to balance the conflicting
interests of labor and management. By its very nature, management prerogative must be exercised always with the principles of fair play and
justice. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. The employer bears the burden of proving that
the transfer of the employee has complied with the foregoing test.
In the present case, we see no credible reason for Paguios transfer except his criticisms of the companys performance evaluation methods.
Based on the undisputed facts, Garnet Exchange was doing well and excelled in the performance rating. In the same way, Paguios
performance was consistently rated as outstanding. There was also no proof that Paguio refused to comply with any management policy.
Patently, his transfer could not be due to poor performance. Neither was it because he was needed in the new post for the new assignment was
functionless and it was nothing but a title. Paguios transfer could only be caused by the managements negative reception of his comments. It
is prejudicial to Paguio because it left him out for a possible promotion as he was assigned to a functionless position with neither office nor staff.
Hence, transfer was not valid.
Page 72
LABOR RELATIONS
73

7. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
Facts:
According to the respondents, 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 co-worker 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 twenty-one (21) days. She returned to work on December 21, 1999 but she found out that her name was on-hold 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.
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.
Issue:
Whether or not the 1995 Policy/Regulation of the company is violative of the Constitutional rights towards marriage and the family of employees
and of article 136 of the Labor Code.
Ruling:
The Supreme Court held that The 1987 Constitution under Article II, Section 18; Article XIII, Section 3 state our policy towards the protection of
labor under the following provisions. The Civil Code likewise protects labor with the following provisions such as articles 1700 and 1702.
The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar involves Article 136 of the Labor Code which
provides:
Art. 136. It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee
shall not get married, or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated, or
to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.
In denying the contention of the petitioner company, the SC applied the two factors to justify a bona fide occupational qualification:
Since the finding of a bona fide occupational qualification justifies an employers no-spouse rule, the exception is interpreted strictly and
narrowly. There must be a compelling business necessity for which no alternative exists other than the discriminatory practice. To justify a bona
fide occupational qualification, the employer 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.
The requirement that a company policy must be reasonable under the circumstances to qualify as a valid exercise of management prerogative
was also at issue in the 1997 case of Philippine Telegraph and Telephone Company v. NLRC. In said case, the employee was dismissed in
violation of petitioners policy of disqualifying from work any woman worker who contracts marriage. We held that the company policy violates
the right against discrimination afforded all women workers under Article 136 of the Labor Code, but established a permissible exception, viz.:
A requirement that a woman employee must remain unmarried could be justified as a bona fide occupational qualification, or BFOQ, where the
particular requirements of the job would justify the same, but not on the ground of a general principle, such as the desirability of spreading work
in the workplace. A requirement of that nature would be valid provided it reflects an inherent quality reasonably necessary for satisfactory job
performance.
The cases of Duncan and PT&T instruct us that the requirement of reasonableness must be clearly established to uphold the questioned
employment policy. The employer has the burden to prove the existence of a reasonable business necessity. The burden was successfully
discharged in Duncan but not in PT&T.
The SC does not find a reasonable business necessity in the case at bar.
Page 73
LABOR RELATIONS
74

Petitioners sole contention that the company did not just want to have two (2) or more of its employees related between the third degree by
affinity and/or consanguinity is lame. That the second paragraph was meant to give teeth to the first paragraph of the questioned rule is
evidently not the valid reasonable business necessity required by the law.
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-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an
employee 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 employees married to each other will be less efficient. If we uphold the questioned
rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an
employees right to security of tenure.
Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are free to marry persons other than coemployees. 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
employees right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company. Decision
of the CA affirmed.
8. Rivera vs. Solidbank, G.R. No. 163269, April 19, 2006

Facts:
Rivera started working with Solidbank Corporation as an audit clerk since July 1, 1977. Then promoted as credit investigator, senior clerk,
assistant accountant, and finally as assistant manager. Prior to his retirement, he became the Manager of the banks Credit Investigation and
Appraisal Division of the Consumer's Banking Group. In the meantime, Rivera and his brother-in-law put up a poultry business in Cavite. In
December 1994, Solidbank offered two retirement programs to its employees: (a) the Ordinary Retirement Program (ORP), under which an
employee would receive 85% of his monthly basic salary multiplied by the number of years in service; and (b) the Special Retirement Program
(SRP), under which a retiring employee would receive 250% of the gross monthly salary multiplied by the number of years in service. Rivera
decided to devote his time and attention to his poultry business in Cavite and applied for retirement under the SRP. Solidbank approved the
application and confirmed his separation from Solidbank on February 25, 1995. However, Solidbank required Rivera to sign an undated
Release, Waiver and Quitclaim, which was notarized on March 1, 1995. He acknowledged receipt of the net proceeds of his separation and
retirement benefits and promised that "he would not, at any time, in any manner whatsoever, directly or indirectly engage in any unlawful activity
prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary companies, their stockholders, officers, directors, agents or employees,
and their successors-in-interest and will not disclose any information concerning the business of Solidbank, its manner or operation, its plans,
processes, or data of any kind." He also signed in an Undertaking upon which he promised that "not to seek employment with a competitor bank
or financial institution within one (1) year from February 28, 1995, and that any breach of the Undertaking or the provisions of the Release,
Waiver and Quitclaim would entitle Solidbank to a cause of action against him before the appropriate courts of law. But on May 1, 1995, Rivera
got employed with Equitable Banking Corporation (Equitable) as Manager of its Credit Investigation and Appraisal Division of its Consumers'
Banking Group. Upon learning this, Solidbank wrote a letter dated May 18, 1995, informing Rivera that he had violated the Undertaking and
demanded the return of all the monetary benefits he received in consideration of the SRP within five (5) days from receipt; otherwise,
appropriate legal action would be taken against him.
Issue:
Whether the employment ban incorporated in the Undertaking which petitioner executed upon his retirement is unreasonable, oppressive,
hence, contrary to public policy.
Ruling:
The petition is meritorious. There is no dispute between the parties that, in consideration for his availment of the SRP, petitioner executed the
Release, Waiver and Quitclaim, and the Undertaking as supplement thereto, and that he received retirement pay amounting to P963,619.28
from respondent. We agree with petitioner's contention that the issue as to whether the post-retirement competitive employment ban
incorporated in the Undertaking is against public policy is a genuine issue of fact, requiring the parties to present evidence to support their
respective claims. The well-entrenched doctrine is that the law does not relieve a party from the effects of an unwise, foolish or disastrous
contract, entered into with full awareness of what he was doing and entered into and carried out in good faith. Such a contract will not be
Page 74
LABOR RELATIONS
75

discarded even if there was a mistake of law or fact. Courts have no jurisdiction to look into the wisdom of the contract entered into by and
between the parties or to render a decision different therefrom. They have no power to relieve parties from obligation voluntarily assailed, simply
because their contracts turned out to be disastrous deals.
On the other hand, retirement plans, in light of the constitutional mandate of affording full protection to labor, must be liberally construed in favor
of the employee, it being the general rule that pension or retirement plans formulated by the employer are to be construed against it. Retirement
benefits, after all, are intended to help the employee enjoy the remaining years of his life, releasing him from the burden of worrying for his
financial support, and are a form of reward for being loyal to the employer. Undeniably, petitioner retired under the SRP and received
P963,619.28 from respondent. However, petitioner is not proscribed, by waiver or estoppel, from assailing the post-retirement competitive
employment ban since under Article 1409 of the New Civil Code, those contracts whose cause, object or purpose is contrary to law, morals,
good customs, public order or public policy are inexistent or void from the beginning. Estoppel cannot give validity to an act that is prohibited by
law or one that is against public policy.
Respondent, as employer, is burdened to establish that a restrictive covenant barring an employee from accepting a competitive employment
after retirement or resignation is not an unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus, unenforceable for
being repugnant to public policy. Courts should carefully scrutinize all contracts limiting a man's natural right to follow any trade or profession
anywhere he pleases and in any lawful manner. But it is just as important to protect the enjoyment of an establishment in trade or profession,
which its employer has built up by his own honest application to every day duty and the faithful performance of the tasks which every day
imposes upon the ordinary man. What one creates by his own labor is his. Public policy does not intend that another than the producer shall
reap the fruits of labor; rather, it gives to him who labors the right by every legitimate means to protect the fruits of his labor and secure the
enjoyment of them to himself. 56 Freedom to contract must not be unreasonably abridged. Neither must the right to protect by reasonable
restrictions that which a man by industry, skill and good judgment has built up, be denied. Consideration must be given to the employee's right to
earn a living and to his ability to determine with certainty the area within which his employment ban is restituted. A provision on territorial
limitation is necessary to guide an employee of what constitutes as violation of a restrictive covenant and whether the geographic scope is coextensive with that in which the employer is doing business. In considering a territorial restriction, the facts and circumstances surrounding the
case must be considered.
Thus, in determining whether the contract is reasonable or not, the trial court should consider the following factors:
(a) whether the covenant protects a legitimate business interest of the employer; (b) whether the covenant creates an undue burden on the
employee; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations contained in the covenant are
reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy.
We are not impervious of the distinction between restrictive covenants barring an employee to accept a post-employment competitive
employment or restraint on trade in employment contracts and restraints on post-retirement competitive employment in pension and retirement
plans either incorporated in employment contracts or in collective bargaining agreements between the employer and the union of employees, or
separate from said contracts or collective bargaining agreements which provide that an employee who accepts post retirement competitive
employment will forfeit retirement and other benefits or will be obliged to restitute the same to the employer. A post-retirement competitive
employment restriction is designed to protect the employer against competition by former employees who may retire and obtain retirement or
pension benefits and, at the same time, engage in competitive employment.
9. Tiu v. Platinum Plans, Inc., G.R. No. 163512, February 28, 2007
Facts:
Platinum Plans Philippines, Inc. is a domestic corporation engaged in the pre-need industry. From 1987 to 1989, petitioner Daisy B. Tiu was its
Division Marketing Director. Platinum Inc. rehired Tiu as Senior Assistant Vice-President and Territorial Operations Head in charge of its
Hongkong and Asean operations. The parties executed a contract of employment valid for five years. On September 16, 1995, petitioner
stopped reporting for work. In November 1995, she became the Vice-President for Sales of Professional Pension Plans, Inc., a corporation
engaged also in the pre-need industry. Platinum Plans sued Tiu for damages before the RTC of Pasig City, Branch 261. alleging, among others,
that petitioners employment with Professional Pension Plans, Inc. violated the non-involvement clause in her contract of employment:
The EMPLOYEE further undertakes that during his/her engagement with EMPLOYER and in case of separation from the Company, whether
voluntary or for cause, he/she shall not, for the next TWO (2) years thereafter, engage in or be involved with any corporation, association or
entity, whether directly or indirectly, engaged in the same business or belonging to the same pre-need industry as the EMPLOYER. Any breach
of the foregoing provision shall render the EMPLOYEE liable to the EMPLOYER in the amount of One Hundred Thousand Pesos (P100,000.00)
for and as liquidated damages.
Page 75
LABOR RELATIONS
76

Tiu countered that the non-involvement clause was unenforceable for being against public order or public policy: First, the restraint imposed was
much greater than what was necessary to afford respondent a fair and reasonable protection. Petitioner contended that the transfer to a rival
company was an accepted practice in the pre-need industry.
Court of Appeals and trial court ruled against Tiu. It reasoned that petitioner entered into the contract on her own will and volition. Thus, she
bound herself to fulfill not only what was expressly stipulated in the contract, but also all its consequences that were not against good faith,
usage, and law. The appellate court also ruled that the stipulation prohibiting non-employment for two years was valid and enforceable
considering the nature of respondents business.
Issue:
WON the non-involvement clause is valid.
Ruling:
The petition is DENIED for lack of merit.
Supreme Court held that said that such clause was unreasonable restraint of trade and therefore against public policy. However, a noninvolvement clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations as to time, trade, and place.
Nevertheless, in this case, the non-involvement clause has a time limit: two years from the time petitioners employment with respondent ends. It
is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need business akin to respondents.
Since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge of respondents Hongkong and Asean
operations, she had been privy to confidential and highly sensitive marketing strategies of respondents business. To allow her to engage in a
rival business soon after she leaves would make respondents trade secrets vulnerable especially in a highly competitive marketing
environment. In sum, we find the non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and
reasonable protection to respondent.13
In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
Article 115914 of the same Code also provides that obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith. Courts cannot stipulate for the parties nor amend their agreement where the same does not contravene
law, morals, good customs, public order or public policy, for to do so would be to alter the real intent of the parties, and would run contrary to the
function of the courts to give force and effect thereto.15 Not being contrary to public policy, the non-involvement clause, which petitioner and
respondent freely agreed upon, has the force of law between them, and thus, should be complied with in good faith.
Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay respondent P100,000 as liquidated damages. While we have
equitably reduced liquidated damages in certain cases, we cannot do so in this case, since it appears that even from the start, petitioner had
not shown the least intention to fulfill the non-involvement clause in good faith.
10. Duldulao vs. Court of Appeals, G.R. No. 164893, March 1, 2007
Facts:
Petitioner Constancia P. Duldulao was hired by respondent Baguio Colleges Foundation (BCF) as secretary/clerk-typist and assigned to the
College of Law sometime in June of 1987. In August 1996, a certain law student filed a complaint against petitioner for alleged irregularities in
the performance of her work. Petitioner was told to submit her answer to the complaint and given several extensions within which to do so.
Despite the extensions, she failed to submit her answer. On 1 October 1996, Dean Honorato V. Aquino of the College of Law informed
respondents President, Atty. Edilberto B. Tenefrancia, of petitioners failure to file her answer and recommended the assignment of petitioner
outside the College of Law, not only because of such failure to answer but also her having admitted fraternizing with students of the College. On
the same day, respondents Vice President for Administration, Leonardo S. dela Cruz, issued a Department Order to Mrs. Duldulao informing her
of her transfer to the Office of the Principals of the High School and Elementary Departments. On 21 January 1997, the Administrative
Investigating Committee found the Department Order appropriate since it was intended to prevent the controversy between petitioner and the
Page 76
LABOR RELATIONS
77

complaining student from adversely affecting a harmonious relationship within the College of Law among all its constituents. On 17 February
1997, petitioner filed a complaint for constructive dismissal with prayer for moral and exemplary damages and attorneys fees before the NLRC
Regional Arbitration Branch-Cordillera Administrative Region. She stated that aside from being tainted with procedural lapses in violation of her
right to due process, the transfer also amounted to her demotion in rank. The NLRC dismissed the complaint for lack of merit which decision
was affirmed by the Court of Appeals.
Issue:
Whether petitioners transfer as secretary/clerk-typist from the College of Law to the High School and Elementary Departments amounts to
constructive dismissal.
Ruling:
There was no constructive dismissal. There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it would foreclose any choice by him except to forego his continued employment. It
exists where there is cessation of work because "continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay." The factual milieu in this case is different. It is the employers prerogative, based on its assessment
and perception of its employees qualifications, aptitudes, and competence, to move them around in the various areas of its business operations
in order to ascertain where they will function with maximum benefit to the company. An employees right to security of tenure does not give him
such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be
most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or a
diminution of his salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. The transfer
of petitioner does not amount to a demotion in rank and status. Petitioner was a secretary/clerk-typist of the College of Law. As such
secretary/clerk-typist, she would only have to perform the same duties in the Office of the Principals of the High School and Elementary
Departments. Petitioner was not denied due process. Reassignments made by management pending investigation of irregularities allegedly
committed by an employee fall within the ambit of management prerogative. The transfer, while incidental to the pending charges against
petitioner, was not meant to be a penalty, but rather a preventive measure to avoid further damage to the College of Law. The purpose of
reassignments is no different from that of preventive suspension which management could validly impose as a measure of protection of the
companys property pending investigation of any malfeasance or misfeasance committed by the employee.
11. Almario v. Philippine Airlines, G.R. No. 170928, September 11, 2007
Facts:
Vicente S. Almario (Almario), was hired by respondent, Philippine Airlines, Inc. (PAL),
as a Boeing 747 Systems Engineer. He successfully bid for the higher position of
Airbus 300 (A-300) First Officer. Since said higher position required additional training,
he underwent, at PALs expense, more than five months of training consisting of
ground schooling in Manila and flight simulation in Melbourne, Australia. After
completing the training course, Almario served as A-300 First Officer of PAL, but after
eight months of service, he tendered his resignation, for personal reasons. PAL
sent Almario a letter informing that his proposed resignation will make him reimburse
the training costs plus damages as he is required to render 3 years of service because
the company invested heavily on his professional training.
Almario denied the
existence of any agreement with PAL and pointed out that the CBA between PAL and
Airlines Pilot Association carried no such agreement. RTC rendered judgment in favor
of Almario and CA reversed the decision, hence this petition.
Issue:
WON Almario should reimburse the training cost.
Page 77
LABOR RELATIONS
Ruling: Yes.
78
PAL invested for the training of Almario to enable him to acquire a higher level of skill,
proficiency, or technical competence so that he could efficiently discharge the position
of A-300 First Officer. Given that, PAL expected to recover the training costs by
availing of Almarios services for at least three years. The expectation of PAL was not
fully realized, however, due to Almarios resignation after only eight months of service
following the completion of his training course. He cannot, therefore, refuse to
reimburse the costs of training without violating the principle of unjust enrichment.
The pertinent provision of the CBA and its rationale aside, contrary to Almarios claim,
Article 22 of the Civil Code applies.
Art. 22. Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him,
12. San Miguel Corp. v. Pontillas, G.R. No. 155178, May 07, 2008
Facts:
On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas (respondent) as a daily wage company guard. In 1984
respondent became a monthly-paid employee which entitled him to yearly increases in salary. Respondent alleged that his yearly salary
increases were only a percentage of what the other security guards received.
On 19 October 1993, respondent filed an action for recovery of damages due to discrimination under Article 100 4 of the Labor Code, as well as
for recovery of salary differential and backwages, against petitioner. Manager, issued a Memorandum ordering, among others, the transfer of
responsibility of the Oro Verde Warehouse to the newly-organized VisMin Logistics Operations effecting the formal transfer of responsibility of
the security personnel and equipment in the Oro Verde Warehouse. Simultaneously, the manager gave the same information to his Supervising
Security Guards for them to relay the information to the company security guards. Petitioner alleged that respondent was properly notified of the
transfer but he refused to receive
Respondent continued to report at Oro Verde Warehouse. He alleged that he was not properly notified of the transfer and that he did not receive
any written order Petitioner alleged that respondent was properly notified of the transfer but he refused to receive Petitioner also alleged that
respondent was given notices of Guard Detail separately dated. but he still refused to report for duty at the VisMin Logistics Operations.
In a letter, petitioner informed respondent that an administrative investigation would be conducted on relative to his alleged offenses of
Insubordination or Wilful Disobedience in Carrying out Reasonable Instructions of his superior. , respondent filed an amended complaint against
petitioner for illegal dismissal and payment of backwages, termination pay, moral and exemplary damages, and attorney's fees.
LA: Ruled in favour of the company and against Pontillas. The Labor Arbiter recognized the management prerogative to transfer its employees
from one station to another. The Labor Arbiter found nothing prejudicial, unjust, or unreasonable to petitioner's decision to merge the functions of
the Materials Management of the Mandaue Brewery and the Physical Distribution Group which resulted to the forming of the VisMin Logistics
Operations. The Labor Arbiter further ruled that petitioner did not violate Article 100 of the Labor Code. Labor Arbiter ruled that respondent was
accorded due process before his termination from the service. He was investigated with the assistance of counsel, and he was able to confront
petitioner's witnesses and present evidence in his favor.
NLRC: Set aside the Labor Arbiter's Decision. The NLRC ruled that respondent was not informed of his transfer from Oro Verde Warehouse to
VisMin Logistics Operations. The notices allegedly sent to respondent did not indicate any receipt from respondent. NLRC further ruled that
respondent was a victim of discrimination. The NLRC declared that petitioner failed to justify why respondent was not entitled to the full rate of
salary increases enjoyed by other security guards.
CA: Court of Appeals affirmed with modification the NLRC's Decision. Court of Appeals ruled that under Article 282(a) of the Labor Code, as
amended, an employer may terminate an employment for serious misconduct or willful disobedience by the employee of the lawful orders of his
Page 78
LABOR RELATIONS
79

employer or his representative in connection with his work. The Court of Appeals ruled that there was no sufficient evidence that would show
that respondent's failure to report to his new superior was willful and characterized by a perverse and wrongful attitude.
Issue:
Legality of respondent's dismissal from employment.
Ruling: Respondent was dismissed for a just cause.
An employer may terminate an employment for serious misconduct or wilful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work. Wilful disobedience requires the concurrence of two elements: (1) the employee's assailed
conduct must have been wilful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. Employer exercises the
prerogative to transfer an employee for valid reasons and according to the requirements of its business, provided the transfer does not result in
demotion in rank or diminution of the employee's salary, benefits, and other privileges. In this case, we found that the order of transfer was
reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin Logistics Operations. Respondent was properly informed
of the transfer but he refused to receive the notices on the pretext that he was wary because of his pending case against petitioner. REINSTATE
Decision of the Labor Arbiter.
13. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
Facts:
Petitioners are employees of Tryco Pharmaceuticals Corporation, maker of veterinary medicines and products. Tryco and the petitioners signed
a Memorandum of Agreement (MOA), providing for a compressed workweek schedule to be implemented in the company effective May 20,
1996. The MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of
1990, Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday,
shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those
hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m.
from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also
consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to
overtime pay. Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the implementation of a
compressed workweek in the company. In January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining agreement
(CBA) but failed to arrive at a new agreement. Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of
the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City since its
operating permit was licensed there. Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed petitioners to report to the
company's plant site in Bulacan. BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor
practice. In protest, BMT declared a strike on May 26, 1997. Petitioners then filed their complaints to the labor arbiter alleging that Tryco
negotiated in bad faith and unfair labor practice of Tryco by transferring the members of the union in order to paralyze it and that therefore it
amounted to constructive dismissal.
Issue:
Was there constructive dismissal due to the transfer of the petitioners from Caloocan City to San Rafael Bulacan?
Ruling:
The petition has no merit. Findings of fact of labor officials, who are deemed to have acquired expertise in matters within their respective
jurisdiction, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence.This is particularly
true when the findings of the Labor Arbiter, the NLRC and the CA are in absolute agreement. In this case, the Labor Arbiter, the NLRC, and the
CA uniformly agreed that the petitioners were not constructively dismissed.
Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the
Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of
the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve its purpose cannot be denied.
Page 79
LABOR RELATIONS
80

This prerogative extends to the management's right to regulate, according to its own discretion and judgment, all aspects of employment,
including the freedom to transfer and reassign employees according to the requirements of its business.Management's prerogative of
transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is, therefore,
generally not constitutive of constructive dismissal. Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department
was well within the scope of its management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution
of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. However, the employer
has the burden of proving that the transfer of an employee is for valid and legitimate grounds. The employer must show that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits.
Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the
petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all
residents of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. Objection to a
transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not
a valid reason to disobey an order of transfer.
Hence petition was denied for lack of merit.
14. Coca-Cola Bottlers Philippines, Inc. v. Del Villar, G.R. No. 163091, October 6, 2010
Facts:
Coca-Cola hired respondent Angel U. del Villar (Del Villar) on May 1, 1990 as Physical Distribution Fleet Manager with a job grade of S-7 and
monthly salary of P50,000.00, aside from the use of a company car, gasoline allowance, and annual foreign travel, among other benefits. In
1992, as part of the reorganization of the Company, Del Villar became the Transportation Services Manager, under the Business Logistic
Directorate, headed by Director Edgardo I. San Juan (San Juan).
As Transportation Services Manager, Del Villar prepares the budget for the vehicles of the Company nationwide. Del Villar submitted a Report to
the Company President, detailing an alleged fraudulent scheme undertaken by certain Company officials in conspiracy with local truck
manufacturers, overpricing the trucks purchased by the Company by as much as P70,000.00 each. Del Villar implicated San Juan and Jose L.
Pineda, Jr., among other Company officials, as part of the conspiracy. Pineda then served as the Executive Assistant in the Business Logistic
Directorate in charge of the Refrigeration Services of the Company.
Seven months after the submission of his Report on the fraudulent scheme of several company officials, Del Villar received a Memorandum from
San Juan, informing him that (1) he was designated as Staff Assistant to the Corporate Purchasing and Materials Control Manager, with a job
grade of NS-VII; (2) with Del Villars new assignment, he ceased to be entitled to the benefits accruing to an S-7 position under existing company
rules and policies; and (3) Del Villar was to turn over the vehicle assigned to him as Transportation Services Manager to Pineda by July 10,
1996.
Although as the Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar continued to receive the same salary as
Transportation Services Manager, but his car and other privileges were withdrawn and he spent his time at his new post sitting "at a desk with
no meaningful work whatsoever." Del Villar believed that he was demoted by the Company to force him to resign. Unable to endure any further
the harassment, Del Villar filed with the Arbitration Branch of the NLRC on November 11, 1996 a complaint against the Company for illegal
demotion and forfeiture of company privileges.
According to Coca-Cola [Del Villar] was not outrightly dismissed; instead, he was removed from his former position as Transportation Services
Manager, and demoted to Staff Assistant to the Corporate Purchasing and Materials Control Manager. The Company embarked on a
reorganization of the Business Logistic Directorate. As a result, the functions related to Refrigeration were assigned to the Transportation
Services Manager, which was renamed the Transportation and Refrigeration Services Manager.
Page 80
LABOR RELATIONS
81

The Company failed to appear, despite due notice, at the scheduled preliminary conference before the NLRC Arbitration Branch. The Company
reasoned that in appointing Del Villar as the Staff Assistant of the Corporate Purchasing and Materials Control Manager, from his former position
as Transportation Services Manager, the Company was merely exercising its inherent management prerogative to transfer an employee from
one position to another. They contended that Del Villar had no vested right to the privileges he previously enjoyed as Transportation Services
Manager. Since the various programs will affect some of its employees, in good faith the Company has initiated a special program called
"Project New Start". This program is intended to assist employees whose positions will be declared redundant with the implementation of new
distribution systems, utilization of improved operational processes and functional re-organizations.
Labor Arbiter rendered a Decision in Del Villars favor. The Labor Arbiter held that the allegations in Del Villars complaint sufficiently presented a
cause of action against the Company.
Del Villar appears to have been singled out or discriminated upon due to his having reported the 1996 truck scam, and his present isolation can
be seen as a punishment for acting in a righteous and forthright manner. Otherwise, as a "Staff Assistant" [Del Villar] should have been given
some meaningful or responsible work appurtenant to the job designation.
NLRC reversed the Labor Arbiter, reasoning that:virtualaw
Contrary to the Labor Arbiters pronouncement that [the Company] should have rebutted allegations of bad faith and malice, we are more
inclined to apply the presumption of good faith. Mere conclusions of fact and law should not be used as bases for an automatic finding of bad
faith. As it is, we do not even see any disclosure of the scam and his alleged demotion. If indeed the so-called "great grandmother of Coca cola
scams of 1996" were true, the logical consequence of such disclosure is for the president of the company to dismiss the erring employees and
officers for their highly irregular acts and not to penalize [Del Villar] for making such disclosure.
This is amply supported by the fact that the [the Company] conducted a thorough investigation of the reported scam and even obtained the
services of an independent auditor to determine whether the alleged anomalous transactions were actually irregular and/or questionable. This
manifests that [Del Villars] disclosure was taken seriously contrary to his claims of discrimination. Accordingly, it cannot be said that the act of
the [Company] was retaliatory or penal in nature nor tainted with bad faith and/or malice. Otherwise, [the Company] would not have given grave
attention to the disclosure of [Del Villar].
A company cannot, however, be reasonably expected to provide the same benefits to an employee whose position for example, requires that he
stays in the office during working hours. Benefits, privileges and perquisites that attach to a certain position do not provide sufficient bases for
determining the superiority or inferiority of the position so held.
Issue:
Whether or not Company, in transferring Del Villar from the position of Transportation Services Manager to Staff Assistant to the Corporate
Purchasing and Materials Control Manager, validly exercised its management prerogative or committed constructive dismissal, or demotion?
Whether or not there has been redundancy in the position held by Del Villar that justified the company from the act of taking the position from
him?
Ruling:
In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from one office or area of
operation to another provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated
by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. The right of employees to security
of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them.virtuallawlibrary
Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair
play and justice. But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel must be exercised without
grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in
which that right is exercised.
Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to
show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of
his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employees transfer shall be tantamount
to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or
unlikely; as an offer involving a demotion in rank and diminution in pay.
Page 81
LABOR RELATIONS
82

Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to
the employee leaving him with no option but to forego with his continued employment.uallawlibrary
After a careful scrutiny of the records, we agree with the Labor Arbiter and the Court of Appeals that the Company failed to discharge this burden
of proof. The Company and its officials attempt to justify the transfer of Del Villar by alleging his unsatisfactory performance as Transportation
Services Manager. The Company disclosed that: [Del Villar] displayed an utterly woeful performance. He was unable to submit basic data as to
type and brand of vehicles with highest/lowest maintenance cost as requested. [Del Villar] could not even update the records of his office. He
could not work with minimum or no supervision. His activities needed to be closely and constantly monitored by his superiors. [Del Villar] lacked
initiative and had to be constantly reminded of what to do. He merited a mediocre grade of 2 in a scale of one (1) to five (5), the latter number
being the highest grade
We are unconvinced. The dismal performance evaluations of Del Villar were prepared by San Juan and Pineda after Del Villar already
implicated his two superiors in his Report dated January 4, 1996 in an alleged fraudulent scheme against the Company. More importantly, we
give weight to the following instances establishing that Del Villar was not merely transferred from the position of Transportation Services
Manager to the position of Staff Assistant to the Corporate Purchasing and Materials Control Manager; he was evidently demoted.
A transfer is a movement from one position to another which is of equivalent rank, level or salary, without break in service . Promotion, on the
other hand, is the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually
accompanied by an increase in salary. Conversely, demotion involves a situation where an employee 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.
Del Villars demotion is readily apparent in his new designation. Formerly, he was the Transportation Services Manager; then he was made a
Staff Assistant a subordinate to another manager, particularly, the Corporate Purchasing and Materials Control Manager.
Second, the two posts are not of the same weight in terms of duties and responsibilities. Del Villars position as Transportation Services Manager
involved a high degree of responsibility, he being in charge of preparing the budget for all of the vehicles of the Company nationwide. As Staff
Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar contended that he was not assigned any meaningful work at all.
Third, while Del Villars transfer did not result in the reduction of his salary, there was a diminution in his benefits. The Company admits that as
Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar could no longer enjoy the use of a company car, gasoline
allowance, and annual foreign travel, which Del Villar previously enjoyed as Transportation Services Manager.
Fourth, it was not bad enough that Del Villar was demoted, but he was even placed by the Company under the control and supervision of
Pineda as the latters Staff Assistant. To recall, Pineda was one of the Company officials who Del Villar accused of defrauding the Company in
his Report dated January 4, 1996. It is not too difficult to imagine that the working relations between Del Villar, the accuser, and Pineda, the
accused, had been strained and hostile. The situation would be more oppressive for Del Villar because of his subordinate position vis-vis Pineda.
Fifth, all the foregoing caused Del Villar inconvenience and prejudice, so unbearable for him that he was constrained to seek remedy from the
NLRC. The Labor Arbiter was correct in his observation that had Del Villar resigned immediately after his "transfer," he could be said to have
been constructively dismissed. There is constructive dismissal when there is a demotion in rank and/or diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to the employee.
Eventually, however, the Company actually terminated Del Villars services effective May 31, 1998, as his position was no longer necessary or
was considered redundant due to the reorganization of the Business Logistic Directorate. Redundancy is one of the authorized causes for the
dismissal of an employee. It is governed by Article 283 of the Labor Code, which reads:
ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to
the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and
the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation
of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least 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 to 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.
Page 82
LABOR RELATIONS
83

Redundancy, for purposes of the Labor Code, exists where the services of an employee 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.
The determination that the employee's services are no longer necessary or sustainable and, therefore, properly terminable for being redundant
is an exercise of business judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the
Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act.
In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such
redundancy to justify the dismissal of the affected employees.
Coca Cola presented no other evidence , Neither did the Company present proof that it had complied with the procedural requirement in Article
283 of prior notice to the Department of Labor and Employment (DOLE) of the termination of Del Villars employment due to redundancy one
month prior to May 31, 1998.
Del Villars poor employee performance is irrelevant as regards the issue on redundancy. Redundancy arises because there is no more need for
the employees position in relation to the whole business organization, and not because the employee unsatisfactorily performed the duties and
responsibilities required by his position.
An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and reinstatement. If reinstatement is not viable,
separation pay is awarded to the employee. In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount
to be awarded shall be equivalent to one month salary for every year of service. Under Republic Act No. 6715, employees who are illegally
dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their
actual compensation was withheld from them up to the time of their actual reinstatement but if reinstatement is no longer possible, the
backwages shall be computed from the time of their illegal termination up to the finality of the decision. We note that Del Villars reinstatement is
no longer possible because the position he previously occupied no longer exists, per San Juans Affidavit dated October 15, 1998. Also, Del Villar
had already received his separation pay sometime in October 1998.
15. Manila Electric Co. vs. Lim, G.R. No. 184769, October 5, 2010
Facts:
Rosario G. Lim (respondent), also known as Cherry Lim, is an administrative clerk at

the Manila Electric Company (MERALCO). On June 4, 2008, an anonymous letter was
posted at the door of the Metering Office of the Administration building of MERALCO
Plaridel, Bulacan Sector, at which respondent is assigned, denouncing respondent.
The letter reads:
Cherry Lim:
MATAPOS MONG LAMUNIN LAHAT NG BIYAYA NG MERALCO, NGAYON NAMAN AY GUSTO
MONG PALAMON ANG BUONG KUMPANYA SA MGA BUWAYA NG GOBYERNO. KAPAL NG
MUKHA MO, LUMAYAS KA RITO, WALANG UTANG NA LOOB
Resource Staffing, directed the transfer of respondent to MERALCO's Alabang Sector in
Muntinlupa as "A/F OTMS Clerk," effective July 18, 2008 in light of the receipt of ". . .
reports that there were accusations and threats directed against her from unknown
individuals and which could possibly compromise her safety and security."
Respondent, by letter of July 10, 2008 addressed to petitioner Ruben A. Sapitula, VicePresident and Head of MERALCO's Human Resource Administration, appealed her
transfer and requested for a dialogue so she could voice her concerns and misgivings
on the matter, claiming that the "punitive" nature of the transfer amounted to a denial
of due process. Citing the grueling travel from her residence in Pampanga to Alabang
Page 83
LABOR RELATIONS
84
and back entails, and violation of the provisions on job security of their Collective
Bargaining Agreement (CBA).
Respondent filed a petition for the issuance of a writ of habeas data against
petitioners before the Regional Trial Court (RTC) of Bulacan. By respondent's
allegation, petitioners' unlawful act and omission consisting of their continued failure
and refusal to provide her with details or information about the alleged report which
MERALCO purportedly received concerning threats to her safety and security amount
to a violation of her right to privacy in life, liberty and security, correctible by habeas
data.
Respondent is essentially questioning the transfer of her place of work by her
employer and the terms and conditions of her employment which arise from an
employer-employee relationship over which the NLRC and the Labor Arbiters under
Article 217 of the Labor Code have jurisdiction.
Petitioners moved for the dismissal of the petition and recall of the TRO on the
grounds that, inter alia, resort to a petition for writ of habeas data was not in order;
and the RTC lacked jurisdiction over the case which properly belongs to the National
Labor Relations Commission (NLRC).
Issue:
Whether or not, RTC has jurisdiction.
Ruling:
Respondent's plea that she be spared from complying with MERALCO's Memorandum
directing her reassignment to the Alabang Sector, under the guise of a quest for
information or data allegedly in possession of petitioners, does not fall within the
province of a writ of habeas data.
It is evident that respondent's reservations on the real reasons for her transfer a
legitimate concern respecting the terms and conditions of one's employment are
what prompted her to adopt the extraordinary remedy of habeas data. Jurisdiction
over such concerns is inarguably lodged by law with the NLRC and the Labor Arbiters.
16. Bello vs. Bonifacio Security Services, G.R. No. 188086, August 3, 2011
Facts:
Respondent Bonifacio Security Services, Inc. (BSSI) is a domestic private corporation

engaged in the business of providing security services. In July 2001, the BSSI hired
Bello as a roving traffic marshal to manage traffic and to conduct security and safetyrelated operations in the Bonifacio Global City (BGC). In August 2001, Bello was
posted at the Negros Navigation Company in Pier 2, North Harbor, to supervise
sectoral operations. In November 2001, he was assigned at BGC as assistant
detachment commander. After a week, he was transferred to Pacific Plaza Towers as
Page 84
LABOR RELATIONS
85
assistant detachment commander and later as detachment commander. In June 2002,

he was assigned at Pier 2, North Harbor as assistant detachment commander, but
later reassigned to BGC. In August 2002, the BSSI hired a new operations manager,
resulting in the reorganization of posts. In October 2002, Bello was assigned as roving
traffic marshal at the BGC. On October 25, 2002, he filed an indefinite leave of
absence when his new assignment took effect.
On November 5, 2002, Bello filed a complaint against the BSSI and its General
Manager, respondent Samuel Tomas, with the National Labor Relations
Commission (NLRC), claiming that he had been constructively dismissed when he was
demoted from a detachment commander to a mere traffic marshal. He alleged that he
received a series of promotions from 2001 to 2002, from traffic marshal to supervisor,
to assistant detachment commander, and to detachment commander.
The BSSI denied Bello's claim of constructive dismissal, arguing that no promotion
took place; Bello's designation as assistant detachment commander or detachment
commander was not an employment position but a duty-related assignment; Bello
abandoned his job when he went on an indefinite leave of absence and did not report
for work.
Labor Arbiter Cresencio G. Ramos, Jr. found that Bello was illegally dismissed, noting
that the BSSI failed to adduce evidence that Bello abandoned his employment.
In its March 26, 2008 resolution, the NLRC affirmed the labor arbiter's decision, finding
that Bello had been constructively dismissed when he was demoted to the rank-andfile position of traffic marshal after occupying the supervisory position of assistant
detachment commander and detachment commander.
The CA nullified the NLRC resolutions, finding the records bereft of evidence
substantiating the labor arbiter's and the NLRC's conclusions that Bello had been
constructively dismissed. It noted that Bello offered no evidence to prove that there
was a series of promotions that would justify his claim of subsequent demotion. The
CA denied
the BSSI's motion for reconsideration, paving the way for the present petition.
Issue:
Whether or not, Bello was illegally dismissed.
Ruling:
We find no reason to disturb the CA conclusion that there was no constructive

dismissal. Case law defines constructive dismissal as a cessation of work because
continued employment has been rendered impossible, unreasonable, or unlikely, as
when there is a demotion in rank or diminution in pay, or both, or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee.
Other than his bare and self-serving allegations, Bello has not offered any evidence
that he was promoted in a span of four months since his employment as traffic
marshal in July 2001 to a detachment commander in November 2001. During his sixmonth probationary period of employment, it is highly improbable that Bello would be
Page 85
LABOR RELATIONS
86
promoted after just a month of employment, from a traffic marshal in July 2001 to
supervisor in August 2001, and three months later to assistant detachment
commander and to detachment commander in November 2001. At most, the BSSI
merely changed his assignment or transferred him to the post where his service would
be most beneficial to its clients. The management's prerogative of transferring and
reassigning employees from one area of operation to another in order to meet the
requirements of the business is generally not constitutive of constructive
dismissal. We see this to be the case in the present dispute so that the consequent
reassignment of Bello to a traffic marshal post was well within the scope of the BSSI's
management prerogative.
17. Alert Security and Investigation Agency vs. Pasawilan, G.R. No. 182397, September 14, 2011
Facts:
Respondents Saidali Pasawilan, Wilfredo Verceles and Melchor Bulusan were all employed by petitioner Alert Security and Investigation
Agency, Inc. (Alert Security) as security guards beginning March 31, 1996, January 14, 1997, and January 24, 1997, respectively. They were
paid 165.00 pesos a day as regular employees, and assigned at the Department of Science and Technology (DOST) pursuant to a security
service contract between the DOST and Alert Security.
Respondents aver that because they were underpaid, they filed a complaint for money claims against Alert Security and its president and
general manager, petitioner Manuel D. Dasig, before Labor Arbiter Ariel C. Santos. As a result of their complaint, they were relieved from their
posts in the DOST and were not given new assignments despite the lapse of six months. On January 26, 1999, they filed a joint complaint for
illegal dismissal against petitioners.
Petitioners, on the other hand, deny that they dismissed the respondents. Petitioners presented "Duty Detail Orders" that Alert Security issued to
show that respondents were in fact assigned to LRTA. Respondents, however, failed to report at the LRTA and instead kept loitering at the
DOST and tried to convince other security guards to file complaints against Alert Security. Thus, on August 3, 1998, Alert Security filed a
"termination report" with the Department of Labor and Employment relative to the termination of the respondents.
Issue:
Whether respondents were illegally dismissed
Rulings:
We rule in the affirmative.
As a rule, employment cannot be terminated by an employer without any just or authorized cause. No less than the 1987 Constitution in Section
3, Article 13 guarantees security of tenure for workers and because of this, an employee may only be terminated for just or authorized causes
that must comply with the due process requirements mandated by law. Hence, employers are barred from arbitrarily removing their workers
whenever and however they want. The law sets the valid grounds for termination as well as the proper procedure to take when terminating the
services of an employee.
Although we recognize the right of employers to shape their own work force, this management prerogative must not curtail the basic right of
employees to security of tenure. There must be a valid and lawful reason for terminating the employment of a worker. Otherwise, it is illegal and
would be dealt with by the courts accordingly.
The Labor Code, as amended, enumerates several just and authorized causes for a valid termination of employment. An employee asserting his
right and asking for minimum wage is not among those causes. Dismissing an employee on this ground amounts to retaliation by management
for an employees legitimate grievance without due process. Such stroke of retribution has no place in Philippine Labor Laws.
On the element of the failure of the employee to report for work, we also cannot accept the allegations of petitioners that respondents
unjustifiably refused to report for duty in their new posts. A careful review of the records reveals that there is no showing that respondents were
notified of their new assignments. Granting that the "Duty Detail Orders" were indeed issued, they served no purpose unless the intended
recipients of the orders are informed of such.
Page 86
LABOR RELATIONS
87

The employer cannot simply conclude that an employee is ipso facto notified of a transfer when there is no evidence to indicate that the
employee had knowledge of the transfer order. Hence, the failure of an employee to report for work at the new location cannot be taken against
him as an element of abandonment.
We acknowledge and recognize the right of an employer to transfer employees in the interest of the service. This exercise is a management
prerogative which is a lawful right of an employer. However, like all rights, there are limitations to the right to transfer employees. As ruled in the
case of Blue Dairy Corporation v. NLRC:
x x x The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements
of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a
subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits. x x x
In addition to these tests for a valid transfer, there should be proper and effective notice to the employee concerned. It is the employers burden
to show that the employee was duly notified of the transfer. Verily, an employer cannot reasonably expect an employee to report for work in a
new location without first informing said employee of the transfer. Petitioners insistence on the sufficiency of mere issuance of the transfer order
is indicative of bad faith on their part.
18. Manila Pavilion Hotel vs. Delada, G.R. No. 189947, January 25, 2012
Facts:
Delada was the Union President of the Manila Pavilion Supervisors Association at MPH. He was originally assigned as Head Waiter of
Rotisserie, a fine-dining restaurant operated by petitioner. Pursuant to a supervisory personnel reorganization program, MPH reassigned him as
Head Waiter of Seasons Coffee Shop, another restaurant operated by petitioner at the same hotel. Respondent declined the inter-outlet transfer
and instead asked for a grievance meeting on the matter, pursuant to their Collective Bargaining Agreement (CBA). He also requested his
retention as Head Waiter of Rotisserie while the grievance procedure was ongoing.
MPH replied and told respondent to report to his new assignment for the time being, without prejudice to the resolution of the grievance involving
the transfer. He adamantly refused to assume his new post at the Seasons Coffee Shop and instead continued to report to his previous
assignment at Rotisserie. Thus, MPH sent him several memoranda on various dates, requiring him to explain in writing why he should not be
penalized for the following offenses: serious misconduct; willful disobedience of the lawful orders of the employer; gross insubordination; gross
and habitual neglect of duties; and willful breach of trust. Despite the notices from MPH, Delada persistently rebuffed orders for him to report to
his new assignment. According to him, since the grievance machinery under their CBA had already been initiated, his transfer must be held in
abeyance. Thus, on 9 May 2007, MPH initiated administrative proceedings against him.
Issue:
Whether MPH retained the authority to continue with the administrative case against Delada for insubordination and willful disobedience of the
transfer order.
Rulings:
Accordingly, we rule in this case that MPH did not lose its authority to discipline respondent for his continued refusal to report to his new
assignment. In relation to this point, we recall our Decision in Allied Banking Corporation v. Court of Appeals.
In Allied Banking Corporation, employer Allied Bank reassigned respondent Galanida from its Cebu City branch to its Bacolod and Tagbilaran
branches. He refused to follow the transfer order and instead filed a Complaint before the Labor Arbiter for constructive dismissal. While the
case was pending, Allied Bank insisted that he report to his new assignment. When he continued to refuse, it directed him to explain in writing
why no disciplinary action should be meted out to him. Due to his continued refusal to report to his new assignment, Allied Bank eventually
terminated his services. When the issue of whether he could validly refuse to obey the transfer orders was brought before this Court, we ruled
thus:
The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer. Employees may object to, negotiate
and seek redress against employers for rules or orders that they regard as unjust or illegal. However, until and unless these rules or orders are
declared illegal or improper by competent authority, the employees ignore or disobey them at their peril. For Galanidas continued refusal to
Page 87
LABOR RELATIONS
88

obey Allied Bank's transfer orders, we hold that the bank dismissed Galanida for just cause in accordance with Article 282(a) of the Labor Code.
Galanida is thus not entitled to reinstatement or to separation pay. (Emphasis supplied, citations omitted).
It is important to note what the PVA said on Deladas defiance of the transfer order:
In fact, Delada cannot hide under the legal cloak of the grievance machinery of the CBA or the voluntary arbitration proceedings to disobey a
valid order of transfer from the management of the hotel. While it is true that Deladas transfer to Seasons is the subject of the grievance
machinery in accordance with the provisions of their CBA, Delada is expected to comply first with the said lawful directive while awaiting the
results of the decision in the grievance proceedings. This issue falls squarely in the case of Allied Banking Corporation vs. Court of Appeals x x
x.
Pursuant to Allied Banking, unless the order of MPH is rendered invalid, there is a presumption of the validity of that order. Since the PVA
eventually ruled that the transfer order was a valid exercise of management prerogative, we hereby reverse the Decision and the Resolution of
the CA affirming the Decision of the PVA in this respect. MPH had the authority to continue with the administrative proceedings for
insubordination and willful disobedience against Delada and to impose on him the penalty of suspension. As a consequence, petitioner is not
liable to pay back wages and other benefits for the period corresponding to the penalty of 90-day suspension.
Page 88
LABOR RELATIONS
89

TERMINATION OF EMPLOYMENT
1. Retuya v. NLRC, G.R. No. 148848, August 5, 2003, citing Bustamante

Facts:
Private respondent, Insular Builders, Inc., is a family-owned corporation managed and operated principally by Antonio Murillo, father, and his
son, Rodolfo Murillo. It is engaged in the construction business. Petitioners, on the other hand, were workers who have rendered services in
various corporations of private respondents, namely Mindanao Integrated Builders, Inc., Sta. Clara Plywood, Inc., Insular Builders, Inc. and
Queen City Builders, Inc.
Early 1993, at the height of the feud between private respondents Antonio Murillo and Rodolfo Murillo, the former discharged the latter from his
position as manager of Insular Builders, Inc. and assumed control of the company. Petitioners found themselves in the middle of the crossfire
and were told to temporarily stop working. Later, or on July 26, 1993, private respondent Antonio Murillo dismissed petitioners and reported the
matter to the Department of Labor and Employment (DOLE). Petitioners were however made to continue their work, rendering the same
services, in the same place, locality and at the same office but under a different company, the Queen City Builders, Inc., managed and controlled
by private respondent Rodolfo Murillo.
On August 3, 1993, petitioners filed with the NLRC, Regional Arbitration Branch No. X, Davao City, a complaint for illegal dismissal, nonpayment of wages, 13th month pay, and retirement pay as regards petitioner Abdon Dayson. Petitioners averred that they were terminated from
employment on July 26, 1993 without prior notice and also in absence of any valid cause. They alleged that their termination was an off-shoot of
the supposed personal rift and disagreements between private respondents Antonio Murillo and Rodolfo Murillo.
Issue:
Whether petitioners are entitled to full back wages and separation pay in accordance with Article 279 of the Labor Code
HELD
Bustamante v. NLRC held that illegally dismissed employees were entitled to full back wages that should not be diminished or reduced by the
amount they had earned from another employment during the period of their illegal dismissal. While litigating, employees must still earn a living.
Furthermore, as penalty for their illegal dismissal, their employers must pay them full back wages. This rule has been uniformly applied in
subsequent cases.
In the present case, petitioners were dismissed because of a "change of management." They were not given any prior written notice, but simply
told that their services were terminated on the day they stopped working for Insular Builders, Inc. Under the circumstances, the CA was correct
in upholding the labor arbiter's finding that they had been illegally dismissed.
Having been illegally dismissed, petitioners should be awarded back wages in accordance with Bustamante v. NLRC. The fact that they worked
for a sister company immediately after being dismissed from Insular Builders, Inc. should not preclude such award.
Bustamante v. NLRC held that illegally dismissed employees were entitled to full back wages that should not be diminished or reduced by the
amount they had earned from another employment during the period of their illegal dismissal. While litigating, employees must still earn a living.
Furthermore, as penalty for their illegal dismissal, their employers must pay them full back wages. This rule has been uniformly applied in
subsequent cases.
In the present case, petitioners were dismissed because of a "change of management." They were not given any prior written notice, but simply
told that their services were terminated on the day they stopped working for Insular Builders, Inc. Under the circumstances, the CA was correct
in upholding the labor arbiter's finding that they had been illegally dismissed.
Having been illegally dismissed, petitioners should be awarded back wages in accordance with Bustamante v. NLRC. The fact that they worked
for a sister company immediately after being dismissed from Insular Builders, Inc. should not preclude such award.
While it may be true that petitioners continued to work in the same place and office as in their previous employment, it is equally true that they
had in fact been illegally dismissed by their previous employer. Thus, they lost their former work status and benefits in a manner violative of the
Page 89
LABOR RELATIONS
90

law. Be it noted that, without their consent, their employment was changed. They became new employees of the latter firm and, as such, were
deprived of seniority and other employment benefits they had when they were still with their former employer.
2. Agabon vs. NLRC, G.R. No. 158693, November 17, 2004

Facts:
Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed
petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they
were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December
28, 1999.
The Labor Arbiter: declared the dismissals illegal and ordered private respondent to pay the monetary claims.
NLRC: reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and
separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.
CA: reversed the decision of the NLRC.
Hence this petition.
Issue:
Whether petitioners were illegally dismissed.
Ruling:
Negative. To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the
employee the opportunity to be heard and to defend himself. Article 282 of the Labor Code enumerates the just causes for termination by the
employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latters representative in
connection with the employees work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of
the trust reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the
foregoing. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty,
hence, a just cause for termination of employment by the employer. For a valid finding of abandonment, these two factors should be present:
(1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship,
with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no
more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. In
February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for
another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time
they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time
warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to
sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be
meted out to him. The law imposes many obligations on the employer such as providing just compensation to workers, observance of the
procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the
employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty. The employer
may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. After
establishing that the terminations were for a just and valid cause, we now determine if the procedures for dismissal were observed. The
procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code:
Standards of due process: requirements of notice. In all cases of termination of employment, the following standards of due process shall be
substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and
Page 90
LABOR RELATIONS
91

(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination.
In case of termination, the foregoing notices shall be served on the employees last known address.
Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes
involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires
payment of separation pay. When the termination of employment is declared illegal, reinstatement and full backwages are mandated under
Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Procedurally, (1) if the
dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to
be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is
based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment
written notices 30 days prior to the effectivity of his separation. From the foregoing rules four possible situations may be derived: (1) the
dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article
284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is
without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not
observed. In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability. In the second and third situations
where the dismissals are illegal, Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other
privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the
compensation was not paid up to the time of actual reinstatement. In the fourth situation, the dismissal should be upheld. While the procedural
infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the
procedural requirements of due process. The present case squarely falls under the fourth situation. 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
employees last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process. To be sure,
the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in
the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is
that which comports with the deepest notions of what is fair and right and just. It is a constitutional restraint on the legislative as well as on the
executive and judicial powers of the government provided by the Bill of Rights. Due process under the Labor Code, like Constitutional due
process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural,
i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended,
otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10. Breaches of
these due process requirements violate the Labor Code. 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 employees from being
unjustly terminated without just cause after notice and hearing. The employer should not be compelled to continue employing a person who is
admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law protecting the
rights of the laborer authorizes neither oppression nor self-destruction of the employer. It must be stressed that in the present case, the
petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were complied with, would undoubtedly
result in a valid dismissal. An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice
Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the eminent Justice Jose P.
Laurel observed, social justice must be founded on the recognition of the necessity of interdependence among diverse units of a society and of
the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life , consistent with the
fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about the greatest
good to the greatest number.
Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners holiday pay, service incentive leave pay and
13th month pay. We are not persuaded. We affirm the ruling of the appellate court on petitioners money claims. Private respondent is liable for
petitioners holiday pay, service incentive leave pay and 13 th month pay without deductions. As a general rule, one who pleads payment has the
burden of proving it. Even where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove
payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records,
remittances and other similar documents which will show that overtime, differentials, service incentive leave 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 employer. In the case at bar, if private
respondent indeed paid petitioners holiday pay and service incentive leave pay, it could have easily presented documentary proofs of such
monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13 th month pay wherein it presented cash
vouchers showing payments of the benefit in the years disputed. Allegations by private respondent that it does not operate during holidays and
Page 91
LABOR RELATIONS
92

that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to
discharge the onus probandi thereby making it liable for such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 13 th month pay, we find the same to be
unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to
employees not already receiving the same so as to further protect the level of real wages from the ravages of world-wide inflation. Clearly, as
additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit:
(f)
Wage paid to any employee shall mean 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 employer to an employee 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 employer to the employee
from which an employer is prohibited under Article 113 of the same Code from making any deductions without the employees knowledge and
consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner
Virgilio Agabons 13th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner
Virgilio Agabon included the same as one of his money claims against private respondent. The Court of Appeals properly reinstated the
monetary claims awarded by the Labor Arbiter ordering the private respondent to pay each of the petitioners holiday pay for four regular holidays
from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of
Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00.
3. Jaka Food Processing vs. Pacot, G.R. No. 151378, March 28, 2005
Facts:
Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by
petitioner JAKA Foods Processing Corporation (JAKA, for short) until the latter terminated their employment on August 29, 1997 because the
corporation was in dire financial straits. It is not disputed, however, that the termination was effected without JAKA complying with the
requirement under Article 283 of the Labor Code regarding the service of a written notice upon the employees and the Department of Labor and
Employment at least one (1) month before the intended date of termination. In time, respondents separately filed with the regional Arbitration
Branch of the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and nonpayment of
service incentive leave and 13th month pay against JAKA and its HRD Manager, Rosana Castelo. After due proceedings, the Labor Arbiter
rendered a decision declaring the termination illegal and ordering JAKA and its HRD Manager to reinstate respondents with full backwages, and
separation pay if reinstatement is not possible. More specifically the decision dispositively reads: In time, respondents separately filed with the
regional Arbitration Branch of the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and
nonpayment of service incentive leave and 13 th month pay against JAKA and its HRD Manager, Rosana Castelo. After due proceedings, the
Labor Arbiter rendered a decision declaring the termination illegal and ordering JAKA and its HRD Manager to reinstate respondents with full
backwages, and separation pay if reinstatement is not possible.
Issues:
Does the absence of the notice of hearing in dismissal due to authorize cause amounts to illegal dismissal?
Are the dismissed employees, because of companys serious losses, entitled to separation pay?
Ruling:
A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the
employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has
neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process. On another breath, a dismissal for an
authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal
process is initiated by the employers exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when
he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program. The clear-cut distinction
between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that
in the first, payment of separation pay, as a rule, is not required, while in the second, the law requires payment of separation pay. For these
reasons, there ought to be a difference in treatment when the ground for dismissal is one of the just causes under Article 282, and when based
on one of the authorized causes under Article 283. Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article
Page 92
LABOR RELATIONS
93

282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the
dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under
Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was
initiated by the employers exercise of his management prerogative.
It is, therefore, established that there was ground for respondents dismissal, i.e., retrenchment, which is one of the authorized causes
enumerated under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the
same Article. Considering the factual circumstances in the instant case and the above ratiocination, we, therefore, deem it proper to fix the
indemnity at P50,000.00. We likewise find the Court of Appeals to have been in error when it ordered JAKA to pay respondents separation pay
equivalent to one (1) month salary for every year of service. This is because in Reahs Corporation vs. NLRC we made the
following declaration: The rule, therefore, is that in all cases of business closure or cessation of operation or undertaking of the employer, the
affected employee 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 employees to separation pay is lost for obvious
reasons. xxx.
4. Mauricio v. NLRC, G.R. No. 164635, November 17, 2005

Facts:
1. Petitioner Mauricio, started working as an Administrative Assistant in the Legal Department of the Manila Banking Corporation on July 1, 1999
as a probationary employee.
2. As a pre-employment requirement, the bank directed the submission by petitioner of, among other things, a 1x1 ID picture, 2 x 2 ID picture,
two reference letters, and clearance from the employee's previous employment.
3. Petitioner failed to submit the required documents. The bank gave her up to December 15, 1999 to comply, and advised her that the
processing of her regularization as employee would be held in abeyance.
4. Despite the deadline given her, petitioner still failed to comply with the requirements, drawing the bank to send her a Memorandum giving her
until December 29, 1999 to submit the requirements, and informing that her failure to do so would cause the termination of her employment
effective December 29, 1999.
5. Petitioner, by letter of December 28, 1999, informed the bank that she could not secure a clearance from her previous employer, the Manila
Bankers Life Insurance Corporation, a sister company of the bank, as she had a pending case with it. She thus requested that any action
relative to her employment be held in abeyance as she was still following up the early resolution of the case.
6. By reply memorandum, the bank denied petitioner's request on the ground that the submission of the pre-employment requirements, one of
which is a clearance from the previous employer if one is previously employed, is a standing policy of Manilabank applicable especially to bank
officers. The bank further reasoned that, to allow an exemption to the rule that the same should be submitted prior to the expiration of the 6month probationary employment will create a precedent which will prejudice an established hiring policy, not to mention the legal implication of
waiver on the part of the bank to further require submission of the clearance after the lapse of the probationary employment. However, the bank
was still open in the event that petitioner will secure the required clearance form (sic) Manila Bankers Life and would consider her future
employment with Manilabank.
7. Petitioner filed on January 21, 2000 a complaint for illegal dismissal, unpaid salary, and moral and exemplary damages against the bank.
Issue:
W/N Mauricios probationary employment was validly terminated by Manila Banking Corporation
Ruling:
Yes, Mauricios probationary employment was validly terminated by the bank.
In denying Muricios petition, SC affirmed the Labor Arbiters decision. To quote:
Page 93
LABOR RELATIONS
94

The submission of clearance from a previous employer is a reasonable requirement to qualify as a regular employee upon the expiration of the
six months probationary employment. This reasonable regulation is mandatory in the sense that it speaks of the employee's character before he
or she becomes a regular employee. For sure, no employer in his right mind would engage the regular service of an employee unless he is
certain of the moral character of a probationary employee applying as regular employee. To say that the requirement is a mere formality is an
oversimplification of the long standing policy in the bank industry.
In the case of San Miguel Brewery Sales Force Union vs. Ople (170 SCRA 25), the Honorable Supreme Court ruled that:
Except as limited by special laws, an employer is free to regulate according to his own discretion and judgment, all aspects of employment,
including hiring.
The pre-employment requirements of respondent bank which was made known to complainant upon the inception of her employment were not
shown to be unreasonable so as to render ineffectual complainant's denial as regular employee.
In fact, complainant was given a six month period to produce the clearance requirement and as early as November 26, 1999, complainant was
directed to submit the documents required for regularization but she dilly-dallied. It was only on December 28, 1999 or a day before the deadline
that complainant wrote her previous employer about the issuance of the clearance requirement but considering that complainant has a pending
questionably petty cash liquidation problem upon audit, the clearance cannot be issued before the expiration of the six months probationary
period.
The fact that complainant's previous employer cannot issue a clearance because of pending questionable transaction in which complainant is
involved, it is within the province of respondents to deny the regularization of complainant.
5. Industrial Timber Corp. vs. Ababon, G.R. No. 164518, Janury 25, 2006 and March 28, 2007
Facts:
Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant located at Agusan, Pequeo, Butuan City, leased to Industrial
Timber Corporation (ITC) on August 30, 1985 for a period of five years. Thereafter, ITC commenced operation of the plywood plant and hired
387 workers. On March 16, 1990, ITC notified the Department of Labor and Employment (DOLE) and its workers that effective March 19, 1990
it will undergo a no plant operation due to lack of raw materials and will resume only after it can secure logs for milling. Meanwhile, IPGC
notified ITC of the expiration of the lease contract in August 1990 and its intention not to renew the same. On June 26, 1990, ITC notified the
DOLE and its workers of the plants shutdown due to the non-renewal of anti-pollution permit that expired in April 1990. This fact and the
alleged lack of logs for milling constrained ITC to lay off all its workers until further notice. This was followed by a final notice of closure or
cessation of business operations on August 17, 1990 with an advice for all the workers to collect the benefits due them under the law and CBA.
On October 15, 1990, IPGC took over the plywood plant after it was issued a Wood Processing Plant Permit No. WPR-1004-081791-042, which
included the anti-pollution permit, by the Department of Environment and Natural Resources (DENR) coincidentally on the same day the ITC
ceased operation of the plant. This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal dismissal, unfair labor
practice and damages. They alleged, among others, that the cessation of ITCs operation was intended to bust the union and that both
corporations are one and the same entity being controlled by one owner.
Issue:
Whether or not Ababon, et al. were illegally dismissed due to the closure of ITCs business; and whether they are entitled to separation pay,
backwages, and other monetary awards.
Ruling:
Under Article 283 of the Labor Code, three requirements are necessary for a valid cessation of business operations: (a) service of a written
notice to the employees and to the DOLE at least one month before the intended date thereof; (b) the cessation of business must be bona fide
in character; and (c) payment to the employees of termination pay amounting to one month pay or at least one-half month pay for every year of
service, whichever is higher. As borne out from the records, respondent ITC actually underwent no plant operation since 19 March 1990 due to
lack of log supply. This fact is admitted by complainants (Minutes of hearing, 28 October 1991). Since then several subsequent incidents
prevented respondent ITC to resume its business operations e.g. expiration and non-renewal of the wood processing plant permit, anti-pollution
permit, and the lease contract on the plywood plant.
Page 94
LABOR RELATIONS
95

Without the raw materials respondent ITC has nothing to produce. Without the permits it cannot lawfully operate the plant. And without the
contract of lease respondent ITC has no option but to cease operation and turn over the plant to the lessor. Having established that ITCs
closure of the plywood plant was done in good faith and that it was due to causes beyond its control, the conclusion is inevitable that said
closure is valid. Consequently, Ababon, et al. could not have been illegally dismissed to be entitled to full backwages. Thus, we find it no longer
necessary to discuss the issue regarding the computation of their backwages. However, they are entitled to separation pay equivalent to one
month pay or at least one-half month pay for every year of service, whichever is higher. Although the closure was done in good faith and for valid
reasons, The Supreme Court find that ITC did not comply with the notice requirement. While an employer is under no obligation to conduct
hearings before effecting termination of employment due to authorized cause, however, the law requires that it must notify the DOLE and its
employees at least one month before the intended date of closure. In the case at bar, ITC notified its employees and the DOLE of the no plant
operation on March 16, 1990 due to lack of raw materials. This was followed by a shut down notice dated June 26, 1990 due to the expiration
of the anti-pollution permit. However, this shutdown was only temporary as ITC assured its employees that they could return to work once the
renewal is acted upon by the DENR. On August 17, 1990, the ITC sent its employees a final notice of closure or cessation of business
operations to take effect on the same day it was released. We find that this falls short of the notice requirement for termination of employment
due to authorized cause considering that the DOLE was not furnished and the notice should have been furnished both the employees and the
DOLE at least one month before the intended date of closure. In Agabon v. National Labor Relations Commission and Jaka Food Processing
Corporation v. Pacot, the Court sustained the dismissals for just cause under Article 282 and for authorized cause under Article 283 of the Labor
Code, respectively, despite non-compliance with the statutory requirement of notice and hearing. The grounds for the dismissals in those cases,
namely, neglect of duty and retrenchment, remained valid because the non-compliance with the notice and hearing requirement in the Labor
Code did not undermine the validity of the grounds for the dismissals. Indeed, to invalidate a dismissal merely because of a procedural defect
creates absurdity and runs counter to public interest. Where the dismissal is based on an authorized cause under Article 283 of the Labor Code
but the employer failed to comply with the notice requirement, the sanction should be stiff as the dismissal process was initiated by the
employers exercise of his management prerogative, as opposed to a dismissal based on a just cause under Article 282 with the same
procedural infirmity where the sanction to be imposed upon the employer should be tempered as the dismissal process was, in effect, initiated
by an act imputable to the employee.
6. Equitable Bank vs Sadac, G.R. No. 164772, June 8, 2006

Facts:
Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1 August 1981, and subsequently
General Counsel thereof on 8 December 1981. On 26 June 1989, nine lawyers of petitioner Banks Legal Department, in a letter-petition to the
Chairman of the Board of Directors, accused respondent Sadac of abusive conduct and petitioned for a change in leadership of the department.
On the ground of lack of confidence in respondent Sadac, under the rules of client and lawyer relationship, petitioner Bank instructed respondent
Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto,
respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. On 9 November 1989, respondent
Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof.
After learning of the filing of the complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on 10 August 1989, respondent
Sadac was removed from his office and ordered disentitled to any compensation and other benefits. The issues on the existence of employeremployee relationship as well as the legality of the dismissal were decided by the Court in the case of Equitable Banking Corporation vs. NLRC,
G.R. No. 102467, June 13, 1997, wherein it was held that there was employer-employee relationship between petitioner Bank and respondent
Sadac and that Sadac's dismissal was illegal, his dismissal not being grounded on any of the causes stated in Article 282 of the Labor Code and
there being disregard of the procedural requirements in terminating Sadac's employment. In said case, respondent Sadac was held to be
entitled to backwages from termination of employment until turning sixty (60) years of age (in 1995) and, thereupon, to retirement benefits in
accordance with law. He shall also be paid an additional amount of P5,000.00. The controversy in the present case arises on the computation of
backwages wherein respondent Sadac included the general salary increases in said computation while petitioner Bank insists that the general
salary increases should not be included in the computation of backwages but rather the computation should be based on the wage rate at the
time of dismissal.
Issue:
Whether or not general salary increases should be included in the base figure to be used in the computation of backwages.
Ruling:
General salary increases are not included in the base figure to be used in the computation of backwages. Article 279 mandates that an
employees full backwages shall be inclusive of allowances and other benefits or their monetary equivalent. A salary increase cannot be
Page 95
LABOR RELATIONS
96

interpreted as either an allowance or a benefit. Salary increases are not akin to allowances or benefits, and cannot be confused with either. The
term "allowances" is sometimes used synonymously with "emoluments," as indirect or contingent remuneration, which may or may not be
earned, but which is sometimes in the nature of compensation, and sometimes in the nature of reimbursement. Allowances and benefits are
granted to the employee apart or separate from, and in addition to the wage or salary. In contrast, salary increases are amounts which are
added to the employees salary as an increment thereto for varied reasons deemed appropriate by the employer. Salary increases are not
separate grants by themselves but once granted, they are deemed part of the employees salary. To extend the coverage of an allowance or a
benefit to include salary increases would be to strain both the imagination of the Court and the language of law. As observed by the NLRC, "to
otherwise give the meaning other than what the law speaks for by itself, will open the floodgates to various interpretations." Indeed, if the intent
were to include salary increases as basis in the computation of backwages, the same should have been explicitly stated in the same manner
that the law used clear and unambiguous terms in expressly providing for the inclusion of allowances and other benefits. Furthermore, salary
increases are a mere expectancy. They are, by its nature volatile and are dependent on numerous variables, including the companys fiscal
situation and even the employees future performance on the job, or the employees continued stay in a position subject to management
prerogative to transfer him to another position where his services are needed. In short, there is no vested right to salary increases. That
respondent Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness
that is inherent in backwages. From the foregoing, the plain conclusion is that respondent Sadacs computation of his full backwages which
includes his prospective salary increases cannot be permitted. In addition, a cursory reading of the dispositive portion of the Courts Decision of
13 June 1997 in G.R. No. 102467, awarding backwages to respondent Sadac, shows that the award of backwages therein is unqualified.
Judicial precedents tell us that an unqualified award of backwages means that the employee is paid at the wage rate at the time of his dismissal.
Thus, the base figure to be used in the computation of backwages is pegged at the wage rate at the time of the employees dismissal, inclusive
of regular allowances that the employee had been receiving such as the emergency living allowances and the 13th month pay mandated under
the law.
7. Heirs of Sara Lee vs. Rey, G.R. No. 1499013, August 31, 2006
Facts:
The House of Sara Lee (petitioner) is engaged in the direct selling of a variety of product lines for men and women, 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 and then sell the same products to their own customers at fixed prices
also determined by the petitioner. Cynthia Rey (respondent), at the time of her dismissal from employment, or on June 25, 1996, held the
position of Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. 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, a certain Ms.
Magi Caroline Mendoza, to change the credit term of one of the IBMs of the petitioner, a certain Ms. Mariam Rey-Petilla, who happens to be
respondents sister-in-law, from the 52-day limit to an unauthorized term of 60 days. . As a consequence of the discovery of the foregoing
alleged anomalous practice of extending the credit terms of certain IBMs, management undertook an audit of the Cagayan de Oro City and
Butuan City branches. On the basis of the hearing, the alleged voluntary admissions of respondent, and the findings of the auditors report, the
petitioner, on June 25, 1996, formally dismissed the respondent for breach of trust and confidence. On September 24, 1996, as stated above,
respondent filed her Complaint for illegal dismissal, backwages and damages, with the Labor Arbiter. On April 30, 1998, the Labor Arbiter
rendered a decision in favor of the respondent. Aggrieved, the petitioner appealed to the NLRC. On October 29, 1998, the NLRC rendered its
decision dismissing the appeal. The petitioner appealed to the CA under Rule 65. On August 25, 2000, the CA dismissed the Petition on the
sole ground that factual issues are not proper subjects for a special civil action of certiorari.
Issue:
Is the respondent dismissed for a just cause?
Ruling:
Contrary to the findings of the NLRC and the CA, the Court holds that respondent was dismissed for a just cause. Law and jurisprudence have
long recognized the right of employers to dismiss employees by reason of loss of trust and confidence. More so, in the case of supervisors or
personnel occupying positions of responsibility, loss of trust justifies termination. Loss of confidence as a just cause for dismissal is premised on
the fact that an employee concerned holds a position of trust and confidence. This situation applies where a person is entrusted with confidence
on delicate matters, such as the custody, handling, or care and protection of the employers property. But, in order to constitute a just cause for
dismissal, the act complained of must be work-related, such that the employee concerned is unfit to continue working for the employer. In the
Page 96
LABOR RELATIONS
97

present case, the respondent is not an ordinary rank-and-file employee. The nature of her work requires a substantial amount of trust and
confidence on the part of the employer. Being the Credit Administration Supervisor of the Cagayan de Oro and Butuan City branches of the
petitioner, respondent occupied a highly sensitive and critical position and may thus be dismissed on the ground of loss of trust and confidence.
The duties of the respondent included the strict monitoring of the 38- or 52-day rolling due date of each of its IBMs and IGSs, as well as the
supervision of the credit and collection of payments and outstanding accounts due to the petitioner from its dealers. More importantly,
respondent has a direct hand in the preparation and computation of the Service Fees or sales commissions accruing to each dealer. The
computation of these commissions depends on whether the dealer concerned was able to remit the sales proceeds within the 38-day or 52-day
rolling deadline. Clearly, respondents position involves a high degree of responsibility requiring trust and confidence. The position carried with it
the duty to observe proper company procedures in the fulfillment of her job, as it relates closely to the financial interests of the company.
Respondents unauthorized extensions of the credit periods of the dealers are prejudicial to the interest of the petitioner and bear serious
financial implications. Employers, generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or
those of similar rank performing functions which by their nature require the employers trust and confidence, than in the case of ordinary rankand-file employees. There can be no doubt continuance in the sensitive fiduciary position of Credit Administration Supervisor would be patently
inimical to the interests of the petitioner. It would be oppressive and unjust to order the petitioner to take her back, for the law, in protecting the
rights of the employee, authorizes neither oppression nor self-destruction of the employer.
8. Galaxi Steel Workers Union vs. NLRC, G.R. No. 165757, October 17, 2006, citing North Davao Mining
Facts:
Galaxie is a corporation engaged in the business of manufacturing and sale of re-bars and steel billets which are used primarily in the
construction of high-rise buildings. On account of serious business losses which occurred in 1997 up to mid-1999 totaling around
P127,000,000.00, Galaxie decided to close down its business operations. Galaxie thus filed on July 30, 1999 a written notice with the DOLE
informing the latter of its intended closure and the consequent termination of its employees effective August 31, 1999. And it posted the notice of
closure on the corporate bulletin board. Petitioners Galaxie Steel Workers Union and Galaxie employees filed a complaint for illegal dismissal,
unfair labor practice, and money claims against Galaxie. The Labor Arbiter declared valid Galaxies closure of business but nevertheless ordered
it to pay the employees separation pay, pro-rata 13 th month pay, and vacation and sick leave credits. The NLRC upheld the Labor Arbiters
decision but reversed the award of pro-rata 13th month pay and vacation and sick leave credits, the same not being among petitioners causes of
action as in fact they were not even mentioned in their pleadings. And it reversed too the award for separation pay, the closure of Galaxies
business being due to serious business losses. Nevertheless, the NLRC directed Galaxie to grant petitioners, by way of financial assistance, the
same amount given to the employees who had executed quitclaims. Their motion for reconsideration having been denied, petitioners filed a
petition for certiorari with the Court of Appeals, arguing that the NLRC acted with grave abuse of discretion in not finding Galaxie guilty of unfair
labor practice and of violating petitioners right to notice of closure, and in deleting the award of separation pay. CA upheld the NLRC decision.
Hence, the present petition for review.
Issues:
Whether or not Galaxie is guilty of unfair labor practice in closing its business operations shortly after petitioner union filed for certification
election.
Whether or not petitioners are entitled to separation pay.
Whether or not the written notice posted by Galaxie on the company bulletin board sufficiently complies with the notice requirement under Article
283 of the Labor Code.
Ruling:
Petitioners contend that the Court of Appeals erred in not finding that Galaxies closure of business operations was motivated not by serious
business losses but by their anti-union stance. It is settled that SC is not a trier of facts, a rule which applies with greater force in labor cases
where the findings of fact of the NLRC are accorded respect and even finality, as long as they are supported by substantial evidence from which
an independent evaluation of the facts may be made. In this case, the Labor Arbiter, the NLRC, and the CA were unanimous in ruling that
Galaxies closure or cessation of business operations was due to serious business losses or financial reverses, and not because of any alleged
anti-union position. The Court finds no reason to modify such finding. In any event, petitioners contend that Galaxie did not serve written notices
of the closure of business operations upon its employees, it having merely posted a notice on the company bulletin board. Indeed, Galaxies
documentary evidence shows that it had been experiencing serious financial losses at the time it closed business operations. As aptly found by
the Court of Appeals: The NLRCs finding on the legality of the closure should be upheld for it is supported by substantial evidence consisting of
the audited financial statements showing that Galaxie continuously incurred losses from 1997 up to mid-1999, to wit: P65,753,480.65 in 1997,
P48,429,785.89 in 1998, and P13,204,389.97 in 1999; and of the various demand notices of payments from creditor banks. Besides, the
Page 97
LABOR RELATIONS
98

petitioners had not presented evidence to the contrary; nor did they establish that the closure was motivated by Galaxies anti-union stance.
True, the union was seeking the holding of a certification election at the time that Galaxie closed its business operation, but that, without more,
was not sufficient to attribute anti-unionism against Galaxie. Upon the other hand, petitioners failed to present concrete evidence supporting
their claim of unfair labor practice. Unfair labor practice refers to acts that violate the workers right to organize, and are defined in Articles 248
and 261 of the Labor Code. The prohibited acts relate to the workers right to self-organization and to the observance of Collective Bargaining
Agreement without which relation the acts, no matter how unfair, are not deemed unfair labor practices.
Respecting petitioners claim for separation pay, in North Davao Mining Corporation v. National Labor Relations Commission, this Court held that
Article 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to
serious business losses or financial reverses . . ." Where, the closure then is due to serious business losses, the Labor Code does not impose
any obligation upon the employer to pay separation benefits. The denial of petitioners claim for separation pay was thus in order.
With regard to the notice requirement, the Labor Arbiter found, and it was upheld by the NLRC and the Court of Appeals, that the written notice
of closure or cessation of Galaxies business operations was posted on the company bulletin board one month prior to its effectivity. The mere
posting on the company bulletin board does not, however, meet the requirement under Article 283 of "serving a written notice on the workers."
The purpose of the written notice is to inform the employees of the specific date of termination or closure of business operations, and must be
served upon them at least one month before the date of effectivity to give them sufficient time to make the necessary arrangements. In order to
meet the foregoing purpose, service of the written notice must be made individually upon each and every employee of the company.
Nevertheless, the validity of termination of services can exist independently of the procedural infirmity in the dismissal. After analyzing the
consequences of the divergent doctrines on employment termination, the Court held that in cases involving dismissals for cause, but without
observance of statutory due process, the better rule is to declare that the dismissal was for cause but imposing sanctions on the employer. By
so doing, dispensing justice not just to employees but to employers as well is achieved.
In Business Services of the Future Today, Inc. v. Court of Appeals, which reiterated the ruling in Agabon v. National Labor Relations
Commission, this Court held that where the dismissal is for an authorized cause, the lack of statutory due process should not nullify the
dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee, in the form of nominal damages, for the
violation of his right to statutory due process.
9. Sy vs. Metro Bank, G.R. No. 160618, November 2, 2006

Facts:
Petitioner Dennis Sy was the branch manager in Bajada, Davao City of respondent Metropolitan Bank and Trust Company. Sy would have
rendered 30 years of service by August 18, 1999 under the banks retirement plan, which provides that an employee must retire upon reaching
55 years of age or after rendering 30 years of service, whichever comes earlier. However, on February 5, 1999, a few months before he was
supposed to retire, the bank reappointed him as branch manager for a term of one year from August 18, 1999 until August 18, 2000, with a
corresponding salary increase effective August 16, 1999. In November 1999, the bank released the results of the audit conducted. Sy, on
November 15, 1999, tendered an irrevocable letter of retirement, wherein he requested the timely release of his retirement pay and other
benefits. His request was denied. The bank averred that Sy has allowed client-Spouses Ong to conduct kiting activities in their account. The
bank placed Sy on preventive suspension. Sy responded that he only made a wrong credit judgment. The bank, not satisfied with his answer,
notified Sy of other violations of company policies. Unconvinced of Sy explanation, the bank dismissed Sy. Sy then filed a case for illegal
dismissal, which was dismissed by the labor arbiter for lack of merit. On appeal, the NLRC deemed Sy compulsorily retired. When brought up
to the Court of Appeals, the labor arbiters decision was reinstated.
Issues:
Was Sy illegally terminated?
If his dismissal was valid, would he still be entitled to retirement benefits?
Ruling:
No. 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 employer will not suffice, the sheer existence of a basis for believing
that the employers trust has been breach is enough for the dismissal of a managerial employee. Petitioner, however, theorizes that having been
Page 98
LABOR RELATIONS
99

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 in him by
the bank. He cannot now elude dismissal for a just cause by claiming he was already retired compulsorily.
No. Under the Labor Code, only unjustly dismissed employees are entitled to retirement benefits and other privileges including reinstatement
and backwages. Since petitioners dismissal was for a just cause, he is not entitled to any retirement benefit.
10. King of Kings Transport vs. NLRC, G.R. No. 166208, June 29, 2007
Facts:
Respondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) on April 29, 1999. Respondent was required to
accomplish a "Conductor's Trip Report" and submit it to the company after each trip. As a background, this report indicates the ticket opening
and closing for the particular day of duty. After submission, the company audits the reports. Once an irregularity is discovered, the company
issues an "Irregularity Report" against the employee, indicating the nature and details of the irregularity. Thereafter, the concerned employee is
asked to explain the incident by making a written statement or counter-affidavit at the back of the same Irregularity Report. After considering the
explanation of the employee, the company then makes a determination of whether to accept the explanation or impose upon the employee a
penalty for committing an infraction. That decision shall be stated on said Irregularity Report and will be furnished to the employee.
Upon audit of the October 28, 2001 Conductor's 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, respondent said that the erroneous
declaration in his October 28, 2001 Trip Report was unintentional. He explained that during that day's trip, the windshield of the bus assigned to
them was smashed; and they had to cut short the trip in order to immediately report the matter to the police. As a result of the incident, he got
confused in making the trip report.
On November 26, 2001, respondent received a letter terminating his employment effective November 29, 2001. The dismissal letter alleged that
the October 28, 2001 irregularity was an act of fraud against the company. KKTI also cited as basis for respondent's dismissal the other offenses
he allegedly committed since 1999.
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.
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.
Issue:
Whether or not procedural requirements were complied with.
Ruling:
Due process under the Labor Code involves two aspects: first, substantive the valid and authorized causes of termination of employment
under the Labor Code; and second, procedural the manner of dismissal.
Non-compliance with the Due Process Requirements
Art. 277 of the Labor Code provides the manner of termination of employment, thus:
Art. 277. Miscellaneous Provisions. . . .
Page 99
LABOR RELATIONS
100

(b)Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and
authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose
employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be
without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the
National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.
Accordingly, the implementing rule of the aforesaid provision states:
SEC. 2.Standards of due process; requirements of notice. In all cases of termination of employment, the following standards of due process
shall be substantially observed:
I.For termination of employment based on just causes as defined in Article 282 of the Code:
(a)A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity
within which to explain his side.
(b)A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond
to the charge, present his evidence, or rebut the evidence presented against him.
(c)A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been
In case of termination, the foregoing notices shall be served on the employee's last known address.
To clarify, the following should be considered in terminating the services of employees:
(1)The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a
directive that the employees are given the opportunity to submit their written explanation within a reasonable period . "Reasonable opportunity"
under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare
adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 282 is being charged against the employees.
(2)After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the
opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut
the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by
the parties as an opportunity to come to an amicable settlement.
(3)After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination
indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established
to justify the severance of their employment.
In the instant case, KKTI admits that it had failed to provide respondent with a "charge sheet." 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 employee does not comply with the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC, the Court held that
consultations or conferences are not a substitute for the actual observance of notice and hearing.
Second, the Court observed the irregularity reports against respondent for his other offenses that such contained merely a general description of
the charges against him. The reports did not even state a company rule or policy that the employee had allegedly violated. Likewise, there is no
mention of any of the grounds for termination of employment under Art. 282 of the Labor Code. Thus, KKTI's "standard" charge sheet is not
sufficient notice to the employee.
Page 100
LABOR RELATIONS
101

Third, no hearing was conducted. Regardless of respondent's written explanation, a hearing was still necessary in order for him to clarify and
present evidence in support of his defense. Moreover, respondent made the letter merely to explain the circumstances relating to the irregularity.
He was unaware that a dismissal proceeding was already being effected.
Sanction for Non-compliance with Due Process Requirements
As stated earlier, after a finding that petitioners failed to comply with the due process requirements, the CA awarded full backwages in favor of
respondent in accordance with the doctrine in Serrano v. NLRC. However, the doctrine in Serrano had already been abandoned in Agabon v.
NLRC by ruling that if the dismissal is done without due process, the employer should indemnify the employee with nominal damages.
Thus, for non-compliance with the due process requirements in the termination of respondent's employment, petitioner KKTI is sanctioned to
pay respondent the amount of thirty thousand pesos (PhP30,000) as damages.
11. Johnson & Johnson v. Johnson Office & Sales Union, G.R. No. 172799, July 6, 2007
Facts:
A complaint for illegal dismissal was filed by respondents Ma. Jesusa Bonsol and Rizalinda Hirondo against petitioners Johnson & Johnson
(Phils.), Inc. and Janssen Pharmaceutica, one of the formers divisions. The Labor Arbiter dismissed the complaint, prompting respondents to
elevate the matter to the NLRC.
On 14 December 2001, the NLRC rendered a Resolution, modifying the decision of the Labor Arbiter. The NLRC ruled that the violations of
company procedure committed by respondents did not constitute serious misconduct or willful disobedience warranting their dismissal; hence,
respondents were entitled to reinstatement.
Johnson and Johnson sought partial reconsideration but the NLRC denied the motion in a Resolution dated 11 February 2002.
Neither party appealed from the resolution decision of the NLRC within the reglementary period. The Resolution dated 14 December
2001 became final and executory.
31 March 2004 At a conference held, petitioner Johnson and Johnson reiterated their intention to satisfy respondents monetary award but
the latter refused and insisted on their reinstatement. Thereafter, petitioner filed a Manifestation and Motion, arguing that the 14 December 2001
Resolution granted them the right to choose between the payment of separation pay and the reinstatement of respondents based on the finding
that while their termination was illegal, respondents were not entirely faultless as they did not follow the exact procedure in the performance of
their duties. Petitioners also claimed that reinstatement was no longer feasible in view of the strained relations between the parties.
18 June 2004 the NLRC issued a Resolution, which directed the reinstatement of respondents pursuant to the 14 December
2001 Resolution. The NLRC recognized respondents right to choose between reinstatement and separation pay and disregarded petitioners
claim of strained relations. Petitioners motion for reconsideration was denied in the Resolution dated 28 July 2004.
The Court of Appeals affirmed the resolutions of the NLRC dated 18 June 2004 and 8 July 2004.
Thus in a petitioner for certiorari before the SC, Johnson and Johnson contends that the intent of the 14 December 2001 Resolution was to
grant them the option to reinstate respondents to their former positions without the payment of backwages, or in the alternative, to pay them
separation pay, because the dispositive portion of the Resolution was directed toward or addressed to them (Johnson and Johnson), who are
legally obliged to implement the ruling. According to petitioners, the NLRC erred and modified the Resolution dated 14 December 2001, which
had become final and executory, when it stated in its 18 June 2004 Resolution that respondents have the right to choose between their
reinstatement and getting paid the monetary award when no such categorical pronouncement can be gathered from the 14 December
2001 Resolution.
Issue:
Whether or not Johnson and Johnson, as the employer, has the option to reinstate respondents to their former positions without the payment of
backwages, or in the alternative, to pay them separation pay
Ruling:
Page 101
LABOR RELATIONS
102

The petition has no merit.
Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a matter of right. Over the years, however, case
law developed that where reinstatement is not feasible, expedient or practical, as where reinstatement would only exacerbate the tension and
strained relations between the parties, or where the relationship between the employer and employee has been unduly strained by reason of
their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be
more prudent to order payment of separation pay instead of reinstatement. In other words, the payment of separation compensation in lieu of
the reinstatement of an employee who was illegally dismissed from work shall be allowed if and only if the employer can prove the existence of
circumstances showing that reinstatement will no longer be for the mutual benefit of the employer and employee.
The NLRC Resolution dated 14 December 2001 expressly recognized respondents right to reinstatement in view of the illegality of their
termination. Thus, the dispositive portion of said resolution ordered respondents reinstatement without, however, the payment of backwages as
a primary relief.
Petitioners are mistaken in holding that they have the prerogative to choose whether to reinstate respondents to their former positions or to just
pay their monetary award. Neither party can claim that it has the categorical right to choose between reinstatement and the payment of the
monetary award. Ultimately, the NLRC has the authority to execute its judgment and to settle any issue that may arise pertaining to the manner
or details of implementing its judgment.
In the instant case, although the opposing parties yielded to the judgment of the NLRC and did not anymore elevate the labor dispute to the
appellate court, they are now at odds as to how the 14 December 2001 Resolution should be implemented. Thus, the NLRC properly exercised
its authority to resolve the controversy when it issued the Resolution dated 18 June 2004, where it categorically ordered the reinstatement of
respondents to their former positions, in consonance with its earlier ruling. The NLRC upheld the continuing primacy of reinstatement as the
available relief and made short shrift of petitioners avowal that separation pay should be awarded in lieu of reinstatement. Effectively, the NLRC
and the Court of Appeals disregarded petitioners claim that the relation between the parties was so strained that only the payment of the
monetary award was feasible under the circumstances. The Court defers, as it should, to the common finding of the NLRC and Court of Appeals
since the issue of the existence of strained relations between the parties is factual in nature.
12. Asian Terminal vs. NLRC, G.R. No. 158458, December 19, 2007, citing Standard Electric Mfg. vs. Standard Electric Employees
Union, G.R. No. 166111, August 25, 2005
Facts:
Romeo Labrague (respondent) was a stevedore antigo employed with Asian Terminals, Inc. since the 1980's. Beginning September 9, 1993,
respondent failed to report for work allegedly because he was arrested and placed in detention for reasons not related to his work. After
respondent had been absent for more than one year, Asian Terminals, Inc., through Atty. Rodolfo G. Corvite, Jr., (petitioners) sent him
(respondent) a letter, dated December 27, 1994, at his last known address at Area H, Parola, Tondo, Manila, requiring him to explain within 72
hours why he should not suffer disciplinary penalty for his prolonged absence. The following month, petitioner sent respondent another notice of
similar tenor. Finally, on February 8, 1995, petitioner issued a memorandum stating: For having incurred absence without official leave (AWOL)
from 03 September 1993 up to the present after you were put behind bars due to your involvement in a killing incident, your employment is
hereby terminated for cause effective IMMEDIATELY. Following his acquittal and release from detention, respondent reported for work on July 3,
1996 but was advised by petitioners to file a new application so that he may be rehired.Thus, respondent filed with the NLRC a complaint for
illegal dismissal, separation pay, non-payment of labor standard benefits, damages and attorney's fees.
Ruling:
In declaring the dismissal of respondent illegal, the concurrent view of the CA, NLRC and LA is that the latter's prolonged absence was
excusable, for it was brought about by his detention for almost three years for a criminal charge that was later declared baseless. They held that
his prolonged absence was not coupled with an intention to relinquish his employment, and therefore did not constitute abandonment.
Petitioners argue that they were justified in dismissing respondent after the latter incurred a three-year absence without leave, and refused to
report for work despite several notices. Petitioners argue that respondent's prolonged absence was not justified or excused by his so-called
detention, which remained a mere allegation that was never quite substantiated by any form of official documentation. The foregoing arguments
of petitioners are specious. It cannot be gainsaid that respondent was in detention during the entire period of his absence from work and, more
importantly, that his situation was known to petitioners. It is of record that in the February 8, 1995 termination notice it issued, petitioners
expressly acknowledged that respondent began incurring absences without leave after [he was] put behind bars due to [his] involvement in a
Page 102
LABOR RELATIONS
103

killing incident. It clearly indicates that petitioners knew early on of the situation of respondent. It also explains why in its reply before the LA,
appeal before the NLRC and petition for certiorari before CA, petitioners never questioned the truth about respondent's detention. Petitioners'
skepticism about respondent's detention is a mere afterthought not proper for consideration in a petition for review under Rule 45, which bars
reappraisal of facts not disputed before the lower courts or already settled in their proceedings, and unanimously at that. It is beyond dispute
then that the underlying reason for respondent's absences was his detention. The question is whether the CA erred in holding that such
absences did not amount to abandonment as to furnish petitioners cause to dismiss respondent. To justify the dismissal of respondent for
abandonment, petitioners should have established by concrete evidence the concurrence of two elements: first, that respondent had the
intention to deliberately and without justification abandon his employment or refuse to resume his work; and second, that respondent performed
overt acts from which it may be deduced that he no longer intended to work. Petitioners failed to discharge such burden of proof. Respondent's
absences, even after notice to return to work, cannot be equated with abandonment, especially when we take into account that the latter
incurred said absences unwillingly and without fault. Absences incurred by an employee who is prevented from reporting for work due to his
detention to answer some criminal charge is excusable if his detention is baseless, in that the criminal charge against him is not at all supported
by sufficient evidence. In Magtoto v. National Labor Relations Commission as well as Pedroso v. Castro, we declared such absences as not
constitutive of abandonment, and held the dismissal of the employee-detainee invalid. We recently reiterated this ruling in Standard Electric
Manufacturing Corporation v. Standard Electric Employees Union-NAFLU-KMU, viz.:
The facts in Pedroso v. Castro are similar to the set of facts in the present case. The petitioners therein were arrested and detained by the
military authorities by virtue of a Presidential Commitment Order allegedly for the commission of Conspiracy to Commit Rebellion under Article
136 of the RPC. As a result, their employer hired substitute workers to avoid disruption of work and business operations. They were released
when the charges against them were not proven. After incarceration, they reported back to work, but were refused admission by their employer.
The Labor Arbiter and the NLRC sustained the validity of their dismissal. Nevertheless, this Court again held that the dismissed employees
should be reinstated to their former positions, since their separation from employment was founded on a false or non-existent cause; hence,
illegal.
Respondent Javiers absence from August 9, 1995 cannot be deemed as an abandonment of his work. Abandonment is a matter of intention
and cannot lightly be inferred or legally presumed from certain equivocal acts. To constitute as such, two requisites must concur: first, the
employee must have failed to report for work or must have been absent without valid or justifiable reason; and second, there must have been a
clear intention on the part of the employee to sever the employer-employee relationship as manifested by some overt acts, with the second
element being the more determinative factor. Abandonment as a just ground for dismissal requires clear, willful, deliberate, and unjustified
refusal of the employee to resume his employment. Mere absence or failure to report for work, even after notice to return, is not tantamount to
abandonment. Moreover, respondent Javiers acquittal for rape makes it more compelling to view the illegality of his dismissal. The trial court
dismissed the case for insufficiency of evidence, and such ruling is tantamount to an acquittal of the crime charged, and proof that respondent
Javiers arrest and detention were without factual and legal basis in the first place. Similarly, respondent herein was prevented from reporting for
work by reason of his detention. That his detention turned out to be without basis, as the criminal charge upon which said detention was ordered
was later dismissed for lack of evidence, made the absences he incurred as a consequence thereof not only involuntary but also excusable. It
was certainly not the intention of respondent to absent himself, or his fault that he was detained on an erroneous charge. In no way may the
absences he incurred under such circumstances be likened to abandonment. The CA, therefore, correctly held that the dismissal of respondent
was illegal, for the absences he incurred by reason of his unwarranted detention did not amount to abandonment.
13. Smart Communications v. Astorga, G.R. No. 148142, January 28, 2008
Facts:
Regina M. Astorga (Astorga) was employed by respondent SMART on May 8, 1997 as District Sales Manager of the Corporate Sales Marketing
Group/ Fixed Services Division (CSMG/FSD).
In February 1998, SMART launched an organizational realignment to achieve more efficient operations. This was made known to the
employees. Part of the reorganization was the outsourcing of the marketing and sales force. Thus, SMART entered into a joint venture
agreement with NTT of Japan, and formed SMART-NTT Multimedia, Incorporated (SNMI). Since SNMI was formed to do the sales and
marketing work, SMART abolished the CSMG/FSD, Astorgas division.
To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who would be recommended by SMART. SMART then
conducted a performance evaluation of CSMG personnel and those who garnered the highest ratings were favorably recommended to SNMI.
Astorga landed last in the performance evaluation, thus, she was not recommended by SMART. SMART, nonetheless, offered her a supervisory
position in the Customer Care Department, but she refused the offer because the position carried lower salary rank and rate.
Page 103
LABOR RELATIONS
104

Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March 3, 1998, SMART issued a memorandum advising
Astorga of the termination of her employment on ground of redundancy, effective April 3, 1998. Astorga received it on March 16, 1998.
The termination of her employment prompted Astorga to file a Complaint for illegal dismissal, non-payment of salaries and other benefits with
prayer for moral and exemplary damages against SMART and Ann Margaret V. Santiago (Santiago). She claimed that abolishing CSMG and,
consequently, terminating her employment was illegal for it violated her right to security of tenure. She also posited that it was illegal for an
employer, like SMART, to contract out services which will displace the employees, especially if the contractor is an in-house agency.
SMART responded that there was valid termination. It argued that Astorga was dismissed by reason of redundancy, which is an authorized
cause for termination of employment, and the dismissal was effected in accordance with the requirements of the Labor Code. The redundancy of
Astorgas position was the result of the abolition of CSMG and the creation of a specialized and more technically equipped SNMI, which is a valid
and legitimate exercise of management prerogative.
Issue:
WON the dismissal of Astorga is valid.
Ruling:
YES. Astorgas dismissal is founded upon authorized cause.
Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an employee. The nature of redundancy
as an authorized cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v. National Labor Relations Commission, viz:
x x x redundancy in an employers 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 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 the Labor Code, exists where the services of an employee 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.
The characterization of an employees services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of
business judgment on the part of the employer. The wisdom and soundness of such characterization or decision is not subject to discretionary
review provided, of course, that a violation of law or arbitrary or malicious action is not shown.
Astorga claims that the termination of her employment was illegal and tainted with bad faith. She asserts that the reorganization was done in
order to get rid of her. But except for her barefaced allegation, no convincing evidence was offered to prove it. This Court finds it extremely
difficult to believe that SMART would enter into a joint venture agreement with NTT, form SNMI and abolish CSMG/FSD simply for the sole
purpose of easing out a particular employee, such as Astorga. Moreover, Astorga never denied that SMART offered her a supervisory position in
the Customer Care Department, but she refused the offer because the position carried a lower salary rank and rate. If indeed SMART simply
wanted to get rid of her, it would not have offered her a position in any department in the enterprise.
Astorga also states that the justification advanced by SMART is not true because there was no compelling economic reason for redundancy. But
contrary to her claim, an employer is not precluded from adopting a new policy conducive to a more economical and effective management even
if it is not experiencing economic reverses. Neither does the law require that the employer should suffer financial losses before he can terminate
the services of the employee on the ground of redundancy.
We agree with the CA that the organizational realignment introduced by SMART, which culminated in the abolition of CSMG/FSD and
termination of Astorgas employment was an honest effort to make SMARTs sales and marketing departments more efficient and competitive. As
the CA had taken pains to elucidate:
x x x a careful and assiduous review of the records will yield no other conclusion than that the reorganization undertaken by SMART is for no
purpose other than its declared objective as a labor and cost savings device. Indeed, this Court finds no fault in SMARTs decision to outsource
the corporate sales market to SNMI in order to attain greater productivity. [Astorga] belonged to the Sales Marketing Group under the Fixed
Services Division (CSMG/FSD), a distinct sales force of SMART in charge of selling SMARTs telecommunications services to the corporate
market. SMART, to ensure it can respond quickly, efficiently and flexibly to its customers requirement, abolished CSMG/FSD and shortly
thereafter assigned its functions to newly-created SNMI Multimedia Incorporated, a joint venture company of SMART and NTT of Japan, for the
reason that CSMG/FSD does not have the necessary technical expertise required for the value added services. By transferring the duties of
Page 104
LABOR RELATIONS
105

CSMG/FSD to SNMI, SMART has created a more competent and specialized organization to perform the work required for corporate accounts.
It is also relieved SMART of all administrative costs management, time and money-needed in maintaining the CSMG/FSD. The determination to
outsource the duties of the CSMG/FSD to SNMI was, to Our mind, a sound business judgment based on relevant criteria and is therefore a
legitimate exercise of management prerogative.
Indeed, out of our concern for those lesser circumstanced in life, this Court has inclined towards the worker and upheld his cause in most of his
conflicts with his employer. This favored treatment is consonant with the social justice policy of the Constitution. But while tilting the scales of
justice in favor of workers, the fundamental law also guarantees the right of the employer to reasonable returns for his investment. In this light,
we must acknowledge the prerogative of the employer to adopt such measures as will promote greater efficiency, reduce overhead costs and
enhance prospects of economic gains, albeit always within the framework of existing laws. Accordingly, we sustain the reorganization and
redundancy program undertaken by SMART.
However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice prior to termination. The record is clear
that Astorga received the notice of termination only on March 16, 1998 or less than a month prior to its effectivity on April 3, 1998. Likewise, the
Department of Labor and Employment was notified of the redundancy program only on March 6, 1998.
Article 283 of the Labor Code clearly provides:
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the intended date thereof x x x.
SMARTs assertion that Astorga cannot complain of lack of notice because the organizational realignment was made known to all the employees
as early as February 1998 fails to persuade. Astorgas actual knowledge of the reorganization cannot replace the formal and written notice
required by the law. In the written notice, the employees are informed of the specific date of the termination, at least a month prior to the
effectivity of such termination, to give them sufficient time to find other suitable employment or to make whatever arrangements are needed to
cushion the impact of termination. In this case, notwithstanding Astorgas knowledge of the reorganization, she remained uncertain about the
status of her employment until SMART gave her formal notice of termination. But such notice was received by Astorga barely two (2) weeks
before the effective date of termination, a period very much shorter than that required by law.
Be that as it may, this procedural infirmity would not render the termination of Astorgas employment illegal. The validity of termination can exist
independently of the procedural infirmity of the dismissal.
The CA, therefore, committed no reversible error in sustaining Astorgas dismissal and at the same time, awarding indemnity for violation of
Astorga's statutory rights.
However, we find the need to modify, by increasing, the indemnity awarded by the CA to Astorga, as a sanction on SMART for non-compliance
with the one-month mandatory notice requirement, in light of our ruling in Jaka Food Processing Corporation v. Pacot, viz.:
[I]f the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be
imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee, and (2) if the
dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should
be stiffer because the dismissal process was initiated by the employers exercise of his management prerogative.
We deem it proper to increase the amount of the penalty on SMART to P50,000.00.
As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to separation pay equivalent to at least one (1) month salary or to at
least one (1) months pay for every year of service, whichever is higher. The records show that Astorgas length of service is less than a year. She
is, therefore, also entitled to separation pay equivalent to one (1) month pay.
However, the award of backwages to Astorga by the CA should be deleted for lack of basis. Backwages is a relief given to an illegally dismissed
employee. Thus, before backwages may be granted, there must be a finding of unjust or illegal dismissal from work. Since Astorgas dismissal is
for an authorized cause, she is not entitled to backwages. The CAs award of backwages is totally inconsistent with its finding of valid dismissal.
Page 105
LABOR RELATIONS
106

14. Enriquez v. Bank of the Philippine Islands, G.R. No. 172812, February 12, 2008
Facts:
Enriquez and Sia were the branch manager and assistant branch manager, respectively, of the BPI-Bacolod Singcang Branch. Enriquez was
first employed by BPI in 1971 and had been an employee thereof for 32 years at the time of her termination, whereas Sia had been with since
1974, or for a total of 29 years at the time of his dismissal. Respondent Luis A. Puentevella (Puentevella) is one of respondents principal officers
and was impleaded in his personal capacity.
Petitioners version of the facts:
Petitioners maintain that on 27 December 2002, their branch experienced a heavy volume of transactions owing to the fact that it was the last
banking day of the year. When banking hours came to a close, teller Geraldine Descartin (Descartin) purportedly discovered that she had a cash
shortage of P36,000.00 and informed Sia about it. Sia, in turn, informed Enriquez of the problem and was directed to review the days
transactions to trace its cause.
Descartin claimed that the discrepancy was due to an innocent oversight and recalled that the unaccounted shortage was due to the failure of
her mother-in-law, Remedios Descartin (Remedios), to sign the withdrawal slip when the latter withdrew P36,000.00 earlier that day. With that
explanation, Enriquez directed Descartin and her co-teller Evelyn Fregil (Fregil) to submit their written memorandum of the incident. Descartin
was permitted to leave the bank to look for Remedios so that the latter could sign the withdrawal slip. At around 7:00 p.m., she returned to the
bank with the signed withdrawal slip and debited the amount from the clients account. Thus, petitioners aver, the transaction was regularized
before the end of the day.
It is the position of petitioners that as there was neither shortage nor loss to the bank because the initial discrepancy was accounted for and that
it was due to a mere oversight, they put the matter to rest. In the meantime, Sia began to wind up his affairs as 27 December 2002 was his last
working day with the bank before going on terminal leave prior to his optional retirement.
BPIs version:
BPI has a different version of what transpired on 27 December 2002. According to them, teller Descartins shortage of P36,000.00, which she
confided to her co-teller Fregil, was incurred because she had temporarily borrowed the money that week to pay her financial obligations but
intended to return the same on the first week of January. Teller Fregil reported the matter to Sia and Enriquez, both of whom suggested that
teller Descartin fill the shortage with a loan from her family. Teller Descartin replied that her family did not have the money, she instead borrowed
the amount from her in-laws. Thus, at 5:21 p.m., teller Descartin posted the unsigned withdrawal slip for the amount of P36,000.00 against the
joint account of her parents-in-law. As the amount exceeded the floor limit for tellers which would require the approval of a superior officer, either
Enriquez or Sia approved the transaction at 5:22 p.m. as reflected on the account records. Teller Descartin thereafter left the bank to secure the
signature of her mother-in-law Remedios and returned at past 7:00 p.m. with the signed withdrawal slip.
Thus, sometime in February 2003, respondent Puentevella initiated further investigation on the incident. Later, on 3 March 2003, teller Fregil
retracted her original statement and instead executed another letter claiming that there was a cover-up of the shortage on the day in question.
Respondents assert that the investigation conducted by the Auditing Division of BPI bolstered teller Fregils claims of irregularity as the audit
report disclosed that petitioners failed to make the necessary report on the shortage and instead assisted in covering-up teller Descartins
wrongdoing.
On 25 April 2003, petitioners were instructed to report to the BPI head office for polygraph testing. While they expressed their willingness to be
interviewed, petitioners objected to the polygraph test. On 27 June 2003, petitioners received show-cause memos directing them to explain in
writing why they should not be sanctioned for conflict of interest and breach of trust. Petitioners submitted their respective replies in which they
denied the charges against them. On14 July 2003, a committee of respondent bank conducted a hearing of the case and as part of the
investigation, separately interviewed petitioners and tellers Descartin and Fregil. On 3 September 2003, petitioners were dismissed from
employment on grounds of breach of trust and confidence and dishonesty.
Issue:
Whether or not there were valid grounds for termination of employment.
Ruling: BPI had just cause to terminate their employment.
There is no denying that loss of trust and confidence is a valid ground for termination of employment. Hence, the basic requisite for dismissal on
the ground of loss of confidence is that
the employee concerned holds a position of trust and confidence or
is routinely charged with the care and custody of the employers money or property.
Page 106
LABOR RELATIONS
107

Moreover, the breach must be related to the performance of the employees function. Also, it must be shown that the
employee is a managerial employee, since the term trust and confidence is restricted to said class of employees.
The SC found sufficient basis in evidence to accord full probative value to Teller Fregils retraction letter which she later affirmed through
subsequent affidavits. The independent audit conducted by the auditing division of BPI notably supports her claim that the wrongdoing was
concealed by petitioners from respondent bank. Moreover, a review of the tellers transaction summary of teller Descartin reinforces the
conclusion that the shortage in her pico box was due to a temporary borrowing, the cover-up of which was sanctioned by petitioners.
It is likewise asserted by petitioners that under BPIs bank policy, failure to report a shortage is not a ground to terminate employment. The
argument is short-sighted.
BPIs policy on tellers shortages is unambiguous. It requires that all shortages be declared properly and booked accordingly on the same day
they are incurred. Furthermore, the same must be reported by the branch head to the designated bank officers and departments not later than
the second banking day from the date of booking.
Taken together with the attending circumstances of the case, the failure of petitioners to report the cash shortage of teller Descartin, even if done
in good faith, nonetheless resulted in their abetting the dishonesty committed by the latter. Under the personnel policies of BPI, this act of
petitioners justifies their dismissal even on the first offense. Even assuming the version of petitioners as the truth, the fact remains that they
willfully decided against reporting the shortage that occurred. As a result, in either situation, petitioners acts have caused respondents to have a
legitimate reason to lose the trust reposed in them as senior managerial employees. Their participation in the cover-up of the misconduct of
teller Descartin makes them unworthy of the trust and confidence demanded by their positions.
It is well-settled that the power to dismiss an employee is a recognized prerogative that is inherent in the employers right to freely manage and
regulate his business. An employer cannot be expected to retain an employee whose lack of morals, respect and loyalty to his employer or
regard for his employers rules and appreciation of the dignity and responsibility of his office has so plainly and completely been bared. Thus, to
compel respondent bank to keep petitioners in its employ after the latter have betrayed the confidence given to them would be unjust to
respondent bank. The expectation of trust is more so magnified in the instant case in light of the nature of respondent banks business. The
banking industry is imbued with public interest and is mandated by law to serve its clients with extraordinary care and diligence. To be able to
fulfill this duty, it in turn must rely on the honesty and loyalty of its employees.
Clearly, as a measure of self-preservation against acts patently inimical to its interests, respondent bank had every right to dismiss petitioners
for breach of trust, loss of confidence and dishonesty. Indeed, in cases of this nature, the fact that petitioners had been employees of BPI for a
long time, if it is to be considered at all, should be taken against them. Their manifest condonation and even concealment of an offense
prejudicial to their employers interest committed by a subordinate under their supervision reflect a regrettable lack of loyalty which they should
have reinforced, instead of betrayed.
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
labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and
enforcement in the interest of simple fair play.
15. RB Michael Press vs. Galit, G.R. No. 153510, February 13, 2008
Facts:
Respondent was employed by petitioner R.B. Michael Press as an offset machine operator, whose work schedule was from 8:00 a.m. to 5:00
p.m., Mondays to Saturdays, and he was paid PhP230 a day. During his employment, Galit was tardy for a total of 190 times, totaling to 6,117
minutes, and was absent without leave for a total of nine and a half days.
On February 22, 1999, respondent was ordered to render overtime service in order to comply with a job order deadline, but he refused to do so.
The following day, respondent reported for work but petitioner Escobia told him not to work, and to return later in the afternoon for a hearing.
When he returned, a copy of an Office Memorandum was served on him, as follows:
To:Mr. Nicasio Galit
From:ANNALENE REYES-ESCOBIA
Re:WARNING FOR DISMISSAL; NOTICE OF HEARING
Page 107
LABOR RELATIONS
108

This warning for dismissal is being issued for the following offenses:
(1)habitual and excessive tardiness
(2)committing acts of discourtesy, disrespect in addressing superiors
(3)failure to work overtime after having been instructed to do so
(4)Insubordination willfully disobeying, defying or disregarding company authority
The offenses you've committed are just causes for termination of employment as provided by the Labor Code. You were given verbal warnings
before, but there had been no improvement on your conduct.
Further investigation of this matter is required, therefore, you are summoned to a hearing at 4:00 p.m. today. The hearing will determine your
employment status with this company.
(SGD) ANNALENE REYES-ESCOBIA
Manager
On February 24, 1999, respondent was terminated from employment. The employer, through petitioner Escobia, gave him his two-day salary
and a termination letter averring that Galit was dismissed due to the following offenses: (1) habitual and excessive tardiness; (2) commission of
discourteous acts and disrespectful conduct when addressing superiors; (3) failure to render overtime work despite instruction to do so; and (4)
insubordination, that is, willful disobedience of, defiance to, or disregard of company authority..
Respondent subsequently filed a complaint for illegal dismissal and money claims before the National Labor Relations Commission (NLRC).
Issues:
(1) WON there was just cause to terminate the employment of respondent, and whether due process was observed in the dismissal process;
(2) WON respondent is entitled to backwages and other benefits despite his refusal to be reinstated.
Ruling:
Respondent's tardiness cannot be considered condoned by petitioners
Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to work on time everyday exhibit the
employee's deportment towards work. Habitual and excessive tardiness is inimical to the general productivity and business of the employer. This
is especially true when the tardiness and/or absenteeism occurred frequently and repeatedly within an extensive period of time.
The mere fact that the numerous infractions of respondent have not been immediately subjected to sanctions cannot be interpreted as
condonation of the offenses or waiver of the company to enforce company rules. A waiver is a voluntary and intentional relinquishment or
abandonment of a known legal right or privilege. It has been ruled that "a waiver to be valid and effective must be couched in clear and
unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to him." Hence, the
management prerogative to discipline employees and impose punishment is a legal right which cannot, as a general rule, be impliedly waived.
Thus it is incumbent upon the employee to adduce substantial evidence to demonstrate condonation or waiver on the part of management to
forego the exercise of its right to impose sanctions for breach of company rules.
In the case at bar, respondent did not adduce any evidence to show waiver or condonation on the part of petitioners.
Insubordination or willful disobedience
For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the employee's assailed conduct must have been
willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to
the employee, and must pertain to the duties which he had been engaged to discharge.
In the present case, there is no question that petitioners' order for respondent to render overtime service to meet a production deadline complies
with the second requisite. Art. 89 of the Labor Code empowers the employer to legally compel his employees to perform overtime work against
their will to prevent serious loss or damage:
Art. 89.EMERGENCY OVERTIME WORK
Any employee may be required by the employer to perform overtime work in any of the following cases:
xxx xxx xxx
(c)When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer
or some other cause of similar nature;
xxx xxx xxx
Page 108
LABOR RELATIONS
109

In the present case, petitioners' business is a printing press whose production schedule is sometimes flexible and varying. It is only reasonable
that workers are sometimes asked to render overtime work in order to meet production deadlines.
The issue now is, whether respondent's refusal or failure to render overtime work was willful; that is, whether such refusal or failure was
characterized by a wrongful and perverse attitude. In Lakpue Drug Inc. v. Belga, willfulness was described as "characterized by a wrongful and
perverse mental attitude rendering the employee's act inconsistent with proper subordination." The fact that respondent refused to provide
overtime work despite his knowledge that there is a production deadline that needs to be met, and that without him, the offset machine operator,
no further printing can be had, shows his wrongful and perverse mental attitude; thus, there is willfulness.
After a re-examination of the facts, we rule that respondent unjustifiably refused to render overtime work despite a valid order to do so. The
totality of his offenses against petitioner R.B. Michael Press shows that he was a difficult employee. His refusal to render overtime work was the
final straw that broke the camel's back, and, with his gross and habitual tardiness and absences, would merit dismissal from service.
Due process: twin notice and hearing requirement
On the issue of due process, petitioners claim that they had afforded respondent due process. Petitioners maintain that they had observed due
process when they gave respondent two notices and that they had even scheduled a hearing where he could have had explained his side and
defended himself.
We are not persuaded.
We held in Agabon v. NLRC:
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a
hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of
Labor and Employment written notices 30 days prior to the effectivity of his separation
Under the twin notice requirement, the employees must be given two (2) notices before his employment could be terminated: (1) a first notice to
apprise the employees of their fault, and (2) a second notice to communicate to the employees that their employment is being terminated. Not to
be taken lightly of course is the hearing or opportunity for the employee to defend himself personally or by counsel of his choice.
A scrutiny of the disciplinary process undertaken by petitioners leads us to conclude that they only paid lip service to the due process
requirements.
The undue haste in effecting respondent's termination shows that the termination process was a mere simulation the required notices were
given, a hearing was even scheduled and held, but respondent was not really given a real opportunity to defend himself; and it seems that
petitioners had already decided to dismiss respondent from service, even before the first notice had been given.
Anent the written notice of charges and hearing, it is plain to see that there was merely a general description of the claimed offenses of
respondent. The hearing was immediately set in the afternoon of February 23, 1999 the day respondent received the first notice. Therefore,
he was not given any opportunity at all to consult a union official or lawyer, and, worse, to prepare for his defense.
16. Cosmos Bottling Corporation v. Nagrama, G.R. No 164403, March 4, 2008

Facts:
Respondent Pablo Nagrama, Jr. was initially employed by petitioner as a maintenance mechanic on June 24, 1993 at the Cosmos Plant in
Cauayan, Isabela. On September 17, 1996, he was elected by the local union as chief shop steward.
Respondent was designated by petitioner as waste water treatment operator effective September 27, 1999. Petitioner hired Clean Flow
Philippines, Inc. to conduct training seminars to acquaint petitioners personnel on the operations of the water treatment plant. Respondent was
instructed to attend the seminar to be held on September 27-30, 1999.
He failed to attend the first two (2) days of the seminar. In a letter by his immediate supervisor, Josephine D. Calacien, dated September 29,
1999, respondent was informed that charges of abandonment of duty and gross insubordination had been lodged against him. He was required
to submit his written explanation.
Page 109
LABOR RELATIONS
110

Respondent filed his explanation on September 30, 1999. He contended that he had to attend to an administrative hearing for fellow
unionists which were held at Santiago, Isabela; that before he went, he first secured permission from the plant controller. He averred that as a
union official, he is obligated to attend to the problems of his fellow union members.
Issue:
Is the dismissal based on the grounds of abandonment and gross insubordination valid?
Ruling:
There is no abandonment and gross insubordination.
Two (2) elements must be satisfied for an employee to be guilty of abandonment. The first is the failure to report for work or absence without
valid or justifiable reason. The second is a clear intention to sever the employer-employee relationship. The second element is the more
determinative factor and must be evinced by overt acts. Likewise, the burden of proof is on the employer to show the employees clear and
deliberate intent to discontinue his employment without any intention of returning; mere absence is not sufficient.
First, respondents absence was justified under the circumstances. He was a shop steward, which recent jurisprudence qualifies as a union
officer. As an officer, he had a valid reason to attend the hearing of his union brothers. He also asked for and was given permission as can be
seen from the minutes of his hearing. Petitioner does not contest this fact. Permission negates any possibility of respondent abandoning his
job.
As to the second requisite, We are not convinced that respondent intended to sever the employer-employee relationship with Cosmos. He
immediately complied with the memo requiring him to explain his absence. His failure to report directly to his Quality Assurance Supervisor and
Analyst can be dismissed as failure to properly understand the instructions he was given.
Moreover, respondent filed a complaint for illegal dismissal. ] A complaint for illegal dismissal shows a desire to continue work. Verily, a review
of the evidence shows that both elements of abandonment are lacking.
For gross insubordination, also called willful disobedience of a lawful order, to lie, two (2) requisites are also necessary. First, the assailed
conduct must have been intentional and characterized by a wrongful and perverse attitude. ] Second, the order violated must have been
reasonable, lawful, and made known to the employee and should pertain to the duties which he has been engaged to
discharge.http://sc.judiciary.gov.ph/jurisprudence/2008/march2008/164403.htm - _ftn83
There is no question that orders to attend the seminar are lawful instructions by petitioner. The first element of gross insubordination, however, is
lacking. A review of the records shows that respondents failure to report to his quality assurance supervisor and failure to fully attend the
seminar was in no way tainted by a wrongful or perverse attitude. His failure to secure a clearance from Clean Flow was due to his attendance
to his union duties. Hence, there is no gross insubordination.
17. School of the Holy Spirit of Q.C. vs. Taguiam, G.R. No. 165565, July 14, 2008
Facts:
Corazon P. Taguiam was the Class Adviser of Grade 5-Esmeralda of the petitioner, School of the Holy Spirit of Quezon City. On March 10,
2000, the class president, wrote a letter to the grade school principal requesting permission to hold a year-end celebration at the school
grounds. The principal authorized the activity and allowed the pupils to use the swimming pool. In this connection, respondent distributed the
parent's/guardian's permit forms to the pupils. Corazon P. Taguiam admitted that Chiara Mae Federico's permit form was unsigned.
Nevertheless, she concluded that Chiara Mae was allowed by her mother to join the activity since her mother personally brought her to the
school with her packed lunch and swimsuit. Before the activity started, she warned the pupils who did not know how to swim to avoid the deeper
area. However, while the pupils were swimming, two of them sneaked out. Respondent went after them to verify where they were going.
Unfortunately, while respondent was away, Chiara Mae drowned. When she returned, the maintenance man was already administering
cardiopulmonary resuscitation on Chiara Mae. The child was still alive when respondent rushed her to the General Malvar Hospital where she
was pronounced dead on arrival. Corazon P. Taguiam was dismissed for gross negligence resulting to loss of confidence.
Issue:
Was the dismissal based on the ground as stated valid?
Page 110
LABOR RELATIONS
111

Ruling:
Yes the dismissal was valid. Under Article 282 of the Labor Code, gross and habitual neglect of duties is a valid ground for an employer to
terminate an employee. Gross negligence implies a want or absence of or a failure to exercise slight care or diligence, or the entire absence of
care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Habitual neglect implies repeated failure to
perform one's duties for a period of time, depending upon the circumstances. Respondent had been grossly negligent. First , it is undisputed
that Chiara Mae's permit form was unsigned. Yet, respondent allowed her to join the activity because she assumed that Chiara Mae's mother
has allowed her to join it by personally bringing her to the school with her packed lunch and swimsuit. The purpose of a permit form is precisely
to ensure that the parents have allowed their child to join the school activity involved. Respondent cannot simply ignore this by resorting to
assumptions. Respondent admitted that she was around when Chiara Mae and her mother arrived. She could have requested the mother to
sign the permit form before she left the school or at least called her up to obtain her conformity. Second, it was respondent's responsibility as
Class Adviser to supervise her class in all activities sanctioned by the school. Thus, she should have coordinated with the school to ensure that
proper safeguards, such as adequate first aid and sufficient adult personnel, were present during their activity. She should have been mindful of
the fact that with the number of pupils involved, it would be impossible for her by herself alone to keep an eye on each one of them. Notably,
respondent's negligence, although gross, was not habitual. In view of the considerable resultant damage, however, the cause is sufficient to
dismiss respondent.
This is not the first time that the SC have departed from the requirements laid down by the law that neglect of duties must be both gross and
habitual. In Philippine Airlines, Inc. v. NLRC, we ruled that Philippine Airlines (PAL) cannot be legally compelled to continue with the employment
of a person admittedly guilty of gross negligence in the performance of his duties although it was his first offense. In that case, we noted that a
mere delay on PAL's flight schedule due to aircraft damage entails problems like hotel accommodations for its passengers, re-booking, the
possibility of law suits, and payment of special landing fees not to mention the soaring costs of replacing aircraft parts. In another case, Fuentes
v. National Labor Relations Commission, we held that it would be unfair to compel Philippine Banking Corporation to continue employing its bank
teller. In that case, we observed that although the teller's infraction was not habitual, a substantial amount of money was lost. The deposit slip
had already been validated prior to its loss and the amount reflected thereon is already considered as current liabilities in the bank's balance
sheet. Indeed, the sufficiency of the evidence as well as the resultant damage to the employer should be considered in the dismissal of the
employee. In this case, the damage went as far as claiming the life of a child. As a result of gross negligence in the present case, petitioners
lost its trust and confidence in respondent. Loss of trust and confidence to be a valid ground for dismissal must be based on a willful breach of
trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Otherwise stated, it must rest on substantial grounds and
not on the employer's arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer.
It should be genuine and not simulated; nor should it appear as a mere afterthought to justify earlier action taken in bad faith or a subterfuge for
causes which are improper, illegal or unjustified. It has never been intended to afford an occasion for abuse because of its subjective nature.
There must, therefore, be an actual breach of duty committed by the employee which must be established by substantial evidence. All told,
there being a clear showing that respondent was culpable for gross negligence resulting to loss of trust and confidence, her dismissal was valid
and legal.
18. Universal Staffing Services Inc. v. NLRC, G.R. No. 177576, July 21, 2008
Facts:
Respondent Grace M. Morales (Morales) applied for and was hired as receptionist by petitioner Universal Staffing Services, Inc. (USSI) in behalf
of its principal Jin Xiang International Labour Supply of United Arab Emirates (U.A.E.). The contract duly approved by the Philippine Overseas
Employment Administration (POEA), provided for an employment term of two (2) years with a monthly salary of Dhs1, 100.00. After Ten (10)
months of work in Al Sandos Suites (Al Sandos) Abu Dhabi, U.A.E. Morales employment was terminated allegedly due to her poor work
performance. Morales received Dhs1,300.00 as full and final settlement of all her claims on January 1, 2003, and was repatriated on January 7,
2003.
Claiming that she was illegally terminated, Morales filed a complaint for illegal dismissal and non-payment of overtime and vacation pay against
USSI and Al Sandos Hotel Management with the Labor Arbiter.
Issue:
Whether or not Morales is illegally dismissed
Page 111
LABOR RELATIONS
112

Ruling:
USSI insists that Morales dismissal was based on a valid and legal ground. The Labor Arbiter lent credence to USSIs posture and dismissed
Morales complaint, but the NLRC and the CA reversed the Arbiters findings.
Morales was dismissed for her alleged poor performance. As a general concept, "poor performance" is equivalent to inefficiency and
incompetence in the performance of official duties. Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for
dismissal only if it amounts to gross and habitual neglect of duties. Thus, the fact that an employee's performance is found to be poor or
unsatisfactory does not necessarily mean that the employee is grossly and habitually negligent of his duties. Gross negligence implies a want or
absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them.
No substantial evidence was presented to substantiate the cause of Morales dismissal. First, USSI failed to cite particular acts or instances that
would validate its claim of Morales poor performance. Second, no convincing proof was offered to substantiate Morales alleged poor
performance.
The principle echoed and reechoed in jurisprudence is that the onus of proving that the employee was dismissed for a just cause rests on the
employer, and the latters failure to discharge that burden would result in a finding that the dismissal is unjustified.
Furthermore, Morales was not accorded due process. Under Article 277(b) of the Labor Code, the employer must send the employee who is
about to be terminated, a written notice stating the cause/s for termination and must give the employee the opportunity to be heard and to
defend himself. There was no showing that Al Sandos warned Morales of her alleged poor performance. Likewise, Morales was not served the
first notice apprising her of the particular acts or omissions on which her dismissal was based together with the opportunity to explain her side.
The only notice given to Morales was the letter dated December 14, 2002 informing her that she was already terminated.
Certainly, there can be no other conclusion than that Morales was illegally dismissed and her employment contract was illegally terminated. With
this finding, it is imperative that Morales be granted the monetary benefits due her.
WHEREFORE, the petition is PARTIALLY GRANTED. Grace M. Morales is declared illegally dismissed. Petitioner Universal Staffing Services,
Inc. is ordered to pay Morales three (3) months salary or Dhs3,300.00, or its peso equivalent. The awards of overtime and holiday pay, as well
as attorneys fees, are DELETED.
19. Flight Attendants and Steward Association of the Philippines (FASAP) v. Philippine Airlines, G.R. No. 178083, G.R. No. 178083, July
22, 2008
Facts:
Petitioner FASAP is the duly certified collective bargaining representative of PAL flight attendants and stewards, or collectively known as PAL
cabin crew personnel. Respondent PAL is a domestic corporation organized and existing under the laws of the Republic of the Philippines,
operating as a common carrier transporting passengers and cargo through aircraft.
On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its cabin crew personnel, to take effect on July 15,
1998. PAL adopted the retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline
industry brought about by the Asian financial crisis. During said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood
at P85 billion.
In implementing the retrenchment scheme, PAL adopted its so-called Plan 14 whereby PALs fleet of aircraft would be reduced from 54 to 14,
thus requiring the services of only 654 cabin crew personnel. PAL admits that the retrenchment is wholly premised upon such reduction in fleet,
and to the strike staged by PAL pilots since this action also translated into a reduction of flights.
PAL claims that the scheme resulted in savings x x x amounting to approximately P24 million per month savings that would greatly alleviate
PALs financial crisis.
On June 22, 1998, FASAP filed a Complaint against PAL and Patria T. Chiong (Chiong) for unfair labor practice, illegal retrenchment with claims
for reinstatement and payment of salaries, allowances and backwages of affected FASAP members, actual, moral and exemplary damages with
a prayer to enjoin the retrenchment program then being implemented.
Page 112
LABOR RELATIONS
113

Meanwhile, months after the June 15, 1998 mass dismissal of its cabin crew personnel, PAL began recalling to service those it had previously
retrenched. Thus, in November 1998 and up to March 1999 several of those retrenched were called back to service. To date, PAL claims to have
recalled 820 of the retrenched cabin crew personnel. FASAP, however, claims that only 80 were recalled as of January 2001.
Issue:
Whether PALs retrenchment scheme was justified.
Ruling:
No. Under the Labor Code, retrenchment or reduction of employees is authorized as follows:
ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or
Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of laborsaving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.
The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors
which would endanger its existence or stability. Where appropriate and where conditions are in accord with law and jurisprudence, the Court has
authorized valid reductions in the work force to forestall business losses, the hemorrhaging of capital, or even to recognize an obvious reduction
in the volume of business which has rendered certain employees redundant.
Nevertheless, while it is true that the exercise of this right is a prerogative of management, there must be faithful compliance with substantive
and procedural requirements of the law and jurisprudence, for retrenchment strikes at the very heart of the workers employment, the lifeblood
upon which he and his family owe their survival. Retrenchment is only a measure of last resort, when other less drastic means have been tried
and found to be inadequate.
The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting evidence. Its failure to prove these
reverses or losses necessarily means that the employees dismissal was not justified. Any claim of actual or potential business losses must
satisfy certain established standards, all of which must concur, before any reduction of personnel becomes legal.
These are:
(1)
That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis,
but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2)
That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month
prior to the intended date of retrenchment;
(3)
That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher;
(4)
That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or
circumvent the employees right to security of tenure; and,
(5)
That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the
employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
In view of the facts and the issues raised, the resolution of the instant petition hinges on a determination of the existence of the first, fourth and
the fifth elements set forth above, as well as compliance therewith by PAL, taking to mind that the burden of proof in retrenchment cases lies
with the employer in showing valid cause for dismissal: that legitimate business reasons exist to justify retrenchment.
FIRST ELEMENT:
Page 113
LABOR RELATIONS
114

The employers prerogative to layoff employees is subject to certain limitations.
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 employer 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 employer 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 employer must also exhaust all other means to avoid further losses without retrenching its employees. 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 employer 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 employer undertook was the rotation work scheme, or the threeday-work-per-employee-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 rankand-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 employees; scheming employers might be merely feigning business losses or reverses in order to ease out
employees.
In establishing a unilateral claim of actual or potential losses, financial statements audited by independent external auditors constitute the
normal method of proof of profit and loss performance of a company. A Statement of Profit and Loss submitted to prove alleged losses, without
the accompanying signature of a certified public accountant or audited by an independent auditor, is nothing but a self-serving document which
ought to be treated as a mere scrap of paper devoid of any probative value.
In the instant case, PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more
than 1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis, however, it cannot be
assumed that it has likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate rehabilitation does not
automatically justify the retrenchment of its cabin crew personnel.
To prove that PAL was financially distressed, it could have submitted its audited financial statements but it failed to present the same with the
Labor Arbiter. Instead, it narrated a litany of woes without offering any evidence to show that they translated into specific and substantial losses
that would necessitate retrenchment.
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 a copy of its consolidated audited financial statements for the years 2002, 2003 and 2004. However, these are not
the financial statements that would have shown PALs 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.
FOURTH ELEMENT:
Concededly, retrenchment to prevent losses is an authorized cause for terminating employment and the decision whether to resort to such move
or not is a management prerogative. However, the right of an employer to dismiss an employee differs from and should not be confused with the
manner in which such right is exercised. It must not be oppressive and abusive since it affects one's person and property.
On the requirement that the prerogative to retrench must be exercised in good faith, we have ruled that the hiring of new employees and
subsequent rehiring of retrenched employees constitute bad faith; that the failure of the employer 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 employees to retrench is further proof of the illegality of the employers retrenchment program, not to mention its bad
faith.
When PAL implemented Plan 22, instead of Plan 14, which was what it had originally made known to its employees, 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 employees 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 employees was made. The truth, however, is that it was unfair for PAL to have made such a move;
Page 114
LABOR RELATIONS
115

it was capricious and arbitrary, considering that several thousand employees 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 PALs implementation of Plan 14 becomes more apparent when it rehired 140 probationary cabin attendants whose services it
had previously terminated, and yet proceeded to terminate the services of its permanent cabin crew personnel.
In sum, we find that PAL had implemented its retrenchment program in an arbitrary manner and with evident bad faith, which prejudiced the
tenurial rights of the cabin crew personnel.
FIFTH ELEMENT:
In selecting employees to be dismissed, fair and reasonable criteria must be used, such as but not limited to: (a) less preferred status (e.g.,
temporary employee), (b) efficiency and (c) seniority.
In the implementation of its retrenchment scheme, PAL evaluated the cabin crew personnels 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
personnels Grooming and Appearance Handbook:
A.
INFLIGHT PROFICIENCY EVALUATION 30%
B.
JOB PERFORMANCE 35%

Special Award +5
Commendations +2
Appreciation +1
Disciplinary Actions Reminder (-3), Warning/Admonition & Reprimands (-5), Suspension (-20), Passenger Complaints (-30), Appearance (10)
C.
ATTENDANCE 35%
Perfect Attendance +2
Missed Assignment -30
Sick Leaves in excess of allotment and other leaves in excess of allotment -20
Tardiness -10 1[93]
The appellate court held that there was no need for PAL to consult with FASAP regarding standards or criteria that the airline would utilize in the
implementation of the retrenchment program; and that the criteria actually used which was unilaterally formulated by PAL using its Performance
Evaluation Form in its Grooming and Appearance Handbook was reasonable and fair. Indeed, PAL was not obligated to consult FASAP
regarding the standards it would use in evaluating the performance of the each cabin crew. However, the criteria utilized by PAL in the actual
retrenchment were not reasonable and fair.
Indeed, the NLRC made a detailed listing of the retrenchment scheme based on the ICCD Masterank and Seniority 1997 Ratings. It found the
following:
1.
2.
3.
4.
5.
Number of employees retrenched due to inverse seniority rule and other reasons -- 454
Number of employees retrenched due to excess sick leaves -- 299
Number of employees who were retrenched due to excess sick leave and other reasons -- 61
Number of employees who were retrenched due to other reasons -- 107
Number of employees who were demoted -- 552
Total -- 1,473.4
Prominent from the above data is the 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.
Page 115
LABOR RELATIONS
116

Moreover, 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 employees 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.
In sum, PALs 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 attendants respective service record, thereby disregarding seniority and loyalty in
the evaluation of overall employee performance.
DISPOSITION:
WHEREFORE, the instant petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 87956 dated August 23,
2006, which affirmed the Decision of the NLRC setting aside the Labor Arbiters findings of illegal retrenchment and its Resolution of May 29,
2007 denying the motion for reconsideration, are REVERSED and SET ASIDE and a new one is rendered:
1.
FINDING respondent Philippine Airlines, Inc. GUILTY of illegal dismissal;
2.
ORDERING Philippine Air Lines, Inc. to reinstate the cabin crew personnel who were covered by the retrenchment and demotion
scheme of June 15, 1998 made effective on July 15, 1998, without loss of seniority rights and other privileges, and to pay them full backwages,
inclusive of allowances and other monetary benefits computed from the time of their separation up to the time of their actual reinstatement,
provided that with respect to those who had received their respective separation pay, the amounts of payments shall be deducted from their
backwages. Where reinstatement is no longer feasible because the positions previously held no longer exist, respondent Corporation shall pay
backwages plus, in lieu of reinstatement, separation pay equal to one (1) month pay for every year of service;
3.
ORDERING Philippine Airlines, Inc. to pay attorneys fees equivalent to ten percent (10%) of the total monetary award.
Costs against respondent PAL.
20. John Hancock Life Insurance Corp. vs. Davis, G.R. No. 169549, Sept. 3, 2008
Facts:
Joanna Cantre Davis was agency administration officer of John Hancock Life Insurance Corporation. On October 18, 2000, Patricia Yuseco,
JHLICs corporate affairs manager, discovered that her wallet was missing. She immediately reported the loss of her credit cards to AIG and BPI
Express. To her surprise, she was informed that "Patricia Yuseco" had just made substantial purchases using her credit cards in various stores
in the City of Manila. She was also told that a proposed transaction in Abenson's-Robinsons Place was disapproved because "she" gave the
wrong information upon verification. Because loss of personal property among its employees had become rampant in its office, petitioner sought
the assistance of NBI. The NBI, 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 Davis NBI and Yuseco filed a complaint for qualified theft against Davis 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 Davis under preventive suspension and instructed her to cooperate with
its ongoing investigation. Davis filed a complaint for illegal dismissal alleging that petitioner terminated her employment without cause. The labor
arbiter, in May 21, 2002, found that Davis 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. Upon
appeal, NLRC affirmed the labor arbiter in July 31, 2003 and denied her motion for reconsideration in October 30, 2003. Upon petition for
certiorari filed with the CA, CA on July 4, 2005 granted the petition holding 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
employers (did) not provide legal justification for dismissing an employee". Petitioner moved for reconsideration but it was denied. Hence, this
petition where petitioner argues that the ground for an employee's dismissal need only be proven by substantial evidence. Thus, the dropping of
charges against an employee (especially on a technicality such as lack of proper verification) or his subsequent acquittal does not preclude an
employer from dismissing him due to serious misconduct.
Issue:
Page 116
LABOR RELATIONS
117

Whether or not petitioner substantially proved the presence of valid cause for respondent's termination.
Ruling:
Supreme Court granted the petition and ruled that petitioner validly dismissed Davis for cause analogous to serious misconduct.
Article 282 of the Labor Code provides: Termination by Employer. An employer may terminate an employment for any of the following causes:
(a)
Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or his representatives in connection
with his work;
(e) Other causes analogous to the foregoing.
Misconduct involves "the transgression of some established and definite rule of action, forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment". For misconduct to be serious and therefore a valid ground for dismissal, it must be:
of grave and aggravated character and not merely trivial or unimportant and
connected with the work of the employee.
In this case, petitioner dismissed Davis based on the NBI's finding that the latter stole and used Yuseco's credit cards. But since the theft was
not committed against petitioner itself but against one of its employees, respondent's misconduct was not work-related and therefore, she could
not be dismissed for serious misconduct. Nonetheless, Article 282 (e) of the Labor Code talks of other analogous causes or those which are
susceptible of comparison to another in general or in specific detail. For an employee to be validly dismissed for a cause analogous to those
enumerated in Article 282, the cause must involve a voluntary and/or willful act or omission of the employee. A cause analogous to serious
misconduct is a voluntary and/or willful act or omission attesting to an employee's moral depravity. Theft committed by an employee against a
person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct. 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.
21. Merin vs. NLRC, G.R. No. 171790, October 17, 2008
Facts:
Respondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) on April 29, 1999. Respondent was required to
accomplish a "Conductor's Trip Report" and submit it to the company after each trip. As a background, this report indicates the ticket opening
and closing for the particular day of duty. After submission, the company audits the reports. Once an irregularity is discovered, the company
issues an "Irregularity Report" against the employee, indicating the nature and details of the irregularity. Thereafter, the concerned employee is
asked to explain the incident by making a written statement or counter-affidavit at the back of the same Irregularity Report. After considering the
explanation of the employee, the company then makes a determination of whether to accept the explanation or impose upon the employee a
penalty for committing an infraction. That decision shall be stated on said Irregularity Report and will be furnished to the employee.
Upon audit of the October 28, 2001 Conductor's 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, respondent said that the erroneous
declaration in his October 28, 2001 Trip Report was unintentional. He explained that during that day's trip, the windshield of the bus assigned to
them was smashed; and they had to cut short the trip in order to immediately report the matter to the police. As a result of the incident, he got
confused in making the trip report.
On November 26, 2001, respondent received a letter terminating his employment effective November 29, 2001. The dismissal letter alleged that
the October 28, 2001 irregularity was an act of fraud against the company. KKTI also cited as basis for respondent's dismissal the other offenses
he allegedly committed since 1999.
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.
Page 117
LABOR RELATIONS
118

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.
Issue:
Whether or not procedural requirements were complied with.
Ruling:
Due process under the Labor Code involves two aspects: first, substantive the valid and authorized causes of termination of employment
under the Labor Code; and second, procedural the manner of dismissal.
Non-compliance with the Due Process Requirements
Art. 277 of the Labor Code provides the manner of termination of employment, thus:
Art. 277. Miscellaneous Provisions. . . .
(b)Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and
authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose
opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be
without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the
National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.
Accordingly, the implementing rule of the aforesaid provision states:
SEC. 2.Standards of due process; requirements of notice. In all cases of termination of employment, the following standards of due process
shall be substantially observed:
I.For termination of employment based on just causes as defined in Article 282 of the Code:
(a)A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity
(b)A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond
to the charge, present his evidence, or rebut the evidence presented against him.
(c)A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been
To clarify, the following should be considered in terminating the services of employees:
(1)The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a
directive that the employees are given the opportunity to submit their written explanation within a reasonable period . "Reasonable opportunity"
under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare
adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 282 is being charged against the employees.
(2)After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the
opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut
the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by
the parties as an opportunity to come to an amicable settlement.
Page 118
LABOR RELATIONS
119

(3)After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination
indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established
to justify the severance of their employment.
In the instant case, KKTI admits that it had failed to provide respondent with a "charge sheet." 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 employee does not comply with the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC, the Court held that
consultations or conferences are not a substitute for the actual observance of notice and hearing.
Second, the Court observed the irregularity reports against respondent for his other offenses that such contained merely a general description of
the charges against him. The reports did not even state a company rule or policy that the employee had allegedly violated. Likewise, there is no
mention of any of the grounds for termination of employment under Art. 282 of the Labor Code. Thus, KKTI's "standard" charge sheet is not
sufficient notice to the employee.
Third, no hearing was conducted. Regardless of respondent's written explanation, a hearing was still necessary in order for him to clarify and
present evidence in support of his defense. Moreover, respondent made the letter merely to explain the circumstances relating to the irregularity.
He was unaware that a dismissal proceeding was already being effected.
Sanction for Non-compliance with Due Process Requirements
As stated earlier, after a finding that petitioners failed to comply with the due process requirements, the CA awarded full backwages in favor of
respondent in accordance with the doctrine in Serrano v. NLRC. However, the doctrine in Serrano had already been abandoned in Agabon v.
NLRC by ruling that if the dismissal is done without due process, the employer should indemnify the employee with nominal damages.
Thus, for non-compliance with the due process requirements in the termination of respondent's employment, petitioner KKTI is sanctioned to
pay respondent the amount of thirty thousand pesos (PhP30,000) as damages.
22. Yrasuegui vs. Phil Airlines, G.R. No. 168081, Oct. 17, 2008
Facts:
Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL). He stands five feet and eight inches (58) 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 Manual of PAL. His weight problem dates back to 1984 when PAL advised him to go on an
extended vacation leave from December 29, 1984 to March 4, 1985 to address his weight concerns. For failure to meet the weight
standards another leave without pay from March 5, 1985 to November 1985 was imposed. He met the required weight and was allowed to work
but his weight problem recurred, thus another leave without pay from October 17, 1988 to February 1989. From 1989 to 1992 his weight
fluctuated from 209lb, 215lb, 217lb, 212lb, and 205. During that period he was requested to lose weight and to report for weight checks which he
constantly failed to do. In the meantime his status was off-duty. Finally in 1993, petitioner 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 (5)
years, his services were considered terminated effective immediately. He then filed a complaint for illegal dismissal against PAL. The Labor
Arbiter ruled that he was illegally dismissed and entitles to reinstatement, backwages and attorneys fees. The NLRC affirmed the LA. The CA
reversed the NLRC.
Issue:
Whether or not petitioner was illegally dismissed.
Ruling:
Page 119
LABOR RELATIONS
120

The obesity of petitioner is a ground for dismissal under Article 282(e) of the Labor Code. The weight standards of PAL constitute a continuing
qualification of an employee in order to keep the job. Tersely put, an employee may be dismissed the moment he is unable to comply with his
ideal weight as prescribed by the weight standards. The dismissal would 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 employer; 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 employees position. The failure to meet the employers qualifying standards is in fact a ground that does not squarely
fall under grounds (a) to (d) and is therefore one 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 employee is hired. x x x
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.
II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense . Employment in particular jobs may not be
limited to persons of a particular sex, religion, or national origin unless the employer can show that sex, religion, or national origin is an actual
qualification for performing the job. The qualification is called a bona fide occupational qualification (BFOQ). 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. 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 primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. 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. 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.
Petitioner is entitled to separation pay. Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from the
language of Article 279 of the Labor Code that [a]n employee who is unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Luckily for petitioner, this is not an
ironclad rule. Exceptionally, separation pay is granted to a legally dismissed employee as an act social justice, or based on equity. In both
instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee.
Here, We grant petitioner separation pay equivalent to one-half (1/2) months pay for every year of service. It should include regular allowances
which he might have been receiving.
23. Sagales v. Rustans Commercial Corporation, G.R. No. 166554, November 27, 2008
Facts:
Petitioner Julito Sagales was employed by respondent Rustans Commercial Corporation occupying the position of Chief Cook at the Yum Yum
Tree Coffee Shop from October 1970 until July 26, 2001, when he was terminated. He was paid a basic monthly salary of P9,880.00. He was
also receiving service charge of not less than P3,000.00 a month and other benefits under the law. Petitioner was also a consistent recipient of
numerous citations for his performance. After receiving his latest award, petitioner conveyed to respondent his intention of retiring, after
reaching 31 years in service. Petitioner, however, was not allowed to retire with his honor intact.
On June 18, 2001, Security Guard Magtangob apprehended petitioner in the act of taking out from Rustans Supermarket a plastic bag
containing 1.335 kilos of squid heads worth P50.00. Petitioner was not able to show any receipt when confronted. Thus, petitioner was brought
Page 120
LABOR RELATIONS
121

to the Makati Police Criminal Investigation Division where he was detained. Petitioner was later ordered released pending further investigation
but respondent placed petitioner under preventive suspension.
During the inquest proceedings for qualified theft before Assistant Prosecutor Pineda, petitioner contended that although he was in possession
of the plastic bag containing the squid heads, he did not steal them because he actually paid for them. As proof, petitioner presented a receipt.
The only fault he committed was his failure to immediately show the purchase receipt when he was accosted because he misplaced it when he
changed his clothes. He also alleged that the squid heads were already scraps as these were not intended for cooking. Neither were the
squid heads served to customers. He bought the squid heads so that they could be eaten instead of being thrown away. If he intended to steal
from respondent, he could have stolen other valuable items instead of scrap. Pineda believed the version of petitioner and recommended the
dismissal of the case for lack of evidence.
A formal investigation was conducted by the Legal Department on July 6, 2001. Respondent did not find merit in the explanation of petitioner.
Thus, petitioner was dismissed from service on July 26, 2001. At that time, petitioner had been under preventive suspension for 1 month.
Aggrieved, petitioner filed a complaint for illegal dismissal against respondent. He also prayed for unpaid salaries/wages, overtime pay, as well
as moral and exemplary damages, attorneys fees, and service charges.
Labor Arbiter Pati dismissed the complaint. According to the Labor Arbiter, the nature of the responsibility of petitioner was not that of an
ordinary employee. It then went on to categorize petitioner as a supervisor in a position of responsibility where trust and confidence is
inherently infused. As such, it behooved him to be more knowledgeable if not the most knowledgeable in company policies on employee
purchases of food scrap items in the kitchen. Per the evidence presented by respondent, petitioner breached company policy which justified
his dismissal.
On appeal, NLRC reversed the decision of the Labor Arbiter. The NLRC held that the petitioner is a mere rank-and-file employee. The
evidence is also wanting that petitioner committed the crime charged. The NLRC did not believe that petitioner would trade off almost 31 years
of service for P50.00 worth of squid heads. Hence, petitioner was illegally dismissed as respondent failed to establish a just cause for dismissal.
However, the claim for damages was denied for lack of evidence.
Respondent brought the matter to the CA. In reversing the NLRC, the CA opined that the position of petitioner was supervisory in nature. The
CA also held that the evidence presented by respondent clearly established loss of trust and confidence on petitioner. Lastly, the CA, although
taking note of the long years of service of petitioner and his numerous awards, refused to award separation pay in his favor. According to the
CA, the award of separation pay cannot be sustained under the social justice theory because the instant case involves theft of the employers
property.
Petitioner left with no other recourse, availed of the present remedy.
Issue:S:
(1) WON petitioners position is supervisory in nature which is covered by the trust and confidence rule.
(2) WON the evidence on record sufficient to conclude that petitioner committed the crime charged.
(3) WON the penalty of dismissal is proper.
Ruling:
I. The position of petitioner is supervisory in nature which is covered by the trust and confidence rule.
The nature of the job of an employee becomes relevant in termination of employment by the employer because the rules on termination of
managerial and supervisory employees are different from those on the rank-and-file. Managerial employees are tasked to perform key and
sensitive functions, and thus are bound by more exacting work ethics. As a consequence, managerial employees are covered by the trust and
confidence rule. The same holds true for supervisory employees occupying positions of responsibility.
There is no doubt that the position of petitioner as chief cook is supervisory in nature. A chief cook directs and participates in the preparation
and serving of meals; determines timing and sequence of operations required to meet serving times; and inspects galley and equipment for
cleanliness and proper storage and preparation of food. Naturally, a chief cook falls under the definition of a supervisor, i.e., one who, in the
interest of the employer, effectively recommends managerial actions which would require the use of independent judgment and is not merely
routinary or clerical.
It has not escaped Our attention that petitioner changed his stance as far as his actual position is concerned. In his position paper, he alleged
that at the time of his dismissal, he was Chief Cook. [46] However, in his memorandum, he now claimed that he was an Asst. Cook. The ploy is
Page 121
LABOR RELATIONS
122

clearly aimed at giving the impression that petitioner is merely a rank-and-file employee. The change in nomenclature does not, however, help
petitioner, as he would still be covered by the trust and confidence rule.
Of course, the ruling assumes greater significance if petitioner is the chief cook. A chief cook naturally performs greater functions and has
more responsibilities than an assistant cook. In eo quod plus sit simper inest et minimus. The greater always includes the less. Ang malawak
ay laging sumasakop sa maliit.
II. The evidence on record is sufficient to conclude that petitioner committed the crime charged.
Security of tenure is a paramount right of every employee that is held sacred by the Constitution. The reason for this is that labor is deemed to
be property within the meaning of constitutional guarantees. Indeed, as it is the policy of the State to guarantee the right of every worker to
security of tenure as an act of social justice, such right should not be denied on mere speculation of any similar or unclear nebulous basis.
Indeed, the right of every employee to security of tenure is all the more secured by the Labor Code by providing that the employer shall not
terminate the services of an employee except for a just cause or when authorized by law. Otherwise, an employee who is illegally dismissed
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.
Necessarily then, the employer bears the burden of proof to show the basis of the termination of the employee.
In the case at bar, respondent has discharged its onus of proving that petitioner committed the crime charged. We quote with approval the
observation of the CA in this regard:
On this matter, petitioner presents as evidence the verified statement of security guard Aranas. Aranas positively saw the private in the act of
bringing out the purloined squid heads. Similarly, the statement of security guard Magtangob attested to the commission by private respondent
of the offense charged. Further, the verified statement of Samson, store manager of petitioner corporation who is in charge of all personnel,
including employees of the Yum Yum Tree Coffee Shop of which private respondent was a former assistant cook, attested to the fact of private
respondent seeking apology for the commission of the act. Likewise, the statement of Zenaida Castro (Castro), cashier of petitioner
corporations supermarket, Makati Branch, Ayala Center, Makati City, confirmed that indeed the 1.335 kilos of squid heads amounting to fifty
pesos (P50.00)per kilo, had not been paid for.
The contention of petitioner that respondent merely imputed the crime against him because he was set to retire is difficult, if not impossible, to
believe. Worth noting is the fact that petitioner failed to impute any ill will or motive on the part of the witnesses against him.
We stress that the quantum of proof required for the application of the loss of trust and confidence rule is not proof beyond reasonable doubt. It
is sufficient that there must only be some basis for the loss of trust and confidence or that there is reasonable ground to believe, if not to
entertain the moral conviction, that the employee concerned is responsible for the misconduct and that his participation in the misconduct
rendered him absolutely unworthy of trust and confidence.
It is also of no moment that the criminal complaint for qualified theft against petitioner was dismissed. It is well settled that the conviction of an
employee in a criminal case is not indispensable to the exercise of the employers disciplinary authority.
III. The penalty of dismissal is too harsh under the circumstances.
The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. The only condition is that the exercise
of management prerogatives should not be done in bad faith or with abuse of discretion. Truly, while the employer has the inherent right to
discipline, including that of dismissing its employees, this prerogative is subject to the regulation by the State in the exercise of its police power.
In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only the corresponding penalty demanded by the
circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the employee and must be imposed in
connection with the disciplinary authority of the employer.
In the case at bar, petitioner deserves compassion more than condemnation. At the end of the day, it is undisputed that: (1) petitioner has
worked for respondent for almost thirty-one (31) years; (2) his tireless and faithful service is attested by the numerous awards he has received
from respondent; (3) the incident on June 18, 2001 was his first offense in his long years of service; (4) the value of the squid heads worth
P50.00 is negligible; (5) respondent practically did not lose anything as the squid heads were considered scrap goods and usually thrown away
in the wastebasket; (6) the ignominy and shame undergone by petitioner in being imprisoned, however momentary, is punishment in itself; and
(7) petitioner was preventively suspended for one month, which is already a commensurate punishment for the infraction committed. Truly,
petitioner has more than paid his due.
Page 122
LABOR RELATIONS
123

In any case, it would be useless to order the reinstatement of petitioner, considering that he would have been retired by now. Thus, in lieu of
reinstatement, it is but proper to award petitioner separation pay computed at one-month salary for every year of service, a fraction of at least six
(6) months considered as one whole year. In the computation of separation pay, the period where backwages are awarded must be included.
24. Garcia vs. PAL, G.R. No. 164856, Jan. 20, 2009, En Banc, citing Genuino vs. NLRC, G.R. No. 142732-33, December 4, 2007
Facts:
This case stemmed from an administrative charge filed by PAL against employees, herein petitioners after allegedly being caught in the act of
sniffing shabu in the workplace. After due notice, PAL dismissed petitioners prompting the latter to file a complaint for illegal dismissal which was
resolved by the Labor Arbiter in their favor ordering inter alia their reinstatement. Subsequently, respondent company was placed under
corporate rehabilitation. From the Labor Arbiter, respondent appealed to NLRC which reversed said decision. Later, a writ of execution as
regards the reinstatement was issued by the Labor Arbiter. Respondent then filed an urgent petition for injunction on the ground that it cannot
comply with the reinstatement order due to its corporate rehabilitation.
Issues:
1. Whether a subsequent finding of a valid dismissal by NLRC removes the basis for implementing the reinstatement aspect of the Labor
Arbiters decision?
2. Whether respondent company is justified in refusing to comply with such reinstatement order in view of its corporate rehabilitation?
Ruling:
On the first issue, jurisprudential trend has maintained that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the
higher court. The employee is not required to reimburse whatever salary he may have received for he is entitled to such. The opposite view is
articulated in Genuino vs NLRC which states:
If the decision of the Labor Arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the
right to require the dismissed employee on payroll reinstatement to refund the salaries he or she received while the case was pending appeal,
xxx.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is
not entitled to be paid the salaries xxx.
However, the dearth of authority supporting Genuino renders inutile the rationale of reinstatement pending appeal. Pursuant to police power, the
State may authorize an immediate implementation, pending appeal of a decision reinstating a dismissed or separated employee since that
saving act is designed to stop, although temporarily since the appeal may be decided in favor of the appellant, a continuing threat or danger to
the survival or even the life of the dismissed or separated employee and his family. Thus, the Refund Doctrine easily demonstrates how a
favorable decision by the Labor Arbiter could harm more than help a dismissed employee. The employee, to make both ends meet, would
necessarily have to use up the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of a final
unfavorable decision. The provision of Art. 223 is clear that an award by the Labor Arbiter for reinstatement shall be immediately executory even
pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious
i.e. to make an award of reinstatement immediately enforceable, even pending appeal. The Court reaffirms such prevailing principle that even if
the order of reinstatement is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court.
After the labor arbiters decision is reversed by a higher court, the employee may be barred from collecting the accrued wages if it is shown that
the delay in enforcing the reinstatement was without fault of the employer. The test is two-fold: a) there must be actual delay or the fact that the
order of reinstatement pending appeal was not executed prior to its reversal and b) the delay must not be due to the employers unjustified act or
omission. If the delay is due to employers unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal
of the labor arbiters decision. In Genuino, the former NLRC Rules of Procedure was still applied in which it did not lay down a mechanism to
promptly effectuate the self-executory order of reinstatement, making it difficult to establish that the employer actually refused to comply. The
new NLRC Rules of Procedure which took effect on Jan. 7, 2006 now require the employer to submit a report of compliance within 10 calendar
days from receipt of the labor arbiters decision. The employee need not file a motion for the issuance of a writ of execution since the labor
Page 123
LABOR RELATIONS
124

arbiter shall thereafter motu proprio issues the writ. It is settled that upon appointment by SEC of a rehabilitation receiver, all actions for claims
before any tribunal against the corporation shall ipso jure be suspended. Case law recognizes that unless there is a restraining order, the
implementation of the order of reinstatement is ministerial and mandatory. The suspension of claims partakes of the nature of a restraining order
that constitutes legal justification for respondents non-compliance with the reinstatement order. Respondents failure to exercise the alternative
options of actual reinstatement and payroll reinstatement was thus justified. The petition is denied. The CA decision annulling the NLRC
resolutions affirming the validity of the Writ of Execution and Notice of Garnishment is affirmed.
25. La Union Cement Workers Union et al., vs NLRC et al., G.R. No. 174621, January 30, 2009
Facts:
Private respondent Bacnotan Cement Corporation (respondent company), now known as Holcim Philippines, Inc., is engaged in the
manufacture of cement. Prior to 1994, respondent company had been utilizing the "wet process technology" in its operations. Sometime in 1992,
respondent company introduced the "dry process technology" as part of its modernization program. In 1995, the new "dry process technology"
became fully operational. After a comparative study of the two production lines, respondent company discovered that the "dry process
technology" or the dry line proved to be more efficient as the cost was minimized by P15.00 per cement bag while the "wet process technology"
or the wet line consumed more fuel and had to undergo frequent repairs and shutdowns due to its obsolescence. To implement the closure of
the wet line, respondent company and petitioner La Union Cement Workers Union (petitioner Union) entered into a Memorandum of Agreement
on 19 July 1997, whereby respondent company committed to grant separation pay equivalent to 150% of the monthly basic pay for every year of
service plus the additional fixed amount of P27,000.00 to employees who would be terminated as a result of the closure of the wet line. In an
open letter dated 11 August 1997, Magdaleno B. Albarracin, Jr., the respondent companys Senior Executive Vice President, notified the
employees of the its decision to mothball the wet line and the termination of those whose employment would become unnecessary as a result of
the closure. On 15 August 1997, respondent company sent a letter to the office of Ricardo S. Martinez, Regional Director of the Department of
Labor and Employment (DOLE), informing him about respondent companys decision to shut down the wet line and furnishing him the list of
affected employees. On 16 August 1997, respondent company sent notices of termination to more or less 200 employees including petitioner
Almoite. Upon the receipt of the separation pay, a number of the affected employees signed individual Release Waiver and Quitclaim. Sometime
in November 1997, petitioner Union and some 80 of its members including petitioner Almoite filed complaints for unfair labor practice, illegal layoff and illegal dismissal against respondent company before the NLRC Regional Arbitration Branch 1 in San Fernando, La Union. The petitioners
alleged that while the closure affected only the wet line, among the employees terminated were operating the dry line or performing support
services for both wet and dry lines. They further alleged that after the closure of the wet line, respondent company contracted out the services
performed by the employees who were terminated. Only 31 of the 80 employees pursued the complaints before the Labor Arbiter. After
submission of the parties position papers and pleadings, Labor Arbiter Irenarco R. Rimando rendered a Decision on 19 March 1999 dismissing
the complaints. Labor Arbiter Rimando found that respondent company complied with the requisite notice and severance pay mandated under
Article 283 of the Labor Code. As regards the claim that the services performed by the complainants were eventually assumed by employees
who were retained or were contracted out, Labor Arbiter Rimando ruled that the employer had the prerogative to utilize its remaining workforce
to the maximum. Petitioners appealed to the NLRC, arguing that respondent company failed to prove with substantial evidence that the
retrenchment was absolutely necessary and unavoidable mainly because the affected employees were also performing support services in the
wet line. Public respondent NLRC affirmed in toto the decision of Labor Arbiter Rimando. It held that the appeal was brought by petitioner Union
and not by its members who were the real parties-in-interest and, thus, must be dismissed outright. The NLRC held that the retrenchment on the
ground of redundancy was valid in any case. It concluded that the scaling down of activities requiring support services was a consequence of
the closure of the wet line; hence, the termination of the excess employees performing such support services followed as a matter of course.
Ruling:
In a Resolution dated 13 December 2006, the Court dismissed the petition with respect to petitioner Union for insufficiency or defective
verification and certification of non-forum shopping, as only the president of petitioner Union signed the same in violation of Sections 4 and 5,
Rule 7 of the Rules of Court. The judgment of dismissal has become final and executory with respect to petitioner Union on 08 February 2007.
The instant petition raises two issues: namely, whether petitioner Union is the real party-in-interest in this case and whether petitioner Almoites
termination was valid. The question of petitioner Unions capacity to sue on behalf of its members has become moot and academic in view of the
judgment of dismissal of the instant petition which has already become final and executory with respect to petitioner Union. Thus, the remaining
issue to be resolved in this petition pertains to petitioner Almoites claim that petitioner Union has failed to prove that his work as an oiler for both
the wet and dry lines has become redundant with the closure of the wet line. Petitioner Almoites claim is clearly a factual question which is
beyond the province of a Rule 45 petition. In any event, the Court finds no cogent reason to disturb the judgment of the Court of Appeals
affirming the Labor Arbiter and NLRC rulings that the termination of petitioner Almoite and the other employees of respondent company. As
explained by the NLRC, the termination of petitioner Almoite was a necessary consequence of the partial closure of operations of respondent
company. Petitioner Almoites work as an oiler for both the wet line and dry line has become redundant or superfluous following the closure of
Page 124
LABOR RELATIONS
125

the wet line. By and large, the determination of whether to maintain or phase out an entire department or section or to reduce personnel lies with
the management. Thus, his termination on the ground of redundancy is an authorized cause for termination under Article 283 of the Labor Code.
The Court quotes with approval the following conclusions of the NLRC: x x x There is no dispute as to the fact that there was a partial closure or
cessation of operations with the mothballing of the old wet-process production line of the company a situation which falls among the
authorized causes for termination allowed under Article 283 of the Labor Code. x x x Neither is there any dispute that the logical and
consequence [sic]of such partial cessation of operations was to render certain employees redundant. Obviously enough, since there was a
curtailment in operations, certain activities were rendered either excess or no longer necessary, hence, redundant. The only ostensible argument
presented by appellant is the bare allegation that most of them were not exclusively assigned to the wet process line but were performing
support services for both the wet line and the dry line. Therefore, they argue that they could not be declared redundant by virtue of the closure of
the wet line alone. This line of argument is non sequitur, fallacious and totally untenable. It proceeds from the erroneous premise that only those
exclusively assigned to the wet line can be declared redundant. The mere fact that an employee was performing support services for both the
wet and the dry line does not in any way exclude him from being declared as redundant. On the contrary, with the closure of the wet line and the
consequent scaling down of activities requiring support services, it stands to reason that there was already an excess of employees performing
support services. Respondent had therefore all the reason to include such employees among those whom it considered redundant.
WHEREFORE, the instant petition for review on certiorari is DENIED and the decision and resolution of the Court of Appeals in CA-G.R. SP No.
90597 are AFFIRMED.
26. Mendros, Jr. vs. Mitsubishi Motors Phils Corp., G.R. No. 169780, Feb. 16, 2009
Facts:
MMPC hired Mendros in 1994 as regular body repman, later promoted to assembler major in the companys manufacturing division. Due to
severe drastic slump of its vehicle sales brought about by the financial crisis in 1997, MMPC as per audited financial statements, sustained a
loss of PhP 470 million in 1997, and PhP 771 million in 1998. MMPC implemented various cost-cutting measures, some of which are
employment-hiring freezing, separation of casuals and trainees, manpower services reduction, plant shutdowns, and reduced work week for
managerial and other monthly salaried personnel. In Feb 1998, it instituted the first stage of its retrenchment program affecting 531 hourly
manufacturing employees, which proved in adequate. It then launched a temporary lay-off program of 170 hourly employees, including
Mendros. The latter received a letter informing him of the temporary suspension of his employment for six months from Jan 4 to July 2, 1999.
In the interim, he was updated of the business conditions by MMPC. In June 1, 1999, MMPC notified DOLE that the temporary lay-off is being
made permanent effective July 2, 1999 due to continuing adverse market conditions. Mendros filed for a case of illegal dismissal. In its position
papers, MMPC defined the criteria used in considering employees for retrenchment, and attached its financial statements for 1997-1996 and
1998-1997 prepared by SGV & Co. The Labor Arbiter decided in favor of MMPC. Upon appeal, the NLRC reversed said decision and declared
that the dismissal was illegal stating that the merit rating system adopted by MMPC as additional criterion for retrenchment was erroneous and
arbitrary, being against the CBA. According to the NLRC, the CBA listed only seniority and needs of the company as determinative factors.
The NLRC said that MMPC had not notified Mendros of the additional criterion and of the findings of the merit evaluation, thus nullifying the
retrenchment. The CA decided in favor of MMPC, and reinstated the LAs ruling.
Issue:
Whether or not the temporary lay-off and eventual retrenchment was valid.
Ruling:
The retrenchment was valid. The right or management to retrench workers to meet clear and continuing economic threats or during periods of
economic recession to prevent losses is recognized by Art. 283 of the LC. The requirements for a valid retrenchment are:
that the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, and real, or only if expected, are reasonably imminent as perceived objectively and in good faith by the employer;
that the employer serves written notice both to the employees concerned and the DOLE at least a month before the intended date of
retrenchment;
that the employer pays the retrenched employee separation pay in an amount prescribed by the Code;
that the employer exercises its prerogative to retrench in good faith; and
that it uses fair and reasonable criteria in ascertaining who would be retrenched or retained.
The losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment
is clearly shown to be insubstantial and inconsequential in character, the bonafide nature of the retrenchment would appear to be seriously in
Page 125
LABOR RELATIONS
126

question. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in
good faith by the employer.
There should be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences. Because of
the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The
employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor costs. An
employer who 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 employers 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, costs, etc.have been tried and found wanting. Lastly, 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 employees. There can hardly be any
dispute that MMPC suffered substantial and heavy losses in FY 1997 and continued to bleed in 1998. As shown in its AFS for those fiscal
years, it incurred an aggregate loss of PhP 1.242 billion for its two-year operation. Any suggestion that a billion peso plus loss is de minimis in
extent has to be dismissed for sheer absurdity. It bears to state that Art. 283 of the Code uses the phrase retrenchment to prevent losses. The
phrase necessarily implies that retrenchment may be effected even in the event only of imminent, impending, or expected losses. The employer
need not wait for substantial losses to materialize before exercising ultimate and drastic option to prevent such losses. In the case at bench,
MMPC was already financially hemorrhaging before finally resorting to retrenchment. Mendros argues that since Art. V, Sec 5(c) of the CBA
provides for only two factors, (1) seniority (last-in, first-out) and (2) the needs of the company, to be considered in retrenching MMPC
employees, the company is bereft of authority to arbitrarily impose other factors or criteria in effecting his retrenchment. The Court is not
persuaded. Sec. 1, Art. V of the CBA, allows MMPC, in the exercise of its customary management functions and prerogatives on matters of
promotions, transfer, lay-off, and recall, to consider as guiding norms the following factors or criteria: Seniority, Efficiency and Attitude, Job
Knowledge and Potential, and Attendance. And to complement this prerogative, the company, in the same section, is given the discretion to
exercise just and fair evaluation of such factors, meaning that the company is accorded a reasonable latitude to assign a corresponding weight
to each factor. The Sec. 5(c) needs of the company factor, if viewed by its self without linking it to the Sec. 1 criteria, would be a meaningless, if
not unreasonable, standard. The proper view, therefore, is that the Sec. 1 criteria qualify the factors of seniority and needs of the company in
Sec. 5(c). Sec. 5(c) should be understood in the light of Sec. 1 which, to stress, provides seniority, efficiency and attitude, job knowledge and
potential, and attendance as among the factors that should guide the company in choosing the employees to be laid-off or kept. All other things
being equal, a company would necessarily need to retain those who had rendered dedicated and highly efficient service and whose knowledge,
attendance, and potential hew with company standards. Any other measure would be senseless in the business viewpoint. Accordingly, the
merit rating used by MMPC based on Sec. 5 in conjunction with and as qualified by the factors provided under Sec. 1 is fair and reasonable,
and, to be sure, well within the contemplation of the parties CBA. Mendros lament about not being furnished a copy of the 1997-1996 and
1998-1997 AFS and other financial documents, as well as the finding of the merit evaluation rating, at the time he was notified of his lay-off
cannot be accorded tenability. There is no law or rule that requires an employer to furnish an employee to be retrenched copies of its AFS and
other documents. The appropriate forum for an employee to contest the reality or good faith character of the retrenchment asserted as ground
for dismissal from employment is before the DOLE.
27. Rosa vs. Ambassador Hotel, G.R. No. 177059, March 13, 2009
Facts:
Petitioners file a complaint with the Department of Labor and Employment-NCR which prompted an inspection of the hotels premises by a labor
inspector, respondent was found to have been violating labor standards laws and was thus ordered to pay them some money claims. This
purportedly angered respondents management which retaliated by suspending and/or constructively dismissing them by drastically reducing
their work days through the adoption of a work reduction/rotation scheme. Criminal cases for estafa were likewise allegedly filed against several
of the employees involved, some of which cases were eventually dismissed by the prosecutors office for lack of merit. The labor arbiter found
respondent and its manager Yolanda L. Chan guilty of illegal dismissal and ordered them to pay petitioners separation pay at month for every
year of service with full backwages, and 10% of the monetary award as attorneys fees. Respondent appealed to the NLRC, which affirmed the
labor arbiters ruling with the modification that five of the complainants, namely Diana P. Castillo, Lorena L. Hildao, Gilbert Ongjoco, Salvador So
and Ma. Pilar A. Barcenilla, were directed to report back to work, and respondent was directed to accept them without having to pay them
backwages. With respect to petitioners, the NLRC held that Edgar de Leon was actually dismissed but illegally on November 7, 2001 and that
with respect to the four other petitioners, they were constructively dismissed on April 15, 2002 by virtue of respondents memorandum of even
date. On respondents motion for reconsideration, the NLRC modified its decision by, among other things, absolving respondents manager
Yolanda L. Chan of any personal liability. Respondent appealed and maintained that its act of reducing the number of work days per week was
valid, as it was done to save its business from bankruptcy due to economic reverses. The appellate court reversed the NLRC decision and
Page 126
LABOR RELATIONS
127

dismissed petitioners complaints holding that there was no constructive dismissal because petitioners simply disappeared from work upon
learning of the work reduction/rotation scheme; and that in their position paper submitted before the NLRC, petitioners only prayed for
separation pay and not for reinstatement, hence, following settled jurisprudence, the latter relief has been foreclosed.
Issue:
Whether or not petitioners simply disappeared from their work constitute abandonment?
Ruling:
Case law holds that constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by
an employer becomes unbearable to the employee. Respondents sudden, arbitrary and unfounded adoption of the two-day work scheme
which greatly reduced petitioners salaries renders it liable for constructive dismissal. Respecting the appellate courts ruling that petitioners
simply disappeared from their work, hence, they are guilty of abandonment, the same does not lie. Absence must be accompanied by overt
acts unerringly pointing to the fact that the employee simply does not want to work anymore. And the burden of proof to show that there was
unjustified refusal to go back to work rests on the employer. Abandonment is a matter of intention and cannot lightly be inferred or legally
presumed from certain equivocal acts. For abandonment to exist, two requisites must concur: first, the employee must have failed to report for
work or must have been absent without valid or justifiable reason; and second, there must have been a clear intention on the part of the
employee to sever the employer-employee relationship as manifested by some overt acts. The second element is the more determinative
factor. Abandonment as a just ground for dismissal thus requires clear, willful, deliberate, and unjustified refusal of the employee to resume
employment. Mere absence or failure to report for work, even after notice to return, is not tantamount to abandonment. Respondent, which has
the onus of proving that petitioners abandoned their work, failed to discharge the same, however. Upon the other hand, petitioners immediate
filing of complaints for illegal suspension and illegal dismissal after the implementation of the questioned work scheme, which scheme was
adopted soon after petitioners complaints against respondent for violation of labor standards laws were found meritorious, negates respondents
claim of abandonment. An employee who takes steps to protest his dismissal cannot by logic be said to have abandoned his work.
28. Motorola Phils. v. Ambrocio, G.R. No. 173279, March 30, 2009
Facts:
Sometime in 1997, Motorola Philippines, Inc. (MPI), decided to close its Paraaque plant in order to consolidate its operations at its Carmona,
Cavite plant, offering to its affected employees a redundancy/separation package consisting benefits and emoluments.
Out of about 900 employees who availed of the package and were consequently separated from employment, 236 employees including
respondents herein, filed two separate complaints against MPI, for payment of retirement pay equivalent to one month salary per year of
service, alleging that they were entitled thereto under Sec. III-B of MPIs Retirement Plan.
MPI alleged that the applicable retirement plan was not Sec. III-B, but Policy 1215, which provides that In case of voluntary separation from the
company due to Labor Saving devices or redundancy, retrenchment program initiated by the Company as a result of a merger or to prevent
losses or other similar causes, the company shall provide a separation pay equivalent to one (1) months pay per year of service, inclusive of
any service benefit eligibility under the Retirement Plan.
MPI thus insisted that respondents had already received such one-month pay, the same having been included in the cash component of the
separation/redundancy package, which consisted of two-months pay per year of service, paid to them.
LA ruled in favor of the respondents. NLRC however has a reversed ruling holding that the benefits received by respondents for involuntary
separation under MPIs retirement plan included the service pay benefits under either Sec. III-B of the Retirement Plan or Policy 1215 which
both grant exactly the same benefit in case of involuntary separation one months pay for every year of service, and since none of respondents
retired but were actually involuntarily separated due to redundancy, then they cannot avail of such pay. CA reversed NLRC's decision.
Issue:
WON respondent-employees are entitled to their claim of another separate one-month pay per year of service in pursuant to Sec. III-B of MPIs
Retirement Plan.
Page 127
LABOR RELATIONS
128

Ruling: Petition granted.
Respondents have no cause of action as against petitioners with respect to their claim for additional retirement benefits. Article 283 of the Labor
Code, as amended, provides:
ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or
[Department] of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least 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." (Emphasis supplied)
Separation pay has been defined as the amount that an employee receives at the time of his severance and is designed to provide the
employee with the wherewithal during the period he is looking for another employment,16and is recoverable only in the instances enumerated
under Articles 283 and 284 of the Labor Code, as amended, or in illegal dismissal cases when reinstatement is no longer possible.
Retirement pay, on the other hand, presupposes that the employee entitled to it has reached the compulsory retirement age or has rendered the
required number of years as provided for in the collective bargaining agreement (CBA), the employment contract or company policy, or in the
absence thereof, in Republic Act No. 7641 or the Retirement Law.
It is admitted that respondents were terminated pursuant to a redundancy, and not due to retirement program, hence, they were entitled to a
separation pay of one month salary per year of service.
As correctly ruled by the NLRC, by whatever version of MPIs Retirement Plan would be made applicable, respondents are entitled to a
separation pay of one month salary per year of service.
Thus, when respondents were paid a separation pay of two months salary for every year of service under the Redundancy Package, they
already received what was due them under the law and in accordance with MPIs plan.
29. Perez et al., vs. Phil Telegraph & Telephone Company et al., G.R. No. 152048, April 7, 2009
Facts:
Felix B. Perez and Amante G. Doria were employed by Philippine Telegraph and Telephone Company (PT&T) as shipping clerk and supervisor,
respectively, in PT&Ts Shipping Section, Materials Management Group. Acting on an alleged unsigned letter regarding anomalous transactions
at the Shipping Section, PT&T formed a special audit team to investigate the matter. It was discovered that the Shipping Section jacked up the
value of the freight costs for goods shipped and that the duplicates of the shipping documents allegedly showed traces of tampering, alteration
and superimposition. Perez and Doria were placed on preventive suspension for 30 days for their alleged involvement in the anomaly. Their
suspension was extended for 15 days twice. A memorandum was issued by PT&T dismissing them from service for having falsified company
documents. Perez and Doria filed a complaint for illegal suspension and illegal dismissal, alleging that they were dismissed on the date they
received the memorandum. They likewise contended that due process was not observed in the absence of a hearing in which they could have
explained their side and refuted the evidence against them.
Issue:
Whether or not the dismissal of Perez and Doria was legal.
Ruling:
The dismissal is illegal. PT&T did not observe due process when it failed to comply with the two-notice requirement for terminating employees.
ART. 277. Miscellaneous provisions. x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the
employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so
Page 128
LABOR RELATIONS
129

desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment.
Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing
a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or
authorized cause shall rest on the employer.
Perez and Doria were neither apprised of the charges against them nor given a chance to defend themselves. They were simply and arbitrarily
separated from work and served notices of termination in total disregard of their rights to due process and security of tenure. Where the
dismissal was without just or authorized cause and there was no due process, Article 279 of the Labor Code, mandates that the employee is
entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or
their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. However,
reinstatement is no longer possible because of the length of time that has passed from the date of the incident to final resolution.
*** In this case, due process was not observed because of the violation of the twin notice requirement. However, the absence of a hearing
does not always result to a denial of due process. The court had the following to say:
While a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. An employees right to be
heard in termination cases is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the charges
against him and to submit evidence in support thereof. "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 employees right to be heard. The employer may provide an employee with ample
opportunity to be heard and defend himself with the assistance of a representative or counsel in ways other than a formal hearing. The
employee can be fully afforded a chance to respond to the charges against him, adduce his evidence or rebut the evidence against him through
a wide array of methods, verbal or written. The following are the guiding principles in connection with the hearing requirement in dismissal
cases:
(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee to answer the charges against
him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way.
(b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist
or a company rule or practice requires it, or when similar circumstances justify it.
(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference" requirement in the implementing
rules and regulations.
Petitioners likewise contended that due process was not observed in the absence of a hearing in which they could have explained their side and
refuted the evidence against them. There is no need for a hearing or conference. We note a marked difference in the standards of due process
to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer must
provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires:
Nonetheless, 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 condition sine 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
employer and the employee. The "ample opportunity to be heard" standard is neither synonymous nor similar to a formal hearing. To confine the
employees 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." Significantly, 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.
An employees right to be heard in termination cases under Article 277(b) as implemented by Section 2(d), Rule I of the Implementing Rules of
Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by any
meaningful opportunity to controvert the charges against him and to submit evidence in support thereof. 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 employees right to be heard.
Page 129
LABOR RELATIONS
130

30. Telecommunications Distributors Specialists Inc. et al., vs. Garriel, G.R. No. 174981, May 25, 2009, citing 2009 Perez
Facts:
Raymund Garriel was a Customer Service Assistant (CSA) working at Telecommunications Distributors Specialists Inc.(TDSI). He was in charge
of selling cellphones to customers as well as cellphone line accounts to subscribers from which he collected cash payments for. During these
various transactions, three notable incidents occurred. The first was when he forged the signature of a subscriber, Ms. Ratcliffe, when she forgot
to sign the coverage waiver in her application. The second incident was similar to the first, involving one Mila Huilar, where again, Garriel forged
her signature on her coverage waiver. The third incident involved Garriel in selling a defective cellphone personally owned by him to a
subscriber named Helcon Mabesa. He did not issue any official receipt for the transaction. These incidents were brought to the attention of the
human resource department by these three customers. Garriel was then given a notice to explain why he violated company rules and
procedures. Garriel denies all the accusations before him. An investigation ensued. Thereafter, Garriel was dismissed on grounds of serious
misconduct and loss of trust and confidence. Garriel files an illegal dismissal case against the company.
Issue:
1. Was Garriel illegally dismissed?
2. Was due process observed in dismissing Garriel?
Ruling:
There was a valid dismissal. An employee entrusted with the companys goods and properties, who thereafter violates company policies with
regard to the making fictitious documentation, willfully and knowingly selling defective products, and conniving with co-employees in creating a
cash shortage on the report to pay for his own cellphone constitute serious misconduct as well as loss of trust and confidence as grounds for a
valid dismissal. The company had complied with the twin due process requirement in terminating an employee. He was given a notice to explain
coupled with the list of violations of its company policy. The essence of due process is simply the opportunity to be heard. After being heard, an
investigation was conducted to determine the veracity of the facts alleged on both sides. The notice of dismissal was effected thereafter.
Principles:
1. Grounds for Loss of Trust and Confidence apply only to employees occupying positions of trust and confidence or those who are routinely
charged with the care and custody of the employers money or property. Requisites:
a. the loss of confidence must not be simulated;
b. it should not be used as a subterfuge for causes which are illegal, improper or unjustified;
c. it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary;
d. it must be genuine, not a mere afterthought, to justify earlier action taken in bad faith, and,
e. the employee involved holds a position of trust and confidence.
2. Guiding principles in connection with the hearing requirement in dismissal cases:
A. ample opportunity to be heard means any meaningful opportunity, verbal or written, given to the employee to answer the charges
against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way.
B. a formal hearing or conference becomes MANDATORY only when:
1. requested by the employee in writing or
2. substantial evidentiary disputes exist, or
3. a company rule or practice requires it, or
4. similar circumstances justify it.
C. the amply opportunity to be heard standards in the Labor Code PREVAILS over the hearing or conference requirement in the IRR.
3. Comment on Social Justice:
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. xxx 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. This great policy of our Constitution is not meant for the protection of
those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character.
(Ha Yuan Restaurant v. NLRC)
Page 130
LABOR RELATIONS
131

31. Triumph International Philippines v. Apostol, G.R. No. 164423, June 16, 2009
Facts:
Respondent Apostol was hired as assistant manager by petitioner Triumph International (Phils.), Inc. (TIPI) in March 1991, and was terminated
by TIPI on 21 January 2000. On the other hand, respondent Opulencia was hired as a warehouse helper by TIPI sometime in 1990, and was
the companys warehouse supervisor at the time of the termination of his employment on 21 January 2000. Apostol was the immediate superior
of Opulencia. On 14 and 15 August 1999, TIPI conducted an inventory cycle count of its direct and retail sales in its Muoz warehouse. The
inventory cycle count yielded discrepancies between its result and the stock list balance Sugue (TIPIs Marketing Services Manager) sent a
show-cause letter to Apostol, TIPIs Assistant Manager-Warehouse and Distribution, requiring him to explain in writing the negative variance
based on the inventory cycle count.
On 21 January 2000, TIPI, through Sugue, served notices to Apostol and Opulencia, stating that their employment had been terminated for
committing infractions of the companys rules and regulations. Specifically, Apostol was found to have committed Offense No. 3 (Fraud or willful
breach by an employee of the trust reposed in him by the Company) and Offense No. 25 (Using, uttering or saying profane, indecent, abusive,
derogatory and/or indecorous words or language against the employer or supervisor), while Opulencia was found to have committed Offense
No. 3 only. On 28 January 2000, Apostol and Opulencia filed with the Labor Arbiter a complaint for illegal dismissal and non-payment of salaries
and other benefits against TIPI. Labor Arbiter rendered a Decision dismissing the Complaint for lack of merit. On appeal, the NLRC affirmed the
Decision of the Labor Arbiter. On 20 February 2004, the Court of Appeals rendered judgment, reversing and setting aside the NLRC Decision.
Issues:
WON respondents were illegally dismissed.
Ruling:
NO. We find the appeal meritorious.
In cases of termination of employees, the well-entrenched policy is that no worker shall be dismissed except for just or authorized cause
provided by law and after due process. Dismissals of employees have two facets: first, the legality of the act of dismissal, which constitutes
substantive due process; and second, the legality in the manner of dismissal, which constitutes procedural due process.
TIPI complied with the Procedural Due Process
The grounds to which respondents were held liable are among the just causes for termination of employment under Article 282 of the Labor
Code.
Termination of employment based on Article 282 mandates that the employer substantially comply with the requirements of due process under
the rules implementing the Labor Code (Sec. 2(d), Rule 1, Book VI of the Omnibus Rules), to wit:
x x x
(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity
within which to explain his side;
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented against him; and
(iii) a written notice of termination served on the employee, indicating that upon, due consideration of all the circumstances, grounds have been
x x x
There is no question that TIPI, in dismissing Apostol and Opulencia, complied with the above requirements of procedural due process. The
Court of Appeals even pointed out in its decision some of the documentary proofs of such compliance. We quote the pertinent portion of the
Court of Appeals decision, viz:
x x x In the present case, the evidence shows that the private respondent [TIPI] had substantially complied with the requirements of procedural
due process. The private respondent sent the following to the petitioners: (a) show cause letters addressed to the petitioners [Apostol and
Opulencia] requiring them to explain in writing within 48 hours upon receipt, the discrepancy on the cycle count conducted on the Muoz
warehouse on August 14-15, 1999 and placing both of them on leave with pay until further notice pending investigation on the matter; (b)
memorandum dated October 22, 1999 addressed to petitioner Apostol showing the findings after the investigation was conducted by the private
respondent, requiring him to explain within 24 hours from receipt why he should not be terminated from his employment for loss of confidence;
and (c) the notices of termination dated January 21, 2000.
Page 131
LABOR RELATIONS
132

Substantive Due Process- R were dismissed for valid and just cause
Thus, we are left with the question on whether the alleged causes for dismissal of respondents Apostol and Opulencia are supported by
substantial evidence.
Apostol and Opulencia were dismissed mainly on ground of fraud or willful breach of trust. As previously mentioned, fraud or willful breach of
the employers trust is a just cause for termination of employment under Article 282(c) of the Labor Code. This provision is premised on the fact
that the employee concerned holds a position of trust and confidence, a situation which exists where such employee is entrusted by the
employer with confidence on delicate matters, such as care and protection, handling or custody of the employers property. But, in order to
constitute a just cause for dismissal, the act complained of must be work-related such as would show the employee concerned to be unfit to
continue working for the employer.
Recent decisions of this Court have distinguished the treatment of managerial employees from that of the rank-and-file personnel, insofar as the
application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and
confidence, as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere uncorroborated
assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere existence of a basis for
believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial
employees, proof beyond reasonable doubt is not required. It is sufficient that there is some basis for the employers loss of trust and
confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported
misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position. Nonetheless,
the evidence must be substantial and must establish clearly and convincingly the facts on which the loss of confidence rests and not on the
employers arbitrariness, whims, and caprices or suspicion.
In this case, Apostol and Opulencia were not ordinary rank and file employees; they were managerial and supervisory employees. Apostol was
TIPIs assistant manager for warehouse and distribution, while Opulencia was a warehouse supervisor. They were entrusted with the
management and handling of the companys warehouse goods.
Thus, respondents were found by TIPI to have made unauthorized and unreported adjusting entries to the stocklist without proper investigation
and reconciliation with the Accounting Department, without prior authorization by management, and without preparation of formal reports
indicating the parties responsible for the adjustments and those who approved the same. This, according to TIPI, is a clear violation of the
companys internal control procedures, which resulted to the loss of the companys trust and confidence in the respondents.
Respondents do not deny making adjustment entries to the stocklist. In fact, both admitted making such adjustments in the office memoranda
and affidavits submitted as evidence in this case. The question, therefore, is whether respondents Apostol and Opulencia, in making such
adjustments, violated TIPI internal control procedures.
After a careful evaluation of the evidence on record, we are convinced that the respondents made unauthorized adjustments in TIPIs stocklist,
in violation of the companys internal control procedures. This act warrants respondents dismissal for willful breach of employers trust.
Considering the foregoing, we find that respondents Apostol and Opulencia were dismissed by TIPI for a valid and just cause. The relationship
of employer and employee, especially where the employee has access to the employers property, necessarily involves trust and confidence.
Where the rules laid down by the employer to protect its property are violated by the very employee who is entrusted and expected to follow and
implement the rules, the employee may be validly dismissed from service.
Finding the dismissal of respondents Apostol and Opulencia, based on willful breach of employers trust, valid, we deem it unnecessary to
further rule on TIPIs other ground for Apostols dismissal, i.e., uttering indecent, abusive and derogatory words against his supervisor. Note,
however, that such act of an employee, if substantially proven, may be considered as serious misconduct which would warrant the termination of
his employment.
32. Technological Institute of the Phils Teachers and Employees Organization vs. Court of Appeals, et al., G.R. No. 158703, June 26,
2009
Facts:
Page 132
LABOR RELATIONS
133

Petitioner Magdalena T. Salon (Salon) was a College Instructor 3 of the Humanities and Social Science Department (HSSD) of respondent
Technological Institute of the Philippines (TIP) and a member of the Technological Institute of the Philippines Teachers and Employees
Organization (TIPTEO). Sometime in year 2000, the TIP received complaints from students claiming that Salon was collecting P1.50 per page
for the test paper used in the subject she was teaching at the time. She reportedly asked her students not to write on the test papers; these test
papers were not returned to the students after the test. In addition, a complaint was filed against her for anomalously changing the grade of a
particular student who was at the same time a son of a co-faculty member from 5.0 (failed) to 6.0 (dropped). Salon answered that she only
collected P0.50 per page to reimburse herself from personal expenses. Further, she admitted of having changed the grade in order to vindicate
the student from the wrath of his father. Salon believed that a dropped grade is better than a failed mark. There were enumerated TIP
Memoranda in the case, geared towards avoidance of unduly burdening the students from unreasonable finances. But what is really
determinative is TIP Memorandum No. P-66, which requires a prior permission from the proper school authority should the teacher directly sell
his/her examination papers to students, usually for reimbursement, provided, the cost shall be within the rate prescribed by the school. The
Voluntary Arbitrator ruled in favor of Salon. On appeal under Rule 43, said decision was affirmed by CA. However, on motion for reconsideration,
CA reversed itself, ruling in favor of TIP and against Salon, but granted separation pay.
Issue:
1. Whether or not Salon is guilty of violating TIPs Memorandum No. P-66, for unauthorized selling of examination papers
2. Whether or not Salon is guilty of serious misconduct for falsifying Manalos (the son a co-faculty member) grade and violating the grading
rules under the Manual of Regulations for Private Schools
Ruling:
Salon is guilty of the two valid causes.
On the sale of Papers: The cost of the sale of test papers by Salon to her students was within the prescribed parameters of the school.
However, it cannot be denied that Salon did not first obtain the prior permission of the proper school authority, a condition precedent required by
TIP Memorandum no. P-66. Clearly, she transgressed the school regulation.
On grade tampering: It is a violation against the Manual of Regulation for Private Schools whose Section 79 provides: Sec. 79. Basis for
Grading. The final grade or rating given to a pupil or student in a subject should be based on his scholastic record. Any addition or diminution to
the grade x x x shall not be allowed.
The present violation involves elements of falsification and dishonesty. Knowing fully what Manalo deserved, Salon gave him a grade of 6.0
instead of a failing grade. In the process, she changed in short, falsified her own records by changing the submitted record and the
supporting documents. Viewed in any light, this is Serious Misconduct under Article 282(a) of the Labor Code, and a just cause for termination of
employment.
On separation pay: CA erred on this matter. The violation constituted serious misconduct or a cause relating to the employees moral character.
The fact that Salon committed an offense for the first time, or she has served for 10 years in TIP, and the allegation that there was no malice or
bad intention on her part are misplaced arguments.
Thus, separation pay is not proper.
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. We hereby AFFIRM the amended decision of the Court of
Appeals promulgated on May 22, 2003, but DELETE the award of separation pay. Costs against the petitioners.
33. Llamas v. Ocean Gateway Maritime and Management Services Inc., G.R. No. 179293, August 14, 2009
Facts:
Ocean Gateway Maritime and Management, Inc (OGMM). hired Eden Llamas as an accounting manager. OGMM's Chief Executive Officer
Macaraig called petitioners attention because of her failure, despite repeated demands, to accomplish the long overdue monthly and annual
company financial reports and to remit the companys contributions to the SSS and PhilHealth. But Llamas failed to comply with the instruction
as money for the purpose was not credited to the companys account at the bank.
Page 133
LABOR RELATIONS
134

Macaraig sent a memorandum to petitioner charging her with gross and habitual neglect of duty and/or misconduct or willful disobedience and
insubordination, detailing therein the bases of the charges, and requiring her to submit a written explanation why she should not be penalized or
dismissed from employment but OMGG found the explanation unsatisfactory
Issues:
WON the dismissal was for a just cause
WON due process was observed
Ruling:
THE DISMISSAL WAS FOR A JUST CAUSE.
Under Article 282 (b) of the Labor Code, negligence must be both gross and habitual to justify the dismissal of an employee. Gross negligence
is characterized by want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and
intentionally with a conscious indifference to consequences insofar as other persons may be affected.
In the present case, Llamas, as respondents Accounting Manager, failed to discharge her important duty of remitting SSS/PhilHealth
contributions not once but quadruple times, resulting in respondents incurring of penalties totaling P18,580.41, not to mention the
employees/members contributions being unupdated.
Her claim of being overworked and undermanned does not persuade. As noted by respondent, the company had been in operation for less
than three (3) months at the time the negligence and delays were committed, with only a few transactions and only with one principal, Malaysian
Merchant Marine Bhd., hence, its financial and accounting books should not have been difficult to prepare. Moreover, as claimed by respondent
which was not refuted by petitioner, she failed to remit the contributions as early as November 2001 during which time, however, on-the-job
trainees were still with the company, hence, her claim of being undermanned behind such failure does not lie.
As to the delay in the remittance of SSS/PhilHealth contributions for January 2002, which petitioner claims to be due to the fact that the money
intended for payment was not yet credited as of February 20, 2002 to respondents bank account, as well as to her absence the following day or
on February 21, 2002 due to hypertension, the Court is not persuaded, given that at that time, she had already been in delay in the performance
of her duties.
On petitioners declaration that I believe that I did something good for our office when our declaration of gross income submitted to City Hall for
the renewal of our municipal license was lower than our actual gross income for which the office had paid a lower amount, the Court finds the
same as betraying a streak of dishonesty in her. It partakes of serious misconduct.
x x x Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of 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 employees work to constitute just cause for his separation. Thus, for misconduct or improper behavior to be a just
cause for dismissal, (a) it must be serious; (b) must relate to the performance of the employees duties; and (c) must show that the employee
has become unfit to continue working for the employer. Indeed, an employer may not be compelled to continue to employ such person whose
continuance in the service would be patently inimical to his employers interest.[12] (Emphasis supplied)
For her act of understating the companys profits or financial position was willful and not a mere error of judgment, committed as it was in order
to save costs, which to her warped mind, was supposed to benefit respondent. It was not merely a violation of company policy, but of the law
itself, and put respondent at risk of being made legally liable. Verily, it warrants her dismissal from employment as respondents Accounting
Manager, for as correctly ruled by the appellate court, an employer cannot be compelled to retain in its employ someone whose services is
inimical to its interests.
2. As to the second issue of whether due process was accorded petitioner, the Court rules in the affirmative. Far from being arbitrary, the
termination of her services was effected after she was afforded the opportunity to, as she did, submit her explanation on why she should not be
disciplined or dismissed, which explanation, it bears reiteration, was, however, found unsatisfactory.
34. Lowe Inc., v. CA, G.R. 164813 & 174590, August 14, 2009
Page 134
LABOR RELATIONS
135

Facts:
Lowe is an advertising agency, and Maria Elizabeth "Mariles" L. Gustilo (Gustilo) 9 is the Chief Executive Officer and President of Lowe, while
Raul M. Castro (Castro) is the Executive Creative Director . Both were included in the complaint for illegal dismissal in their capacity as officers
of Lowe.
At the height of the influx of advertising projects, Lowe hired Mutuc as a Creative Director to help out the four other Creative Directors of Lowe.
Mutuc was given a salary of P100,000 a month and Mutuc became a regular employee.
A year after, most of Lowes clients reduced their advertising budget. In response to the situation, Lowe implemented cost-cutting measures
including a redundancy program and Lowe terminated Mutucs services because her position was declared redundant.
Mutuc filed a complaint for illegal dismissal, nonpayment of 13th month pay with prayer for the award of moral and exemplary damages plus
attorneys fees against Lowe. Labor Arbiter dismissed Mutucs complaint NLRC reversed the decision. Both Lowe and Mutuc filed petitions for
certiorari before the Court of Appeals. The Court of Appeals modified the NLRCs decision rendered in favor of Mutuc, hence this petition.
Issues:
1. WON Mutuc was validly dismissed by reason of redundancy
2. WON Mutuc is entitled only to separation pay and proportionate 13th month pay
Ruling:
Yes.
Redundancy exists when the service of an employee is in excess of what is reasonably demanded by the actual requirements of the business.
For a valid implementation of a redundancy program, the employer must comply with the following requisites: (1) written notice served on both
the employee and the DOLE at least one month prior to the intended date of termination; (2) payment of separation pay equivalent to at least
one month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant position; and
(4) fair and reasonable criteria in ascertaining what positions are to be declared redundant. (See Art. 283)
The controversy lies on whether Lowe used any fair and reasonable criteria in declaring Mutucs position redundant and whether there was bad
faith in the abolition of her position.
The determination of the continuing necessity of a particular officer or position in a business corporation is a management prerogative, and the
courts will not interfere unless arbitrary or malicious action on the part of management is shown. Indeed, an employer has no legal obligation to
keep more employees than are necessary for the operation of its business.
The Court recognizes that a host of relevant factors comes into play in determining who among the employees should be retained or
separated. Among the accepted criteria in implementing a redundancy program are: (1) preferred status; (2) efficiency; and (3) seniority.
Lowe employed fair and reasonable criteria in declaring Mutucs position redundant. Mutuc, who was hired only on 23 June 2000, did not deny
that she was the most junior of all the executices of Lowe. Mutuc also did not present contrary evidence to disprove that she was the least
efficient and least competent among all the Creative Directors.
Yes
35. Estacio v. Pampanga I Electric Cooperative, G.R. No. 183196, August 19, 2009
Facts:
This is a Petition for Review on Certiorari. Respondent PELCO I is an electric cooperative duly organized, incorporated, and registered
pursuant to Presidential Decree No. 269. Respondent Engr. Allas is the General Manager
Page 135
LABOR RELATIONS
136

Petitioner Estacio had been employed at respondent PELCO I as a bill custodian since 1977, while petitioner Manliclic had been working for
respondent PELCO I as a bill collector since June 1992.
On 22 August 2002, Nelia D. Lorenzo (Lorenzo), the Internal Auditor of respondent PELCO I, submitted her Audit Findings:
Evaluation of the results of physical inventory of bills through reconciliation of records such as aging schedule of consumer accounts receivable
balance, collection reports and other related documents revealed 87 bills amounting to One Hundred Twenty Six Thousand Seven Hundred Fifty
and 93/100 (P126,750.93) remained unremitted as of August 20, 2002. Accounting of which includes the accountability of Ms. Estacio
amounting to One Hundred Twenty Three Thousand Eight Hundred Seven and 14/100 (P123,807.14) representing 86 bills.2[5]
Respondent Engr. Allas issued a Memorandum to petitioner Estacio informing her of the audit findings, and directing her to explain in writing,
within 72 hours upon receipt thereof, why no disciplinary action should be imposed upon her for Gross Negligence of Duty.
In her written explanation, petitioner Estacio averred that she had no control over and should not be held answerable for the failure of the bill
collectors at the San Luis Area Office to remit their daily collections. Unsatisfied with petitioner Estacios explanation, respondent Engr. Allas
issued a Memorandum charging Estacio with gross negligence of duty. A formal investigation/hearing then ensued, during which petitioner
Estacio was duly represented by counsel.
Respondent Engr. Allas rendered a Decision which adopted the recommendation of the investigation committee dismissing petitioner Estacio
from service, with forfeiture of her benefits, with the modification deleting the charge of dishonesty. Petitioner Estacio sought a reconsideration of
the said decision but it was denied by respondent Engr. Allas.
Labor Arbiter ruled in favor of respondents. NLRC disagreed with the Labor Arbiter.
Issue:
WON Estacio and Manliclic were legally dismissed?
Ruling:
Yes. There was a legal dismissal of petitioner Estacio. Court rules that there is valid cause for petitioner Manliclic dismissal from service. It is
undisputed that petitioners were accorded due process. Through the Memoranda issued by respondent Engr. Allas, petitioners were duly
informed of the results of the audit conducted by Internal Auditor Lazaro, which were unfavorable to petitioners. The Court also finds that there
was valid cause for petitioner Estacios dismissal.
Gross negligence connotes want or absence of or failure to exercise even slight care or diligence, or the total absence of care. 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. Petitioner Estacio, despite the opportunities given to her, did not offer any satisfactory explanation or
evidence in her defense. Her only reason for failing to comply with the requisite daily accounting and reporting of the bill collections was the
terrible weather condition. Petitioner Estacios failure to make a complete accounting and reporting of the bill collections plainly demonstrated
her disregard for one of her fundamental duties as a bill custodian.
Petitioner Manliclics honesty and integrity are the primary considerations for his position as a bill collector because, as such, he has in his
absolute control and possession -- prior to remittance -- a highly essential property of the cooperative. The amount misappropriated by petitioner
Manliclic is irrelevant. More than the resulting material damage or prejudice, it is petitioner Manliclics very act of misappropriation that is
offensive to respondent PELCO petitioner Manliclic committed a breach of the trust reposed in him by his employer, respondent PELCO I. This
constitutes valid cause for his dismissal from service Court of Appeals is AFFIRMED
36. Maralit v. PNB, G.R. No. 163788, August 24, 2009

Facts:
2
Page 136
LABOR RELATIONS
137

Ester B. Maralit (Maralit) worked for respondent Philippine National Bank (PNB) from 27 August 1968 to 31 December 1998(30 years). She
began as a casual clerk and climbed her way to become branch manager. PNB, offered its personnel an early retirement plan known as ,
Special Separation Incentive Plan (SSIP), the guidelines for the availment of the SSIP, that personnel with pending administrative cases or who
are under preliminary investigation may avail of the SSIP. However, payment of their benefits shall be made only after the resolution of their
cases and only if they are not disqualified from receiving such benefits.
PNB charged Maralit with serious misconduct, gross violation of bank rules and regulations, and conduct prejudicial to the best interest of the
bank. PNB stated:
By giving undue and unwarranted preference, advantage or benefit to a private party through manifest partiality and evident bad faith committed
by you while performing the duties as Manager as follows:
(1) in a memorandum dated 8 July 1998, a certain Gay Ophelia T. Alano reported Maralits irregular transactions;
(2) in a memorandum dated 9 July 1998, Vice President Florencio C. Lat of Branch Operations and Consumer Banking Division for Southern
Luzon and Bicol referred Maralits irregular transactions to the IAG for immediate investigation;
(3) Maralit submitted a memorandum dated 9 July 1998 admitting the irregular transactions;
(4) on 9 July 1998, Vice President Milagros Pastrana of Branch Administrative Office for Southern Luzon and Bicol recommended that Maralit be
temporarily assigned to the Naga Branch;
(5) on 15 July 1998, Maralit assumed her new assignment at the Naga Branch;
(6) on 28 July 1998, PNB reported to the BSP the P54,950,000 drawings against uncollected deposits;
(7) in a memorandum dated 8 September 1998, the IAG found that Maralit violated bank policies which resulted in the return of unfunded checks
amounting to P54,950,000 and recommended that Maralit be required to submit her written answer under oath;
(8) on 15 September 1998, Maralit filed her application for early retirement; (9) in its 29 September 1998 memorandum, PNB stated, Attached
is the Internal Audit report dated September 8, 1998; and
(10) in its 16 October 1998 memorandum, PNB stated, In connection with the Special Audit report of Internal Audit Group dated September 8,
1998.
Internal Audit Group (IAG) asks Maralit for a written answer under oath to the above charges together with whatever affidavits and other
documentary evidence you may wish to submit within five (5) days from receipt of this memorandum why she should not be penalized for
Serious Misconduct, Willful Breach of Trust and Gross Violation of Bank Rules and Regulations under Article 282 of the Labor Code.
In its 16 October 1998 memorandum, PNB placed Maralit under preventive suspension. PNB stated: Maralit placed under preventive
suspension for thirty (30) days effective upon receipt hereof pursuant to Section 3, Rule XIV of the Omnibus Rules Implementing the Labor
Code.
On 20 November 1998, PNB conditionally approved Maralits application for early retirement effective at the close of business hours on 31
December 1998. PNB stated that, Payment of Special Separation Incentive and other Benefits shall be made only upon final resolution of the
administrative case against you, provided that the decision in said investigation does not disqualify you from the enjoyment of said
benefits. Under the SSIP, Maralit was entitled to P1,359,086.02 retirement benefits.
Maralit submitted her answer dated 11 January 1999. She stated that The favorable accommodations granted, claiming that were made in
good faith and intended for the higher interests of the Bank. She admitted that the accommodations were deviations from Banks policies,
uncollected deposits were a wanton violation of the policy of the Bangko Sentral ng Pilipinas (BSP) and PNB. She had no discretion to do
prohibited acts, and PNBs interest was unreasonably put at risk.
In 2000 PNB found Maralit, finding her guilty of serious misconduct, gross violation of bank rules and regulations, and conduct prejudicial to the
best interest of the bank. PNB dismissed Maralit from the service with forfeiture of her retirement benefits effective at the close of business
hours on 31 December 1998.
Maralit filed with the arbitration branch of the NLRC a complaint for non-payment of retirement benefits and separation pay, and for damages
against PNB.
The Labor Arbiter held that Maralit was entitled to P1,359,086.02 retirement benefits,P200,000 exemplary damages, and P155,908.60 attorneys
fees. The Labor Arbiter found that (1) Maralit was not under preliminary investigation when she filed her application for early retirement; (2) had
Maralit known that she would
be administratively charged, she would not have availed of the SSIP so that she could continue receiving
her monthly salary; (3) when PNB approved Maralits application for early retirement, the Administrative Adjudication Panel had not decided the
administrative case against her; (4) there was no hearing or conference held where Maralit could respond to the charge, present her
evidence, or rebut the evidence presented against her; and (5) PNB illegally dismissed Maralit and committed an act oppressive to labor.
PNB appealed to the NLRC, claiming that the Labor Arbiter gravely abused his discretion and erred in his factual findings.
Page 137
LABOR RELATIONS
138

NLRC affirmed with modification the Labor Arbiters 22 January 2001 Decision. The NLRC deleted the award of P200,000 exemplary
damages. The NLRC held that (1) there was no grave abuse of discretion on the part of the Labor Arbiter, (2) the material facts as found by the
Labor Arbiter were consistent with the evidence, and (3) the award of exemplary damages lacked basis. PNB claimed that the NLRC committed
grave abuse of discretion when it affirmed the Labor Arbiters 22 January 2001 Decision because (1) Maralit was not entitled to retirement
benefits, (2) Maralit was afforded due process, and (3) Maralit was not entitled to attorneys fees.
The Court of Appeals held that the NLRC committed grave abuse of discretion when it affirmed the Labor Arbiters 22 January 2001
Decision. The Court of Appeals found that Maralit was under preliminary investigation when she filed her application for early retirement and that
she was afforded due process.
Issues:
Whether or not Ester Maralit has retired or was dismissed from the service effective December 31, 1998?
Whether or not she has committed Serious Misconduct, Willful Breach of Trust and Gross Violation of Bank Rules and Regulations under Article
282 of the Labor Code that will forfeit her retirement benefits?
Ruling:
The evidence shows that Maralit was afforded due process. The essence of due process is an opportunity to be heard or, as applied to
administrative proceedings, an opportunity to explain ones side. A formal or trial-type hearing is not essential. PNB gave Maralit ample
opportunity to explain her side. In its 29 September 1998 memorandum, PNB directed Maralit to submit her written answer under oath together
with affidavits and other documentary evidence: The administrative investigation in PNB undergoes a three-tiered process which commences
with an audit report made by the Internal Audit Division (IAD). Three investigative bodies are separate and independent from each other, and
they proceed without influence from the other bodies having their own respective mandates and processes.
Maralit invoking the principle on estoppel, that an employer who accepts or approves the retirement of an employee loses the right to dismiss
such employee in a subsequent action. Retirement and Dismissal are entirely different and incompatible from each other. Each is a distinct
and separate mode of extinguishing an employer-employee relationship, and has its own legal effects in our jurisdiction. Consequently, they
cannot be taken together for the purpose of terminating employment relation.
The Court is unimpressed. The evidence shows that Maralit was under preliminary investigation when she filed her application for early
retirement. PNB consistently stated that payment of Maralits retirement benefits shall be paid only after final resolution of the administrative
case against her, provided that she is not disqualified to receive such benefits.
PNB may rightfully terminate Maralits services for a just cause, including serious misconduct. Serious misconduct is improper conduct, a
transgression of some established and definite rule of action, a forbidden act, or a dereliction of duty. Having been dismissed for a just cause,
Maralit is not entitled to her retirement benefits.
There is substantial evidence showing that there was valid cause for the bank to dismiss petitioners employment for loss of trust and
confidence. Petitioner was a bank accountant, which is a position of trust and confidence. The amount involved is significant, almost P4.5
million.
37. Quevedo v. Benguet Electric Cooperative, G.R. No. 168927, September 11, 2009
Facts:
Petitioners are former employees of respondent Benguet Electric Cooperative, Incorporated (BENECO). BENECO started automating its
operations, rendering redundant the functions performed by some employees, including petitioners. Instead however of terminating outright
petitioners and paying them statutory benefits under the Labor Code, BENECO offered them an option to retire under a newly created optional
retirement program which would provide them with more benefits than what is statutorily required. Petitioners accepted respondents offer and
thereby received benefits.
Nearly four months after their severance from their employment however, petitioners filed a complaint for illegal termination of employment
against BENECO. They claimed that notwithstanding the fact that they had no intention of retiring, they were forced to do so because BENECO
would have them terminated had they insisted otherwise. They also questioned the validity of BENECOs downsizing measure.
Page 138
LABOR RELATIONS
139

The Labor Abiter dismissed their claims for lack of merit. However, upon reaching the NLRC, said court found for them and ordered BENECO to
reinstate them. The Court of Appeals, in a petition for certiorari made by herein respondent, reversed NLRC decision which prompted petitioner
to file the instant case.
Issue:
Whether or not petitioners were illegally dismissed from their employment by the respondent
Ruling:
There was no illegal dismissal. It is inappropriate to discuss whether the requirements for terminating an employee had been complied with
since the petition is focused on whether the retirement was made voluntarily.
While termination of employment and retirement from service are common modes of ending employment, they are mutually exclusive, with
varying juridical bases and resulting benefits. Retirement from service is contractual (i.e. based on the bilateral agreement of the employer and
employee), while termination of employment is statutory (i.e. governed by the Labor Code and other related laws as to its grounds, benefits and
procedure). The benefits resulting from termination vary, depending on the cause. For retirement, Article 287 of the Labor Code gives leeway
to the parties to stipulate above a floor of benefits.
As to whether the retirement in this case was done voluntarily, the line between voluntary and involuntary retirement is thin but it is one which
this Court has drawn. Voluntary retirement cuts employment ties leaving no residual employer liability; involuntary retirement amounts to a
discharge, rendering the employer liable for termination without cause. The employees intent is the focal point of analysis. In determining such
intent, the fairness of the process governing the retirement decision, the payment of stipulated benefits, and the absence of badges of
intimidation or coercion are relevant parameters. The records presented show sufficient compliance with the criteria. Furthermore, the manner
by which BENECO arrived at its decision to downsize and at the same time spare petitioners the lesser benefits under Article 283 of the Labor
Code by creating a more generous retirement package was regular, transparent and fully documented. Petitioners were afforded opportunity to
seek reconsideration of BENECOs decision to downsize, albeit without success as BENECO stood pat on its management decision.
Nor were petitioners here denied the stipulated benefits. The records show that on average, the benefits each of the petitioners received were
more than twice their statutory counterpart under Article 183. The marked difference between these two bundles of benefits not only factored in
petitioners decision to retire under the EVR program but also explained the lapse of nearly four months before petitioners sued BENECO.
Finally, petitioners accepted BENECOs offer without reservation and received payments without protest. True, petitioners requested BENECO
to reconsider its decision to abolish their positions but this is a natural inclination to keep ones livelihood. It does not rise to that level of
intimidation or coercion sufficient to vitiate consent. Petitioners nevertheless argue that their inevitable termination forced their hands, leaving
them no choice but to retire from service. Although superficially appealing, this argument rests on an unfair, but predictably biased, assumption.
petitioners were not compelled to retire, they simply chose, between two equally valid options, the exit route offering bigger benefits.
As already decided by this Court in Benguet Electric Cooperative v. Fianza :
[T]he abolition of a position deemed no longer necessary is a management prerogative, and this Court, absent any findings of malice and
arbitrariness on the part of management, will not efface such privilege if only to protect the person holding that office.
38. Placido et al. v. NLRC, G.R. No. 180888, September 18, 2009
Facts:
Petitioners Placido and Caragay had been employed as cable splicers by PLDT.
PLDT had been receiving reports of theft and destruction of its cables. PLDT inspector and security guard, responding to a report that cables
were being stripped and burned in one of the residences, proceeded to the said area where they saw petitioners service vehicle parked infront
of the house.
Petitioners were seen stripping and burning cables inside the compound of the house which turned out to belong to Caragays mother. With the
assistance of police and barangay officials, PLDT recovered the cables bearing the "PLDT" marking.
PLDT filed an Information for Qualified Theft against petitioners. PLDT also required petitioners to explain within 72 hours why no severe
disciplinary action should be taken against them for Serious Misconduct and Dishonesty. Petitioners submitted a joint explanation denying the
charges against them.
Page 139
LABOR RELATIONS
140

By their claim, they were on their way back from the house of one Quezada from whom they were inquiring about a vehicle when they were
detained by the PLDT investigator.
On petitioners request, a formal hearing was scheduled. Their request for a copy of the Security Investigation was denied, however, on the
ground that they are only entitled to "be informed of the charges, and they cannot demand for the report as it is still on the confidential stage.
Petitioners counsel later reiterated the request for a setting of a hearing and an audiotape of the June 25, 2001 hearing, but the same was
denied. A third time request for another hearing was likewise denied.
PLDT sent notices of termination to petitioners, prompting them to file a complaint for illegal dismissal before the Labor Arbiter.
Labor Arbiter held that petitioners were illegally dismissed which was reversed by the NLRC. Pettitioners appealed to CA which affirmed the
NLRC Decision holding that since the cables bore the "PLDT" marking, they were presumed to be owned by PLDT, hence, the burden of
evidence shifted on petitioners to prove that they were no longer owned by PLDT, but they failed.
Issue:
WON petitioners were denied due process and were illegally dismissed
Ruling:
No, petitioners were not denied due process. They were legally dismissed.
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just or
authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the workers whose
opportunity to be heard and defend himself with the assistance of his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to the guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall
be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of
the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the
employer.
And the Omnibus Rules Implementing the Labor Code require a hearing and conference during which the employee concerned is given the
opportunity to respond to the charge, and present his evidence or rebut the evidence presented against him. Thus Rule I, Section 2(d), provides:
Section 2. Security of Tenure.
(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented against him.1avvphi1
(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been
The abovequoted provision of Section 2(d) should not be taken to mean, however, that holding an actual hearing or conference is a
condition sine qua non for compliance with the due process requirement in case of termination of employment.
For the test for the fair procedure guaranteed under the above-quoted Article 277(b) of the Labor Code is not whether there has been a formal
pretermination confrontation between the employer and the employee. The "ample opportunity to be heard" standard is neither synonymous nor
similar to a formal hearing. To confine the employees right to be heard to a solitary form narrows down that right.
The essence of due process is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain one's
side or an opportunity to seek a reconsideration of the action or ruling complained of. What the law prohibits is absolute absence of the
opportunity to be heard, hence, a party cannot feign denial of due process where he had been afforded the opportunity to present his side.
A formal or trial type hearing is not at all times and in all instances essential to due process, the requirements of which are satisfied where the
parties are afforded fair and reasonable opportunity to explain their side of the controversy.
In the present case, petitioners were, among other things, given several written invitations to submit themselves to PLDTs Investigation Unit to
explain their side, but they failed to heed them. A hearing was conducted where petitioners attended along with their union MKP representatives
during which the principal witnesses to the incident were presented. Petitioners were thus afforded the opportunity to confront those witnesses
and present evidence in their behalf, but they failed to do so.
Page 140
LABOR RELATIONS
141

SC found that as the cables bore the "PLDT" marking, the presumption is that PLDT owned them. The burden of evidence thus lay on
petitioners to prove that they acquired the cables lawfully but this they failed to discharge.
39. Martinez v. B&B Fish Broker, G.R. No. 179985, September 18, 2009
Facts:
Odilon L. Martinez (petitioner) was employed as a cashier by B&B Fish Broker, a partnership owned and managed by respondent Norberto M.
Lucinario (Lucinario) and Jose Suico. Lucinario called petitioners attention to his alleged shortages in his cash collections and ordered him to,
as he did, take a leave the following day. When petitioner reported back for work, he was relieved of his position and reassigned as company
custodian.
As cashier, petitioners duties consisted of issuing receipts on items taken and bought and balancing of the cash on hand and receipts issued at
the close of the business day.
After a few days, petitioner filed an application for a four-day leave effective on even date due to an inflamed jaw. His application, addressed to
Lucinario, was received by a co-employee, Arielle Penaranda.
Subsequently, petitioner discovered that his name had been removed from the company logbook and was prevented from logging in. And he
was informed that his application for a four-day leave of absence had been denied. The following day petitioner, having understood that the
removal of his name from the logbook amounted to the termination of his employment, tried to confer with Lucinario but to no avail, hence, filed
a complaint against B&B Fish Broker and/or Lucinario, for illegal dismissal, underpayment and non-payment of wages with prayer for
reinstatement, before the Arbitration Branch of the National Labor Relations Commission.
Denying petitioners charge that his services were illegally terminated, Lucinario claimed, in effect, that petitioner abandoned his job.
Issue:
Whether or not Petitioner was illegally dismissed?
Ruling:
The petition is impressed with merit.
While Lucinario contends that petitioner abandoned his job, the bulk of his (Lucinarios) evidence relates to petitioners incurring of shortages in
his collections to justify the transfer of petitioners assignment from cashier to company custodian and his alleged previous suspension.
Parenthetically, documentary evidence relating thereto, which could lend light on petitioners performance, was not presented.
On to Lucinarios claim that petitioner abandoned his employment:
It is axiomatic that in a petition for review on certiorari, only questions of law may be raised. The rule admits of certain exceptions, however, one
of which is when there is variance on the appreciation of facts of the case. In the present case, the Labor Arbiter ruled that there is no illegal
dismissal, yet she ordered petitioners reinstatement. The NLRC found otherwise that petitioner was illegally dismissed. On appeal, the
appellate court reversed the findings of the NLRC. This constrains the Court to reassess the evidence of the parties.
Abandonment is a form of neglect of duty, one of the just causes for an employer to terminate an employee. It is a hornbook precept that in
illegal dismissal cases, the employer bears the burden of proof. For a valid termination of employment on the ground of abandonment, Lucinario
must prove, by substantial evidence, the concurrence of petitioners failure to report for work for no valid reason and his categorical intention to
discontinue employment.
Lucinario, however, failed to establish any overt act on the part of petitioner to show his intention to abandon employment. As reflected above,
petitioner, after being informed of his alleged shortages in collections and despite his relegation to that of company custodian, still reported for
work. He later applied for a 4-day leave of absence. On his return, he discovered that his name was erased from the logbook, was refused entry
into the company premises, and learned that his application for a 4-day leave was not approved. He thereupon exerted efforts to communicate
with Lucinario on the status of his employment, but to no avail. To the Court, these circumstances do not indicate abandonment.
Page 141
LABOR RELATIONS
142

Finally, that petitioner immediately filed the illegal dismissal complaint with prayer for reinstatement should dissipate any doubts that he wanted
to return to work.
What thus surfaces is that petitioner was constructively dismissed. No actual dismissal might have occurred in the sense that petitioner was not
served with a notice of termination, but there was constructive dismissal, petitioner having been placed in a position where continued
employment was rendered impossible and unreasonable by the circumstances indicated above.
40. Flight Attendants and Steward Association of the Phils vs. Phil Airlines, G.R. No. 178083, October 2, 2009, see July 22, 2008, main
decision
Facts:
Petitioner FASAP is the duly certified collective bargaining representative of PAL flight attendants and stewards, or collectively known as PAL
cabin crew personnel. Respondent PAL is a domestic corporation organized and existing under the laws of the Republic of the Philippines,
operating as a common carrier transporting passengers and cargo through aircraft. On June 1998, PAL retrenched 5,000 of its employees,
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. 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 Collective Bargaining Agreement in retrenching cabin crew personnel: that is, that
retrenchment shall be based on the individual employees efficiency rating and seniority. On June 1998, FASAP filed a Complaint against PAL
for unfair labor practice, illegal retrenchment with claims for reinstatement and payment of salaries, allowances and backwages of affected
FASAP members, actual, moral and exemplary damages with a prayer to enjoin the retrenchment program then being implemented.
Issue:
Whether or not PALs retrenchment scheme was justified
Ruling:
While it is true that the exercise of this right is a prerogative of management, there must be faithful compliance with substantive and procedural
requirements of the law and jurisprudence. The burden falls upon the employer to prove economic or business losses with sufficient supporting
evidence. Any claim of actual or potential business losses must satisfy certain established standards, all of which must concur, before any
reduction of personnel becomes legal. These are:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to
the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half () month pay for
every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or
circumvent the employees right to security of tenure; and,
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the
PAL failed to comply with the first requirement as in the instant case, PAL failed to substantiate its claim of actual and imminent substantial
losses which would justify the retrenchment of more than 1,400 of its cabin crew personnel. As to the fourth requirement, PAL had implemented
its retrenchment program in an arbitrary manner and with evident bad faith, which prejudiced the tenurial rights of the cabin crew personnel. As
to the fifth requirement, 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 employees covered by it. WHEREFORE, the instant
petition is GRANTED.
Page 142
LABOR RELATIONS
143

41. Eats-Cetera Food Services Outlet v. Letran, G.R. No. 179507, October 2, 2009
Facts:
Espadero had been employed by Eats-cetera Food Services Outlet since June 30, 2001 as cashier. When she reported for duty, Espadero
discovered that her time card was already punched in. After asking around, she found out that a certain Joselito Cahayagan was the one who
punched in her time card. Espadero, however, failed to report the incident to her supervisor, Clarissa Reduca (Reduca), who reported the
incident to the personnel manager, Greta dela Hostria. Espadero contended that she was dismissed outright without being given ample
opportunity to explain her side. She claimed that on November 21, 2002, petitioners called her and asked her to make a letter of admission as a
condition for her reemployment. After writing a letter [of apology about not being able to report the incident immediately], Espadero was told to
wait for an assignment. The following day, on November 22, 2002, the company issued a Memorandum terminating her for violation of Rule 24
of the company rules and regulations. Because of this, Espadero decided to file a complaint for illegal dismissal before the NLRC.
Petitioners maintained that the company rules and regulations, as well as the corresponding penalties in case of violation thereof, were made
known to Espadero before and upon her actual employment as cashier; that contrary to her claim, petitioners gave Espadero ample opportunity
to explain her side; and presented the affidavit of supervisor Reduca [containing the incident report]; they conducted an impartial investigation of
the incident and found substantial evidence that Espadero was in cahoots with a co-worker in punching in her time card. For this reason,
petitioners decided to terminate her.
Labor Arbiter declared petitioners liable for illegally terminating Espadero. Upon appeal, the NLRC reversed the Labor Arbiters findings.
Aggrieved, respondents filed a petition for certiorari before the CA, who rendered a ruling affirming the Labor Arbiters pronouncement that
Espadero was not afforded due process. The appellate court also observed that the punishment of dismissal was too harsh and unjustified.
Issues:
whether Espadero was afforded her right to due process prior to being dismissed from her job;
whether Espaderos infraction was serious enough to warrant the penalty of dismissal.
Ruling:
Article 282 of the Labor Code includes serious misconduct, fraud and willful breach of trust among the just causes for termination. But prior to
termination on such grounds, the employer must satisfy both substantive and procedural due process. Not only must the employee be afforded
a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense, but the dismissal must be for a just or
authorized cause as provided by law.
THE PROCEDURAL REQUIREMENTS are set forth in
Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code, to wit:
SEC. 2. Security of Tenure. x x x. x x x x
(d) In all cases of termination of employment,
the following standards of due process shall be substantially observed:
A written notice served on the employee
specifying the ground or grounds for termination,
and giving said employee reasonable opportunity within which to explain his side.
A hearing or conference during which the employee concerned,
with the assistance of counsel if he so desires is given opportunity
to respond to the charge, present his evidence,
or rebut the evidence presented against him.
A written notice of termination served on the employee,
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.
Petitioners complied with the second notice requirement. Greta dela Hostria, as personnel manager, issued a Memorandum stating with clarity
the reason for Espaderos dismissal.
SUBSTANTIVELY, we also sustain petitioners reasoning that Espaderos position as a cashier - is one that requires a high degree of trust and
confidence, and that her infraction reasonably taints such trust and confidence reposed upon her by her employer.
Page 143
LABOR RELATIONS
144

A POSITION OF TRUST AND CONFIDENCE - has been defined as one where a person is entrusted with confidence on delicate matters, or
with the custody, handling, or care and protection of the employers property and/or funds.
One such position is that of a cashier. A cashier is a highly sensitive position which requires absolute trust and honesty on the part of the
employee. It is for this reason that the Court has sustained the dismissal of cashiers who have been found to have breached the trust and
confidence of their employers.
In one case, the Court upheld the validity of the dismissal of a school cashier despite her 19 years of service after evidence showed that there
was a discrepancy in the amount she was entrusted to deposit with a bank.
In Metro Drug Corporation v. National Labor Relations Commission, we explained:
LOSS OF CONFIDENCE - as a ground for dismissal does not entail proof beyond reasonable doubt of the employees misconduct. It is
enough that there be some basis for such loss of confidence or that the employer has reasonable grounds to believe, if not to entertain the
moral conviction[,]
that the employee concerned is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy
of the trust and confidence demanded by his position.
The rule, therefore, is that - if there is sufficient evidence to show that the employee occupying - a position of trust and confidence - is guilty of
a breach of trust, or that his employer - has ample reason to distrust him, the labor tribunal cannot justly deny the employer - the authority to
dismiss such employee.
In the instant case, petitioners cannot be faulted for losing their trust in Espadero.
As an employee occupying a job - which requires utmost fidelity to her employers, she failed to report to her immediate supervisor - the
tampering of her time card. Whether her failure was deliberate - or due to sheer negligence, and whether Espadero was or was not - in cahoots
with a co-worker, the fact remains that - the tampering was not promptly reported and could, very likely, not have been known by petitioners, or,
at least, could have been discovered at a much later period, if it had not been reported by Espaderos supervisor - to the personnel manager.
Petitioners, therefore, cannot be blamed for losing their trust in Espadero.
Moreover, the peculiar nature of Espaderos position aggravates her misconduct.
MISCONDUCT has been defined as improper or wrong conduct;
the transgression of some established or 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 a grave character
and not merely trivial or unimportant.
To constitute just cause for termination, it must be in connection with the employees work.
With the degree of trust expected of Espadero, such infraction can hardly be classified as one that is trivial or unimportant. Her failure to
promptly report the incident reflects a cavalier regard for the responsibility required of her in the discharge of the duties of her position.
42. Plantation Bay Resort and Spa, et al. vs. Dubrico, G.R. No. 182216, December 4, 2009
Facts:
In compliance with RA 9165 (Comprehensive Dangerous Drugs Act), Plantation Bay conducted surprise random drug tests on 122 unsuspecting
victims. .errr. . .employees. The tests were done with the assistance of PNP SOCO (scene of the crime operations) with 2 labs conducting the
tests: (1) MARTELL drug lab administered the initial tests and (2) PHIL. DRUG SCREENING LAB conducted the confirmatory tests.
Respondents Romel Dubrico, Godfrey Ngujo and Julius Villaflor were among 21 employees found positive for use of methamphetamine
hydrochloride (shabu). In compliance with several memoranda, they submitted their explanations on the results of the tests, which Plantation
Bay found unsatisfactory hence, they were dismissed. Labor Arbiter found them guilty of serious misconduct and ruled that there was no illegal
dismissal. NLRC reversed saying there was illegal dismissal and that respondents were not really using drugs! CA affirmed NLRC decision
based on evidence which showed a discrepancy between the tests conducted by Phil. Drug and Martell. Plantation Bay objected to the
employees questioning the veracity of the tests only in the NLRC Motion for Recon, an issue not raised during the proceedings. Additionally,
they maintain that in terminating the services of respondents, they relied on the results of the random drug tests undertaken by an accredited
and licensed drug testing facility, and if the results turned out to be questionable or erroneous, they should not be made liable therefor.
Issue:
Page 144
LABOR RELATIONS
145

1. Whether or not the NLRC erred in considering the new issue on the veracity of the tests conducted.
2. Whether or not there was illegal dismissal on the part of Plantation Bay.
Ruling:
Petition is bereft of merit. (a) NLRC did not err. Technical rules of procedure are not strictly adhered to in labor cases consistent with the
Constitutional mandate to afford protection to labor. The NLRC did not err in considering the issue of the veracity of the confirmatory tests even
if the same was raised only in respondents Motion for Reconsideration of its Decision, it being crucial in determining the validity of respondents
dismissal from their employment. Technical rules of procedure are not strictly adhered to in labor cases. In the interest of substantial justice,
new or additional evidence may be introduced on appeal before the NLRC. Such move is proper, provided due process is observed, as was the
case here, by giving the opposing party sufficient opportunity to meet and rebut the new or additional evidence introduced.
(b)Yes. Illegal dismissal. Petition likewise fails on the merits. Plantation Bay failed to prove that employees used drugs based on the doubtful
test results.
Exhibit A (Note that the confirmatory test showed earlier results that the initial test LOL)
Name
Drug Test
Confirmatory Test
Romel Dubrico
Urine sample received on 09/29/04 at 5:14 p.m.
Issued on 09/29/04 at 3:57 p.m.
Godfrey Ngujo
Issued on 09/29/04 at 3:57 p.m.
Julius Villaflor
Issued on 09/29/04 at 4:15 p.m.
Where there is no showing of a clear, valid and legal cause for termination, the law considers the case a matter of illegal dismissal. The burden
is on the employer to prove that the termination was for a valid and legal cause. WHEREFORE, the Petition is DENIED.
43. Fulache v. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010
Facts:
Involved in this case are two separate cases. The first one is with regards to the regularization of the petitioners while the second one is with
regards to the illegal dismissal of such petitioners
REGULARIZATION CASE
ILLEGAL DISMISSAL CASE
Petitioners filed two separate complaints against ABSCBN for

regularization, unfair labor practice, and several money claims.
Petitioners were drivers, cameraman, teleprompters, editors, personal
assistants, and VTR editors.
The petitioners alleged that ABS-CBN and the ABS-CBN Rank-andFile Employees Union executed a CBA where they had been excluded
from its coverage as ABS-CBN considered them temporary and not
regular employees, in violation of the Labor Code. They claimed they
had already rendered more than a year of service in the company and,
therefore, should have been recognized as regular employees entitled
to security of tenure and to the privileges and benefits enjoyed by
regular employees. They asked that they be paid overtime, night shift
differential, holiday, and rest day and service incentive leave pay.
They also prayed for an award of moral damages and attorneys fees.
ABS-CBN alleged that the petitioners services were contracted on
various dates by its Cebu station as independent contractors/off
camera talents, and they were not entitled to regularization in these
capacities.
Labor Arbiter rendered a decision holding that the petitioners were
regular employees of ABS-CBN, not independent contractors, and are
entitled to the benefits and privileges of regular employees. ABSCBN
While the appeal of ABSCBN to the NLRC was PENDING, petitioners

were dismissed by ABSCBN.
In defense, ABS-CBN alleged that even before the labor arbiter
rendered his decision in the regularization case, it had already
undertaken a comprehensive review of its existing organizational
structure to address its operational requirements. It then decided to
course through legitimate service contractors all driving, messengerial,
janitorial, utility, make-up, wardrobe and security services for both the
Metro Manila and provincial stations, to improve its operations and to
make them more economically viable. Petitioners were not singled out
for dismissal; as drivers, they were dismissed because they belonged
to a job category that had already been contracted out.
Labor Arbiter upheld the validity of ABS-CBN's contracting out of
certain work or services in its operations. The labor arbiter found that
petitioners had been dismissed due to redundancy, an authorized
cause under the law. Labor Arbiter awarded them separation pay of
one (1) months salary for every year of service.
ABSCBN appealed the above decision to the NLRC.
Page 145
LABOR RELATIONS
146

appealed such decision to the NLRC.
NLRC made a JOINT DECISION regarding the regularization and the illegal dismissal case.
NLRC ruled that there was an employer-employee relationship NLRC reversed the labor arbiters ruling in the illegal dismissal case; it
between the petitioners and ABS-CBN as the company exercised found that petitioners had been illegally dismissed and awarded them
control over the petitioners in the performance of their work; the backwages and separation pay in lieu of reinstatement.
petitioners were regular employees because they were engaged to
perform activities usually necessary or desirable in ABS-CBN's trade
or business; they cannot be considered contractual employees since
they were not paid for the result of their work, but on a monthly basis
and were required to do their work in accordance with the companys
schedule.
Petitioners and ABSCBN both filed for a MOTION FOR RECONSIDERATION of the above decision before the NLRC.
NLRC stood by the ruling that the petitioners were regular employees
entitled to the benefits and privileges of regular employees.
On the illegal dismissal case, the petitioners, while recognized as

regular employees, were declared legally dismissed due to
redundancy.
Issue:/S:
Whether or not petitioners were regular employees of ABSCBN?
Whether or not petitioners were illegally dismissed by ABSCBN?
Ruling:
REGULARIZATION CASE
Supreme Court agreed with the earlier decisions that petitioners were
indeed regular employees of ABSCBN.
As regular employees, the petitioners fall within the coverage of the
bargaining unit and are therefore entitled to CBA benefits as a matter
of law and contract.
ILLEGAL DISMISSAL CASE

The termination of employment of the four drivers occurred under
highly questionable circumstances and with plain and unadulterated
bad faith. The records show that the regularization case was in fact the
root of the resulting bad faith as this case gave rise and led to the
dismissal case.
First, the regularization case was filed leading to the labor arbiters
decision declaring the petitioners to be regular employees. ABS-CBN
appealed the decision and maintained its position that the petitioners
were independent contractors. In the course of this appeal, ABS-CBN
took matters into its own hands and terminated the petitioners
services, clearly disregarding its own appeal then pending with the
NLRC.
To justify the termination of service, the company cited redundancy as
its authorized cause but offered no justificatory supporting evidence. It
merely claimed that it was contracting out the petitioners activities in
the exercise of its management prerogative.
ABS-CBN fell into a downward spiral of irreconcilable legal positions.
ABS-CBN forgot labor law and its realities. It forgot that by claiming
redundancy as authorized cause for dismissal, it impliedly admitted
that the petitioners were regular employees whose services, by law,
can only be terminated for the just and authorized causes defined
under the Labor Code. It similarly forgot that an exercise of
management prerogative can be valid only if it is undertaken in good
faith and with no intent to defeat or circumvent the rights of its
employees under the laws or under valid agreements.
The dismissal was clearly attended by bad faith.
PETITION GRANTED. Petitioners are regular employees of ABSCBN and they are thus entitled to the benefits under the CBA. Petitioners were
likewise illegally dismissed and are thus entitled to reinstatement, backwages, attorneys fees, as well as moral damages for the attendance of
bad faith in such dismissal.
Page 146
LABOR RELATIONS
147

44. Ancheta vs. Destiny Financial Plans Inc. et al., G.R. No. 179702, Feb. 16, 2010
Facts:
On December 1, 2002, respondent Destiny Financial Plans, Inc., a pre-need insurance company, hired petitioner as Head of its Marketing
Group, with a compensation package of Ninety Thousand Pesos (P90,000.00) a month. On February 2, 2004, a Marketing Committee meeting
was called by respondent Arsenio Bartolome (Bartolome) at the conference room of respondent company. Present at the meeting were
petitioner, respondent Bartolome, various leaders of the marketing team, and the operations director of the company. During the meeting,
respondent Bartolome made several announcements. However, to the surprise of petitioner, respondent Bartolome announced that petitioner
was to resign from the respondent company. On February 11, 2004, petitioner received a letter from respondent company, asking him to explain
within forty-eight (48) hours why his services should not be terminated for loss of confidence in his ability to perform the functions of Marketing
Director of the company. On February 13, 2004, petitioner submitted his letter of explanation to respondent company. On February 17, 2004, the
board of directors of respondent company terminated petitioners services on the ground of loss of confidence. Thus, on March 16, 2004,
petitioner filed before the Labor Arbiter a complaint for illegal dismissal, with prayer for reinstatement, payment of full backwages, payment of
13th month pay, moral and exemplary damages, and attorneys fees, against respondent. On April 28, 2005, the Labor Arbiter rendered a
Decision in favor of petitioner Ancheta. National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter. Aggrieved,
petitioner filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. On April 19, 2007, the CA rendered a Decision,
affirming with modification the decision of the NLRC.
Issue:
Whether petitioners employment was validly terminated because of loss of confidence.
Ruling:
Two requisites must concur in order that there be a valid dismissal from employment, namely: (1) the dismissal must be for any of the causes
expressed in Article 282 of the Labor Code; and (2) the employee must be given an opportunity to be heard and to defend himself. Under Article
282(c) of the Labor Code, an employer can terminate the employment of the employee concerned for "fraud or willful breach by an employee of
the trust reposed in him by his employer or duly authorized representative." The doctrine of loss of confidence requires the concurrence of the
following: (1) loss of confidence should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal, or
unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; (4) it must be genuine, not a mere
afterthought to justify an earlier action taken in bad faith; and (5) the employee involved holds a position of trust and confidence. Loss of
confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position of
responsibility, trust and confidence. He must be invested with confidence on delicate matters, such as the custody, handling, care, and
protection of the employer's property and/or funds. In order to constitute a just cause for dismissal, the act complained of must be "work-related"
such as would show the employee concerned to be unfit to continue working for the employer. Petitioner was a managerial employee of
respondent company, holding a highly sensitive position. Being the Head of the Marketing Group of respondent company, he was in charge,
among others, of the over-all production and sales performance of the company. Thus, as aptly pointed out by the CA, his performance was
practically the lifeblood of the corporation, because its earnings depended on the sales of the marketing group, which he used to head. The
position held by petitioner required the highest degree of trust and confidence of his employer in the formers exercise of managerial discretion
insofar as the conduct of the latters business was concerned. Petitioners inability to perform the functions of his office to the satisfaction of his
employer and the formers poor judgment as marketing head caused the company huge financial losses. If these were not timely addressed and
corrected, the company could have collapsed, to the detriment of its policy holders, stockholders, employees, and the public in general. The
power to dismiss an employee is a recognized prerogative inherent in the employers right to freely manage and regulate his business. The law,
in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer. The worker's right to security of tenure
is not an absolute right, for the law provides that he may be dismissed for cause. In this case, as admitted by petitioner, he was hired because of
his expertise in the pre-need industry. His competence and satisfactory performance as head of the marketing group assumed primordial
importance for his continued employment in the company. His dismal performance was causing the company financial losses; thus, it was not
wise for the company to continue his services. To be sure, an employer cannot be compelled to continue with the employment of workers when
continued employment will prove inimical to the employers interest. The SC agrees to CA that private respondents did not strictly comply with
the two notice requirement in dismissing petitioner Ancheta. While private respondents sent a show cause letter to petitioner Ancheta, the
same letter precipitately implemented termination procedures, i.e., demanded the return of the Executive elevator key which allows petitioner
Ancheta access to the office premises and the surrender of the company car assigned to him, even as petitioner Ancheta had yet to answer and
air his side. Such betrays the fact that the said show cause letter was but a formality and petitioner Anchetas dismissal is a foregone
conclusion. It is thus apparent that private respondents did not comply with the procedural requirements of due process in dismissing petitioner
Ancheta. Respondents failure to observe due process in the termination of employment of petitioner for a just cause does not invalidate the
dismissal but makes respondent company liable for non-compliance with the procedural requirements of due process. The violation of
petitioners right to statutory due process warrants the payment of nominal damages, the amount of which is addressed to the sound discretion
of the court, taking into account the relevant circumstances. Petition Denied.
Page 147
LABOR RELATIONS
148
45. Javellana, Jr. vs. Belen, G.R. Nos. 181913 & 182158, March 5, 2010
Facts:
Belen was hired by Javellana as company driver and assigned him the tasks of picking up and delivering live hogs, feeds, and lime stones used
for cleaning the pigpens. On August 19, 1999 Javellana gave him instructions to (a) pick up lime stones in Tayabas, Quezon; (b) deliver live
hogs at Barrio Quiling, Talisay, Batangas; (c) have the delivery truck repaired; and (d) pick up a boar at Joliza Farms in Norzagaray, Bulacan.
Petitioner Belen further alleged that his long and arduous day finally ended at 4:30 a.m. of the following day, August 20, 1999. But after just
three hours of sleep, respondent Javellana summoned him to the office. When he arrived at 8:20 a.m., Javellana had left. After being told that
the latter would not be back until 4:00 p.m., Belen decided to go home and get some more sleep. Petitioner Belen was promptly at the office at
4:00 p.m. but respondent Javellana suddenly blurted out that he was firing Belen from work. Deeply worried that he might not soon get another
job, Belen asked for a separation pay. When Javellana offered him only P5,000.00, he did not accept it. Javellana claimed, on the other hand,
that he hired petitioner Belen in 1995, not as a company driver, but as family driver. Belen did not do work for his farm on a regular basis, but
picked up feeds or delivered livestock only on rare occasions when the farm driver and vehicle were unavailable.
Regarding petitioner Belen's dismissal from work, respondent Javellana insisted that he did it for a reason. Belen intentionally failed to report for
work on August 20, 1999 and this warranted his dismissal.
Issue:
Does the amount that the Labor Arbiter awarded petitioner Belen represent all that he will get when the decision in his case becomes final or
does it represent only the amount that he was entitled to at the time the Labor Arbiter rendered his decision, leaving room for increase up to the
date the decision in the case becomes final?
Ruling:
Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:
Art. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the Labor Arbiter's decision until the
dismissed employee is actually reinstated. But if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that
backwages shall be computed from the time of illegal dismissal until the date the decision becomes final.
As it happens, the parties filed separate petitions before this Court. The petition in G.R. 181913, filed by respondent Javellana, questioned the
CA's finding of illegality of dismissal while the petition in G.R. 182158, filed by petitioner Belen, challenged the amounts of money claims
awarded to him. The Court denied the first with finality in its resolution of September 22, 2008; the second is the subject of the present case.
Consequently, Belen should be entitled to backwages from August 20, 1999, when he was dismissed, to September 22, 2008, when the
judgment for unjust dismissal in G.R. 181913 became final. Separation pay, on the other hand, is equivalent to one month pay for every year of
service, a fraction of six months to be considered as one whole year. Here that would begin from January 31, 1994 when petitioner Belen began
his service. Technically the computation of his separation pay would end on the day he was dismissed on August 20, 1999 when he supposedly
ceased to render service and his wages ended. But, since Belen was entitled to collect backwages until the judgment for illegal dismissal in his
favor became final, here on September 22, 2008, the computation of his separation pay should also end on that date. Further, since the
monetary awards remained unpaid even after it became final on September 22, 2008 because of issues raised respecting the correct
computation of such awards, it is but fair that respondent Javellana be required to pay 12% interest per annum on those awards from
September 22, 2008 until they are paid. The 12% interest is proper because the Court treats monetary claims in labor cases the equivalent of a
forbearance of credit. It matters not that the amounts of the claims were still in question on September 22, 2008. What is decisive is that the
issue of illegal dismissal from which the order to pay monetary awards to petitioner Belen stemmed had been long terminated.
46. WPP Marketing Communications Inc., et al., vs. Galera, G.R. No. 169207, March 25, 2010
Page 148
LABOR RELATIONS
149

Facts:
Petitioner is Jocelyn Galera, an American citizen who was recruited from the US by private respondent John Steedman, Chairman-WPP
Worldwide and Chief Executive Officer of Mindshare, Co., a corporation based in Hong Kong, China, to work in the Philippines for private
respondent WPP Marketing Communications, Inc. (WPP). On December 14, 2000, GALERA alleged she was verbally notified by private
STEEDMAN that her services had been terminated from private respondent WPP. A termination letter followed the next day. On 3 January 2001,
Galera filed a complaint for illegal dismissal, holiday pay, service incentive leave pay, 13th month pay, incentive plan, actual and moral damages,
and attorney's fees against WPP and/or John Steedman (Steedman), Mark Webster (Webster) and Nominada Lansang (Lansang). The Labor
Arbiter's Ruling for illegal dismissal and damages in favor of GALERA. The First Division of the NLRC reversed the ruling of Arbiter Madriaga.
Yet it was reversed again by CA.
Issue:
Whether Galera is an Employee or a Corporate Officer.
Whether WPP illegally dismissed Galera.
Ruling:
Employee. Galera, on the belief that she is an employee, filed her complaint before the Labor Arbiter. On the other hand, WPP, Steedman,
Webster and Lansang contend that Galera is a corporate officer; hence, any controversy regarding her dismissal is under the jurisdiction of the
Regional Trial Court. We agree with Galera. Corporate officers are given such character either by the Corporation Code or by the corporation's
by-laws. Galera's appointment as a corporate officer (Vice-President with the operational title of Managing Director of Mindshare) during a
special meeting of WPP's Board of Directors is an appointment to a non-existent corporate office. At the time of Galera's appointment, WPP
already had one Vice-President in the person of Webster and all five directorship positions provided in the by-laws are already occupied.
Another indicator that she was a regular employee and not a corporate officer is Section 14 of the contract, which clearly states that she is a
permanent employee not a Vice-President or a member of the Board of Directors. Another convincing indication that she was only a regular
employee and not a corporate officer is the disciplinary procedure, which states that her right of redress is through Mindshare's Chief Executive
Officer for the Asia-Pacific. This implies that she was not under the disciplinary control of private respondent WPP's Board of Directors (BOD),
which should have been the case if in fact she was a corporate officer because only the Board of Directors could appoint and terminate such a
corporate officer.
WPP's dismissal of Galera lacked both substantive and procedural due process. Apart from Steedman's letter dated 15 December 2000 to
Galera, WPP failed to prove any just or authorized cause for Galera's dismissal. Steedman's letter to Galera reads: The operations are currently
in a shamble. There is lack of leadership and confidence in your abilities from within, our agency partners and some clients. Most of the staff I
spoke with felt they got more guidance and direction from Minda than yourself. In your role as Managing Director, that is just not acceptable. I
believe your priorities are mismanaged. The recent situation where you felt an internal strategy meeting was more important than a new
business pitch is a good example. You failed to lead and advise on the two new business pitches. In both cases, those involved sort (sic)
Minda's input. As I discussed with you back in July, my directive was for you to lead and review all business pitches. It is obvious [that] confusion
existed internally right up until the day of the pitch. The quality output is still not to an acceptable standard, which was also part of my directive
that you needed to focus on back in July. I do not believe you understand the basic skills and industry knowledge required to run a media special
operation.
WPP, Steedman, Webster, and Lansang, however, failed to substantiate the allegations in Steedman's letter. Galera, on the other hand,
presented documentary evidence 22 in the form of congratulatory letters, including one from Steedman, which contents are diametrically
opposed to the 15 December 2000 letter. The law further requires that the employer must furnish the worker sought to be dismissed with two
written notices before termination of employment can be legally effected: (1) notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer's decision to dismiss
him. Failure to comply with the requirements taints the dismissal with illegality. 23 WPP's acts clearly show that Galera's dismissal did not
comply with the two-notice rule.
47. Mercado v. AMA Computer College, G.R. No. 183572, April 13, 2010
Facts:
Five former faculty members of AMA Computer College in Paraaque City executed individual Teachers Contracts for each of the trimesters
they were engaged to teach. For the school year 2000-2001, when AMACC implemented new faculty screening guidelines, the petitioners failed
Page 149
LABOR RELATIONS
150

to obtain a passing rating based on the performance standards. Thus, AMACC did not give them any salary increase. Due to this, they filed a
complaint for underpayment of wages. Consequently, they were dismissed as their contracts have expired & were not renewed.
The Labor Arbiter ruled that they had been illegally dismissed. The NLRC affirmed the LAs decision. In addition, however, it observed that the
applicable law is Section 92 of the Manual of Regulations for Private Schools (which mandates a probationary period of nine consecutive
trimesters of satisfactory service for academic personnel in the tertiary level where collegiate courses are offered on a trimester basis), not
Article 281 of the Labor Code (which prescribes a probationary period of six months) as the LA ruled. Despite this, the NLRC still affirmed the
LAs finding of illegal dismissal on the basis of standards that were only introduced near the end of their probationary period and not at the time
of engagement. The CA dismissed the action for illegal dismissal ruling that under the Manual for Regulations for Private Schools, a teaching
personnel in a private educational institution (1) must be a full time teacher; (2) must have rendered three consecutive years of service; and (3)
such service must be satisfactory before he or she can acquire permanent status.
Since they had not completed three (3) consecutive years of service (i.e. six regular semesters or nine consecutive trimesters of satisfactory
service) and were still within their probationary period, then they cannot acquire permanent status. The non-renewal of contract is a valid
management prerogative.
Issue:
Whether or not the dismissal is valid.
Ruling:
AMACC failed to prove by substantial evidence that there was just cause for the non-renewal of the petitioners contracts.
The Labor Code is supplemented with respect to the period of probation by special rules found in the Manual of Regulations for Private Schools.
On the matter of probationary period, Section 92 of these regulations provides:
Section 92. Probationary Period. Subject in all instances to compliance with the Department and school requirements, the probationary period
Other than on the period, the following quoted portion of Article 281 of the Labor Code still fully applies: The services of an employee who has
been engaged on a probationary basis may be terminated for a just cause when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
The common practice is for the employer and the teacher to enter into a contract, effective for one school year. At the end of the school year, the
employer has the option not to renew the contract, particularly considering the teachers performance. If the contract is not renewed, the
school year would then be the last year since it would be the third school year of probationary employment. At the end of this third year, the
employer may now decide whether to extend a permanent appointment to the employee, primarily on the basis of the employee having met the
reasonable standards of competence and efficiency set by the employer. For the entire duration of this three-year period, the teacher remains
under probation. Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security of tenure
and compel the employer to renew his employment contract.
The school, however, cannot forget that its system of fixed-term contract is a system that operates during the probationary period and for this
reason is subject to the terms of Article 281 of the Labor Code. Given the clear constitutional and statutory intents, we cannot but conclude that
in a situation where the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers, Article 281 should
assume primacy and the fixed-period character of the contract must give way.
While we can grant that the standards were duly communicated to the petitioners and could be applied beginning the 1st trimester of the school
year 2000-2001, glaring and very basic gaps in the schools evidence still exist. The exact terms of the standards were never introduced as
evidence; neither does the evidence show how these standards were applied to the petitioners. Hence, the dismissal was illegal.
Page 150
LABOR RELATIONS
151

48. Pantoja vs. SCA Hygiene Products Corp., G.R. No. 163554, April 23, 2010
Facts:
SCA Hygiene Products Corp. ( SCA Hygiene for short), a corporation engaged in sale, making and distribution of tissue products and industrial
paper, hired Pantoja on March 1987 as back tender taking charge of operations in one of SCA Hygienes mill ( Paper Mill No.4).On March 1999,
Pantoja received a Notice of Transfer offering him a position at Paper Mill No. 5 under the same terms and conditions of employment for an
anticipated shutdown of Paper Mill No.4 to streamline and phase out the companys industrial paper manufacturing operations in Paper Mill
No.4 due to financial difficulties brought about by the low volume of sales and orders for industrial paper products. But Pantoja (and some
others offered with transfers ) refused to be transferred of which his services were terminated by reason of redundancy of position. Pantoja then
received separation pay (which was handsomely over and above what was provided by law) and executed a release and quitclaim in the corps
favor. However, on June 2000, Pantoja filed a complaint for illegal dismissal against SCA Hygiene for lack of valid cause. Pantoja interposed that
no permanent shutdown of Paper Mill No. 4 due to its continuous operation since his termination, presenting in evidence Paper Mill Personnel
Schedule for Mill No.4 for June, July and August 2000; thus, corp. was in bad faith trying to circumvent his tenurial security when no substantial
reason exist. Labor Arbiter dismissed Pantojas complaint stating his rejection of transfer and receipt of the separation pay belie Pantojas illegal
dismissal. On appeal by Pantoja, NLRC reversed the Arbiters decision stating the redundancy program is legally infirm on feigned shutdown of
operations. On reconsideration by SCA Hygiene asseverating that on 1999 when Mill No.4 was shut down due to low production output, there
was a necessity to occasionally run from time to time the machines only for the purpose of maintaining and preserving the same and does not
mean that Paper Mill No. 4 continued to be operational. Yet, NLRC remain unpersuaded. On appeal by SCA Hygiene, CA reinstated Labor
Arbiters decision.
Issue:
Whether or not Pantoja was illegally dismissed
Ruling:
Pantoja is not illegally dismissed. SCA Hygienes right of management prerogative was exercised in good faith. In International Harvester
Macleod, Inc. v. Intermediate Appellate Court, the determination of the need to phase out a particular department and consequent reduction of
personnel and reorganization as a labor and cost saving device is a recognized management prerogative which the courts will not generally
interfere with. Circumstances pointing good faith on SCA Hygienes part - the abolishment of Paper Mill No. 4 was a business judgment arrived
at due to 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, SCA Hygiene, 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 employee would not want to be transferred. SCA Hygiene 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 employers prerogative to bring
down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means have been tried and found
wanting. 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 employees, thus, the absence of bad faith. No evidence, however, was
presented to prove that there was continuous operation after the shutdown in the year 1999. On record, 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 employer is shown, the
wisdom of a business judgment to implement a cost saving device is beyond this courts determination. Work reassignment of an employee as a
genuine business necessity is a valid management prerogative. Even though the transfer would not involve any diminution of rank and pay, still
Pantoja refused the transfer and instead, accepted the separation pay voluntarily. The consideration for the quitclaim is credible and
reasonable, the waiver represents a valid and binding undertaking. No force and duress attended in its execution. The corp. even gave Pantoja
a separation pay more than what the law requires from respondent.
49. BPI v. NLRC, G.R. No. 179801, June 18, 2010

Facts:
Records show that respondent, Arambulo, was initially employed as Clerk in 1972 at Citytrust Banking Corporation, which eventually merged
with the Bank of Philippine Islands (BPI). She later became Lead Teller, then as Sales Manager, and subsequently, as Bank Manager in BPISan Pablo, Laguna Branch in 1996.
Page 151
LABOR RELATIONS
152

On 4 October 2001, she was reprimanded for the improper handling and retention of a clients account. She was transferred to BPI Family Bank
in Los Baos, Laguna on 21 November 2001.
On 26 April 2002, a client of BPI-San Pablo, Laguna Branch requested for a certification of her savings account. Her balance reflected an
amount less than the actual amount deposited. Hence, BPI conducted an investigation and discovered that its bank teller, Teotima Helen
Azucena (Azucena) was making unauthorized withdrawals. A show cause memorandum was served to Azucena asking her to explain the
unauthorized withdrawals. In her written response, Azucena implicated respondent, in that the latter, on many occasions, would make
temporary cash borrowings and would return the money at the end of the day through withdrawals from her own or other clients accounts.
There were times when respondent would fail to return the money withdrawn resulting in shortages on the part of Azucena. When respondent
was transferred to Los Baos, Laguna, Azucena added that the same practice was continued by her son, Artie Arambulo.
BPI conducted a thorough investigation and discovered that respondent had approved several withdrawals from various accounts of clients
whose signatures were forged.
The assistant branch manager of the said branch also imputed fault to Arambulo.
Arambulo admitted that she prepared the unsigned withdrawal slips on the account of Mr. Vicente Amante (Mr. Amante) totalingP700,000.00
upon request of the latter. She also explained that she processed the withdrawal slips of Mr. Emeterio Dikitan, with the latter signing later on, to
expedite his transaction with the bank. She denied any knowledge with regard to the unfunded checks of Mr. Amante that were supposedly
deposited to other depositors account. She argued that the posting is done by the teller and only amounts over P150,000.00 pass through her.
BPI conducted a hearing and on January 13, 2003, Arambulo was served with notice of termination on the ground of LOSS OF TRUST AND
CONFIDENCE for gross violation of policies and procedures.
Arambulo filed a complaint for illegal dismissal.
The NLRC and CA ruled that respondents dismissal for cause in accordance with the law. It was established that respondent had approved
withdrawals which were later proven to be forged but ordered the payment of separation pay.
Issue:
WON ARAMBULO IS ENTITLED TO SEPARATION PAY.
Ruling:
NO. (Court applied its ruling in Toyota vs NLRC)
While as a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not
entitled to separation pay, the Court has allowed in numerous cases the grant of separation pay or some other financial assistance to an
employee dismissed for just causes on the basis of equity.
In the leading case of Philippine Long Distance Telephone Co. v. NLRC, the Court stated that separation pay shall be allowed as a measure of
social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character. In granting separation pay to respondent, the NLRC and Court of Appeals both adhered to this jurisprudential precept and
cleared respondent of bad faith.
However, the succeeding case of Toyota Motor Phils. Corp. Workers Association v. NLRC reaffirmed the general rule that separation pay shall
be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious
misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer
or his family, or those reflecting on his moral character. These five grounds are just causes for dismissal as provided in Article 282 of the Labor
Code.
Verily, it may not be amiss to emphasize that if an employee has been dismissed for a just cause under Article 282 of the Labor Code, he is not
entitled to separation pay.
In the instant case, respondent was dismissed on the ground of loss of trust and confidence.
It is significant to stress that
Page 152
LABOR RELATIONS
153

for there to be a valid dismissal based on loss of trust and confidence:
the breach of trust must be willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse.
The basic premise for dismissal on the ground of loss of confidence is that the employees concerned hold a position of trust and confidence. It
is the breach of this trust that results in the employers loss of confidence in the employee.
The case of Aromin v. NLRC is in all fours. In said case, Aromin was the assistant vice-president of BPI when he was validly dismissed for loss
of trust and confidence. Invoking the pronouncement in Toyota, the Court disallowed the payment of separation pay on the ground that Aromin
was found guilty of willful betrayal of trust, a serious offense akin to dishonesty.
50. Phil. Rural Reconstruction Movement vs. Pulgar, G.R. No. 169227, July 5, 2010
Facts:
Pulgar was the manager of PRRM's branch office the Tayabas Bay Field Office (TBFO) in Quezon Province. When Pulgar was reassigned
to PRRM's central office, PRRM, through Goyena Solis (Solis), conducted an investigation into alleged financial anomalies committed at the
TBFO.
In her investigation report, Solis stated that part of the funds allotted to the TBFO was missing or not properly accounted for. The report also
stated that some of the receipts that the TBFO submitted to liquidate the organization's financial transactions were fictitious and manufactured.
The PRRM management sent Pulgar a copy of the report, together with a memorandum, asking him to explain these findings.
In a letter dated February 24, 1997, Pulgar admitted that TBFO's reported expenses did not reflect its actual expenses. He explained that as
field manager, he presumed he had the discretion to determine when and how the funds would be used, as long as the use was devoted to the
implementation of TBFO projects. Thus, there were instances when he used the funds intended for one project to sustain the activities of other
projects. Pulgar further admitted that some of the receipts he submitted to liquidate TBFO's expenses were not genuine; he claimed that he had
to produce fake receipts to comply with the central office's requirements and deadlines, otherwise the release of TBFO's subsequent funds
would be delayed. Pulgar also disclosed that he had, on his own initiative, opened a separate bank account at the Capitol Bank 6 for TBFO's
savings; the account had a remaining balance of P206,958.50. Lastly, Pulgar manifested his willingness to attend a meeting with the senior
officers, scheduled on February 28, 1997, to further explain his side.
PRRM maintains that while the investigation was ongoing, Pulgar went on leave on March 3-10, March 20-25, and April 1-15, 1997. After the
lapse of his last leave on April 15, 1997, Pulgar no longer reported to work, leading PRRM to believe that Pulgar had abandoned his work to
evade any liability arising from the investigation. PRRM was therefore surprised to learn that Pulgar had filed an illegal dismissal case on April 3,
1997.
Pulgar tells another tale. According to him, on March 17, 1997, he submitted a letter to PRRM to complain that he was not given the right to
confront and question Solis, but his letter went unanswered. Thereafter, on March 31, 1997, he was not allowed to enter the premises of the
organization. Pulgar also alleges that PRRM's representatives removed his personal properties and records from his office, placed them in
boxes and kept them in storage.
Believing he was constructively dismissed by PRRM's actions, Pulgar filed a complaint against PRRM on April 3, 1997 for illegal dismissal,
illegal suspension, and nonpayment of service incentive leave pay and 13th month pay. Pulgar also asked for actual damages, moral damages,
and attorney's fees.
The CA observed that PRRM presented no evidence to prove that Pulgar abandoned his job. Reasoning that filing an illegal dismissal complaint
is inconsistent with the charge of abandonment, the appellate court concluded that Pulgar had been illegally dismissed.
Issue:
Whether or not Pulgar was illegally dismissed from employment.
Ruling:
Page 153
LABOR RELATIONS
154

No. In concluding that Pulgar was constructively dismissed from employment, the CA relied on two main factors: (a) Pulgar's claim that he was
barred from entering the premises on March 31, 1997; and (b) the fact that Pulgar immediately filed a complaint for illegal dismissal against
PRRM. At first glance, the CA's decision appears correct. But the facts are not as simple as they appear to be.
Primarily, we underscore the fact that when Pulgar filed an illegal dismissal complaint on April 3, 1997, he was still on leave from the
organization. In other words, from PRRM's standpoint, Pulgar was still its employee when he filed the illegal dismissal case against the
organization.
Pulgar claims that he was forced to file an illegal dismissal complaint against PRRM while he was on leave because he was not allowed to enter
the office premises on March 31, 1997. But aside from making this allegation, Pulgar failed to provide any other details on how he was
prevented from entering the premises. Was he physically prevented from entering the premises by a security guard? Did the senior officers of
PRRM refuse to let him into the office when he reported to work? We are left to guess the particulars of how PRRM prevented Pulgar from
entering the premises, leaving us to doubt the veracity of this allegation.
To bolster his contention that he was constructively dismissed, Pulgar asserts that his personal things were taken from his office, placed in
boxes and put in storage. To support this allegation, he attached three photographs. But the only thing seen in these photographs is a storage
room with sealed boxes on the floor. Taken at face value, there is nothing in the photographs that proves that the boxes in the storage room
even contain Pulgar's personal things. Absent such proof, we cannot use these pictures to prove that Pulgar was constructively dismissed from
employment.
We further note that at the time PRRM was conducting an investigation into the alleged anomalies committed in the liquidation and use of
PRRM funds at the TBFO during Pulgar's management, Pulgar went on a number of leaves, specifically on March 3-10, 1997, then on March
20-25, 1997, and finally on April 1-15, 1997. The timing and frequency of these leaves, while not indicative of Pulgar's intention to sever his
employment, at the very least, imply Pulgar's active efforts to evade the organization's ongoing investigation.
Significantly, while Pulgar claims he was constructively dismissed when he was barred from the premises on March 31, 1997, he still filed his
application for leave for April 1-15, 1997. The fact alone that Pulgar was able to return to the office to file his application for leave for April 1-15,
1997 raises doubt as to his purported ban from the premises.
Also worth mentioning is the fact that Pulgar continued to receive his salary from PRRM even after March 31, 1997, or the date of his alleged
constructive dismissal. In fact, Pulgar received his salary up until April 15, 1997, when his vacation and sick leaves had been consumed.
These circumstances, taken together, lead us to conclude that PRRM did not terminate Pulgar's employment. On the contrary, what appears
from the evidence is that it was Pulgar himself who terminated his employment with PRRM when he filed an illegal dismissal complaint against
the organization while he was on leave.
While we recognize the rule that in illegal dismissal cases, the employer bears the burden of proving that the termination was for a valid or
authorized cause, in the present case, however, the facts and the evidence do not establish a prima facie case that the employee was dismissed
from employment. Before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by
substantial evidence the fact of his dismissal from service. Logically, if there is no dismissal, then there can be no question as to its legality or
illegality. Bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence.
Although under normal circumstances, an employee's act of filing an illegal dismissal complaint against his employer is inconsistent with
abandonment; in the present case, we simply cannot use that one act to conclude that Pulgar did not terminate his employment with PRRM, and
in the process ignore the clear, substantial evidence presented by PRRM that proves otherwise.
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
labor dispute will be automatically decided in favor of labor. Management also has its rights which are entitled to respect and enforcement in the
interest of simple fair play.
We have previously ruled on the Labor Arbiter's jurisdiction to rule on all money claims, including those of the employer, arising out of the
employer-employee relationship.
51. Maribago Bluewater Beach Resort v. Dual, G.R. No. 180660, July 20, 2010
Facts:
Page 154
LABOR RELATIONS
155

Petitioner Maribago is a corporation operating a resort hotel and restaurant in Barangay Maribago, Lapu-Lapu City. In 19953, it hired
respondent Dual as waiter and promoted him later as outlet cashier of its Poolbar/Allegro Restaurant.
Sometime in 2005, a group of Japanese guests and their companions dined at Allegro. Captain waiter Hiyas took their dinner orders comprising
of six (6) sets of lamb and six (6) sets of fish. As per company procedure, Hiyas forwarded one copy of the order slip to the kitchen and another
copy to respondent. Pursuant to the order slip, fourteen (14) sets of dinner were prepared by the chef. Hiyas and waiter Genaro Mission, Jr.
served twelve (12) set dinners to the guests, and another two (2) sets to their guides free of charge (total of 14 sets of dinner). After dinner, the
guests asked for their bill. Since Hiyas was attending to other guests, he gave a signal to Mission to give the bill. Mission asked respondent Dual
for the sales transaction receipt and presented this to the guests. The guests paid the amount indicated on the receipt and thereafter left in a
hurry. The receipt printed at 10:40 p.m. shows that only P3,036.00 was remitted by cashier Dual corresponding to six (6) sets of dinner. In
view of the discrepancy between the order slip and the receipt issued, petitioner Maribago, through its Human Resource Development (HRD)
manager, issued memoranda, requiring respondent Dual, Alvin Hiyas, Ernesto Avenido and Basilio Alcoseba to explain why they should not be
penalized for violating House Rule 4.1 (dishonesty in any nature).
During the clarificatory hearing,
butcher Alegrado testified that waiter Alcoseba went to the butchery looking for the order slip for table no. 113. At around 9:45 p.m., waiter
Alcoseba caused the alteration of the order slip to reflect that six (6) orders were cancelled. Alegrado allegedly asked Alcoseba if the cook was
already aware of the cancellation, to which the latter answered "oo, kahibaw na" (yes, he is already aware). Alcoseba stated that he was not
privy to the cancellation of orders since he was busy attending to his room service duty.
He claims that - he saw the cancelled food orders at the waiter's station but insists that - he did not have any part in the alteration of the order
slip. During the clarificatory hearing, however, he admitted that he altered the order slip by cancelling six (6) set dinners.
After the investigation, respondent Dual was found guilty of dishonesty for his fabricated statements and for asking one of the waiters (Mission)
to corroborate his allegations. He was terminated per memorandum dated 22 January 2005. Alcoseba was also terminated for dishonesty based
on his admission that he altered the order slip.
Dual filed a complaint for unfair labor practice, illegal dismissal, non-payment of 13th month and separation pay, and damages.
The Labor Arbiter found that respondent's termination was without valid cause and ruled that respondent is entitled to separation pay; The
NLRC set aside the Labor Arbiter's decision and dismissed the complaint for lack of merit, saying that complainant's act of depriving respondent
of its lawful revenue is tantamount to fraud against the company which warrants dismissal from the service. Falsification of commercial
documents as a means to malverse company funds constitutes fraud against the company; The Court of Appeals reversed the decision and
resolution of the NLRC. Finding no sufficient valid cause to justify respondent's dismissal, the Court of Appeals ordered petitioner to pay
respondent full backwages and separation pay.
Petitioner places - the crux of the controversy - on the proven tampering of the transaction receipt which happened in respondent's workstation.
Respondent, on the other hand, reiterates his story that the order slip was already altered when Mission gave it to him; that he was able to
confirm the cancellation of some orders from Alcoseba and Hiyas; that the receipt he printed was based on the order slip for six (6) sets of
dinner; that Mission gave him P3,100.00 as payment and he returned P64.00 as change.
Issue:
Whether or not the court of appeals committed a grave and reversible error in reversing the national labor relations commission and directing
petitioner to pay respondent full backwages from the time he was illegally dismissed, up to the finality of [its] decision and separation pay of one
month salary for every year of service.
In essence, the issue is whether the Court of Appeals erred in ruling that respondent was illegally dismissed.
Ruling:
The law requires that
an employer shall not terminate the services of an employee
except for a just or authorized cause.
Otherwise, an employee unjustly dismissed from work is entitled to reinstatement and full backwages.
The law also requires
the employer - to observe due process in termination cases. w
Page 155
LABOR RELATIONS
156
34
In Agabon v. National Labor Relations Commission, cralaw

we ruled that- violation of the employee's statutory right to due process makes the employer liable to pay indemnity in the form of nominal
damages. The law further requires that the burden of proving the cause for termination rests with the employer.cra 35
In this case,
we are in agreement that petitioner's evidence proved that respondent is guilty of DISHONESTY and of stealing money entrusted to him as
cashier.
Instead of reporting P10,100.00 as payment by the guests for their dinner, respondent cashier only reported P3,036.00 as shown by the receipt
which he admitted to have issued. The receipt which bears his name "NITO" was printed at "22:40" (10:40 p.m.) or 1 hour and 40 minutes after
the guests had left at 9:00 p.m. Two other receipts were issued for the same amount at "22:39:55" and "22:40:01".
Moreover, respondent's claim that - he received P3,100.00 only and gave Mission P64.00 as change is not shown by the receipt that he issued.
The issued receipt does not show that change was given. In addition, the amount indicated in the receipt does not coincide with Dual's
contention that only four (4) dishes were cancelled and two (2) dishes were given free of charge.
If such were the case, then the amount charged to the guests should have been for eight (8) sets of dinner and not six (6) sets. As established
during the clarificatory hearing, twelve (12) sets of dinner were served to guests and two (2) dinner sets were given to the tour guides free of
charge. It is clearly indicated in the altered order slip that six (6) out of the twelve (12) sets of dinner were cancelled.
The allegation of Dual that - six (6) dinner sets were indeed cancelled as evidenced by the dishes he allegedly saw in the utensil station is
negated by the testimonies of the kitchen staff (Chef Armand Galica, Butcher Alegrado and Dessert-in-charge John Marollano) that twelve (12)
set meals were served and consumed.
These testimonies coincide with the claim of waiters Hiyas and Mission that fourteen (14) sets of dinner were served. The serving of food
eliminates the argument of cancellation.
The alibi of cancellation has no leg to stand on.
The standard operating procedure of Maribago dictates that in cases of cancellation, the order slip - has to be countersigned by the attending
waiter (which in this case should have been Chief Waiter Hiyas) but such was not so in this case.
The foregoing facts - explain why Dual and Alcoseba tried twice to convince Mission to cover up their crime.
They even asked Mission to take the fall by asking him to admit that he altered the order slip from twelve (12) sets of dinner to six (6) sets.
In fine, what is damning to the cause of Dual - is the receipt which he admittedly issued. The receipt was issued long after the guests had left
(9:00 p.m.) and after the alteration of the order slip (9:45 p.m.) was done. Such fact led us to the conclusion that - he consented to and
participated in the anomaly.
Respondent's acts constitute SERIOUS MISCONDUCT
which is a just cause for termination under the law.
THEFT committed by an employee is a valid reason for his dismissal by the employer.
Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties
imposed on them,
ACTS OF DISHONESTY - in the handling of company property, petitioner's income in this case, are a different matter.
Withal, the law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer. 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 labor dispute will be
automatically decided in favor of labor.
The management also has its own rights, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern
for those with less privileges in life, the Supreme Court has inclined more often than not - toward the worker and upheld his cause - in his
conflicts with the employer.
Such favoritism, however, 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 applicable law and doctrine.
Page 156
LABOR RELATIONS
157

52. New Puerto Commercial vs. Lopez, G.R. No. 169999, July 26, 2010
In order to validly dismiss an employee, he must be accorded both substantive and

procedural due process by the employer. Procedural due process requires that the
employee be given a notice of the charge against him, an ample opportunity to be
heard, and a notice of termination. Even if the aforesaid procedure is conducted after the filing of the illegal dismissal case, the
legality of the dismissal, as to its procedural aspect, will be upheld provided that the employer is able to show that compliance with these
requirements was not a mere afterthought.
Facts:
In 1999, petitioner New Puerto Commercial hired respondents Felix Gavan and Rodel Lopez as a delivery panel driver and as a roving
salesman, respectively. Under a rolling store scheme, petitioners assigned respondents to sell goods stocked in a van on cash or credit to the
sari-sari stores of far-flung barangays and municipalities outside Puerto Princesa City, Palawan. Respondents were duty-bound to collect the
accounts receivables and remit the same upon their return to petitioners' store on a weekly basis.
In 2000, respondents filed a Complaint for illegal dismissal and non-payment of monetary benefits against petitioners with the Regional Office of
the DOLE in Puerto Princesa City. On November 20, 2000, a conciliation conference was held but the parties failed to reach an amicable
settlement. As a result, the complaint was endorsed for compulsory arbitration at the
RAB of the NLRC.
Previously or on November 28, 2000, petitioners sent respondents notices to explain
why they should not be dismissed for gross misconduct based on (1) the alleged
misappropriation of their sales collections, and (2) their absence without leave for
more than a month. The notice also required respondents to appear before petitioners'
lawyer on December 2, 2000 to give their side with regard to the foregoing charges.
Respondents refused to attend said hearing. On December 18, 2000, petitioners
served notices of termination on respondents on the grounds of gross misconduct and
absence without leave for more than one month.
The Labor Arbiter dismissed the complaint for illegal dismissal. The NLRC affirmed the ruling of the Labor Arbiter. It ruled
that damages cannot be awarded in favor of respondents because their dismissal was for just causes. The CA affirmed with modification the
ruling of the NLRC, to wit, it awarded nominal damages of P30,000.00 each to petitioners because they were denied due process.
Issue:
Whether the respondents were denied procedural due process justifying the award of nominal damages in accordance with the ruling in Agabon
v. National Labor Relations Commission
Ruling:
The petition is meritorious.
When the requirements of procedural due process are satisfied, the award of nominal damages is improper.
In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. The employer must
furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the
employer's decision to dismiss him. The requirement of a hearing is complied with as

long as there was an opportunity to be heard, and not necessarily that an actual
hearing was conducted. As we explained in Perez v. Philippine Telegraph and
Telephone Company:
An employee's right to be heard in termination cases under Article 277 (b) as
implemented by Section 2 (d), Rule I of the Implementing Rules of Book VI of the
Page 157
LABOR RELATIONS
158
Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal
face to face confrontation but by any meaningful opportunity to controvert the
charges against him and to submit evidence in support thereof.
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" [in Article 277 of the Labor Code] 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
employee's right to be heard.
It was duly established, as affirmed by the appellate court itself, that respondents
failed to report for work starting from October 22, 2000 for respondent Lopez and
October 28, 2000 for respondent Gavan, then at the time of the filing of the complaint
with the labor office on November 3, 2000, respondents were not yet dismissed from
employment. Prior to this point in time, there was, thus, no necessity to comply with
the twin requirements of notice and hearing.
The mere fact that the notices were sent to respondents after the filing of the labor
complaint does not, by itself, establish that the same was a mere afterthought. The
surrounding circumstances of this case adequately explain why the requirements of
procedural due process were satisfied only after the filing of the labor complaint.
Sometime in the third week of October 2000, petitioners received information that
respondents were not remitting their sales collections to the company. Thereafter,
petitioners initiated an investigation by sending one of their trusted salesmen,
Bagasala, in the route being serviced by respondents. To prevent a possible cover up,
respondents were temporarily reassigned to a new route to service. Subsequently,
respondents stopped reporting for work (i.e., starting from October 22, 2000 for
respondent Lopez and October 28, 2000 for respondent Gavan) after they got wind of
the fact that they were being investigated for misappropriation of their sales
collection, and, on November 3, 2000, respondents filed the subject illegal dismissal
case to pre-empt the outcome of the ongoing investigation. On November 18, 2000,
Bagasala returned from his month-long investigation in the far-flung areas previously
serviced by respondents and reported that respondents indeed failed to remit
P2,257.03 in sales collections. As a result, on November 28, 2000, termination
proceedings were commenced against respondents by sending notices to explain with
a notice of hearing scheduled on December 2, 2000. As narrated earlier, respondents
failed to give their side despite receipt of said notices. Petitioners sent another set of
notices to respondents on December 7, 2000 to attend a hearing on December 15,
2000 but respondents again refused to attend. Thus, on December 18, 2000,
petitioners served notices of termination on respondents for gross misconduct in
misappropriating their sales collections and absence without leave for more than a
month.
As can be seen, under the peculiar circumstances of this case, it cannot be concluded
that the sending of the notices and setting of hearings were a mere afterthought
Page 158
LABOR RELATIONS
159
because petitioners were still awaiting the report from Bagasala when respondents
pre-empted the results of the ongoing investigation by filing the subject labor
complaint. For this reason, there was sufficient compliance with the twin requirements
of notice and hearing even if the notices were sent and the hearing conducted after
the filing of the labor complaint. Thus, the award of nominal damages by the appellate
court is improper.
53. Artificio vs. NLRC, G.R. No. 172988, July 26, 2010
Facts:
Petitioner Jose P. Artificio was employed as security guard by respondent RP Guardians Security Agency, Inc., a corporation duly organized and
existing under Philippine Laws and likewise duly licensed to engage in the security agency business.
Sometime in June 2002, Artificio had a heated argument with a fellow security guard, Merlino B. Edu (Edu). On 25 July 2002, Edu submitted a
confidential report 5 to Antonio A. Andres (Andres), Administration & Operations Manager, requesting that Artificio be investigated for maliciously
machinating Edu's hasty relief from his post and for leaving his post during night shift duty to see his girlfriend at a nearby beerhouse.
On 29 July 2002, another security guard, Gutierrez Err (Err), sent a report 6 to Andres stating that Artificio arrived at the office of RP Guardians
Security Agency, Inc. on 25 June 2002, under the influence of liquor. When Artificio learned that no salaries would be given that day, he badmouthed the employees of RP Guardians Security Agency, Inc. and threatened to "arson" their office.
On even date, Andres issued a Memorandum temporarily relieving Artificio from his post and placing him under preventive suspension pending
investigation for conduct unbecoming a security guard, such as, abandonment of post during night shift duty, light threats and irregularities in the
observance of proper relieving time. He also directed Artificio to report to the office of RP Guardians Security Agency, Inc. and submit his written
answer immediately upon receipt of the memorandum.
In another memorandum, Andres informed Artificio that a hearing will be held on 12 August 2002.
Without waiting for the hearing to be held, Artificio filed on 5 August 2002, a complaint for illegal dismissal, illegal suspension, non-payment of
overtime pay, holiday pay, premium pay for holiday and rest days, 13th month pay, and damages. He also prayed for payment of separation pay
in lieu of reinstatement. 10
Labor Arbiter rendered a decision dated 6 October 2003, finding respondents guilty of illegal suspension and dismissal. It was also held that
Artificio should have been allowed to confront Edu and Err before he was preventively suspended. Since the complainant does not seek
reinstatement, he is entitled to limited backwages and separation pay.
On appeal, the NLRC, set aside the decision of the Labor Arbiter ruling that the Labor Arbiter erred in considering preventive suspension as a
penalty. The motion for reconsideration filed by Artificio was denied for lack of merit
Artificio next filed a petition for certiorari before the Court of Appeals which rendered a decision affirming the NLRC decision. Artificio filed a
motion for reconsideration which the Court of Appeals again denied.
Issues:
1. Wether or not Petitioner Artificio's preventive suspension was justified
2. Whether or not, he is entitled to backwages and separation pay
Ruling:
1. Yes. Sections 8 and 9 of Rule XXIII, Implementing Book V of the Omnibus Rules Implementing the Labor Code provides that preventive
suspension is justified where the employee's continued employment poses a serious and imminent threat to the life or property of the employer
or of the employee's co-workers. Without this kind of threat, preventive suspension is not proper.
In this case, Artificio's preventive suspension was justified since he was employed as a security guard tasked precisely to safeguard
respondents' client. His continued presence in respondents' or its client's premises poses a serious threat to respondents, its employees and
client in light of the serious allegation of conduct unbecoming a security guard such as abandonment of post during night shift duty, light threats
and irregularities in the observance of proper relieving time.
Page 159
LABOR RELATIONS
160

Besides, Management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to
company rules and regulations.
This Court has upheld a company's management prerogatives so long as they are exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements. 20
Significantly, Artificio regrettably chose not to present his side at the administrative hearing scheduled to look into the factual issues that
accompanied the accusation against him. In fact, he avoided the investigation into the charges by filing his illegal dismissal complaint ahead of
the scheduled investigation. He, on his own decided that his preventive suspension was in fact illegal dismissal and that he is entitled to
backwages and separation pay. Indeed, Artificio would even reject reinstatement revealing his bent to have his own way through his own means.
As aptly noted by the NLRC, Artificio preempted the investigation that could have afforded him the due process of which he would then say he
was denied.
2. Yes for Backwages. No for separation pay.
That resolved, we next proceed to the benefits due Artificio.
Having determined that the imposition on Artificio of preventive suspension was proper and that such suspension did not amount to illegal
dismissal, we see no basis for the grant of backwages.
Nonetheless, given the attendant circumstances in this case, namely, that Artificio had been working with the company for a period of sixteen
(16) years and without any previous derogatory record, the ends of social and compassionate justice would be served if Artificio be given some
equitable relief in the form of separation pay. 22
Artificio is entitled to separation pay considering that while reinstatement is an option, Artificio himself has never, at anytime after the notice of
preventive suspension intended to remain in the employ of private respondents.
54. Calipay vs. NLRC, G.R. No. 166411, August 3, 2010

Facts:
On July 16, 1999, a Complaint 3 for illegal dismissal, unfair labor practice, underpayment of wages and 13th month pay, non-payment of service
incentive leave pay, overtime pay, premium pay for holiday, rest day, night shift allowances and separation pay was filed by herein petitioner
Elpidio Calipay, together with Alfredo Mission and Ernesto Dimalanta against herein private respondents Triangle Ace Corporation (Triangle) and
Jose Lee.
Calipay and the other complainants alleged in their Position Paper that in the course of their employment, they were not given any specific work
assignment; they performed various kinds of work imposed upon them by Lee; in discharging their functions, they were required by Lee to work
for nine (9) hours a day, beginning from 7:00 a.m. and ending at 6:00 p.m. with a break of one hour at 12:00 noon; they were also required to
report from Monday to Sunday; for work rendered from Mondays to Saturdays beyond the normal eight (8) working hours in a day, they were
paid a uniform daily wage in the amount of P140.00 even during holidays; for work performed on Sundays, they were not paid any wage due to
the policy of Lee that his workers must provide work without pay at least a day in the week under his so-called "bayanihan system"; in receiving
their wages, they were not given any duly accomplished payslips; instead, they were forced to sign a blank form of their daily time records and
salary vouchers.
It was further alleged that in May 1998, Lee confronted Calipay and Mission regarding their alleged participation and assistance in Dimalanta's
claim for disability benefits with the Social Security System; despite their denials, Lee scolded Calipay and Mission; this incident later led to their
dismissal in the same month.
Labor Arbiter handling the case rendered a Decision dismissing the Complaint for lack of merit.
Calipay and the other complainants filed an appeal with the National Labor Relations Commission (NLRC) modifying the Labor Arbiter's decision
and ordering respondents Triangle Ace Corporation Inc./Jose Lee to reinstatement.
Aggrieved, private respondents filed a Motion for Reconsideration was Given due course and the decision of the Labor Arbiter was reinstated
and affirmed.
As a consequence, Calipay and the other complainants moved for the reconsideration, but the same was denied by the NLRC.
Appealed to CA which rendered its Decision dismissing the petition. Calipay filed a Motion for Reconsideration, but the CA denied
Page 160
LABOR RELATIONS
161

Hence, the instant petition of Calipay raising the following issues:
Issue:
Whether or not there was abandonment of work a just ground for dismissal
Held:
Calipay and the other complainants failed to sufficiently refute these findings of the Labor Arbiter in their appeal filed with the NLRC. They simply
insisted that they did not report for work, because they were already terminated. However, they did not present any evidence to prove their
allegation. On the other hand, as held by the Labor Arbiter, private respondents were able to present the DTRs and Salary Vouchers of Calipay
and the other complainants showing that they indeed reported for work even after their alleged termination from employment. 26 Calipay and the
other complainants also failed to present evidence to prove their allegation that they were forced to sign blank forms of their DTRs and Salary
Vouchers.
On the basis of the foregoing, the Court arrives at the conclusion that the filing of the complaint for illegal dismissal appears only as a convenient
afterthought on the part of petitioner and the other complainants after they were dismissed in accordance with law.
Jurisprudence has held time and again that abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal,
more so if the same is accompanied by a prayer for reinstatement. 27 In the present case, however, petitioner filed his complaint more than one
year after his alleged termination from employment. Moreover, petitioner and the other complainants' inconsistency in their stand is also shown
by the fact that in the complaint form which they personally filled up and filed with the NLRC, they only asked for payment of separation pay and
other monetary claims. They did not ask for reinstatement. It is only in their Position Paper later prepared by their counsel that they asked for
reinstatement. This is an indication that petitioner and the other complainants never had the intention or desire to return to their jobs. In fact,
there is no evidence to prove that petitioner and his former co-employees ever attempted to return to work after they were dismissed from
employment.
On the other hand, private respondents were able to present memoranda or show-cause letters served on petitioner and the other complainants
at their last known address requiring them to explain their absence, with a warning that their failure would be construed as abandonment of
work. Also, private respondents served on petitioner and the other complainants a notice of termination as required by law. Private respondents'
compliance with said requirements, taken together with the other circumstances above-discussed, only proves petitioner and the other
complainants' abandonment of their work.
55. Nacague v. Sulpicio Lines, G.R. No. 172589, August 8, 2010

Facts:
On 15 June 1995, Sulpicio Lines, Inc. (Sulpicio Lines) hired Nacague as hepe de viaje or the representative of Sulpicio Lines on board its
vessel M/V Princess of the World (the ship). On 14 February 2003, Ceasar T. Chico, a housekeeper on the ship, submitted a report regarding
the drug paraphernalia found inside the Mopalla Suite Room and the threat on his life made by Nacague and Chief Mate Reynaldo Doroon after
he found the drug paraphernalia. On 15 February 2003, Sulpicio Lines sent a notice of investigation to Nacague informing him of the charges
against him for use of illegal drugs and threatening a co-employee. When the ship docked in the port of Manila on 18 February 2003, some crew
members of the ship, together with Nacague, were subjected to a random drug test. They were taken to S.M. Lazo Medical Clinic (S.M. Lazo
Clinic) and were required to submit urine samples. The result of the random drug test revealed that Nacague was positive for
methamphetamine hydrochloride or shabu. On 20 February 2003, Sulpicio Lines subjected Nacague to a formal investigation. Nacague denied
using illegal drugs. On 23 February 2003, Nacague went to Chong Hua Hospital in Cebu City to undergo a voluntary drug test. The drug test
with Chong Hua Hospital yielded a negative result. Nacague submitted this test result to Sulpicio Lines. However, on 7 March 2003, Sulpicio
Lines sent a memorandum to Nacague terminating him from the service. The memorandum reads:
After a careful consideration of your case with the evidence available, including your explanation, and with the positive drug test result,
management finds you culpable of grave misconduct and loss of trust and confidence.
In view thereof, the company is constrained to terminate your employment effective today, March 7, 2003. Feeling aggrieved, Nacague filed a
complaint for illegal suspension, illegal dismissal and for reinstatement with backwages. LAIssue:
Page 161
LABOR RELATIONS
162

WON the termination is valid.
Ruling:
Nacague maintains that the S.M. Lazo Clinic drug test was not credible because Sulpicio Lines failed to show that S.M. Lazo Clinic is an
authorized drug testing center. Nacague also alleges that the urine samples were gathered carelessly without proper labels to identify their
owners and that S.M. Lazo Clinic did not ask Nacague if he was taking any medication that might alter the results of the drug test. Nacague
adds that Republic Act No. 9165 (R.A. No. 9165) and the Department of Labor and Employment Order No. 53-03 (Department Order No. 53-03)
require two drug tests a screening test and a confirmatory test. Nacague maintains that, since only a screening test was conducted, he was
illegally dismissed based on an incomplete drug test. Nacague argues that Sulpicio Lines failed to discharge its burden of proving that the
termination of his employment was legal. On the other hand, Sulpicio Lines questions the belated attempt of Nacague to question the credibility
of S.M. Lazo Clinic. Sulpicio Lines also argues that since Nacague knew that the residue of the drug would no longer be detectable in his body
after five days, Nacague underwent another drug test with the Chong Hua Hospital. Sulpicio Lines insists that the most accurate drug test is the
random drug test conducted by S.M. Lazo Clinic and that the test with Chong Hua Hospital was a planned test. Under Article 279 of the Labor
Code, an employer may terminate the services of an employee for just causes or for authorized causes. Furthermore, under Article 277(b) of the
Labor Code, the employer must send the employee who is about to be terminated, a written notice stating the causes for termination and must
give the employee 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 employee must be afforded an opportunity to be heard and to
defend himself.
Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by authorized drug testing centers. Moreover, Section 36 also
prescribes that drug testing shall consist of both the screening test and the confirmatory test. Section 36 of R.A. No. 9165 reads:
SEC. 36. Authorized Drug Testing. Authorized drug testing shall be done by any government forensic laboratories or by any of the drug testing
laboratories accredited and monitored by the DOH to safeguard the quality of test results. The DOH shall take steps in setting the price of the
drug test with DOH accredited drug testing centers to further reduce the cost of such drug test. The drug testing shall employ, among others, two
(2) testing methods, the screening test which will determine the positive result as well as the type of drug used and the confirmatory test which
will confirm a positive screening test. x x x (Emphasis supplied)
Department Order No. 53-03 further provides:
Drug Testing Program for Officers and Employees
Drug testing shall conform with the procedures as prescribed by the Department of Health (DOH) (www.doh.gov.ph). Only drug testing
centers accredited by the DOH shall be utilized. A list of accredited centers may be accessed through the OSHC website
(www.oshc.dole.gov.ph).
Drug testing shall consist of both the screening test and the confirmatory test; the latter to be carried out should the screening test turn
positive. The employee concerned must be informed of the test results whether positive or negative. (Emphasis supplied)
The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case, Sulpicio Lines failed to prove that S.M.
Lazo Clinic is an accredited drug testing center. Sulpicio Lines did not even deny Nacagues allegation that S.M. Lazo Clinic was not accredited.
Also, only a screening test was conducted to determine if Nacague was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive
result of the screening test with a confirmatory test. Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs
amounting to serious misconduct and loss of trust and confidence. Sulpicio Lines failed to clearly show that it had a valid and legal cause for
terminating Nacagues employment. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the
law considers the matter a case of illegal dismissal. However, reinstatement is no longer feasible due to strained relations between Nacague
and Sulpicio Lines and that Nacague should instead be granted separation pay.
56. Century Canning Corp. vs. Ramil, G.R. No. 171630, August 8, 2010
Facts:
On March 3, 1999, respondent prepared a CAPEX form for external fax modems and terminal server, per order of Technical Operations
Manager Jaime Garcia, Jr. and endorsed it to Marivic Villanueva, Secretary of Executive Vice-President Ricardo T. Po, for the latter's signature.
Page 162
LABOR RELATIONS
163
The CAPEX form, however, did not have the complete details 3 and some required signatures. The following day, March 4, 1999, with the form
apparently signed by Po, respondent transmitted it to Purchasing Officer Lorena Paz in Taguig Main Office. Paz processed the paper and found
that some details in the CAPEX form were left blank. She also doubted the genuineness of the signature of Po, as appearing in the form. Paz
then transmitted the CAPEX form to Purchasing Manager Virgie Garcia and informed her of the questionable signature of Po. Consequently, the
request for the equipment was put on hold due to Po's forged signature. However, due to the urgency of purchasing badly needed equipment,
respondent was ordered to make another CAPEX form, which was immediately transmitted to the Purchasing Department. ACcHIa
Suspecting him to have committed forgery, respondent was asked to explain in writing the events surrounding the incident. He vehemently
denied any participation in the alleged forgery. Respondent was, thereafter, suspended on April 21, 1999. Subsequently, he received a Notice of
Termination from Armando C. Ronquillo, on May 20, 1999, for loss of trust and confidence.
Respondent filed a case for illegal dismissal.
LA dismissed the complaint for lack of merit. NLRC found in favor of respondent. NLRC reversed itself and rendered a new Decision upholding
LA decision. The CA, rendered judgment in favor of respondent and reinstated the earlier decision of the NLRC.
Issue:
Whether or not the dismissal was valid.
Ruling:
Respondent alleged in his position paper that after preparing the CAPEX form on March 3, 1999, he endorsed it to Marivic Villanueva for the
signature of the Executive Vice-President Ricardo T. Po. The next day, March 4, 1999, respondent received the CAPEX form containing the
signature of Po. Petitioner never controverted these allegations in the proceedings before the NLRC and the CA despite its opportunity to do so.
Petitioner's belated allegations in its reply filed before this Court that Marivic Villanueva denied having seen the CAPEX form cannot be given
credit. Points of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body
need not be considered by a reviewing court, as they cannot be raised for the first time at that late stage. When a party deliberately adopts a
certain theory and the case is decided upon that theory in the court below, he will not be permitted to change the same on appeal, because to
permit him to do so would be unfair to the adverse party.
The law mandates that the burden of proving the validity of the termination of employment rests with the employer. Failure to discharge this
evidentiary burden would necessarily mean that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations,
and conclusions of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases should be resolved in
favor of labor, pursuant to the social justice policy of labor laws and the Constitution.
Petitioner based respondent's dismissal on its unsubstantiated suspicions and conclusion that since respondent was the custodian and the one
who prepared the CAPEX forms, he had the motive to commit the forgery.
We have previously held that employers are allowed a wider latitude of discretion in terminating the services of employees who perform
functions which by their nature require the employers' full trust and confidence and the mere existence of basis for believing that the employee
has breached the trust of the employer is sufficient, this does not mean that the said basis may be arbitrary and unfounded.
The right of an employer to dismiss an employee on the ground that it has lost its trust and confidence in him must not be exercised arbitrarily
and without just cause. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded
on clearly established facts. The basis for the dismissal must be clearly and convincingly established, but proof beyond reasonable doubt is not
necessary. It must rest on substantial grounds and not on the employer's arbitrariness, whim, caprice or suspicion; otherwise, the employee
would eternally remain at the mercy of the employer.
Petitioner's reliance on respondent's previous tardiness in reporting for work as a ground for his dismissal is likewise not meritorious. The correct
rule has always been that such previous offense may be used as valid justification for dismissal from work only if the infractions are related to
the subsequent offense upon which the basis of termination is decreed. His previous offenses were entirely separate and distinct from his latest
alleged infraction of forgery. Hence, the same could no longer be utilized as an added justification for his dismissal.
Besides, respondent had already been sanctioned for his prior infractions. To consider these offenses as justification for his dismissal would be
penalizing respondent twice for the same offense.
Respondent's illegal dismissal carries the legal consequences defined under Article 279 of the Labor Code, that is, an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, and to the payment of his full
Page 163
LABOR RELATIONS
164

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.
However, the Court finds that it would be best to award separation pay instead of reinstatement, in view of the strained relations between
petitioner and respondent. Respondent was dismissed due to loss of trust and confidence and it would be impractical to reinstate an employee
whom the employer does not trust, and whose task is to handle and prepare delicate documents.
Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when
the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive
work environment. On the other hand, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a
worker it could no longer trust.
In view of the foregoing, respondent is entitled to the payment of full backwages, inclusive of allowances, and other benefits or their monetary
equivalent, computed from the date of his dismissal on May 20, 1999 up to the finality of this decision, and separation pay in lieu of
reinstatement equivalent to one month salary for every year of service, computed from the time of his engagement by petitioner on August 1993
up to the finality of the decision.
57. D.M Consunji vs. Gobres, G.R. No. 169170, August 8, 2010
Facts:
Respondents Antonio Gobres, Magellan Dalisay, Godofredo Paragsa, Emilio Aleta and Generoso Melo worked as carpenters in the construction
projects of petitioner D.M. Consunji, Inc., a construction company, on several occasions and/or at various times. Their termination from
employment for each project was reported to the Department of Labor and Employment (DOLE), in accordance with Policy Instruction No. 20,
which was later superseded by Department Order No. 19, series of 1993. On October 14, 1998, respondents saw their names included in the
Notice of Termination posted on the bulletin board at the project premises. Respondents filed a Complaint with the Arbitration Branch of the
National Labor Relations Commission (NLRC) against petitioner D.M. Consunji, Inc. and David M. Consunji for illegal dismissal, and nonpayment of 13th month pay, five (5) days service incentive leave pay, damages and attorney's fees.
Petitioner contended that since respondents were terminated by reason of the completion of their respective phases of work in the construction
project, their termination was warranted and legal. Moreover, petitioner claimed that respondents have been duly paid their service incentive
leave pay and 13th month pay through their respective bank accounts, as evidenced by bank remittances.
Labor Arbiter ruled that the employees were project employees. NLRC affirmed the decision of the Labor Arbiter, and Court of Appeals affirmed
the decision of NLRC but awarded damages for the failure of the company to observe procedural due process.
Issue:
Whether or not notice (procedural due process) is required in termination of project employees
Ruling:
No. A project employee is defined under Article 280 of the Labor Code as one whose "employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season."
As project employees, respondents' termination is governed by Section 1 (c) and Section 2 (III), Rule XXIII (Termination of Employment), Book V
of the Omnibus Rules Implementing the Labor Code.
Section 1 (c), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code states:
Section 1.Security of tenure. (a) In cases of regular employment, the employer shall not terminate the services of an employee except for just
or authorized causes as provided by law, and subject to the requirements of due process.
xxx xxx xxx
(c)In cases of project employment or employment covered by legitimate contracting or sub-contracting arrangements, no employee shall be
dismissedprior to the completion of the project or phase thereof for which the employee was engaged, or prior to the expiration of the contract
between the principal and contractor, unless the dismissal is for just or authorized cause subject to the requirements of due process or prior
notice, or is brought about by the completion of the phase of the project or contract for which the employee was engaged.
Page 164
LABOR RELATIONS
165

Records show that respondents were dismissed after the expiration of their respective project employment contracts, and due to the completion
of the phases of work respondents were engaged for. Hence, the cited provision's requirements of due process or prior notice when an
employee is dismissed for just or authorized cause (under Articles 282 and 283 of the Labor Code) prior to the completion of the project or
phase thereof for which the employee was engaged do not apply to this case. AECDHS
Further, Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides:
Section 2.Standard of due process: requirements of notice. In all cases of termination of employment, the following standards of due process
shall be substantially observed.
1 .For termination of employment based on just causes as defined in Article 282 of the Code:
(a)A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
(b)A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and
(c)A written notice [of] termination served on the employee indicating that upon due consideration of all the circumstance, grounds have been
II.For termination of employment as based on authorized causes defined in Article 283 of the Code, the requirements of due process shall be
deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department at least thirty (30)
days before the effectivity of the termination, specifying the ground or grounds for termination.
III.If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required . If the termination is brought
about by the failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a
written notice is served the employee within a reasonable time from the effective date of termination.
In this case, the Labor Arbiter, the NLRC and the Court of Appeals all found that respondents were validly terminated due to the completion of
the phases of work for which respondents' services were engaged. The above rule clearly states, "If the termination is brought about by the
completion of the contract or phase thereof, no prior notice is required." Cioco, Jr. v. C.E. Construction Corporation explained that this is
because completion of the work or project automatically terminates the employment, in which case, the employer is, under the law, only obliged
to render a report to the DOLE on the termination of the employment.
Hence, prior or advance notice of termination is not part of procedural due process if the termination is brought about by the completion of the
contract or phase thereof for which the employee was engaged. Petitioner, therefore, did not violate any requirement of procedural due process
by failing to give respondents advance notice of their termination; thus, there is no basis for the payment of nominal damages.
58. Nagkaka-sang Lakas ng Manggagawa sa Keihin vs. Keihin Phils. Corp., G.R. No. 171115, August 9, 2010
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. 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 following day,respondent company issued a show cause notice 7 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)." Paul Cupon, Helens supervisor, called her to his office and directed her to explain in writing why no disciplinary
action should be taken against her. Helen 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 the ground of serious
misconduct.
Page 165
LABOR RELATIONS
166

On October 15, 2003, petitioners filed a complaintagainst respondent for illegal dismissal, non-payment of 13th month pay, with a prayer for
reinstatement and payment of full back wages, as well as moral and exemplary damages.
Issues:
Whether or not the dismissal was illegal
Ruling:
I. SHE WAS GUILTY OF SERIOUS MISCONDUCT
The petitioners argue that serious misconduct under existing law and jurisprudence could not be attributed to Helen because she was not
motivated by malicious intent. it was Helens honest belief that the tape she took was of no use or value and that she did not hide the same.
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 employees duties; and (c) must show that the employee has become unfit to continue working
for the employer.
It is noteworthy that prior to this incident, respondent issued two memoranda implementing an intensive inspection procedure and reminding all
employees that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the companys Code of
Conduct. This was due to some problems of vandalism and loss in the company.
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 Employees Association v. National Labor Relations Commission which
involved the theft a bottle of lighter fluid. The supreme court then refrained from imposing the supreme penalty of dismissal since the employee
had no violations "in his eight years of service and the value of the lighter fluid is very minimal compared to his salary.
However, supreme court says that the case at bar is different from the Caltex case for two reasons: (1) In the Caltex case, the employee had
been employed for eight years without incident and (2) is that respondent company was dealing with several cases of theft, vandalism, and loss
of company and employees property when the incident involving Helen transpired. Petition is Denied
FINAL NOTE: Supreme Court very briefly dealt with the defense of absence of due process which the court brushed aside by saying:
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. In Metropolitan Bank and Trust Company v. Barrientos, 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, 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."
59. Garcia v. Molina, G.R. No. 157383, August 18, 2010

Facts:
Respondents Molina and Velasco, both Attorney V of the GSIS, received two separate Memoranda from petitioner charging them with grave
misconduct. Specifically, Molina was charged for allegedly committing the following acts: 1) directly and continuously helping some alleged
disgruntled employees to conduct concerted protest actions and/or illegal assemblies against the management and the GSIS President and
General Manager; 2) leading the concerted protest activities held in the morning of May 22, 2002 during office hours within the GSIS compound;
and 3) continuously performing said activities despite warning from his immediate superiors. In addition to the charge for grave misconduct for
performing the same acts as Molina, Velasco was accused of performing acts in violation of the Rules on Office Decorum for leaving his office
without informing his supervisor of his whereabouts; and gross insubordination for persistently disregarding petitioners instructions that Velasco
should report to the petitioners office. These acts, according to petitioner, were committed in open betrayal of the confidential nature of their
positions and in outright defiance of the Rules and Regulations on Public Sector Unionism.
Considering the gravity of the charges against them, petitioner ordered the preventive suspension of respondents for ninety (90) days without
pay, effective immediately. The following day, a committee was constituted to investigate the charges against respondents. Respondents filed
with the Civil Service Commission (CSC) an Urgent Petition to Lift Preventive Suspension Order. They contended that the acts they allegedly
committed were arbitrarily characterized as grave misconduct. Consistent with their stand that petitioner could not act as the complainant,
Page 166
LABOR RELATIONS
167

prosecutor and judge at the same time, respondents filed with the CSC a Petition to Transfer Investigation to This Commission. Despite their
urgent motions, the CSC failed to resolve respondents motions to lift preventive suspension order and to transfer the case from the GSIS to the
CSC. Respondents filed with the CA a special civil action for certiotari and prohibition with prayer for Temporary Restraining Order (TRO).
Respondents sought the annulment and setting aside of petitioners order directing the former to submit to the jurisdiction of the committee
created to hear and investigate the administrative case filed against them. The CA rendered a decision in favor of respondents: Public
respondents are hereby PERPETUALLY RESTRAINED from hearing and investigating the administrative case against petitioners, without
prejudice to pursuing the same with the Civil Service Commission or any other agency of government as may be allowed for (sic) by law.
Aggrieved, petitioner comes before the Court in this petition for review on certiorari under Rule 45 of the Rules of Court.
In the meantime, the CSC resolved respondents Petition to Lift Order of Preventive Suspension and Petition to Transfer Investigation to the
Commission. As to the lifting of the order of preventive suspension, the CSC considered the issue moot and academic considering that the
period had lapsed and respondents had been allowed to resume their specific functions. This notwithstanding, the CSC opted to discuss the
matter by way of obiter dictum. Without making a definitive conclusion as to the effect thereof in the case against respondents, the CSC
declared that a preliminary investigation is a pre-requisite condition to the issuance of a formal charge. Aggrieved, respondents appealed to the
CA through a Petition for Review under Rule 43 of the Rules of Court. The CA rendered a Decision in favor of respondents. The CA declared null
and void respondents formal charges for lack of the requisite preliminary investigation. In view thereof, the CA disagreed with the CSC that the
question on the propriety of the preventive suspension order had become moot and academic. Rather, it concluded that the same is likewise
void having emanated from the void formal charges. Consequently, the CA found that respondents were entitled to back salaries during the time
of their illegal preventive suspension.
Issue:
Whether the preventive suspension orders issued against respondents Molina and Velasco are valid, well-founded and duly recognized by law.
Ruling:
The petitions are without merit. DENIED (G.R. No. 157383)/DISMISSED (G.R. No. 174137)
It is likewise undisputed that the formal charges were issued without preliminary or fact-finding investigation. The filing by petitioner of formal
charges against the respondents without complying with the mandated preliminary investigation or at least give the respondents the opportunity
to comment violated the latter's right to due process. Hence, the formal charges are void ab initio and may be assailed directly or indirectly at
anytime. Although administrative procedural rules are less stringent and often applied more liberally, administrative proceedings are not exempt
from basic and fundamental procedural principles, such as the right to due process in investigations and hearings. 37 In particular, due process
in administrative proceedings has been recognized to include the following: (1) the right to actual or constructive notice to the institution of
proceedings which may affect a respondent's legal rights; (2) a real opportunity to be heard personally or with the assistance of counsel, to
present witnesses and evidence in one's favor, and to defend one's rights; (3) a tribunal vested with competent jurisdiction and so constituted as
to afford a person charged administratively a reasonable guarantee of honesty as well as impartiality; and (4) a finding by said tribunal which is
supported by substantial evidence submitted for consideration during the hearing or contained in the records or made known to the parties
affected.38
In the procedure adopted by petitioner, respondents were preventively suspended in the same formal charges issued by the former without the
latter knowing that there were pending administrative cases against them. It is true that prior notice and hearing are not required in the issuance
of a preventive suspension order.41 However, considering that respondents were preventively suspended in the same formal charges that we
now declare null and void, then their preventive suspension is likewise null and void.
Lastly, the CA committed no reversible error in ordering the payment of back salaries during the period of respondents preventive suspension.
As the administrative proceedings involved in this case are void, no delinquency or misconduct may be imputed to respondents and the
preventive suspension meted them is baseless. Consequently, respondents should be awarded their salaries during the period of their
unjustified suspension.42 In granting their back salaries, we are simply repairing the damage that was unduly caused respondents, and unless
we can turn back the hands of time, we can do so only by restoring to them that which is physically feasible to do under the
circumstances.43 The principle of "no work, no pay" does not apply where the employee himself was unlawfully forced out of job.
60. Escario v. NLRC, G.R. No. 160302, September 27, 2010

Facts:
Page 167
LABOR RELATIONS
168

The petitioners were among the regular employees 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).
At 8:30 in the morning of March 13, 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 Aurora Manor, PINAs personnel
manager, and Yolanda Fabella, 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.
On April 14, 1993, 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 dated July 13, 1994 that the March 13, 1993 incident was an illegal walkout constituting ULP; and that all the
Unions officers, except Caete, had thereby lost their employment.
On April 28, 1993, the Union filed a notice of strike, claiming that PINA was guilty of union busting through the constructive dismissal of its
officers. On May 9, 1993, the Union held a strike vote, at which a majority of 190 members of the Union voted to strike. The strike was held in
the afternoon of June 15, 1993.
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 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, employees, suppliers, and customers.
On August 18, 1998, Labor Arbiter Jose G. de Vera (LA) rendered a decision, to wit:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered declaring the subject strike to be illegal.
On appeal, the NLRC sustained the finding that the strike was illegal, but reversed the LAs ruling that there was abandonment, viz:
However, we disagree with the conclusion that respondents union members should be considered to have abandoned their employment.
On August 18, 2003, the CA affirmed the NLRC. In denying the petitioners claim for full backwages, the CA applied the third paragraph of Article
264(a) instead of Article 279 of the Labor Code, explaining that the only instance under Article 264 when a dismissed employee would be
reinstated with full backwages was when he was dismissed by reason of an illegal lockout; that Article 264 was silent on the award of
backwages to employees participating in a lawful strike; and that a reinstatement with full backwages would be granted only when the dismissal
of the petitioners was not done in accordance with Article 282 (dismissals with just causes) and Article 283 (dismissals with authorized causes)
of the Labor Code.
Issue:
The petitioners posit that they 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. They insist that the CA decided the question in a manner contrary to law and jurisprudence.
The petitioners argue that the finding of no abandonment equated to a finding of illegal dismissal in their favor. Hence, they were entitled to full
backwages.
Ruling:
The petitioners argument cannot be sustained.
The petitioners participation in the illegal strike was precisely what prompted PINA to file a complaint to declare them, as striking employees, 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 employers ULP, considering that a strike was not a renunciation of the employment relation.
Page 168
LABOR RELATIONS
169

As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during the whole period that he is out of
his job. Considering that an illegally dismissed employee 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 the Labor
Code, and is in the nature of a command to the employer to make a public reparation for his illegal dismissal of the employee in violation of the
Labor Code.
That backwages are not granted to employees participating in an illegal strike simply accords with the reality that they do not render work for the
employer during the period of the illegal strike. According to G&S Transport Corporation v. Infante:
With respect to backwages, the principle of a "fair days wage for a fair days labor" remains as the basic factor in determining the award thereof.
If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work
but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working. xxx In Philippine Marine Officers Guild v.
Compaia Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court stressed that for
this exception to apply, it is required that the strike be legal, a situation that does not obtain in the case at bar. (emphasis supplied)
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 employees
should litigate against their employer on the latters time. Thus, the Court deleted the award of backwages and held that the striking workers
were entitled only to reinstatement in Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel Employees
Union, considering that the striking employees did not render work for the employer during the strike.
61. Simizu Phils Contractors v. Callanta, G.R. No. 165923, September 29, 2010
Facts:
Shimizu Phils. a corporation engaged in the construction business, employed Virgilio Callanta on August 23, 1994 as Safety Officer assigned at
Yutaka-Giken Project and eventually as Project Administrator of petitioners Structural Steel Division (SSD) in 1995. Virgilio Callanta was
informed that his services will be terminated effective July 9, 1997 due to the lack of any vacancy in other projects and the need to re-align the
companys personnel requirements brought about by the imperatives of maximum financial commitments. He then filed an illegal dismissal
complaint against petitioner assailing his dismissal as without any valid cause.
Shimizu advanced that respondents services was terminated in accordance with a valid retrenchment program being implemented by the
company since 1996 due to financial crisis that plague the construction industry. To prove its financial deficit, petitioner presented financial
statements for the years 1995 to 1997 as well as the Securities and Exchange Commissions approval of petitioners application for a new paidin capital amounting to P330,000,000. Shimizu alleged that in order not to jeopardize the completion of its projects, the abolition of several
departments and the concomitant termination of some employees were implemented as each project is completed. When respondents Honda
Project was completed, petitioner offered respondent his separation pay which the latter refused to accept and instead filed an illegal dismissal
complaint.
Mr. Callanta claimed that Shimizu failed to comply with the requirements called for by law before implementing a retrenchment program thereby
rendering it legally infirmed. First, it did not comply with the provision of the Labor Code mandating the service of notice of retrenchment. He
pointed out that the notice sent to him never mentioned retrenchment but only project completion as the cause of termination. Also, the notice
sent to the Department of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second, petitioner failed to
use fair and reasonable criteria in determining which employees shall be retrenched or retained. In the termination report submitted to DOLE, he
was the only one dismissed out of 333 employees. Worse, junior and inexperienced employees were appointed/assigned in his stead to new
projects thus also ignoring seniority in hiring and firing employees.
Shimizu argued that when it submitted the retrenchment notice/termination report to DOLE, there was already substantial compliance with the
requirement.
Labor Arbiter rendered a decision holding that Mr. Callanta was validly retrenched. He found that sufficient evidence was presented to establish
company losses; that petitioner offered respondent his separation pay; and that petitioner duly notified DOLE about the retrenchment. The Labor
Arbiter further relied on petitioners factual version relating to respondents employment background with regard to his position and behavioral
conduct.
Page 169
LABOR RELATIONS
170

NLRC upheld the ruling that there was valid ground for respondents termination but modified the Labor Arbiters Decision by holding that
petitioner violated respondents right to procedural due process. The NLRC found that petitioner failed to comply with the 30-day prior notice to
the DOLE and that there is no proof that petitioner used fair and reasonable criteria in the selection of employees to be retrenched. Shimizu
Philippine Contractor, Inc., is ordered to pay complainant-appellant Virgilio P. Callanta his separation pay equivalent to one (1) month pay for
every year of service. For want of due notice, respondent is further directed to pay complainant an indemnity equivalent to one (1) month salary.
CA reversed and set aside the NLRCs ruling. The CA opined that Shimizu failed to prove that there were employees other than respondent who
were similarly dismissed due to retrenchment and that respondents alleged replacements held much higher ranks and were more deserving
employees. Moreover, there were no proofs to sustain that petitioner used fair and reasonable criteria in determining which employees to
retrench. According to the CA, petitioners failure to produce evidence raises the presumption that such evidence will be adverse to it.
Consequently, the CA invalidated the retrenchment, held respondent to have been illegally dismissed, and ordered respondents reinstatement
and payment of backwages.
Issue:
Whether or not Shimizu has failed to obeserve fair and reasonable standards or criteria in effecting the dismissal or Mr. Callanta?
Ruling:
There was substantial compliance for a valid retrenchment; Shimizu used fair and reasonable criteria in effecting retrenchment.
As an authorized cause for separation from service under Article 283 of the Labor Code, retrenchment is a valid exercise of management
prerogative subject to the strict requirements set by jurisprudence:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis,
(3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least month pay for every year of
service, whichever is higher;
circumvent the employees right to security of tenure; and
Both the Labor Arbiter and the NLRC found sufficient compliance with these substantive requirements, there being enough evidence to prove
that petitioner was sustaining business losses, that separation pay was offered to respondent, and that notices of termination of service were
furnished respondent and DOLE. However, the NLRC modified the Decision of the Labor Arbiter by granting respondent indemnity since the
notice to DOLE was served short of the 30-day notice requirement and that there is no proof of the use of fair and reasonable criteria in the
selection of employees to be retrenched or retained. The CA, then, reversed the Decision of the NLRC by ruling that the absence of fair and
reasonable criteria in implementing the retrenchment invalidates altogether the retrenchment.
In implementing its retrenchment scheme, petitioner was constrained to streamline its operations and to downsize its complements in a
progressive manner in order not to jeopardize the completion of its projects. Thus, several departments like the Civil Works Division, Electromechanical Works Division and the Territorial Project Management Offices, among others, were abolished in the early part of 1996 and
thereafter the Structural Steel Division, of which respondent was an Administrator. Respondent was among the last batch of employees who
were retrenched and by the end of year 1997, all of the employees of the Structural Steel Division were severed from employment.
Mr. Callanta argued that that he was singled out for termination as allegedly shown in petitioners monthly termination report for the month of
July 1997 filed with the DOLE does not persuade this Court. Standing alone, this document is not proof of the total number of retrenched
employees or that respondent was the only one retrenched. It merely serves as notice to DOLE of the names of employees terminated/
retrenched only for the month of July. In other words, it cannot be deemed as an evidence of the number of employees affected by the
retrenchment program. Thus we cannot conclude that no other employees were previously retrenched.
Shimizu implemented its retrenchment program in good faith because it undertook several measures in cutting down its costs, to wit,
withdrawing certain privileges of petitioners executives and expatriates; limiting the grant of additional monetary benefits to managerial
employees and cutting down expenses; selling of company vehicles; and infusing fresh capital into the company. Respondent did not attempt to
refute that petitioner adopted these measures before implementing its retrenchment program.
Page 170
LABOR RELATIONS
171

Shimizu was able to prove that it incurred substantial business losses, that it offered to pay respondent his separation pay, that the retrenchment
scheme was arrived at in good faith, and lastly, that the criteria or standard used in selecting the employees to be retrenched was work
efficiency which passed the test of fairness and reasonableness.
The termination notice sent to DOLE did not comply with the 30-day notice requirement, thus, respondent is entitled to indemnity for violation of
due process. However, petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the
second notice, before the intended date of respondents dismissal.
The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of termination. Noncompliance with this rule clearly violates the employees right to statutory due process.
Consequently, we affirm the NLRCs award of indemnity to respondent for want of sufficient due notice. But to be consistent with our ruling in
Jaka Food Processing Corporation v. Pacot, the indemnity in the form of nominal damages should be fixed in the amount of P50,000.00.
WHERFORE, the petition is GRANTED., respectively, upholding the legality of respondents dismissal and awarding him separation pay
equivalent to one (1) month pay or one-half (1/2) month pay for every year of service, whichever is higher,
are REINSTATED and AFFIRMED with MODIFICATION that the indemnity to be awarded to respondent is fixed in the amount of P50,000.00 as
nominal damages. SO ORDERED.
62. Solidbank Corporation v. Gamier, G.R. No. 159461, November 15, 2010
Facts:
Sometime in October 1999, petitioner Solidbank and respondent Solidbank Employees Union (Union) were set to renegotiate the economic
provisions of their 1997-2001 Collective Bargaining Agreement (CBA) to cover the remaining two years thereof. Negotiations commenced on
November 17, 1999 but seeing that an agreement was unlikely, the Union declared a deadlock on December 22, 1999 and filed a Notice of
Strike on December 29, 1999. During the collective bargaining negotiations, some Union members staged a series of mass actions. In view of
the impending actual strike, then Secretary of Labor and Employment Bienvenido E. Laguesma assumed jurisdiction over the labor dispute,
pursuant to Article 263 (g) of the Labor Code, as amended. The assumption order dated January 18, 2000 directed the parties "to cease and
desist from committing any and all acts that might exacerbate the situation.
Dissatisfied with the Secretarys ruling, the Union officers and members decided to protest the same by holding a rally infront of the Office of the
Secretary of Labor and Employment in Intramuros, Manila, simultaneous with the filing of their motion for reconsideration of the March 24, 2000
Order. Thus, on April 3, 2000, an overwhelming majority of employees, including the individual respondents, joined the "mass leave" and
"protest action" at the Department of Labor and Employment (DOLE) office while the banks provincial branches in Cebu, Iloilo, Bacolod and
Naga followed suit and "boycotted regular work. The union members also picketed the banks Head Office in Binondo on April 6, 2000, and
Paseo de Roxas branch on April 7, 2000.
As a result of the employees concerted actions, Solidbanks business operations were paralyzed. On the same day, then President of
Solidbank, Deogracias N. Vistan, issued a memorandum addressed to all employees calling their absence from work and demonstration infront
of the DOLE office as an illegal act, and reminding them that they have put their jobs at risk as they will be asked to show cause why they
should not be terminated for participating in the union-instigated concerted action. The employees work abandonment/boycott lasted for three
days, from April 3 to 5, 2000.
On the third day of the concerted work boycott (April 5, 2000), Vistan issued another memorandum, this time declaring that the bank is prepared
to take back employees who will report for work starting April 6, 2000 "provided these employees were/are not part of those who led or instigated
or coerced their co-employees into participating in this illegal act." Out of the 712 employees who took part in the three-day work boycott, a total
of 513 returned to work and were accepted by the bank. The remaining 199 employees insisted on defying Vistans directive, which included
herein respondents Ernesto U. Gamier, Elena R. Condevillamar, Janice L. Arriola and Ophelia C. De Guzman. For their failure to return to work,
the said 199 employees were each issued a show-cause memo directing them to submit a written explanation within twenty-four (24) hours why
they should not be dismissed for the "illegal strike in defiance of the Assumption Order of the Secretary of Labor resulting to grave and
irreparable damage to the Bank", and placing them under preventive suspension.
Gamier, Condevillamar, Arriola and De Guzman filed complaints for illegal dismissal, moral and exemplary damages and attorneys fees.
Issue:
Whether the respondents were validly terminated?
Page 171
LABOR RELATIONS
172

Ruling:
The Court has consistently ruled that once the Secretary of Labor assumes jurisdiction over a labor dispute, such jurisdiction should not be
interfered with by the application of the coercive processes of a strike or lockout. A strike that is undertaken despite the issuance by the
Secretary of Labor of an assumption order and/or certification is a prohibited activity and thus illegal.
Article 264 (a) of the Labor Code, as amended, also considers it a prohibited activity to declare a strike "during the pendency of cases involving
the same grounds for the same strike." There is no dispute that when respondents conducted their mass actions on April 3 to 6, 2000, the
proceedings before the Secretary of Labor were still pending as both parties filed motions for reconsideration of the March 24, 2000 Order.
Clearly, respondents knowingly violated the aforesaid provision by holding a strike in the guise of mass demonstration simultaneous with
concerted work abandonment/boycott.
However, a worker merely participating in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during
a strike that he may be declared to have lost employment status. The Court have held that the responsibility of union officers, as main players in
an illegal strike, is greater than that of the members and, therefore, limiting the penalty of dismissal only for the former for participation in an
illegal strike is in order.
For the respondents who are union members, the rule is that an ordinary striking worker cannot be terminated for mere participation in an illegal
strike. There must be proof that he or she committed illegal acts during a strike. In all cases, the striker must be identified. But proof beyond
reasonable doubt is not required. Substantial evidence available under the attendant circumstances, which may justify the imposition of the
penalty of dismissal, may suffice. Liability for prohibited acts is to be determined on an individual basis.
Petitioners have not adduced evidence on such illegal acts committed by each of the individual respondents who are union members. Instead,
petitioners simply point to their admitted participation in the mass actions which they knew to be illegal, being in violation of the Secretarys
assumption order.
The dismissal of herein respondent-union members are therefore unjustified in the absence of a clear showing that they committed specific
illegal acts during the mass actions and concerted work boycott.
The award of backwages is a legal consequence of a finding of illegal dismissal. Assuming that respondent-union members have indeed
reported back to work at the end of the concerted mass actions, but were soon terminated by petitioners who found their explanation
unsatisfactory, they are not entitled to backwages in view of the illegality of the said strike.
Under the circumstances, respondents reinstatement without backwages suffices for the appropriate relief. But since reinstatement is no longer
possible, given the lapse of considerable time from the occurrence of the strike, not to mention the fact that Solidbank had long ceased its
banking operations, the award of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order.
63. Coca-Cola Export Corp. v. Gacayan, G.R. No. 149433, December 15, 2010
Facts:
1. Respondent Gacayan worked with petitioner for 9 years. She held the position of Senior Financial Accountant. Her employment was
terminated for alleged loss of trust and confidence on the ground of fraudulently altering three receipts (1 Mdonalds receipt and 3 Shakeys
Pizza receipts) which she submitted to support her claim for reimbursement of meal expenses.
2. The date of issuance of the Mdonalds receipt was altered. In her orders in Shakeys Pizza it was discovered that the receipt was actually for
three orders of Bunch of Lunch, and not for Buddy Pack.
3. Respondent allegedly violated Section II, No. 15, paragraph (d) of the companys rules and regulations which punishes with dismissal the
submission of any fraudulent item of expense.
4. She was dismissed for fraudulently submitting tampered and/or altered receipts in support of her petty cash reimbursements in gross violation
of the companys rules and regulations.
5. She filed a complaint for illegal dismissal, non-payment of service incentive leave, sick leave and vacation leave with prayer for reinstatement,
payment of backwages as well as for damages and attorneys fees, against petitioner.
6. The Labor Arbiter and NLRC ruled that the termination was valid but CA ruled that the penalty of dismissal imposed on respondent was too
harsh and directed petitioner to immediately reinstate her.
Page 172
LABOR RELATIONS
173

Issue:
WON termination of Gacayan was valid
Ruling:
No, her termination was invalid.
Respondents dismissal from employment was not grounded on any of the just causes enumerated under Article 282 of the Labor Code. Also,
SC did not agree with petitioners contention that respondents repeated submission of altered or tampered receipts to support her claim for
reimbursement constitutes a betrayal of the employers trust and confidence and a serious misconduct, thus, giving cause for the termination of
her employment.
It is important to note that the term trust and confidence is restricted to managerial employees.
In Samson v. National Labor Relations Commission, the Court, citing Section 2(b), Rule I, Book III of the Omnibus Rules Implementing the Labor
Code, enumerated the conditions for one to be properly considered a managerial employee:
(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 employees therein; [and]
(3) They have the authority to hire or fire other employees 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 employees are given particular weight.
In the instant case, respondent was the Senior Financial Accountant with the Job Description of a Financial Project Analyst. Respondent, among
others, provides support in the form of financial analyses and evaluation of alternative strategies or action plans to assist management in
strategic and operational decision-making, liaises with the Bottler to comply with Corporate Bottler financial reporting requirements and to
ensure Bottlers plans are aligned with TCCECs, and assists management on various initiatives on ad hoc basis.
In Nokom v. National Labor Relations Commission, this Court set the guidelines for the application of the doctrine of loss of confidence
(a) Loss of confidence should not be simulated;
(b) It should not be used as a subterfuge for causes which are improper, illegal or unjustified;
(c) It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and
(d) It must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
In the instant case, the basis for terminating the employment of respondent was for gross violation of the companys rules and regulations, as
specified in the termination letter.
No mention was made regarding petitioners alleged loss of trust and confidence in respondent. Neither was there any explanation nor
discussion of the alleged sensitive and delicate position of respondent requiring the utmost trust of petitioner.
For loss of trust and confidence to be a valid ground for dismissal, it must be substantial and founded on clearly established facts. Loss of
confidence must not be used as a subterfuge for causes which are improper, illegal or unjustified; it must be genuine, not a mere afterthought, to
justify earlier action taken in bad faith.
Because of its subjective nature, this Court has been very scrutinizing in cases of dismissal based on loss of trust and confidence because the
same can easily be concocted by an abusive employer. Thus, when the breach of trust or loss of confidence theorized upon is not borne by
clearly established facts, as in the instant case, such dismissal on the ground of loss and confidence cannot be countenanced.
In the instant case, it was only in the Reply to Respondents Comment, that petitioner made mention of another ground for the dismissal of
respondent, that of serious misconduct, when she submitted altered or tampered receipts to support her claim for reimbursement. Such
allegation appears to be a mere afterthought, being tardily raised only in the Reply.
Page 173
LABOR RELATIONS
174

The alleged infractions of respondent could hardly be considered serious misconduct. It is well to stress that in order to constitute serious
misconduct which will warrant the dismissal of an employee, it is not sufficient that the act or conduct complained of has violated some
established rules or policies. It is equally important and required that the act or conduct must have been done with wrongful intent. Such is,
however, lacking in the instant case.
In the instant case, petitioner alleged that under its rules and regulations, respondents submission of fraudulent items of expense is punishable
by dismissal. However, petitioners rules cannot preclude the State from inquiring whether the strict and rigid application or interpretation thereof
would be harsh to the employee. Even when an employee is found to have transgressed the employers rules, in the actual imposition of
penalties upon the erring employee, due consideration must still be given to his length of service and the number of violations committed during
his employ. Respondent had no previous record in her 9 years of service; this would have been her first offense. Respondent had also been
a recipient of various commendations attesting to her competence and diligence in the performance of her duties, not only from petitioner, but
also from petitioners counterparts in Poland and Thailand. Respondent also countered that she acted in good faith and with no wrongful intent
when she submitted the receipts in support of her claim for reimbursement of meal allowance. According to respondent, only the dates or items
were altered on the receipts. She did not claim more than what was allowed as meal expense for the days that she rendered overtime
work. She believed that the submission of receipts was simply for records-keeping, since she actually rendered overtime work on the dates that
she claimed for meal allowance. All told, this Court holds that the penalty of dismissal imposed on respondent is unduly oppressive and
disproportionate to the infraction which she committed. A lighter penalty would have been more just.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the time of his actual reinstatement and not from the date of her dismissal from the
service up to the date of finality of this decision as the CA ruled.
SC ruled in favor of Gacayan. Petitioner was ordered to reinstate her.
64. Robinsons Galleria/Robinsons Supermarket v. Ranchez, G.R. No. 177937, January 19, 2011
Facts:
Respondent was a probationary employee of petitioner Robinsons Galleria/Robinsons Supermarket Corporation (petitioner Supermarket) for a
period of five (5) months. She underwent six (6) weeks of training as a cashier before she was hired as such on October 15, 1997.
Two weeks after she was hired, respondent reported to her supervisor the loss of cash amounting to Twenty Thousand Two Hundred NinetyNine Pesos (P20,299.00) which she had placed inside the company locker. Petitioner Jess Manuel (petitioner Manuel), the Operations Manager
of petitioner Supermarket, ordered that respondent be strip-searched by the company guards. However, the search on her and her personal
belongings yielded nothing.
Respondent acknowledged her responsibility and requested that she be allowed to settle and pay the lost amount. However, petitioner Manuel
did not heed her request and instead reported the matter to the police. Petitioner Manuel likewise requested the Quezon City Prosecutors Office
for an inquest.
Subsequently, an information for Qualified Theft was filed. Thus, respondent filed a complaint for illegal dismissal and damages.
Issue:
Whether respondent was illegally terminated from employment by petitioners?
Ruling:
There is probationary employment when the employee upon his engagement is made to undergo a trial period during which the employer
determines his fitness to qualify for regular employment based on reasonable standards made known to him at the time of engagement.
A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of probationary employment, aside from just or
authorized causes of termination, an additional ground is provided under Article 281 of the Labor Code, i.e., the probationary employee may also
be terminated for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of the engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated
Page 174
LABOR RELATIONS
175

for any of the following: (1) a just or (2) an authorized cause; and (3) when he fails to qualify as a regular employee in accordance with
reasonable standards prescribed by the employer.
Article 277(b) of the Labor Code mandates that subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal, except for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the same Code,
the employer shall furnish the worker, whose employment is sought to be terminated, a written notice containing a statement of the causes of
termination, and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of a representative if he so
desires, in accordance with company rules and regulations pursuant to the guidelines set by the Department of Labor and Employment.
In the instant case, based on the facts on record, petitioners failed to accord respondent substantive and procedural due process. The
haphazard manner in the investigation of the missing cash, which was left to the determination of the police authorities and the Prosecutors
Office, left respondent with no choice but to cry foul. Administrative investigation was not conducted by petitioner Supermarket. On the same
day that the missing money was reported by respondent to her immediate superior, the company already pre-judged her guilt without proper
investigation, and instantly reported her to the police as the suspected thief, which resulted in her languishing in jail for two weeks.
As correctly pointed out by the NLRC, the due process requirements under the Labor Code are mandatory and may not be supplanted by police
investigation or court proceedings. The criminal aspect of the case is considered independent of the administrative aspect. Thus, employers
should not rely solely on the findings of the Prosecutors Office. They are mandated to conduct their own separate investigation, and to accord
the employee every opportunity to defend himself. Furthermore, respondent was not represented by counsel when she was strip-searched
inside the company premises or during the police investigation, and in the preliminary investigation before the Prosecutors Office.
As to respondents monetary claims, Article 279 of the Labor Code provides that an employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges, 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,
due to the strained relations of the parties, the payment of separation pay has been considered an acceptable alternative to reinstatement, when
the latter option is no longer desirable or viable.
Thus, as an illegally or constructively dismissed employee, respondent 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.
In this case, since respondent was a probationary employee at the time she was constructively dismissed by petitioners, she is entitled to
separation pay and backwages. Reinstatement of respondent is no longer viable considering the circumstances. However, the backwages that
should be awarded to respondent shall be reckoned from the time of her constructive dismissal until the date of the termination of her
employment.
In all cases involving employees engaged on probationary basis, the employer shall make known to its employees the standards under which
they will qualify as regular employees at the time of their engagement. Where no standards are made known to an employee at the time, he
shall be deemed a regular employee, unless the job is self-descriptive, like maid, cook, driver, or messenger.
65. Hospital Management Services v. HMSI-Medical Center Manila Employees Asso., G.R. No. 176287, January 31, 2011
Facts:
Respondent De Castro started working as a staff nurse at petitioner hospital since September 28, 1990, until she was dismissed on July 20,
1999.
Between 2:00 a.m. to 3:00 a.m. of March 24, 1999, while respondent De Castro and
ward-clerk orientee Gina Guillergan were at the nurse station on night duty (from
10:00 p.m. of March 23, 1999 to 6:00 a.m. of March 24, 1999), one Rufina Causaren,
an 81-year-old patient confined at Room 724-1 of petitioner hospital for gangrenous
wound on her right anterior leg and right forefoot and scheduled for operation on
March 26, 1999, fell from the right side of the bed as she was trying to reach for the
bedpan. Because of what happened, the niece of patient Causaren staying in the
Page 175
LABOR RELATIONS
176
room was awakened and she sought assistance from the nurse station. Instead of
personally seeing the patient, respondent De Castro directed ward-clerk orientee
Guillergan to check the patient. The vital signs of the patient were normal. Later, the
physician on duty and the nursing staff on duty for the next shift again attended to
patient Causaren.
Chief Nurse Josefina M. Villanueva informed Dr. Asuncion Abaya-Morido, president and
hospital director, about the incident and requested for a formal investigation. On May
11, 1999, the legal counsel of petitioner hospital directed respondent De Castro and
three other nurses on duty, Staff Nurse Janith V. Paderes and Nursing Assistants
Marilou Respicio and Bertilla T. Tatad, to appear before the Investigation Committee.
De Castro explained that at around 2:30 a.m. to 3:00 a.m., she was attending to a
newly-admitted patient at Room 710 and, because of this, she instructed Nursing
Assistant Tatad to check the vital signs of patient Causaren, with ward-clerk orientee
Guillergan accompanying the latter. When the two arrived at the room, the patient
was in a squatting position, with the right arm on the bed and the left hand holding on
to a chair.
In the Investigation Report, the Investigation Committee found that the subject
incident happened between 11:00 a.m. to 11:30 a.m. of March 23, 1999. The three
other nurses for the shift were not at the nurse station. Staff Nurse Paderes was then
in another nurse station encoding the medicines for the current admissions of
patients, while Nursing Assistant Respicio was making the door name tags of admitted
patients and Nursing Assistant Tatad delivered some specimens to the laboratory. The
committee recommended that despite her more than seven years of service,
respondent De Castro should be terminated from employment for her lapse in
responding to the incident and for trying to manipulate and influence her staff to
cover-up the incident. As for Staff Nurse Paderes and Nursing Assistants Respicio and
Tatad, the committee recommended that they be issued warning notices for failure to
note the incident and endorse it to the next duty shift and, although they did not have
any knowledge of the incident, they should be reminded not to succumb to pressure
from their superiors in distorting the facts.
On July 5, 1999, Janette A. Calixijan, HRD Officer of petitioner hospital, issued a notice
of termination, duly noted by Dr. Abaya-Morido, upon respondent De Castro, effective
at the close of office hours of July 20, 1999, for alleged violation of company rules and
regulations, particularly paragraph 16 (a), Item 3, Chapter XI of the Employee's
Handbook and Policy Manual of 1996 (Employee's Handbook) (1) negligence to follow
company policy on what to do with patient Rufina Causaren who fell from a hospital
bed; (2) failure to record and refer the incident to the physician-[on- duty and]
allow[ing] a significant lapse of time before reporting the incident; (3) deliberately
instructing the staff to follow her version of the incident in order to cover up the lapse;
and (4) negligence and carelessness in carrying out her duty as staff nurse-on-duty
when the incident happened.
On July 21, 1999, respondent De Castro, with the assistance of respondent Hospital
Management Services Inc.-Medical Center Manila Employees Association-AFW, filed a
Complaint[7] for illegal dismissal against petitioners with prayer for reinstatement and
Page 176
LABOR RELATIONS
177
payment of full backwages without loss of seniority rights, P20,000.00 moral

damages, P10,000.00 exemplary damages, and 10% of the total monetary award as
attorney's fees.
The Labor Arbiter rendered a Decision, [8] ordering the hospital to reinstate respondent
De Castro to her former position or by payroll reinstatement, at the option of the
former, without loss of seniority rights, but without backwages and, also, directing
petitioners to notify her to report to work. The Labor Arbiter concluded that although
respondent De Castro committed the act complained of, being her first offense, the
penalty to be meted should not be dismissal from the service, but merely 7 to 14 days
suspension as the same was classified as a less serious offense under the Employees
Handbook.
On appeal by respondent De Castro, the NLRC rendered a Decision reversing the
findings of the Labor Arbiter and dismissing the complaint against the petitioners. It
observed that respondent De Castro lacked diligence and prudence in carrying out her
duty when, instead of personally checking on the condition of patient Causaren after
she fell from the bed, she merely sent ward-clerk orientee Guillergan to do the same
in her behalf and for influencing her staff to conceal the incident.
The NLRC denied respondent De Castro's Motion for Reconsideration.
The CA reversed and set aside the Decision of the NLRC and reinstated the Decision
of the Labor Arbiter, with modification that respondent De Castro should be entitled to
payment of full backwages and other benefits, or their monetary equivalent,
computed from the expiration of the 14-day-suspension period up to actual
reinstatement. The CA ruled that while respondent De Castro's failure to personally
attend to patient Causeran amounted to misconduct, however, being her first offense,
such misconduct could not be categorized as serious or grave that would warrant the
extreme penalty of termination from the service after having been employed for
almost 9 years. It added that the subject infraction was a less serious offense
classified under commission of negligent or careless acts during working time or on
company property that resulted in the personal injury or property damage causing
expenses to be incurred by the company stated in subparagraph 11, paragraph 3 (B),
Chapter XI [on the Rules on Discipline] of the Employee's Handbook [9] of petitioner
hospital.
The CA denied the hospitals MR.
Issue:
Was De Castro guilty of serious misconduct? Was the penalty of termination
reasonable?
Ruling:
The hospital is guilty of illegal dismissal.
Page 177
LABOR RELATIONS
178
Article 282 (b) of the Labor Code provides that an employer may terminate an
employment for gross and habitual neglect by the employee of his duties. The CA
ruled that per the Employees Handbook of petitioner hospital, respondent De Castros
infraction is classified as a less serious offense for commission of negligent acts
during working time as set forth in subparagraph 11, paragraph 3 (B) of Chapter
XI[10] thereof. Petitioners anchor respondent De Castros termination of employment
on the ground of serious misconduct for failure to personally attend to patient
Causaren who fell from the bed as she was trying to reach for the bedpan. Based on
her evaluation of the situation, respondent De Castro saw no necessity to record in the
chart of patient Causaren the fact that she fell from the bed as the patient did not
suffer any injury and her vital signs were normal. She surmised that the incident was
not of a magnitude that would require medical intervention as even the patient and
her niece did not press charges against her by reason of the subject incident.
It is incumbent upon respondent De Castro to ensure that patients, covered by the
nurse station to which she was assigned, be accorded utmost health care at all times
without any qualification or distinction. Respondent De Castros failure to personally
assist patient Causaren, check her vital signs and examine if she sustained any injury,
refer the matter to the patient's attending physician or any physician-on-duty, and
note the incident in the report sheet for endorsement to the next shift for proper
monitoring constitute serious misconduct that warrants her termination of
employment. After attending to the toxic patients under her area of responsibility,
respondent De Castro should have immediately proceeded to check the health
condition of patient Causaren and, if necessary, request the physician-on-duty to
diagnose her further. More importantly, respondent De Castro should make
everything of record in the patients chart as there might be a possibility that while
the patient may appear to be normal at the time she was initially examined, an injury
as a consequence of her fall may become manifest only in the succeeding days of her
confinement. The patients chart is a repository of ones medical history and, in this
regard, respondent De Castro should have recorded the subject incident in the chart
of patient Causaren so that any subsequent discomfort or injury of the patient arising
from the incident may be accorded proper medical treatment.
Neglect of duty, to be a ground for dismissal, must be both gross and habitual.
Gross negligence connotes want of care in the performance of one's duties.
Habitual neglect implies repeated failure to perform one's duties for a period of time,
depending upon the circumstances.
A single or isolated act of negligence does not constitute a just cause for the dismissal
of the employee. Despite our finding of culpability against respondent De Castro;
however, we do not see any wrongful intent, deliberate refusal, or bad faith on her
part when, instead of personally attending to patient Causaren, she requested Nursing
Assistant Tatad and ward-clerk orientee Guillergan to see the patient, as she was then
attending to a newly-admitted patient at Room 710. It was her judgment call, albeit
an error of judgment, being the staff nurse with presumably more work experience
and better learning curve, to send Nursing Assistant Tatad and ward-clerk orientee
Page 178
LABOR RELATIONS
179
Guillergan to check on the health condition of the patient, as she deemed it best,
under the given situation, to attend to a newly-admitted patient who had more
concerns that needed to be addressed accordingly. Being her first offense, respondent
De Castro cannot be said to be grossly negligent so as to justify her termination of
employment. Moreover, petitioners allegation, that respondent De Castro exerted
undue pressure upon her co-nurses to alter the actual time of the incident so as to
exculpate her from any liability, was not clearly substantiated.
Negligence is defined as the failure to exercise the standard of care that a reasonably
prudent person would have exercised in a similar situation. The Court emphasizes
that the nature of the business of a hospital requires a higher degree of caution and
exacting standard of diligence in patient management and health care as what is
involved are lives of patients who seek urgent medical assistance. An act or omission
that falls short of the required degree of care and diligence amounts to serious
misconduct which constitutes a sufficient ground for dismissal.
However, in some cases, the Court had ruled that sanctioning an erring employee with
suspension would suffice as the extreme penalty of dismissal would be too
harsh. Considering that this was the first offense of respondent De Castro in her nine
(9) years of employment with petitioner hospital as a staff nurse without any previous
derogatory record and, further, as her lapse was not characterized by any wrongful
motive or deceitful conduct, the Court deems it appropriate that, instead of the harsh
penalty of dismissal, she would be suspended for a period of six (6) months without
pay, inclusive of the suspension for a period of 14 days which she had earlier
served. Thereafter, petitioner hospital should reinstate respondent Edna R. De Castro
to her former position without loss of seniority rights, full backwages, inclusive of
allowances and other benefits, or their monetary equivalent, computed from the
expiration of her suspension of six (6) months up to the time of actual reinstatement.
66. Culili v. Eastern Telecommunications Phils., G.R. No. 165381, February 9, 2011
Facts:
Nelson Culili was employed by Eastern Telecommunications a Senior Technician. In 1998, due to business losses, ETPI was compelled to
implement a Right-Sizing Program which consisted of two phases: the first phase involved the reduction of ETPIs workforce to only those
employees that were necessary and which ETPI could sustain; the second phase entailed a company-wide reorganization which would result in
the transfer, merger, absorption or abolition of certain departments of ETPI. Among the departments abolished was the Service Quality
Department. As a result, Culilis position was abolished due to redundancy. Upon filing a complaint, the Labor Arbiter rendered a decision finding
ETPI guilty of illegal dismissal and unfair labor practice, which was affirmed by the NLRC. However, the Court of Appeals found that Culilis
position was validly abolished due to redundancy. It was highly unlikely that ETPI would effect a company-wide reorganization simply for the
purpose of getting rid of Culili. Also, ETPI cannot be held guilty of unfair labor practice as mere contracting out of services being performed by
union members does not per se amount to unfair labor practice unless it interferes with the employees right to self-organization.
Issue:
Whether or not there was an illegal dismissal.
Ruling: There was a valid dismissal on the ground of redundancy.
Page 179
LABOR RELATIONS
180

There is redundancy when the service capability of the workforce is greater than what is reasonably required to meet the demands of the
business enterprise. A position becomes redundant when it is rendered superfluous by any number of factors such as over-hiring of workers,
decrease in volume of business, or dropping a particular product line. Among the requisites of a valid redundancy program are: (1) the good faith
of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what positions are to be declared
redundant such as but not limited to: preferred status, efficiency, and seniority.
The records show that ETPI had sufficiently established not only its need to reduce its workforce and streamline its organization, but also the
existence of redundancy in the position of a Senior Technician. It was decided that, in the judgment of ETPI management, the specialized
functions of a Senior Technician whose sole function was essentially the repair and servicing of ETPIs telecommunications equipment was no
longer needed since the Business and Consumer [Accounts] Department had to remain economical and focused yet versatile enough to meet
all the multifarious needs of its small and medium sized clients. It is inconceivable that ETPI would effect a company-wide reorganization of this
scale for the mere purpose of singling out Culili and terminating him. What ETPI did was to abolish the position itself for being too specialized
and limited.
SC finds Culilis dismissal was for a lawful cause and not an act of unfair labor practice, ETPI, however, was remiss in its duty to observe
procedural due process in effecting the termination of Culili. In Mayon Hotel & Restaurant v. Adana, SC observed that the requirement of law
mandating the giving of notices was intended:
not only to enable the employees to look for another employment and therefore ease the impact of the loss of their jobs and the corresponding
income,
but more importantly, to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized
cause of termination.
With regard to the impleaded corporate officers, they cannot be held liable for acts done in his official capacity because a corporation, by legal
fiction, has a personality separate and distinct from its officers, stockholders, and members. To pierce this fictional veil, it must be shown that
the corporate personality was used to perpetuate fraud or an illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In
illegal dismissal cases, corporate officers may be held solidarily liable with the corporation if the termination was done with malice or bad faith.
Culili has failed to prove that his dismissal was orchestrated by the individual respondents herein for the mere purpose of getting rid of him.
Hence, the dismissal is declared valid but Eastern Telecommunications Philippines, Inc. is ordered to pay petitioner Nelson A. Culili the amount
of P50,000.00 as nominal damages for non-compliance with statutory due process, in addition to the mandatory separation pay required under
Article 283 of the Labor Code.
67. Plastimer Industrial Corp. v. Gopo, G.R. No. 183390, February 16, 2011
Facts:
The Personnel and Administration Manager of Plastimer issued a Memorandum informing all its employees of the decision of the Board of
Directors to downsize and reorganize its business operations due to withdrawal of investments and shares of stocks which resulted in the
change of its corporate structure. On 14 May 2004, the employees of Plastimer, including respondent Gopo and other employees were served
written notices of their termination effective 13 June 2004. Plastimer and Plastimer Industrial Corporation Christian Brotherhood (PICCB), the
incumbent sole and exclusive collective bargaining representative of all rank and file employees, entered into a Memorandum of Agreement
(MOA) relative to the terms and conditions that would govern the retrenchment of the affected employees. On 26 May 2004, Plastimer submitted
to the DOLE an Establishment Termination Report containing the list of the employees affected by the reorganization and downsizing. The
affected employees, including respondents, signed individual Release Waiver and Quitclaim.
Thereafter, respondents filed a complaint against Plastimer and its President Teo Kee Bin (petitioners) before the Labor Arbiter for illegal
dismissal with prayer for reinstatement and full backwages, underpayment of separation pay, moral and exemplary damages and attorneys
fees. Respondents alleged that they did not voluntarily relinquish their jobs and that they were required to sign the waivers and quitclaims
without giving them an opportunity to read them and without explaining their contents; and that Plastimer failed to establish the causes/valid
reasons for the retrenchment and to comply with the one-month notice to the DOLE as well as the standard prescribed under the Collective
Bargaining Agreement between Plastimer and the employees. Petitioners countered that the retrenchment was a management prerogative and
that respondents got their retrenchment or separation pay even before the effective date of their separation from service.
The Labor Arbiter ruled in favor of petitioners. It held that petitioners were able to prove that there was a substantial withdrawal of stocks that led
to the downsizing of the workforce; that notice to the affected employees were given on 14 May 2004, 30 days before its effective date on 14
Page 180
LABOR RELATIONS
181

June 2004, and it was only the notice to the DOLE that was filed short of the 30-day period; that respondents claimed their separation pay in
accordance with the MOA; and that respondents could not claim ignorance of the contents of the waivers and quitclaims because they were
assisted by the union President and their counsel in signing them.
On appeal, the NLRC affirmed the Labor Arbiters decision.
The Court of Appeals reversed the NLRC decision and found that petitioners have been illegally dismissed.
The Court of Appeals ruled that there was no valid cause for retrenchment; that while Plastimer claimed financial losses from 2001 to 2004,
records showed an improvement of its finances in 2003; that Plastimer failed to use a reasonable and fair standard or criteria in ascertaining
who would be dismissed and who would be retained among its employees; that the MOA between Plastimer and PICCB only recognized the
need for partial retrenchment and the computation of retrenchment pay without disclosing the criteria in the selection of the employees to be
retrenched; and that the union President and the PICCBs counsel were not present when the retrenched employees were made to sign the
waivers and quitclaims.
Hence, the petition before this Court.
Issue:
WON respondents were illegally retrenched by petitioners.
Ruling:
The petition has merit.
This Court is not precluded from reviewing the factual issues when there are conflicting findings by the Labor Arbiter, the NLRC and the Court of
Appeals. In this case, we find that the findings of the Labor Arbiter and the NLRC are more in accord with the evidence on record.
One-Month Notice of Termination of Employment
ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or
Department of Labor and Employment at least one (1) month before the intended date thereof. xxx
In this case, Plastimer submitted the notice of termination of employment to the DOLE on 26 May 2004. However, notice to the affected
employees were given to them on 14 May 2004 or 30 days before the effectivity of their termination from employment on 13 June 2004. While
notice to the DOLE was short of the one-month notice requirement, the affected employees were sufficiently informed of their retrenchment 30
days before its effectivity. Petitioners failure to comply with the one-month notice to the DOLE is only a procedural infirmity and does not render
the retrenchment illegal. In Agabon v. NLRC, we ruled that when the dismissal is for a just cause, the absence of proper notice should not nullify
the dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for the violation of his statutory rights. Here,
the failure to fully comply with the one-month notice of termination of employment did not render the retrenchment illegal but it entitles
respondents to nominal damages.
Validity of Retrenchment
The fact that there was a net income in 2003 does not justify the Court of Appeals ruling that there was no valid reason for the retrenchment.
Records showed that the net income of P6,185,707.05 for 2003 was not even enough for petitioners to recover from the P52,904,297.88 loss in
2002. Article 283 of the Labor Code recognizes retrenchment to prevent losses as a right of the management to meet clear and continuing
economic threats or during periods of economic recession to prevent losses. There is no need for the employer to wait for substantial losses to
materialize before exercising ultimate and drastic option to prevent such losses.
Validity of Waivers and Quitclaims
The Court has ruled that a waiver or quitclaim is a valid and binding agreement between the parties, provided that it constitutes a credible and
reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full understanding of its import.
Page 181
LABOR RELATIONS
182

We agree with the Labor Arbiter and the NLRC that respondents were sufficiently apprised of their rights under the waivers and quitclaims that
they signed. Each document contained the signatures of Marcaida, PICCB President, and Atty. Diwa, the counsel for the union, which proved
that respondents were duly assisted when they signed the waivers and quitclaims. Further, Marcaidas letter to Teo Kee Bin, dated 28 May 2004,
proved that proper assistance was extended upon respondents. Hence, we rule that the waivers and quitclaims that respondents signed were
valid.
WHEREFORE, we SET ASIDE the Decision and Resolution of the Court of Appeals, and hereby REINSTATE the Decision of the Labor Arbiter
and the Resolution of the NLRC upholding the validity of respondents retrenchment with MODIFICATION that petitioners pay each of the
respondents the amount of P30,000 as nominal damages for non-compliance with statutory due process.
68. St. Marys Academy of Dipolog City vs. Palacio, G.R. No. 164913, September 8, 2010
Facts:
On different dates in the late 1990s, petitioner hired respondents Calibod, Laquio, Santander, Saile and Montederamos, as classroom teachers,
and respondent Palacio, as guidance counselor. In separate letters dated March 31, 2000, however, petitioner informed them that their reapplication for school year 2000-2001 could not be accepted because they failed to pass the Licensure Examination for Teachers (LET).
According to petitioner, as non-board passers, respondents could not continue practicing their teaching profession pursuant to the Department
of Education, Culture and Sports (DECS) Memorandum No. 10, S. 1998 7 which requires incumbent teachers to register as professional
teachers pursuant to Section 27of Republic Act (RA) No. 7836, otherwise known as the Philippine Teachers Professionalization Act of 1994.
The DECS Memorandum, pursuant to PRC Resolution No. 600, S. 1997 fixed the deadline for teachers to register on September 19, 2000.
Further, as the aforesaid law provides for exceptions to the taking of examination, some of them possessed civil service eligibilities and special
permits to teach. Also, it was established the petitioner retained other teachers who did not also possess the required eligibility.
Together with four other classroom teachers namely Gail Josephine Padilla (Padilla), Virgilio Andalahao (Andalahao), Alma Decipulo (Decipulo),
and Marlynn Palacio, who were similarly dismissed by petitioner on the same ground, respondents filed a complaint contesting their termination
as highly irregular and premature.
Petitioner claimed that it decided to terminate their services as early as March 31, 2000 because it would be prejudicial to the school if their
services will be terminated in the middle of the school year.
Issue:
Whether or not there was illegal dismissal
Ruling:
The dismissal of Teresita Palacio, Calibod, Laquio, Santander, and Montederamos was premature and defeated their right to security of tenure.
Sailes dismissal has legal basis for lack of the required qualification needed for continued practice of teaching
Pursuant to RA7836, its resolution and subsequent memorandum, effective September 20, 2000, only holders of valid certificates of
registration, valid professional licenses and valid special/temporary permits can engage in teaching in both public and private
schools.24 Clearly, respondents, in the case at bar, had until September 19, 2000 to comply with the mandatory requirement to register as
professional teachers. As respondents are categorized as those not qualified to register without examination, the law requires them to register
by taking and passing the licensure examination.
Petitioner claims that it terminated respondents employment as early as March 2000 because it would be highly difficult to hire professional
teachers in the middle of the school year as replacements for respondents without compromising the operation of the school and education of
the students. Petitioners intention and desire not to put the students education and school operation in jeopardy is neither a decisive
consideration for respondents termination prior to the deadline set by law. Again, by setting a deadline for registration as professional teachers,
the law has allowed incumbent teachers to practice their teaching profession until September 19, 2000, despite being unregistered and
unlicensed. The prejudice that respondents retention would cause to the schools operation is only trivial if not speculative as compared to the
consequences of respondents unemployment.
Incidentally, petitioner did not dispute that it hired and retained other teachers who do not likewise possess the qualification and eligibility and
even allowed them to teach during the school year 2000-2001. This indicates petitioners ulterior motive in hastily dismissing respondents.
Page 182
LABOR RELATIONS
183

It is incumbent upon this Court to afford full protection to labor. Thus, while we take cognizance of the employers right to protect its interest, the
same should be exercised in a manner which does not infringe on the workers right to security of tenure. "Under the policy of social justice, the
law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life
should have more in law.
Petition DENIED.
69. PLDT vs. Teves, G.R. No. 143511, November 15, 2010
Facts:
Respondent was employed by petitioner Philippine Long Distance Telephone Company in 1981 as Clerk II until his termination from service on
June 1, 1992. Petitioner terminated respondent through an Inter-Office Memorandum dated May 29, 1992 on account of his three (3)
unauthorized leaves of absence committed within three (3) years in violation of petitioners rules and regulations.
Respondent was absent from August 23 to September 3, 1990 as his wife gave birth and suffered complications. Respondent called up through
a third party to inform petitioner that he would go on an extended leave. Upon his reporting for work, he wrote petitioner a letter confirming his
leave of absence without pay for that period and stating the reasons thereof, with his wife's medical certificate attached. Dissatisfied, petitioner
required respondent to submit further explanation which the latter did reiterating his previous explanation. However, it found respondents
explanation to be unacceptable and unmeritorious for the latter's failure to call, notify or request petitioner for such leave and suspended
respondent from work without pay for 20 days.
Respondent was absent from May 29 to June 12, 1991 his eldest and youngest daughters getting sick and had to be confined in the hospital.
Further, respondent alleged that he had relayed said message to an officemate who unfortunately did not also report for work. Petitioner found
respondents explanation insufficient, respondent was suspended without pay for 45 days.
Eight months thereafter, respondent availed of a seven-day leave of absence and extended such leave to complete his annual vacation leave.
However, respondent failed to report for work from February 11 to February 19, 1992 which was made to prolong payment of his demandable
financial obligations in the office. He further stated that he realized that what he did was wrong and only worsened his situation and asked for
another chance. Petitioner found such explanation totally unacceptable. Thus, in an Inter-Office Memorandum dated May 29, 1992 addressed
to respondent, the latter was terminated from service effective June 1, 1992 due to his third unauthorized absence within a three-year period.
The LA found that respondents dismissal was legal. However, the NLRC found that the two previous incidents of respondents alleged
unauthorized absences were justified, and that while his absence from February 11 to 19, 1992 was unacceptable and unreasonable, he should
have been penalized therefor accordingly, but not with dismissal from service. The CA affirmed the NLRCs findings and concluded that
respondents absences from February 11 to 19, 1992 was his first and only unauthorized absences during his 11 years of stay, and it did not
merit the harsh penalty of dismissal.
Issue:
Whether or not there is sufficient ground for the termination of respondent.
Held:
We find that respondent's termination for committing three unauthorized absences within a three-year period had no basis; thus, there was no
valid cause for respondent's dismissal.
Even assuming that respondent's absenteeism constitutes willful disobedience, such offense does not warrant respondent's dismissal. Not every
case of insubordination or willful disobedience by an employee reasonably deserves the penalty of dismissal. There must be a reasonable
proportionality between the offense and the penalty.
Petitioner's claim that the alleged previous infractions may be used as supporting justification to a subsequent similar offense, which would merit
dismissal, finds no application in this case. Respondent's absence from August 23 to September 3, 1990 was justified and not unauthorized as
there was prior notice. His absence from May 29 to June 12, 1991, although found to be unauthorized, was not at all unjustified. Thus, his
absence during the period from February 11 to 19, 1991, being the only unauthorized and unjustified absence and his second unauthorized
absence, should not merit the penalty of dismissal.
Page 183
LABOR RELATIONS
184

While management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers, pursuant to company
rules and regulations, however, such management prerogatives must be exercised in good faith for the advancement of the employers interest
and not for the purpose of defeating or circumventing the rights of the employees under special laws and valid agreements. The Court is wont to
reiterate that while an employer has its own interest to protect, and pursuant thereto, it may terminate an employee for a just cause, such
prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Its implementation should be tempered with
compassion and understanding. The employer should bear in mind that, in the execution of said prerogative, what is at stake is not only the
employees position, but his very livelihood, his very breadbasket.
Considering that respondent was illegally dismissed from service, he is entitled to be reinstated, without loss of seniority rights and the payment
of backwages from the time respondents compensation was withheld from him until his reinstatement on November 12, 1997. However, since
we find that respondent's absence from February 11 to 19, 1992 was unjustified and unauthorized, thus, his suspension for thirty days would be
in order. Hence, the amount equivalent to the thirty-day suspension, which respondent should have served for his absence on February 11 to
19, 1992, should be deducted from the backwages to be awarded to him.
70. University of the Immaculate Concepcion vs. NLRC, G.R. No. 181146, January 26, 2011
Facts:
Teodora C. Axalan is a regular faculty member holding the position of Associate Professor II in the University of the Immaculate Conception in
Davao. She was dismissed due to 2 instances wherein she was allegedly absent without leave, attending seminars in Quezon City and Baguio
City, respectively.
On the first instance, Axalan claimed that she held online classes. She was convinced that she cannot be considered absent and opted not to
write the letter of apology requested of her by the University President to avoid any administrative charge. On the second instance, Axalan
claimed that she asked permission from the VP for Academics who denied giving the same.
After conducting hearings and receiving evidence, the ad hoc grievance committee found Axalan to have incurred AWOL on both instances and
recommended that Axalan be suspended without pay for six months on each AWOL charge. The university president approved the committees
recommendation and wrote Axalan a letter informing her of her absences and of her total penalty of one-year suspension without pay for both
AWOL charges effective immediately.
Issue:
Whether or not there was constructive dismissal.
Held:
NO, there was no constructive dismissal, Axalan having been validly validly suspended for cause and in accord with procedural due process.
Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely
as when there is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an employer becomes
unbearable to the employee leaving the latter with no other option but to quit.
In this case however, there was no cessation of employment relations between the parties. It is unrefuted that Axalan promptly resumed
teaching at the university right after the expiration of the suspension period. In other words, Axalan never quit. Hence, Axalan cannot claim that
she was left with no choice but to quit, a crucial element in a finding of constructive dismissal. Thus, Axalan cannot be deemed to have been
constructively dismissed.
Significantly, at the time the Labor Arbiter rendered his Decision on 11 October 2004, Axalan had already returned to her teaching job at the
university on 1 October 2004. The Labor Arbiters Decision ordering the reinstatement of Axalan, who at the time had already returned to work,
is thus absurd.
There being no constructive dismissal, there is no legal basis for the Labor Arbiters order of reinstatement as well as payment of backwages,
salary differentials, damages, and attorneys fees. Thus, the third issue raised in the petition is now moot.
Page 184
LABOR RELATIONS
185

The Court recognizes the right of employers to discipline its employees for serious violations of company rules after affording the latter due
process and if the evidence warrants. The university, after affording Axalan due process and finding her guilty of incurring AWOL on two
separate occasions, acted well within the bounds of labor laws in imposing the penalty of six-month suspension without pay for each incidence
of AWOL.
As a learning institution, the university cannot be expected to take lightly absences without official leave among its employees, more so among
its faculty members even if they happen to be union officers. To do so would send the wrong signal to the studentry and the rest of its teaching
staff that irresponsibility is widely tolerated in the academe.
The law protects both the welfare of employees and the prerogatives of management. Courts will not interfere with prerogatives of management
on the discipline of employees, as long as they do not violate labor laws, collective bargaining agreements if any, and general principles of
fairness and justice.
71. Simizu Phils Contractors v. Callanta, G.R. No. 165923, September 29, 2010
Facts:
Shimizu Phils. a corporation engaged in the construction business, employed Virgilio Callanta on August 23, 1994 as Safety Officer assigned at
Yutaka-Giken Project and eventually as Project Administrator of petitioners Structural Steel Division (SSD) in 1995. Virgilio Callanta was
informed that his services will be terminated effective July 9, 1997 due to the lack of any vacancy in other projects and the need to re-align the
companys personnel requirements brought about by the imperatives of maximum financial commitments. He then filed an illegal dismissal
complaint against petitioner assailing his dismissal as without any valid cause.
Shimizu advanced that respondents services was terminated in accordance with a valid retrenchment program being implemented by the
company since 1996 due to financial crisis that plague the construction industry. To prove its financial deficit, petitioner presented financial
statements for the years 1995 to 1997 as well as the Securities and Exchange Commissions approval of petitioners application for a new paidin capital amounting to P330,000,000. Shimizu alleged that in order not to jeopardize the completion of its projects, the abolition of several
departments and the concomitant termination of some employees were implemented as each project is completed. When respondents Honda
Project was completed, petitioner offered respondent his separation pay which the latter refused to accept and instead filed an illegal dismissal
complaint.
Mr. Callanta claimed that Shimizu failed to comply with the requirements called for by law before implementing a retrenchment program thereby
rendering it legally infirmed. First, it did not comply with the provision of the Labor Code mandating the service of notice of retrenchment. He
pointed out that the notice sent to him never mentioned retrenchment but only project completion as the cause of termination. Also, the notice
sent to the Department of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second, petitioner failed to
use fair and reasonable criteria in determining which employees shall be retrenched or retained. In the termination report submitted to DOLE, he
was the only one dismissed out of 333 employees. Worse, junior and inexperienced employees were appointed/assigned in his stead to new
projects thus also ignoring seniority in hiring and firing employees.
Shimizu argued that when it submitted the retrenchment notice/termination report to DOLE, there was already substantial compliance with the
requirement.
Labor Arbiter rendered a decision holding that Mr. Callanta was validly retrenched. He found that sufficient evidence was presented to establish
company losses; that petitioner offered respondent his separation pay; and that petitioner duly notified DOLE about the retrenchment. The Labor
Arbiter further relied on petitioners factual version relating to respondents employment background with regard to his position and behavioral
conduct.
NLRC upheld the ruling that there was valid ground for respondents termination but modified the Labor Arbiters Decision by holding that
petitioner violated respondents right to procedural due process. The NLRC found that petitioner failed to comply with the 30-day prior notice to
the DOLE and that there is no proof that petitioner used fair and reasonable criteria in the selection of employees to be retrenched. Shimizu
Philippine Contractor, Inc., is ordered to pay complainant-appellant Virgilio P. Callanta his separation pay equivalent to one (1) month pay for
every year of service. For want of due notice, respondent is further directed to pay complainant an indemnity equivalent to one (1) month salary.
CA reversed and set aside the NLRCs ruling. The CA opined that Shimizu failed to prove that there were employees other than respondent who
were similarly dismissed due to retrenchment and that respondents alleged replacements held much higher ranks and were more deserving
employees. Moreover, there were no proofs to sustain that petitioner used fair and reasonable criteria in determining which employees to
Page 185
LABOR RELATIONS
186

retrench. According to the CA, petitioners failure to produce evidence raises the presumption that such evidence will be adverse to it.
Consequently, the CA invalidated the retrenchment, held respondent to have been illegally dismissed, and ordered respondents reinstatement
and payment of backwages.
Issue:
Whether or not Shimizu has failed to obeserve fair and reasonable standards or criteria in effecting the dismissal or Mr. Callanta?
Ruling:
There was substantial compliance for a valid retrenchment; Shimizu used fair and reasonable criteria in effecting retrenchment.
As an authorized cause for separation from service under Article 283 of the Labor Code, retrenchment is a valid exercise of management
prerogative subject to the strict requirements set by jurisprudence:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis,
(3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least month pay for every year of
circumvent the employees right to security of tenure; and
Both the Labor Arbiter and the NLRC found sufficient compliance with these substantive requirements, there being enough evidence to prove
that petitioner was sustaining business losses, that separation pay was offered to respondent, and that notices of termination of service were
furnished respondent and DOLE. However, the NLRC modified the Decision of the Labor Arbiter by granting respondent indemnity since the
notice to DOLE was served short of the 30-day notice requirement and that there is no proof of the use of fair and reasonable criteria in the
selection of employees to be retrenched or retained. The CA, then, reversed the Decision of the NLRC by ruling that the absence of fair and
reasonable criteria in implementing the retrenchment invalidates altogether the retrenchment.
In implementing its retrenchment scheme, petitioner was constrained to streamline its operations and to downsize its complements in a
progressive manner in order not to jeopardize the completion of its projects. Thus, several departments like the Civil Works Division, Electromechanical Works Division and the Territorial Project Management Offices, among others, were abolished in the early part of 1996 and
thereafter the Structural Steel Division, of which respondent was an Administrator. Respondent was among the last batch of employees who
were retrenched and by the end of year 1997, all of the employees of the Structural Steel Division were severed from employment.
Mr. Callanta argued that that he was singled out for termination as allegedly shown in petitioners monthly termination report for the month of
July 1997 filed with the DOLE does not persuade this Court. Standing alone, this document is not proof of the total number of retrenched
employees or that respondent was the only one retrenched. It merely serves as notice to DOLE of the names of employees terminated/
retrenched only for the month of July. In other words, it cannot be deemed as an evidence of the number of employees affected by the
retrenchment program. Thus we cannot conclude that no other employees were previously retrenched.
Shimizu implemented its retrenchment program in good faith because it undertook several measures in cutting down its costs, to wit,
withdrawing certain privileges of petitioners executives and expatriates; limiting the grant of additional monetary benefits to managerial
employees and cutting down expenses; selling of company vehicles; and infusing fresh capital into the company. Respondent did not attempt to
refute that petitioner adopted these measures before implementing its retrenchment program.
Shimizu was able to prove that it incurred substantial business losses, that it offered to pay respondent his separation pay, that the retrenchment
scheme was arrived at in good faith, and lastly, that the criteria or standard used in selecting the employees to be retrenched was work
efficiency which passed the test of fairness and reasonableness.
The termination notice sent to DOLE did not comply with the 30-day notice requirement, thus, respondent is entitled to indemnity for violation of
due process. However, petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the
second notice, before the intended date of respondents dismissal.
The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of termination. Noncompliance with this rule clearly violates the employees right to statutory due process.
Page 186
LABOR RELATIONS
187

Consequently, we affirm the NLRCs award of indemnity to respondent for want of sufficient due notice. But to be consistent with our ruling in
Jaka Food Processing Corporation v. Pacot, the indemnity in the form of nominal damages should be fixed in the amount of P50,000.00.
72. Manila Mining Corp. Employees Association-FFW vs. Manila Mining Corp., G.R. No. 178222-23, September 29, 2010
Facts:
Respondent Manila Mining Corporation (MMC) is a publicly-listed corporation engaged in large-scale mining for gold and copper ore. MMC is
required by law to maintain a tailings containment facility to store the waste material generated by its mining operations. Consequently, MMC
constructed several tailings dams to treat and store its waste materials. One of these dams was Tailings Pond No. 7 (TP No. 7), which was
constructed in 1993 and was operated under a permit issued by the Department of Environment and Natural Resources (DENR), through its
Environmental Management Bureau (EMB) in Butuan City, Agusan del Norte.
Upon expiration of the tailings permit on 25 July 2001, DENR-EMB did not issue a permanent permit due to the inability of MMC to secure an
Environmental Compliance Certificate (ECC). An essential component of an ECC is social acceptability or the consent of the residents in the
community to allow TP No. 7 to operate, which MMC failed to obtain. Hence, it was compelled to temporarily shut down its mining operations,
resulting in the temporary lay-off of more than 400 employees in the mine site.
On 30 July 2001, MMC called for the suspension of negotiations on the CBA with the Union until resumption of mining operations.
Among the employees laid-off, complainants Samuel Zuiga, Myrna Maquio, Doroteo Torre, Arsenio Mark Perez, Edmundo Galvez, Diana Ruth
Rellores, Jonathan Araneta, Teresita Lagman, Reynaldo Anzures, Gerardo Opena, and Edwin Tuazon, together with the Union filed a complaint
before the labor arbiter on even date praying for reinstatement, recognition of the Union as the sole and exclusive representative of its rank-andfile employees, and payment of moral and exemplary damages and attorneys fees.
In their Position Paper, complainants challenged the validity of their lay-off on the averment that MMC was not suffering from business losses.
They alleged that MMC did not want to bargain collectively with the Union, so that instead of submitting their counterproposal to the CBA, MMC
decided to terminate all union officers and active members. Petitioners questioned the timing of their lay-off, and alleged that first, there was no
showing that cost-cutting measures were taken by MMC; second, no criteria were employed in choosing which employees to lay-off; and third,
the individuals laid-off were those who signed the attendance sheet of the union organizational meeting. Petitioners likewise claimed that they
were denied due process because they were not given a 30-day notice informing them of the lay-off. Neither was the DOLE informed of this layoff, as mandated by law.
Respondents justified the temporary lay-off as bona fide in character and a valid management prerogative pending the issuance of the permit to
continuously operate TP No. 7.
The labor arbiter ruled in favor of MMC and held that the temporary shutdown of the mining operation, as well as the temporary lay-off of the
employees, is valid.
On appeal, the National Labor Relations Commission (NLRC) modified the judgment of the labor arbiter and ordered the payment of separation
pay equivalent to one month pay for every year of service. It ratiocinated that the temporary lay-off, which exceeded more than six (6) months,
had the effect of severance of the employer-employee relationship.
Issue:
WON there was bad faith on the part of MMC in implementing the temporary lay-off resulting in the complainants constructive dismissal
Held:
The lay-off is neither illegal nor can it be considered as unfair labor practice.
Despite all efforts exerted by MMC, it did not succeed in obtaining the consent of the residents of the community where the tailings pond would
operate, one of the conditions imposed by DENR-EMB in granting its application for a permanent permit. It is precisely MMCs faultless failure
to secure a permit which caused the temporary shutdown of its mining operations.
Page 187
LABOR RELATIONS
188

For a charge of unfair labor practice to prosper, it must be shown that the employer was motivated by ill-will, bad faith or fraud, or was
oppressive to labor. The employer must have acted in a manner contrary to morals, good customs, or public policy causing social humiliation,
wounded feelings or grave anxiety. While the law makes it an obligation for the employer and the employees to bargain collectively with each
other, such compulsion does not include the commitment to precipitately accept or agree to the proposals of the other. All it contemplates is that
both parties should approach the negotiation with an open mind and make reasonable effort to reach a common ground of agreement.
Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation at all to the laid-off employees. The validity of its act of
suspending its operations does not excuse it from paying separation pay.
Article 286 of the Labor Code allows the bona fide suspension of operations for a period not exceeding six (6) months. During the suspension,
an employee is not deemed terminated. As a matter of fact, the employee is entitled to be reinstated once the employer resumes operations
within the 6-month period. However, Article 286 is silent with respect to the rights of the employee if the suspension of operations lasts for more
than 6 months. Thus is bred the issue regarding the responsibility of MMC toward its employees.
The Court is not impressed with the claim that actual severe financial losses exempt MMC from paying separation benefits to complainants. In
the first place, MMC did not appeal the decision of the Court of Appeals which affirmed the NLRCs award of separation pay to
complainants. MMCs failure had the effect of making the awards final so that MMC could no longer seek any other affirmative relief. In the
second place, the non-issuance of a permit forced MMC to permanently cease its business operations, as confirmed by the Court of
Appeals. Under Article 283, the employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations
is bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as he pays his
employees their termination pay in the amount corresponding to their length of service. The cessation of operations, in the case at bar is of such
nature. It was proven that MMC stopped its operations precisely due to failure to secure permit to operate a tailings pond. Separation pay must
nonetheless be given to the separated employees.
73. Lopez vs. Alturas Group of Companies, G.R. No. 191008, April 11, 2011
Facts:
Petitioner Lopez is the truck driver of the respondent. He was given a notice to the effect that he would be terminated by the respondent on the
ground that he was caught by the security guard stealing scrap irons by smuggling them out from the company premises. Later on, the
respondent filed a criminal case of qualified theft against the respondent. Petitioner then filed an illegal dismissal case against the respondent on
the ground that he was dismissed by the respondent without just cause and that he was not afforded due process as he was not given a counsel
and an opportunity to confront witnesses. As the case was appealed, the NLRC ruled that there was a violation of due process in dismissing the
petitioner as he was not afforded ample opportunity to refute the allegations lodged against him. Furthermore, petitioner advanced that there
was no sufficient cause to terminate him as such ground was only a mere subterfuge of the respondent so as for him not to lodge a complaint of
underpayment of wages.
Issue:
Whether or not the dismissal is illegal
Ruling:
No, the dismissal is not illegal.
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, conpounded 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 employees covers employees occupying a position of trust who are proven to have
breached the trust and confidence reposed on them
The language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based on willful breach of the trust reposed
in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly. And, in order to constitute a just cause for dismissal, the act complained of
must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a
just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and
confidence or that the employee concerned is entrusted with confidence with respect to delicate matters, such as the handling or care and
protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized.
Page 188
LABOR RELATIONS
189

It is, however, with respect to the appellate courts finding that petitioner was not afforded procedural due process that the Court deviates from.
Procedural due process has been defined as giving an opportunity to be heard before judgment is rendered.
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. The
right to counsel and the assistance of one in investigations involving termination cases is personally or with the assistance of a representative or
counsel. He may also ask the employer 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.
74. Apacible vs. Multimed Industries Inc., G.R. No. 178903, May 30, 2011
Facts:
Petitioner Juliet Apacible was hired sometime in 1994 by respondent. She rose from the ranks to become Assistant Area Sales Manager for
Cebu Operations, the position she held at the time she was separated from the service in 2003.
On August 4, 2003, petitioner was informed by respondent Marlene Orozco (Marlene), her immediate superior, that she would be transferred to
the company's main office in Pasig City on account of the ongoing reorganization. Petitioner requested that her transfer be made effective in
October or November 2003 and that she be given time to discuss it with her husband and daughter.
A week later, however, or on August 11, 2003, petitioner was informed that her transfer would be effective August 18, 2003. On even date, she
was placed under investigation for the delayed released of BCRs (cash budget for customer representation in sealed envelopes which are given
to loyal clients) which she received for distribution earlier in July 2003.
Finding that the delay in releasing the BCRs amounted to loss of trust and confidence, petitioner claims that in a meeting with the respondents,
she was given four options: resignation, termination, availment of an early retirement package worth P40,000, or transfer to Pasig City. Without
availing of any option, petitioner took a leave of absence on August 28, 29 and September 1, 2003.
On September 3, 2003, respondent company sent petitioner a memorandum-directive for her to immediately report to the head office in Pasig
City and to return the company vehicle assigned to her to the Cebu Office within 24 hours. Petitioner did not heed the directive, however. She
instead filed an application for sick leave until September 11, 2003, and another until September 27, 2003.
On October 6, 2003, petitioner requested that she be given her daily work assignment in Cebu, which request was later to be denied by Olga by
letter dated October 8, 2003. On October 7, 2003, petitioner was given a show cause notice for her to explain in writing why she should not be
sanctioned for insubordination for failure to comply with the transfer order.
On November 4, 2002, respondent company sent petitioner a notice of termination effective November 7, 2003 for insubordination, prompting
petitioner to file a complaint for illegal dismissal, non-payment of overtime pay, 13th month pay, service incentive leave pay, separation pay,
damages and attorney's fees before the Labor Arbiter.
The Court of Appeals ruled that petitioner was not entitled to separation pay because, contrary to the NLRC's finding, she "lacked good faith." It
noted that petitioner, from the start, knew and accepted the company policy on transfers whenever so required, and could not thus refuse
"another valid reassignment by treating it as an imposition and burden."
ISSUE:
Whether petitioner is entitled separation pay by way of financial assistance.
RULING:
NO. Reno Foods, Inc. v. Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan 16 explains the propriety of granting separation pay in
termination cases in this wise:
Page 189
LABOR RELATIONS
190

The law is clear. Separation pay is only warranted when the cause for termination is not attributable to the employee's fault, such as those
provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not
allowed when an employee is dismissed for just cause, such as serious misconduct.
xxx xxx xxx
It is true that there have been instances when the Court awarded financial assistance to employees who were terminated for just causes, on
grounds of equity and social justice. The same, however, has been curbed and rationalized in Philippine Long Distance Telephone Company v.
National Labor Relations Commission. In that case, we recognized the harsh realities faced by employees that forced them, despite their good
intentions, to violate company policies, for which the employer can rightly terminate their employment. For these instances, the award of
financial assistance was allowed. But, in clear and unmistakable language, we also held that the award of financial assistance shall not be given
to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character. When the employee
commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. 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.
In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, we
ruled that separation pay shall not be granted to all employees who are dismissed on any of the four grounds provided in Article 282 of the Labor
Code. Such ruling was reiterated and further explained in Central Philippines Bandag Retreaders, Inc. v. Diasnes:
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay based on social justice when an
employee's dismissal is based on serious misconduct or wilful disobedience; gross and habitual neglect of duty; fraud or wilful breach of trust; or
commission of a crime against the person of the employer or his immediate family grounds under Art. 282 of the Labor Code that sanction
dismissals of employees. They must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional
policy to provide full protection to labor is not meant to be an instrument to oppress the employers. The commitment of the Court to the cause of
labor should not embarrass us from sustaining the employers when they are right, as assistance to the undeserving and those who are unworthy
of the liberality of the law. (italics in the original, emphasis and underscoring supplied) ASTIED
Petitioner was, it bears reiteration, dismissed for wilfully disobeying the lawful order of her employer to transfer from Cebu to Pasig City. As
correctly noted by the appellate court, petitioner knew and accepted respondent company's policy on transfers when she was hired and was in
fact even transferred many times from one area of operations to another Bacolod City, Iloilo City and Cebu.
Clearly, petitioner's adamant refusal to transfer, coupled with her failure to heed the order for her return the company vehicle assigned to her
and, more importantly, allowing her counsel to write letters couched in harsh language to her superiors unquestionably show that she was guilty
of insubordination, hence, not entitled to the award of separation pay.
75. Barroga vs. Data Center College, G.R. No. 174158, June 27, 2011
Facts:
On November 11, 1991, petitioner was employed as an Instructor in Data Center College Laoag City branch in Ilocos Norte. In a Memorandum
dated June 6, 1992, respondents transferred him to University of Northern Philippines (UNP) in Vigan, Ilocos Sur where the school had a tie-up
program. Petitioner was informed through a letter dated June 6, 1992 that he would be receiving, in addition to his monthly salary, a P1,200.00
allowance for board and lodging during his stint as instructor in UNP-Vigan. In 1994, he was recalled to Laoag campus. On October 3, 2003,
petitioner received a Memorandum transferring him to Data Center College Bangued, Abra branch as Head for Education/Instructor due to an
urgent need for an experienced officer and computer instructor thereat.
However, petitioner declined to accept his transfer to Abra citing the deteriorating health condition of his father and the absence of additional
remuneration to defray expenses for board and lodging which constitutes implicit diminution of his salary.
On November 10, 2003, petitioner filed a Complaint for constructive dismissal against respondents. Petitioner alleged that his proposed transfer
to Abra constitutes a demotion in rank and diminution in pay and would cause personal inconvenience and hardship.
For their part, respondents claimed that they were merely exercising their management prerogative to transfer employees for the purpose of
advancing the schools interests. They argued that petitioners refusal to be transferred to Abra constitutes insubordination.
Ruling:
Page 190
LABOR RELATIONS
191

Petitioners transfer is not tantamount to constructive dismissal.
Petitioner was originally appointed as instructor in 1991 and was given additional administrative functions as Head for Education during his stint
in Laoag branch. He did not deny having been designated as Head for Education in a temporary capacity for which he cannot invoke any
tenurial security. Hence, being temporary in character, such designation is terminable at the pleasure of respondents who made such
appointment. Moreover, respondents right to transfer petitioner rests not only on contractual stipulation but also on jurisprudential authorities.
The Labor Arbiter and the NLRC both relied on the condition laid down in petitioners employment contract that respondents have the
prerogative to assign petitioner in any of its branches or tie-up schools as the necessity demands. In any event, it is management prerogative for
employers to transfer employees on just and valid grounds such as genuine business necessity. It is also important to stress at this point that
respondents have shown that it was experiencing some financial constraints. Because of this, respondents opted to temporarily suspend the
post-graduate studies of petitioner and some other employees who were given scholarship grants in order to prioritize more important
expenditures.
76. Lopez vs. Keppel Bank Phils., G.R. No. 176800, September 5, 2011
Facts:
Petitioner Elmer Lopez was the Branch Manager of the respondent Keppel Bank Philippines, Inc. (bank) in Iloilo City. Allegedly, through his
efforts, Hertz Exclusive Cars, Inc. (Hertz) became a client of the bank.
By a notice, the bank asked Lopez to explain in writing why he should not be disciplined for issuing, without authority, two purchase
orders (POs) for the Hertz account amounting to a total of P6,493,000.00, representing the purchase price of 13 Suzuki Bravo and two Nissan
Exalta vehicles. Lopez submitted his written explanation on the same day, but the bank refused to give it credit. Through respondents Manuel
Bosano III (Vice-President and Head of Retail Banking Division/Consumer Banking Division) and Stefan Tong Wai Mun (VicePresident/Comptroller), the bank terminated Lopezs employment effective immediately.
Lopez filed a complaint for illegal dismissal and money claims against the bank, Bosano and Tong. Lopez alleged before the labor arbiter that he
issued the POs as part of his strategy to enhance the bank's business, in line with his duty as branch manager to promote the growth of the
bank. For its part, the bank denied approving the first PO, arguing that Lopez did not have the authority to issue the POs for the Hertz account
as there was a standing advice that no Hertz loan application was to be approved. It stressed that Lopez committed a serious violation of
company rules when he issued the POs.
Issue:
Whether or not petitioner was illegally dismissed
Held:
The right of an employer to freely select or discharge his employee is a recognized prerogative of management; an employer cannot be
compelled to continue employing one who has been guilty of acts inimical to its interests. When this happens, the employer can dismiss the
employee for loss of confidence.
At the same time, loss of confidence as a just cause of dismissal was never intended to provide employers with a blank check for terminating
employment. Loss of confidence should ideally apply only (1) to cases involving employees occupying positions of trust and confidence, or (2) to
situations where the employee is routinely charged with the care and custody of the employer's money or property. To the first class belong
managerial employees, i.e., those vested with the powers and prerogatives to lay down management polices and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees, or effectively recommend such managerial actions. To the second class belong
cashiers, auditors, property custodians, or those who, in the normal and routine exercise of their functions, regularly handle significant amounts
of money or property.
As branch manager, Lopez clearly occupies a "position of trust." His hold on his position and his stay in the service depend on the employer's
trust and confidence in him and on his managerial services. According to the bank, Lopez betrayed this trust and confidence when he issued the
subject POs without authority and despite the express directive to put the client's application on hold. In response, Lopez insists that he had
sufficient authority to act as he did, as this authority is inherent in his position as bank manager. He points to his record in the past when he
issued POs which were honored and paid by the bank and which constituted the arbiter's "overwhelming evidence" in support of the finding that
"complainant's dismissal from work was without just cause, hence, illegal."
Page 191
LABOR RELATIONS
192

As a bank official, the petitioner must have been aware that it is basic in every sound management that people under one's supervision and
direction are bound to follow instructions or to inform their superior of what is going on in their respective areas of concern, especially regarding
matters of vital interest to the enterprise. Under these facts, we find it undisputed that Lopez disobeyed the bank's directive to put the Hertz loan
application on hold, and did not wait until its negative credit rating was cleared before proceeding to act. That he might have been proven right is
immaterial. Neither does the submission that the bank honored and paid the first PO and even realized a profit from the transaction, mitigate the
gravity of Lopez's defiance of the directive of higher authority on a business judgment. What appears clear is that the bank cannot in the future
trust the petitioner as a manager who would follow directives from higher authorities on business policy and directions. The bank can be placed
at risk if this kind of managerial attitude will be repeated, especially if it becomes an accepted rule among lower managers.
Under the circumstances of this case, we are convinced that the bank was justified in terminating Lopez's employment by reason of loss of trust
and confidence. He admitted issuing the two POs, claiming merely that he had the requisite authority. He could not present any proof in this
regard, however, except to say that it was part of his inherent duty as bank manager. He also claimed that the bank acquiesced to the issuance
of the POs as it paid the first PO and the POs he issued in the past. This submission flies in the face of the bank's directive for him not to
proceed unless matters are cleared with the bank's credit committee. The bank had a genuine concern over the issue as it found through its
credit committee that Hertz was a credit risk. Whether the credit committee was correct or not is immaterial as the bank's direct order left Lopez
without any authority to clear the loan application on his own. After this defiance, we cannot blame the bank for losing its confidence in Lopez
and in separating him from the service.
77. St. Paul College Quezon City vs. Ancheta II, G.R. No. 169905, September 7, 2011
Facts:
Respondent Remigio Michael Ancheta II and his wife, respondent Cynthia was hired by the same school as a part time teacher of the Mass
Communication Department. A letter was sent to petitioner Sr. Bernadette and signed by some of the teachers of SPCQC, including the
respondent spouses. The said letter contained the teachers' sentiments regarding two school policies, namely: first, the policy of penalizing the
delay in encoding final grades and, second, the policy of withholding salaries of the teachers. The letter enumerated the departmental and
instructional policies that respondent Remigio Michael failed to comply with, such as the late submission of final grades, failure to submit final
test questions to the Program Coordinator, the giving of tests in the essay form instead of the multiple choice format as mandated by the school
and the high number of students with failing grades in the classes that he handled.
Mr. Ancheta failed 27 in a class of 44 students, and had a total number of 56 failures in his sections of Philippine History. Mrs. Ancheta failed 11
students in a class of 37, and had a total number of 16 failures in her 2 classes of Communication Theories.
Subsequently, the respondent spouses received their respective letters of termination. Respondent spouses sent a letter for reconsideration to
petitioner Sr. Lilia, but was eventually denied. Thus, respondent spouses filed a complaint for illegal dismissal with the NLRC but the Labor
Arbiter dismissed the complaint.
Issue:
Whether or not the respondent spouses were validly dismissed
Held:
It is not disputed that respondent Remigio Michael was a full-time probationary employee and his wife, a part-time teacher of the petitioner
school. A reality we have to face in the consideration of employment on probationary status of teaching personnel is that they are not governed
purely by the Labor Code. The Labor Code is supplemented with respect to the period of probation by special rules found in the Manual of
Regulations for Private Schools. On the matter of probationary period, Section 92 of these regulations provides:
Section 92.Probationary Period. Subject in all instances to compliance with the Department and school requirements, the probationary period
A probationary employee or probationer is one who is on trial for an employer, during which the latter determines whether or not he is qualified
for permanent employment. The probationary employment is intended to afford the employer an opportunity to observe the fitness of a
probationary employee while at work, and to ascertain whether he will become an efficient and productive employee. While the employer
observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on
Page 192
LABOR RELATIONS
193

the other hand, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment.
Thus, the word probationary, as used to describe the period of employment, implies the
purpose of the term or period, not its length.
The common practice is for the employer and the teacher to enter into a contract, effective for one school year. At the end of the school year, the
employer has the option not to renew the contract, particularly considering the teacher's performance. If the contract is not renewed, the
school year would then be the last year since it would be the third school year of probationary employment. At the end of this third year,
the employer may now decide whether to extend a permanent appointment to the employee, primarily on the basis of the employee having met
the reasonable standards of competence and efficiency set by the employer. For the entire duration of this three-year period, the teacher
remains under probation. Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security
of tenure and compel the employer to renew his employment contract.
Petitioner school contends that it did not extend the contracts of respondent spouses. It claims that, although, it has sent letters to the spouses
informing them that the school is extending to them new contracts for the coming school year, the letters do not constitute as actual employment
contracts but merely offers to teach on the said school year.
Section 91 of the Manual of Regulations for Private Schools, states that:
Section 91.Employment Contract. Every contract of employment shall specify the designation, qualification, salary rate, the period and nature
of service and its date of effectivity, and such other terms and condition of employment as may be consistent with laws and rules, regulations
and standards of the school. A copy of the contract shall be furnished the personnel concerned.
It is important that the contract of probationary employment specify the period or term of its effectivity. The failure to stipulate its precise duration
could lead to the inference that the contract is binding for the full three-year probationary period. Therefore, the letters sent by petitioner Sr.
Racadio, which were void of any specifics cannot be considered as contracts. The closest they can resemble to are that of informal
correspondence among the said individuals. As such, petitioner school has the right not to renew the contracts of the respondents, the old ones
having been expired at the end of their terms.
Assuming, arguendo, that the employment contracts between the petitioner school and the respondent spouses were renewed, this Court finds
that there was a valid and just cause for their dismissal. The Labor Code commands that before an employer may legally dismiss an employee
from the service, the requirement of substantial and procedural due process must be complied with. Under the requirement of substantial due
process, the grounds for
termination of employment must be based on just or authorized causes.
The plain admissions of the charges against them were the considerations taken into account by the petitioner school in their decision not to
renew the respondent spouses' employment contracts. This is a right of the school that is mandated by law and jurisprudence. It is the
prerogative of the school to set high standards of efficiency for its teachers since quality education is a mandate of the Constitution. As long as
the standards fixed are reasonable and not arbitrary, courts are not at liberty to set them aside. Schools cannot be required to adopt standards
which barely satisfy criteria set for government recognition. The same academic freedom grants the school the autonomy to decide for itself the
terms and conditions for hiring its teacher, subject of course to the overarching limitations under the Labor Code. The authority to hire is
likewise covered and protected by its management prerogative the right of an employer to regulate all aspects of employment, such as hiring,
the freedom to prescribe work assignments, working methods, process to be followed, regulation regarding transfer of employees, supervision of
their work, lay-off and discipline, and dismissal and recall of workers.
78. Jumuad vs. Hi-Flyer Food, G.R. No. 187887, September 7, 2011
Facts:
Petitioner Pamela Florentina P. Jumuad began her employment with respondent Hi-Flyer Food, Inc. as management trainee. Based on her
performance through the years, Jumuad received several promotions until she became the area manager for the entire Visayas-Mindanao 1
region. Sometime on October 2004, Hi-Flyer conducted a food safety, service and sanitation audit and revealed several sanitation violations,
such as the presence of rodents and the use of a defective chiller for the storage of food. When asked to explain, Jumuad first pointed out that
she had already taken steps to prevent the further infestation of the branch. As to why the branch became infested with rodents, Jumuad faulted
management's decision to terminate the services of the branch's pest control program and to rely solely on the pest control program of the mall.
Page 193
LABOR RELATIONS
194

Hi-Flyer audited the account of one of its branches and found out irregularities of cash shortages. Another sanitation audit was made and signs
of rodent gnawing/infestation were found. This time, Jumuad explained to management that she had been busy conducting management team
meetings and that, at the date the audit was conducted, she had no scheduled visit. Hi-Flyer sent Jumuad an Irregularities Report and Notice of
Charges. Jumuad submitted her written explanation. Hi-Flyer held an administrative hearing where Jumuad appeared with counsel. Apparently
not satisfied with her explanations, Hi-Flyer served her a Notice of Dismissal. This prompted Jumuad to file a complaint against Hi-Flyer for
illegal dismissal.
Issue::
Whether Jumuad was illegally dismissed
HELD:
The Court is convinced that Jumuad cannot be dismissed on the ground of gross and habitual neglect of duty. The Court notes the apparent
neglect of Jumuad of her duty in ensuring that her subordinates were properly monitored and that she had dutifully done all that was expected of
her to ensure the safety of the consuming public. The nature of the anomalies uncovered were each of a different nature, the Court finds that her
acts or lack of action in the performance of her duties is not born of habit.
Despite saying this, it cannot be denied that Jumuad willfully breached her duties as to be unworthy of the trust and confidence of Hi-Flyer.
Based on established facts, the mere existence of the grounds for the loss of trust and confidence justifies petitioner's dismissal. In the present
case, the reports of Hi-Flyer show that there were anomalies committed in the branches managed by Jumuad. On the principle of respondeat
superior or command responsibility alone, Jumuad may be held liable for negligence in the performance of her managerial duties. She may not
have been directly involved in causing the cash shortages but her involvement in not performing her duty monitoring and supporting the day to
day operations of the branches and ensure that all the facilities and equipment at the restaurant were properly maintained and serviced, could
have truly prevented the whole debacle from ever occurring. Moreover, it is observed that rather than taking proactive steps to prevent the
anomalies at her branches, Jumuad merely effected remedial measures. In the restaurant business where the health and well-being of the
consuming public is at stake, this does not suffice. Thus, there is reasonable basis for Hi-Flyer to withdraw its trust in her and dismissing her
from its service.
79. Nissan Motor Phils. Angelo, G.R. No. 164181, September 14, 2011
Facts:
Respondent Victorino Angelo was employed by Nissan as one of its payroll staff. Respondent was not able to prepare the payroll for the said
period as he was on sick leave. On his approved vacation leave, he was not again able to prepare the payroll for that particular period.
Respondent received a Memorandum from the petitioner stating that the company is considering his dismissal from employment on the grounds
of serious misconduct, willful disobedience and gross neglect of duties. It was stated in the memorandum that the supposed cut-off date for
payroll purposes, the respondent went home early without finishing his work. The following day, he did not report for work, without any notice to
the company or to any of his immediate superior section head. As a result, the company was doing the payroll thru IT and that the amount
released to the employees were not accurate. Consequently, many employees got angry the deductions from salaries was not finished, the
salaries of contractuals, apprentices were also not finished. Since the bank only reads account numbers of employees, the company
experienced delay in the payroll processing. As a consequence of all these, the manufacturing employees, numbering about 350 people or
about 65% of [Nissan's total population], have started to decline rendering overtime work, saying after their 15 days of work they received only
less than P200 while some even received only P80. In sum, the company has suffered massive loss of opportunity to sell because of failure to
produce in the production area due to non-availability of workers rendering overtime, high absenteeism rate among plant direct workers primarily
due to the payroll problem. Finding that respondent's explanation was untrue and insufficient, petitioner issued a Notice of Termination.
Respondent filed a complaint for illegal dismissal.
Issue:
Whether respondent was illegally dismissed
Ruling:
Going through the records, this Court found evidence to support the allegation of serious misconduct or insubordination. The language used by
respondent in his Letter-Explanation is akin to a manifest refusal to cooperate with company officers, and resorted to conduct which smacks of
Page 194
LABOR RELATIONS
195

outright disrespect and willful defiance of authority or insubordination. Accusatory and inflammatory language used by an employee to the
employer or superior can be a ground for dismissal or termination. Another just cause cited by the petitioner is willful disobedience.
Disobedience, to be a just cause for termination, must be willful or intentional, willfulness being characterized by a wrongful and perverse mental
attitude rendering the employee's act inconsistent with proper subordination. This allegation of willful disobedience can still be adduced and
proven from the same Letter-Explanation. Petitioner also dismissed respondent because of gross or habitual negligence. Neglect of duty, to be a
ground for dismissal, must be both gross and habitual. In finding that petitioner was able to adduce evidence that would justify its dismissal of
respondent, the NLRC correctly ruled that the latter's failure to turn over his functions to someone capable of performing the vital tasks which he
could not effectively perform or undertake because of his heart ailment or condition constitutes gross neglect.
However, although the dismissal was legal, respondent is still entitled to a separation pay as a measure of financial assistance, considering his
length of service and his poor physical condition which was one of the reasons he filed a leave of absence. As a general rule, an employee who
has been dismissed for any of the just causes enumerated under Article 282 29 of the Labor Code is not entitled to separation pay. Although by
way of exception, the grant of separation pay or some other financial assistance may be allowed to an employee dismissed for just causes on
the basis of equity.
80. Phil. National Bank vs. Padao, G.R. No. 180849, November 16, 2011
Facts:
On August 21, 1981, Padao was hired by PNB as a clerk at its Dipolog City Branch. He was later designated as a credit investigator in an acting
capacity on November 9, 1993. On March 23, 1995, he was appointed regular Credit Investigator III, and was ultimately promoted to the position
of Loan and Credit Officer IV.
Sometime in 1994, PNB became embroiled in a scandal involving behest loans. A certain Sih Wat Kai complained to the Provincial Office of
the Commission on Audit (COA) of Zamboanga del Norte that anomalous loans were being granted by its officers: Assistant Vice President
(AVP) and Branch Manager Aurelio De Guzman (AVP de Guzman), Assistant Department Manager and Cashier Olson Sala (Sala), and Loans
and Senior Credit Investigator Primitivo Virtudazo (Virtudazo).
The questionable loans were reportedly being extended to select bank clients, among them Joseph Liong, Danilo Dangcalan, Jacinto Salac,
Catherine Opulentisima, and Virgie Pango. The expos triggered the conduct of separate investigations by the COA and PNBs Internal Audit
Department (IAD) from January to August 1995. Both investigations confirmed that the collateral provided in numerous loan accommodations
were grossly over-appraised. The credit standing of the loan applicants was also fabricated, allowing them to obtain larger loan portfolios from
PNB. These borrowers eventually defaulted on the payment of their loans, causing PNB to suffer millions in losses.
On June 14, 1996, Padao was administratively charged with Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct Prejudicial to the
Best Interest of the Service, and violation of R.A. No. 3019.
The case against Padao was grounded on his having allegedly presented a deceptively positive status of the business, credit standing/rating
and financial capability of loan applicants Reynaldo and Luzvilla Baluma and eleven (11) others. It was later found that either said borrowers
businesses were inadequate to meet their loan obligations, or that the projects they sought to be financed did not exist.
Padao was also accused of having over-appraised the collateral of the spouses Gardito and Alma Ajero, the spouses Ibaba, and Rolly Pango.
On January 10, 1997, after due investigation, PNB found Padao guilty of gross and habitual neglect of duty and ordered him dismissed from the
bank.
Issue:
Won the court of appeals erred in treating the act of falsifying the credit and appraisal reports and that of merely affixing ones signature in a
false report prepared by another as one and the same degree of misconduct which warrants legal dismissal.
Held:
In this case, Padao was dismissed by PNB for gross and habitual neglect of duties under Article 282 (b) of the Labor Code.
Page 195
LABOR RELATIONS
196

Thus, in cases of regular employment, the employer is prohibited from terminating the services of an employee except for a just or authorized
cause. Such just causes for which an employer may terminate an employee are enumerated in Article 282 of the Labor Code:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his
work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate family member of his family or his
duly authorized representative; and
(e) Other causes analogous to the foregoing.
In this case, Padao was dismissed by PNB for gross and habitual neglect of duties under Article 282 (b) of the Labor Code.
Gross negligence connotes want of care in the performance of ones duties, while habitual neglect implies repeated failure to perform ones
duties for a period of time, depending on the circumstances. 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.
Padaos repeated failure to discharge his duties as a credit investigator of the bank amounted to gross and habitual neglect of duties under
Article 282 (b) of the Labor Code. He not only failed to perform what he was employed to do, but also did so repetitively and habitually, causing
millions of pesos in damage to PNB. Thus, PNB acted within the bounds of the law by meting out the penalty of dismissal, which it deemed
appropriate given the circumstances.
However, Padao is not entitled to financial assistance. In Toyota Motor Phils. Corp. Workers Association v. NLRC, the Court reaffirmed the
general rule that separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed
for causes other than serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of
a crime against the employer or his family, or those reflecting on his moral character. These five grounds are just causes for dismissal as
provided in Article 282 of the Labor Code.
81. Tamsons Enterprises Inc. vs. CA, G.R. No. 192881, November 16, 2011
Facts:
This case stemmed from a complaint for illegal dismissal with money claims filed by respondent Rosemarie L. Sy (Sy) before the Arbitration
Branch, National Capital Region, NLRC, against petitioners Tamsons Enterprises, Inc. (Tamsons), Nelson Lee (Lee), the company President;
and Lilibeth Ong (Ong) and Johnson Ng (Ng), her co-employees.
On September 1, 2006, Sy was hired by Tamsons as Assistant to the President. Despite the title, she did not act as such because, per
instruction of Lee, she was directed to act as payroll officer, though she actually worked as a payroll clerk.
On February 24, 2007, four days before she completed her sixth month of working in Tamsons, Ng, the Sales Project Manager, called her to a
meeting with him and Lee. During the meeting, they informed Sy that her services would be terminated due to inefficiency. She was asked to
sign a letter of resignation and quitclaim. She was told not to report for work anymore because her services were no longer needed. On her last
day of work, Ong humiliated her in front of her officemates by shouting at her and preventing her from getting her personal things or any other
document from the office.
During her pre-employment interview, Lee had nice comments about her good work experience and educational background. She was assured
of a long-term employment with benefits. Throughout her employment, she earnestly performed her duties, had a perfect attendance record,
worked even during brownouts and typhoons, and would often work overtime just to finish her work.
Sy claimed that the remarks of her superiors about her alleged inefficiency were ill-motivated and made without any basis. She had been
rendering services for almost six (6) months before she was arbitrarily and summarily dismissed. Her dismissal was highly suspicious as it took
place barely four (4) days prior to the completion of her six-month probationary period. The petitioners did not show her any evaluation or
Page 196
LABOR RELATIONS
197

appraisal report regarding her alleged inefficient performance. As she was terminated without an evaluation on her performance, she was
deprived of the opportunity to be regularly part of the company and to be entitled to the benefits and privileges of a regular employee. Worse,
she was deprived of her only means of livelihood.
She further claimed was illegally terminated from service and insists that the petitioners cannot invoke her failure to qualify as she was not
informed of the standards or criteria which she should have met for regular employment. Moreover, no proof was shown as to her alleged poor
work performance. She was unceremoniously terminated to prevent her from becoming a regular employee and be entitled to the benefits as
such.
ISSUE:
WON the termination of Sy, a probationary employee, was valid or not.
HELD:
The Court finds the petition devoid of merit.
The pertinent law governing the present case is Article 281 of the Labor Code which provides as follows:
Art. 281. Probationary employment. Probationary employment shall not exceed six months from the date the employee started working,
unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged in a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee. (Underscoring supplied)
It is settled that even if probationary employees do not enjoy permanent status, they are accorded the constitutional protection of security of
tenure. This means they may only be terminated for a just cause or when they otherwise fail to qualify as regular employees in accordance with
reasonable standards made known to them by the employer at the time of their engagement.
Under the terms of the Labor Code, these standards should be made known to the [employees] on probationary status at the start of their
probationary period, or xxx during which the probationary standards are to be applied. Of critical importance in invoking a failure to meet the
probationary standards, is that the [employer] should show as a matter of due process how these standards have been applied.
For failure of the petitioners to support their claim of unsatisfactory performance by Sy, this Court shares the view of the CA that Sys
employment was unjustly terminated to prevent her from acquiring a regular status in circumvention of the law on security of tenure. As the
Court previously stated, this is a common and convenient practice of unscrupulous employers to circumvent the law on security of tenure.
Security of tenure, which is a right of paramount value guaranteed by the Constitution, should not be denied to the workers by such a stratagem.
The Court can not permit such a subterfuge, if it is to be true to the law and social justice.
The law is clear that in all cases of probationary employment, the employer shall make known to the employee the standards under which he will
qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be
deemed a regular employee. The standards under which she would qualify as a regular employee not having been communicated to her at the
start of her probationary period, Sy qualified as a regular employee. As held by this Court in the very recent case of Hacienda Primera
Development Corporation v. Villegas.
Being a regular employee whose termination was illegal, Sy is entitled to the twin relief of reinstatement and backwages granted by the Labor
Code. Article 279 provides that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges, to her full backwages, inclusive of allowances, and to her other benefits or their monetary equivalent computed from
the time her compensation was withheld from her up to the time of actual reinstatement. Likewise, having been compelled to come to court and
to incur expenses to protect her rights and interests, the award of attorneys fees is in order.
82. Concepcion vs. Minex Import Corp., G.R. No. 153569, January 24, 2012
Facts:
Page 197
LABOR RELATIONS
198

Respondent is engaged in the retail of semi-precious stones, selling them in kiosks or stalls installed in various shopping centers. It employed
the petitioner initially as a salesgirl then later on as supervisor. Working under her supervision were salesgirls Cristina Calung and Lida Baquilar.
One day the petitioner and her salesgirls had sales of crystal items totaling P39,194.50. At the close of business that day, they conducted a
cash-count of their sales proceeds, including those from the previous two days and determined their total for the three days to be P50,912.00.
The petitioner wrapped the amount in a plastic bag and deposited it in the drawer of the locked wooden cabinet of the kiosk.
The following day petitioner phoned respondent Vina Mariano to report that the P50,912.00 was missing, explaining how she and her salesgirls
had placed the wrapped amount at the bottom of the cabinet the night before, and how she had found upon reporting to work that morning that
the contents of the cabinet were in disarray and the money.
Later, while the petitioner was giving a detailed statement on the theft to the security investigator of Harrison Plaza, Vina and Sylvia Mariano, her
superiors, arrived with a policeman who immediately placed the petitioner under arrest and brought her to a police station where she was
investigated her and detained for a day.
Subsequently petitioner filed a case for illegal dismissal against respondent and two days later respondent filed a criminal case for qualified theft
against petitioner. The petitioner insisted on her innocence, reiterating that on the time the alleged crime took place she, together with her two
salesgirls, had first counted the cash before placing it in a plastic bag that she deposited inside the drawer of the cabinet with the knowledge of
the other salesgirls. One of the salesgirls however averred that she had left the petitioner alone because the latter had still to change her
clothes; and that that was the first time that the petitioner had ever asked to be left behind, for they had previously left the kiosk together.
Respondent Vina declared that the petitioner did not call the office of Minex for the pick-up of the P39,194.50 cash sales on that faithful day in
violation of the standard operating procedure (SOP) requiring cash proceeds exceeding P10,000.00 to be reported for pick-up if the amount
could not be deposited in the bank. After the preliminary investigation, the fiscal rendered a resolution finding probable cause for qualified theft
and recommending the filing of an information against the petitioner. Thus, she was charged with qualified theft before the Regional Trial Court.
The petitioner argued that there was no evidence at all upon which Minex could validly dismiss her considering that she had not yet been found
guilty beyond reasonable doubt of the crime of qualified theft.
Issues:
Whether or not there was valid ground to terminate the petitioner.
Ruling:
The petitioners argument is not novel. It has been raised and rejected many times before on the basis that neither conviction beyond
reasonable doubt for a crime against the employer nor acquittal after criminal prosecution was indispensable. Nor was a formal charge in court
for the acts prejudicial to the interest of the employer a pre-requisite for a valid dismissal. T he criminal charges initiated by the company against
private respondents and the finding after preliminary investigation of their prima facie guilt of the offense charged constitute substantial evidence
sufficient to warrant a finding by the Labor Tribunal of the existence of a just cause for their termination based on loss of trust and confidence .
The Labor Tribunal need not have gone further as to require private respondents conviction of the crime charged, or inferred innocence on their
part from their release from detention, which was mainly due to their posting of bail.
While there is a valid ground to terminate petitioner, respondent however failed to comply with the requirements of due process prior to the
termination under the implementing rules and regulations of the Labor Code.
In all cases of termination of employment, the following standards of due process shall be substantially observed.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to
respond to the charge, present his evidence, or rebut the evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination
In this case the respondents immediately had her arrested and investigated by the police authorities for qualified theft which constitutes a denial
of her right to due process of law, consisting in the opportunity to be heard and to defend herself. In fact, their decision to dismiss her was
already final even before the police authority commenced an investigation of the theft, the finality being confirmed by no less than Sylvia
Page 198
LABOR RELATIONS
199

Mariano herself telling the petitioner during their phone conversation following the latters release from police custody that she (Sylvia) no
longer wanted to see her.
The fact that the petitioner was the only person suspected of being responsible for the theft aggravated the denial of due process.
83. Morales vs. Harbour Centre Port Terminal Inc., G.R. No. 174208, January 25, 2012
Facts:
Petitioner was hired by respondent Harbour Centre Port Terminal, Inc. (HCPTI) as an Accountant and Acting Finance Officer, with a monthly
salary of P18,000. Morales was later on promoted to Division Manager of the Accounting Department, for which he was compensated a monthly
salary of P33,700.00, plus allowances . Subsequent to HCPTIs transfer to its new offices at Vitas, Tondo, Manila Morales received an interoffice memorandum reassigning him to Operations Cost Accounting, tasked with the duty of monitoring and evaluating all consumables
requests, gears and equipment related to the corporations operations and of interacting with its sub-contractor, Bulk Fleet Marine Corporation.
Morales wrote Singson, protesting that his reassignment was a clear demotion since the position to which he was transferred was not even
included in HCPTIs plantilla. In response to Morales grievance Singson issued an inter-office memorandum to the effect that transfer of
employees is a management prerogative and that HCPTI had the right and responsibility to find the perfect balance between the skills and
abilities of employees to the needs of the business. For the whole of the ensuing month Morales was absent from work and/or tardy. Singson
issued to Morales a memorandum denominated as a First Warning reminding Morales that, as an employee of HCPTI, he was subject to its
rules and regulations and could be disciplinarily dealt with pursuant to its Code of Conduct. In view of the absences Morales continued to incur,
HCPTI issued a Second Warning and a Notice to Report for Work and Final Warning. In the meantime, Morales filed a complaint against
HCPTI, Filart and Singson, for constructive dismissal. Respondent filed their position paper, arguing that Morales abandoned his employment
and was not constructively dismissed.
Issue:
WON petitioner was constructively dismissed.
Held:
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. In cases of a transfer of an employee, the rule is
settled that the employer is charged with the burden of proving that its conduct and action are for valid and legitimate grounds such as genuine
business necessity and that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome this
burden of proof, the employees transfer shall be tantamount to unlawful constructive dismissal.
Petitioner was constructively dismissed. He was already occupying the position of Division Manager at HCPTIs Accounting Department and as
a consequence of his promotion to said position. That the reassignment was a demotion is evident from Morales new duties which, far from
being managerial in nature, were very simply and vaguely described as inclusive of monitoring and evaluating all consumables requests, gears
and equipments related to [HCPTIs] operations as well as close interaction with its sub-contractor Bulk Fleet Marine Corporation . Morales
demotion is evident from the fact that his reassignment entailed a transfer from a managerial position to one which was not even included in the
corporations plantilla.
While ordinarily management prerogative is not interfered with, it is also not absolute and is subject to limitations imposed by law, collective
bargaining agreement, and general principles of fair play and justice. Thus, an employer may transfer or assign employees from one office or
area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. Respondent however
failed to justify the demotion of petitioner on the ground that it was reorganizing its business structure, this was evidenced by the fact that
Morales was able to prove that HCPTIs existing plantilla did not include an Operations Cost Accounting Department and/or an Operations Cost
Accountant. As the party belatedly seeking to justify the reassignment due to the supposed reorganization of its corporate structure, HCPTI, in
contrast, did not even bother to show that it had implemented a corporate reorganization and/or approved a new plantilla of positions which
included the one to which Morales was being transferred. On the allegation of abandonment on the part of petitioner As a just and
valid ground for dismissal, at any rate, abandonment requires the deliberate,
unjustified refusal of the employee to resume his employment, without any intention
of returning. Since an employee like Morales who takes steps to protest his dismissal
cannot logically be said to have abandoned his work, it is a settled doctrine that the
Page 199
LABOR RELATIONS
200
filing of a complaint for illegal dismissal is inconsistent with abandonment of

employment.
84. Mansion Printing Center vs. Bitara, G.R. No. 168120, January 25, 2012
Facts:
Petitioner Mansion Printing Center is a single proprietorship registered under the name of its president and co-petitioner Clement Cheng. It is
engaged in the printing of quality self-adhesive labels, brochures, posters, stickers, packaging and the like. Petitioners engaged the services of
respondent as a helper (kargador), who was later as the company's sole driver tasked to pick-up raw materials for the printing business, collect
account receivables and deliver the products to the clients within the delivery schedules.
Petitioners aver that the timely delivery of the products to the clients is one of the foremost considerations material to the operation of the
business. It being so, they closely monitored the attendance of respondent. They noted his habitual tardiness and absenteeism. Thus, as early
as 23 June 1999, petitioners issued a Memorandum requiring respondent to submit a written explanation why no administrative sanction should
be imposed on him for his habitual tardiness.
Despite having sent petitioners a letter stating his apologies and resolution to correct his tardiness and constant unauthorized absences,
respondent still did not do what he had committed to do. Because of this, Davis Cheng, General Manager of the company and son of petitioner
Cheng, issued another Memorandum (Notice to Explain) requiring respondent to explain why his services should not be terminated. He
personally handed the Notice to Explain to respondent but the latter, after reading the directive, refused to acknowledge receipt thereof. He did
not submit any explanation and, thereafter, never reported for work.
Due to the actions of respondent, petitioner was urged to serve upon him another Memorandum, this time a Notice of Termination upon
informing him that he was found grossly negligent of his duties. Respondent met with management, requesting that his termination from service
would be reconsidered. After hearing the respondent, management still decided to implement the Memorandum, but out of the generosity of the
management, respondent was offered financial assistance equivalent to P6,110.00 equivalent to his one month salary. Respondent demanded
that he be given the amount equivalent to two (2) months' salary but the management declined as it believed it would, in effect, reward
respondent for being negligent of his duties.
Respondent filed a complaint illegal dismissal against petitioners before the LA, praying for reinstatement and payment of full backwages, legal
holiday pay, SIL pay, damages and attorneys fees. LA dismissed the complaint for lack of merit. NLRC affirmed such decision and denied the
motion for reconsideration. After raising the issue that NLRC rendered its decision with grave abuse of discretion and/or without or in excess of
jurisdiction, the CA reversed the decision and found for the respondent. Hence, this petition.
Issue:
Whether or not respondents dismissal was illegal.
Ruling:
The Supreme Court rendered judgment for petitioners.
In order to validly dismiss an employee, the employer is required to observe both substantive and procedural aspects the termination of
employment must be based on a just or authorized cause of dismissal and the dismissal must be effected after due notice and hearing.
Petitioners complied with substantive due process considering that his termination was not only due to his recent absences but this was
because of his previous infractions capped by his recent unauthorized absences. Petitioners were even able to satisfactorily establish that
respondents absences were indeed unauthorized. And they were able to establish that respondent was gross negligent of his duties as he was
habitually tardy evidenced by his admission in his apology, and yet even after such apology, he continued to be tardy.
Clearly, petitioners also complied with procedural due process since they served him with notice, before having terminated him. We said that
procedural due process called for two requisites: (1) the employer must inform the employee of the specific acts or omissions for which his
dismissal is sought; and (2) after the employee has been given the opportunity to be heard, the employer must inform him of the decision to
terminate his employment Petitioners have repeatedly called the attention of respondent concerning his habitual tardiness, and the first
Page 200
LABOR RELATIONS
201

Memorandum given to him required him to explain his tardiness. Having received this Memorandum, he submitted a letter offering an apology
and undertook to henceforth report for duty on time, but afterward proved unavailing.
The Supreme Court cited a previous jurisprudence defining gross negligence as "want of care in the performance of one's duties" 50 and
habitual neglect as "repeated failure to perform one's duties for a period of time, depending upon the circumstances." 51 These are not overly
technical terms, which, in the first place, are expressly sanctioned by the Labor Code of the Philippines.
Bearing in mind that the tardiness and absences of respondent were not isolated incidents, but manifested a pattern of habituality, then
petitioners were correct with their remedy of terminating him after having properly served him with a Notice of Termination that he refused to
accept.
85. Manila Electric Co. vs. Beltran, G.R. No. 173774, January 30, 2012
Facts:
Beltran was employed by MERALCO and at the time material to this case, she was
holding the position of Senior Branch Clerk at MERALCOs Pasig branch. While
rendering overtime work on September 28, 1996, a Saturday, Beltran
accepted P15,164.48 from Collection Route Supervisor Berlin Marcos (Marcos), which
the latter received from customer Andy Chang (Chang). The cash payment was being
made in lieu of a returned check earlier issued as payment for Changs electric
bill.Beltran received the payment and issued Auxiliary Receipt No. 87964 which she
dated September 30, 1996, a Monday, instead of September 28, 1996. This was done
to show that it was an accommodation, an accepted practice in the office. She
thereafter placed the money and the original auxiliary receipt and other documents
pertinent to the returned check underneath her other files inside the drawer of her
table.
Beltran, however, was only able to remit Changs payment on January 13, 1997. Thus,
in a Memorandum dated January 16, 1997, she was placed under preventive
suspension effective January 20, 1997 pending completion of an investigation.
MERALCO considered as misappropriation or withholding of company funds her failure
to immediately remit said payment in violation of its Code on Employee Discipline.
Garcia, the Administrative Supervisor of MERALCOs Pasig branch, on the other hand,
testified that while doing an accounting of all outstanding returned checks sometime
in December 1996, she noticed that Changs returned check was missing. Upon
further inquiry, she discovered that Chang had already redeemed the returned check
after paying P15,164.48 to Beltran, who in turn issued an Auxiliary Receipt dated
September 30, 1996. It was also discovered that the payment has not yet been
remitted. This prompted her to inquire from Beltran on January 7, 1997 about the
supposed payment and immediately ordered the remittance of the same. Beltran,
however, failed to do so on that day and even on the next day when she reported for
work. Beltran subsequently went on leave of absence on January 9 and 10, 1997. It
was only on January 13, 1997 that the money with the pertinent documents was
handed over. In a memorandum dated February 25, 1997, the investigator found
Beltran guilty of misappropriating and withholding Changs payment of P15,164.48
and recommended her dismissal from service.
Page 201
LABOR RELATIONS
202
Beltran filed a complaint for illegal dismissal against MERALCO. She argued that she
had no intention to withhold company funds. Besides, it was not her customary duty
to collect and remit payments from customers. She claimed good faith, believing that
her acceptance of Changs payment is considered goodwill in favor of both MERALCO
and its customer. If at all, her only violation was a simple delay in remitting the
payment, which caused no considerable harm to the company.
In a Decision of the Labor Arbiter regarded the penalty of dismissal as not
commensurate to the degree of infraction committed as there was no adequate proof
of misappropriation on the part of Beltran. If there was delay in Beltrans remittance of
Changs payment, it was unintentional and same cannot serve as sufficient basis to
conclude that there was misappropriation of company funds. In fact, Beltran did not
even attempt to deny possession of, or refuse to hand in, the money. The Labor
Arbiter thus gave compassionate consideration for the neglect to remit the money
promptly, stating that it is excusable for Beltran to commit lapses in her work due to
serious family difficulties.
Upon appeal, the NLRC reversed the Labor Arbiters Decision and dismissed Beltrans
complaint against MERALCO in its Decision. It found that Beltran withheld company
funds by failing to remit it for almost four months. The NLRC thus ruled that MERALCO
validly dismissed Beltran from the service in the exercise of its inherent right to
discipline its employees.
When Beltran brought the case to the CA the NLRCs ruling was reversed. The CA
instead agreed with the findings of the Labor Arbiter that there were no serious
grounds to warrant Beltrans dismissal. The CA held that the penalty of dismissal is
harsh considering the infraction committed and Beltrans nine years of unblemished
service with MERALCO.
Issue:
Whether or not Beltran dismissal is valid finding that she is guilty of withholding company funds.
Ruling:
support the CAs finding that there are no sufficient grounds to warrant
Beltrans dismissal. For loss of trust and confidence to be a valid ground for dismissal,
it must be based on a willful breach of trust and founded on clearly established
facts. A breach is willful if it is done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently. In addition, loss of trust and confidence must rest on
substantial grounds and not on the employers arbitrariness, whims, caprices or
suspicion.
Supreme Court
In the case at bench, Beltran attributed her delay in turning over Changs payment to
her difficult family situation as she and her husband were having marital problems
and her child was suffering from an illness. Admittedly, she was reminded of Changs
payment by her supervisor on January 7, 1997 but denied having been ordered to
Page 202
LABOR RELATIONS
203
remit the money on that day. She then reasoned that her continued delay was caused
by an inevitable need to take a leave of absence for her to attend to the needs of her
child who was suffering from asthma.
MERALCO cannot claim or conclude that Beltran misappropriated the money based on
mere suspicion. And even if Beltran delayed handing over the funds to the company,
MERALCO still has the burden of proof to show clearly that such act of negligence is
sufficient to justify termination from employment. Beltran was remiss in her duties for
her failure to immediately turn over Changs payment to the company. Such
negligence, however, is not sufficient to warrant separation from employment. To
justify removal from service, the negligence should be gross and habitual. Gross
negligence x x x is the want of even slight care, acting or omitting to act in a situation
where there is duty to act, not inadvertently but willfully and intentionally, with a
conscious indifference to consequences insofar as other persons may be
affected. Habitual neglect, on the other hand, connotes repeated failure to perform
ones duties for a period of time, depending upon the circumstances. No concrete
evidence was presented by MERALCO to show that Beltrans delay in remitting the
funds was done intentionally. Neither was it shown that same is willful, unlawful and
felonious contrary to MERALCOs finging as stated in the letter of termination it sent to
Beltran. Surely, Beltrans single and isolated act of negligence cannot justify her
dismissal from service.
86. Bank of Lubao vs. Manabat, G.R. No. 188722, February 1, 2012
Facts:
Sometime in 2001, Rommel J. Manabat (respondent) was hired by petitioner Bank of Lubao, a rural bank, as a Market Collector. Subsequently,
the respondent was assigned as an encoder at the Bank of Lubaos Sta. Cruz Extension Office, which he manned together with two other
employees, teller Susan P. Lingad (Lingad) and May O. Manasan. As an encoder, the respondents primary duty is to encode the clients
deposits on the banks computer after the same are received by Lingad.
In November 2004, an initial audit on the Bank of Lubaos Sta. Cruz Extension Office conducted by the petitioner revealed that there was a
misappropriation of funds in the amount of P3,000,000.00, more or less. Apparently, there were transactions entered and posted in the
passbooks of the clients but were not entered in the banks book of accounts. Further audit showed that there were various deposits which were
entered in the banks computer but were subsequently reversed and marked as error in posting.
The respondent, through a memorandum sent by the petitioner, was asked to explain in writing the discrepancies that were discovered during
the audit. Respondent submitted to the petitioner his letter-explanation which, in essence, asserted that there were times when Lingad used the
banks computer while he was out on errands.
Administrative hearing was conducted by the banks investigating committee where the respondent was further made to explain his side.
Subsequently, the investigating committee concluded that the respondent conspired with Lingad in making fraudulent entries disguised as error
corrections in the banks computer.Thats why the petitioner filed several criminal complaints for qualified theft against Lingad and the
respondent with the Municipal Trial Court (MTC) of Lubao, Pampanga. Thereafter, citing serious misconduct tantamount to willful breach of trust
as ground, it terminated the respondents employment.
But respondent filed a Complaint for illegal dismissal with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC)
in San Fernando City, Pampanga. In the said complaint, the respondent, to bolster his claim that there was no valid ground for his dismissal,
averred that the charge against him for qualified theft was dismissed for lack of sufficient basis to conclude that he conspired with Lingad. The
respondent sought an award for separation pay, full backwages, 13 thmonth pay for 2004 and moral and exemplary damages.
Page 203
LABOR RELATIONS
204

The Labor Arbiter (LA) rendered a decision sustaining the respondents claim of illegal dismissal thus ordering the petitioner to reinstate the
respondent to his former position and awarding the latter backwages. The LA opined that the petitioner failed to adduce substantial evidence
that there was a valid ground for the respondents dismissal. The NLRC rendered a Decision affirming the Decision of the LA. The NLRC held
that it was sufficiently established that only Lingad was the one responsible for the said misappropriations
However, the CA held that the respondent is entitled to separation pay equivalent to one-month salary for every year of service in lieu of
reinstatement and backwages to be computed from the time of his illegal dismissal until the finality of the said decision. The CA agreed with the
LA and the NLRC that the petitioner failed to establish by substantial evidence that there was indeed a valid ground for the respondents
dismissal. Nevertheless, the CA held that the petitioner should pay the respondent separation pay since the latter did not pray for reinstatement
before the LA and that the same would be in the best interest of the parties considering the animosity and antagonism that exist between them.
Issues:
Whether or not Rommel J. Manabat was illegally dismissed and will be entitled to separation pay in lieu of reinstatement and payment of
backwages.
Ruling:
This Court notes that the LA, the NLRC and the CA unanimously ruled that the respondent was illegally dismissed. Factual findings of quasijudicial bodies like the NLRC, if supported by substantial evidence, are accorded respect and even finality by this Court, more so when they
coincide with those of the LA. Such factual findings are given more weight when the same are affirmed by the CA. We find no reason to depart
from the foregoing rule.
Here, Court agree with the CA that the relations between the parties had been already strained thereby justifying the grant of separation pay in
lieu of reinstatement in favor of the respondent. Undoubtedly, the petitioners filing of various criminal complaints against the respondent for
qualified theft and the subsequent filing by the latter of the complaint for illegal dismissal against the latter, taken together with the pendency of
the instant case for more than six years, had caused strained relations between the parties. considering that the respondents former position as
bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would not be equitable on the part of the petitioner to
be ordered to maintain the former in its employ since it may only inspire vindictiveness on the part of the respondent. Then the refusal of the
respondent to be re-admitted to work is in itself indicative of the existence of strained relations between him and the petitioner.
The backwages that should be awarded to the respondent should be modified. Employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was
withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed
from the time of their illegal termination up to the finality of the decision. Thus, it is but fair that the backwages that should be awarded to the
respondent be computed from the time that the respondent was illegally dismissed until the time when he was required to report for
work, i.e. from September 1, 2005 until May 4, 2007. It is only during the said period that the respondent is deemed to be entitled to the payment
of backwages.
87. Canadian Opportunities Unlimited vs. Dalangin, G.R. No. 172223, February 6, 2012
Facts:
Dalangin was hired by Canadian Opportunities Unlimited Inc. on October 2001 as Immigration and Legal Manager. He was placed on probation
for six months. His tasks involved principally the review of the clients' applications for immigration to Canada to ensure that they are in
accordance with Canadian and Philippine laws.
Barely a month later, on October 27, 2001, the company terminated Dalangin's employment, declaring him "unfit" and "unqualified" to continue
his work. They alleged that during his brief employment in the company, Dalangin showed lack of enthusiasm towards his work and was
indifferent towards his co-employees and the company clients. Dalangin refused to comply with the company's policies and procedures,
routinely taking long lunch breaks, exceeding the one hour allotted to employees, and leaving the company premises without informing his
immediate superior, only to call the office later and say that he would be unable to return because he had some personal matters to attend to.
He also showed lack of interpersonal skills and initiative. Dalangin's lack of interest in the company was further manifested when he refused to
attend company-sponsored seminars designed to acquaint or update the employees with the company's policies and objectives.
Page 204
LABOR RELATIONS
205

Dalangin alleged that the company required its employees to attend a "Values Formation Seminar" scheduled for October 27, 2001 (a Saturday)
at 2:00 p.m. onwards. He inquired from Abad, the Chief Operating Officer, about the subject and purpose of the seminar and when he learned
that it bore no relation to his duties, he told Abad that he would not attend the seminar as he would have to leave at 2:00 p.m. in order to be with
his family in the province. Dalangin claimed that Abad insisted that he attend the seminar. On October 26, 2001, Abad required him to explain
why he could not attend the seminar scheduled for October 27, 2001 and the other forthcoming seminars. The following day, October 27, 2001,
Abad informed him that Mr. Yadi N. Sichani, the company's Managing Director, wanted to meet with him regarding the matter. At that meeting,
Sichani told him that his services were being terminated because Sichani could not keep in his company "people who are hard-headed and who
refuse to follow orders from management."
The Labor Arbiter declared Dalangin's dismissal illegal. He found that the charges against Dalangin were not established by clear and
substantial proof. The NLRC reversed the labor arbiter's ruling. It found Dalangin's dismissal to be a valid exercise of the company's
management prerogative because Dalangin failed to meet the standards for regular employment. The CA held that the NLRC erred when it ruled
that Dalangin was not illegally dismissed. As the labor arbiter did, the CA found that the company failed to support, with substantial evidence, its
claim that Dalangin failed to meet the standards to qualify as a regular employee.
Issues:
Whether Dalangin was illegally dismissed.
Whether the requirements of notice and hearing in employee dismissals are applicable to Dalangin's case, being a probationary employee.
Held:
The SC disagreed with the CA. The company is not liable for illegal dismissal.
A probationary employee, as understood under Article 281 of the Labor Code, is one who is on trial by an employer, during which, the latter
determines whether or not he is qualified for permanent employment. A probationary appointment gives the employer an opportunity to observe
the fitness of a probationer while at work, and to ascertain whether he would be a proper and efficient employee. The essence of a probationary
period of employment fundamentally lies in the purpose or objective of both the employer and the employee during the period. While the
employer 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 word 'probationary,' as used to describe the period of employment, implies the purpose of the term or period, but not its length." Thus, the
fact that Dalangin was separated from the service after only about four weeks does not necessarily mean that his separation from the service is
without basis.
Dalangins refusal to attend the seminar brings into focus and validates what was wrong with him, as Abad narrated in her affidavit and as
reflected in the termination of employment memorandum. It highlights his lack of interest in familiarizing himself with the company's objectives
and policies. In the face of Abad's direct statements, as well as those of his co-employees, it is puzzling that Dalangin chose to be silent about
the charges, other than saying that the company could not cite any policy he violated. All along, he had been complaining that he was not able to
explain his side, yet from the labor arbiter's level, all the way to this Court, he offered no satisfactory explanation of the charges. In this light,
coupled with Dalangin's adamant refusal to attend the company's "Values Formation Seminar" and a similar program scheduled earlier, we find
credence in the company's submission that Dalangin was unfit to continue as its Immigration and Legal Manager. As we stressed earlier, we are
convinced that the company had seen enough from Dalangin's actuations, behavior and deportment during a four-week period to realize that
Dalangin would be a liability rather than an asset to its operations. To our mind, four weeks was enough for the company to assess Dalangin's
fitness for the job and he was found wanting. In separating Dalangin from the service before the situation got worse, we find the company not
liable for illegal dismissal.
As for the second issue, there is no need for a hearing. Section 2, Rule I, Book VI of the Labor Code's Implementing Rules and Regulations
provides:
If the termination is brought about by the completion of a contract or phase thereof, or by failure of an employee to meet the standards of the
employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from
the effective date of termination.
However, the notice served on Dalangin did not give him a reasonable time, from the effective date of his separation, as required by the rules.
He was dismissed on the very day the notice was given to him, or on October 27, 2001. Although we cannot invalidate his dismissal in light of
the valid cause for his separation, the company's non-compliance with the notice requirement entitles Dalangin to indemnity, in the form of
nominal damages of P10,000.00.
Page 205
LABOR RELATIONS
206

88. Manila Electric Co. vs. Gala, G.R. No. 191288 & 191304, March 7, 2012
Facts:
Respondent Jan Carlo Gala was hired by petitioner Meralco as a probationary lineman on March 2, 2006. On July 27, 2006, barely four months
on the job, Gala was dismissed for alleged complicity in pilferages of Meralcos electrical supplies, particularly, for the incident which took place
on May 25, 2006. On that day, Gala and other Meralco workers were instructed to replace a worn-out electrical pole at the Pacheco Subdivision
in Valenzuela City.
While the Meralco crew was at work, one Noberto Llanes, a non-Meralco employee, arrived. He appeared to be known to the Meralco foremen
as they were seen conversing with him. Llanes boarded the trucks, without being stopped, and took out what were later found as electrical
supplies. Aside from Gala, the foremen and the other linemen who were at the worksite when the pilferage happened were later charged with
misconduct and dishonesty for their involvement in the incident. Unknown to them, a Meralco surveillance task force was monitoring their
activities and recording everything with a video camera.
Gala denied involvement in the pilferage, contending that even if his superiors might have committed a wrongdoing, he had no participation in
what they did. He claimed that: (1) he was at some distance away from the trucks when the pilferage happened; (2) he did not have an inkling
that an illegal activity was taking place since his supervisors were conversing with Llanes, giving him the impression that they knew him; (3) he
did not call the attention of his superiors because he was not in a position to do so as he was a mere lineman; and (4) he was just following
instructions in connection with his work and had no control in the disposition of company supplies and materials. He maintained that his mere
presence at the scene of the incident was not sufficient to hold him liable as a conspirator.
Despite Galas explanation, Meralco terminated his employment. Gala responded by filing an illegal dismissal complaint against Meralco. The
Labor Arbiter dismissed the complaint for lack of merit. She held that Galas participation in the pilferage of Meralcos property rendered him
unqualified to become a regular employee. On appeal, the NLRC reversed the labor arbiters ruling. It found that
Gala had been illegally dismissed, since there was no concrete showing of complicity with the alleged misconduct/dishonesty. The CA denied
Meralcos petition for lack of merit and partially granted Galas petition. It concurred with the NLRC that Gala had been illegally dismissed. It
opined that nothing in the records show Galas knowledge of or complicity in the pilferage.
Issue: Whether or not Gala was illegally dismissed.
Held:
We find merit in the petition. Contrary to the conclusions of the CA and the NLRC, there is substantial evidence supporting Meralcos position
that Gala had become unfit to continue his employment with the company. Gala was found, after an administrative investigation, to have failed to
meet the standards expected of him to become a regular employee and this failure was mainly due to his undeniable knowledge, if not
participation, in the pilferage activities done by their group, all to the prejudice of the Companys interests.
As probationary employee, his overall job performance and his behavior were being monitored and measured in accordance with the standards
(i.e., the terms and conditions) laid down in his probationary employment agreement. Under paragraph 8 of the agreement, he was subject to
strict compliance with, and non-violation of the Company Code on Employee Discipline, Safety Code, rules and regulations and existing
policies. Paragraph 10 required him to observe at all times the highest degree of transparency, selflessness and integrity in the performance of
his duties and responsibilities, free from any form of conflict or contradicting with his own personal interest.
On the whole, the totality of the circumstances obtaining in the case convinces us that Gala could not but have knowledge of the pilferage of
company electrical supplies on May 25, 2006; he was complicit in its commission, if not by direct participation, certainly, by his inaction while it
was being perpetrated and by not reporting the incident to company authorities. Thus, we find substantial evidence to support the conclusion
that Gala does not deserve to remain in Meralcos employ as a regular employee. He violated his probationary employment agreement,
especially the requirement for him to observe at all times the highest degree of transparency, selflessness and integrity in the performance of
their duties and responsibilities. He failed to qualify as a regular employee.
89. Aro vs. NLRC, G.R. No. 174792, March 7, 2012

Facts:
Several employees of private respondent Benthel Development Corporation, including the petitioners, filed a Complaint for illegal dismissal with
various money claims and prayer for damages against the latter, in the NLRC Arbitration Branch No. VII in Cebu City and docketed as RAB
Case No. 07-09-1222-97/12-1609-97. Thereafter, Labor Arbiter Ernesto F. Carreon rendered a decision finding private respondent guilty of
illegal dismissal and ordering it to pay its thirty-six (36) employees P446,940.00 as separation pay.
Page 206
LABOR RELATIONS
207

The employees, including the petitioners herein, appealed from the said decision. The NLRC, in NLRC Case No. V-000399-98, affirmed the
decision of Labor Arbiter Carreon in its Decision dated January 12, 1999, with the modification that private respondent pay backwages
computed from the respective dates of dismissal until finality of the decision.
Private respondent, unsatisfied with the modification made by the NLRC, filed a motion for reconsideration with the contention that, since it has
been found by the Labor Arbiter and affirmed in the assailed decision that the employees were project employees, the computation of
backwages should be limited to the date of the completion of the project and not to the finality of the decision. The NLRC, however, denied the
motion ruling that private respondent failed to establish the date of the completion of the project.
As a recourse, private respondent filed a petition for certiorari with the CA, alleging that public respondent committed grave abuse of discretion
in promulgating its assailed decision and denying its motion for reconsideration. The CA granted the petition, therefore, annulling and setting
aside the decision and resolution of the NLRC as to the award for backwages and remanded the case to the same public respondent for the
proper computation of the backwages due to each of the petitioners herein.
Issue:
Whether or not the CA gravely abused its discretion in declaring petitioners as project employees, such that the petitioners-employees are
entitled to payment of backwages until the date of the completion of the project.
Rulings:
It is not disputed that petitioners were hired for the construction of the Cordova Reef Village Resort in Cordova, Cebu. By the nature of the
contract alone, it is clear that petitioners' employment was to carry out a specific project. Hence, the CA did not commit grave abuse of
discretion when it affirmed the findings of the Labor Arbiter
It is settled that, without a valid cause, the employment of project employees cannot be terminated prior to expiration. Otherwise, they shall be
entitled to reinstatement with full backwages. However, if the project or work is completed during the pendency of the ensuing suit for illegal
dismissal, the employees shall be entitled only to full backwages from the date of the termination of their employment until the actual completion
of the work.
While it may be true that in the proceedings below the date of completion of the project for which the private respondents were hired had not
been clearly established, it constitutes grave abuse of discretion on the part of the public respondent for not determining for itself the date of said
completion instead of merely ordering payment of backwages until finality of its decision.
Therefore, being project employees, petitioners are only entitled to full backwages, computed from the date of the termination of their
employment until the actual completion of the work. Illegally dismissed workers are entitled to the payment of their salaries corresponding to the
unexpired portion of their employment where the employment is for a definite period. In this case, as found by the CA, the Cordova Reef Village
Resort project had been completed in October 1996 and private respondent herein had signified its willingness, by way of concession to
petitioners, to set the date of completion of the project as March 18, 1997; hence, the latter date should be considered as the date of completion
of the project for purposes of computing the full backwages of petitioners.
90. Ymbong vs. ABS-CBN Broadcasting Corp., G.R. No. 184885, March 7, 2012
Facts:
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation (ABS-CBN) in 1993 at its regional station in Cebu as a
television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later extended to radio when ABS-CBN Cebu launched its
AM station DYAB in 1995 where he worked as drama and voice talent, spinner, scriptwriter and public affairs program anchor.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as talent, director and scriptwriter for various
radio programs aired over DYAB.
On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the "Policy on Employees Seeking Public Office." The
pertinent portions read:
Page 207
LABOR RELATIONS
208

1.Any employee who intends to run for any public office position, must file his/her letter of resignation , at least thirty (30) days prior to the official
filing of the certificate of candidacy either for national or local election.
xxx xxx xxx
3.Further, any employee who intends to join a political group/party or even with no political affiliation but who intends to openly and aggressively
campaign for a candidate or group of candidates (e.g., publicly speaking/endorsing candidate, recruiting campaign workers, etc.) must file a
request for leave of absence subject to management's approval. For this particular reason, the employee should file the leave request at least
thirty (30) days prior to the start of the planned leave period.
Because of the impending May 1998 elections and based on his immediate recollection of the policy at that time, Dante Luzon, Assistant Station
Manager of DYAB issued the following memorandum:
TO:ALL CONCERNED
FROM:DANTE LUZON
DATE:MARCH 25, 1998
SUBJECT:AS STATED
Please be informed that per company policy, any employee/talent who wants to run for any position in the coming election will have to file a
leave of absence the moment he/she files his/her certificate of candidacy.
The services rendered by the concerned employee/talent to this company will then be temporarily suspended for the entire campaign/election
period.
After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon. Luzon claims that Ymbong approached him and told
him that he would leave radio for a couple of months because he will campaign for the administration ticket. It was only after the elections that
they found out that Ymbong actually ran for public office himself at the eleventh hour. Ymbong, on the other hand, claims that in accordance with
the March 25, 1998 Memorandum, he informed Luzon through a letter that he would take a few months leave of absence from March 8, 1998 to
May 18, 1998 since he was running for councilor of Lapu-Lapu City.
As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor for Naga, Cebu. According to Luzon, he
clarified to Patalinghug that he will be considered resigned and not just on leave once he files a certificate of candidacy
Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he informed them that they cannot work there
anymore because of company policy. As a result, they filed as illegal dismissal suit against ABS-CBN.
Issues:
(1) Whether Policy No. HR-ER-016 is valid;
(2) Whether the March 25, 1998 Memorandum issued by Luzon superseded Policy No. HR-ER-016; and
(3) Whether Ymbong, by seeking an elective post, is deemed to have resigned and not dismissed by ABS-CBN.
Rulings:
Policy No. HR-ER-016 is valid.
We have consistently held that so long as a company's management prerogatives are exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold them. In the instant case, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It is well
within its rights to ensure that it maintains its objectivity and credibility and freeing itself from any appearance of impartiality so that the
confidence of the viewing and listening public in it will not be in any way eroded. Even as the law is solicitous of the welfare of the employees, it
must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied.
Policy No. HR-ER-016 was not superseded by the March 25, 1998 Memorandum
The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of ABS-CBN, has policy-making powers in relation to his
principal task of administering the network's radio station in the Cebu region, the exercise of such power should be in accord with the general
rules and regulations imposed by the ABS-CBN Head Office to its employees. Clearly, the March 25, 1998 Memorandum issued by Luzon which
only requires employees to go on leave if they intend to run for any elective position is in absolute contradiction with Policy No. HR-ER-016
issued by the ABS-CBN Head Office in Manila which requires the resignation, not only the filing of a leave of absence, of any employee who
Page 208
LABOR RELATIONS
209

intends to run for public office. Having been issued beyond the scope of his authority, the March 25, 1998 Memorandum is therefore void and did
not supersede Policy No. HR-ER-016.
Ymbong is deemed resigned when he ran for councilor.
As Policy No. HR-ER-016 is the subsisting company policy and not Luzon's March 25, 1998 Memorandum, Ymbong is deemed resigned when
he ran for councilor.
Ymbong's overt act of running for councilor of Lapu-Lapu City is tantamount to resignation on his part. He was separated from ABS-CBN not
because he was dismissed but because he resigned. Since there was no termination to speak of, the requirement of due process in dismissal
cases cannot be applied to Ymbong. Thus, ABS-CBN is not duty-bound to ask him to explain why he did not tender his resignation before he ran
for public office as mandated by the subject company policy.
In addition, we do not subscribe to Ymbong's claim that he was not in a position to know which of the two issuances was correct. Ymbong most
likely than not, is fully aware that the subsisting policy is Policy No. HR-ER-016 and not the March 25, 1998 Memorandum and it was for this
reason that, as stated by Luzon in his Sworn Statement, he only told the latter that he will only campaign for the administration ticket and not
actually run for an elective post.
91. Blue Sky Trading Co. vs. Blas, G.R. No. 190559, March 7, 2012
Facts:
Petitioner Blue Sky Trading Company, Inc. (Blue Sky) is a duly registered domestic corporation engaged in the importation and sale of medical
supplies and equipment. The respondents Arlene P. Blas (Arlene) and Joseph D. Silvano (Joseph) were regular employees of Blue Sky and they
respectively held the positions of stock clerk and warehouse helper before they were dismissed from service on February 5, 2005.
An incident occurred where six pairs of intensifying screens were missing. On February 3, 2005, Jean B. De La Paz (Jean), Human Resource
Department Head issued notices to explain/preventive suspension to Arlene, Joseph, delivery personnel Jayde Tano-an (Jayde) and
maintenance personnel/driver Wilfredo Fasonilao (Wilfredo). The notices informed them that they were being accused of gross dishonesty in
connection with their alleged participation in and conspiracy with other employees in committing theft against company property, specifically
relative to the loss of the six intensifying screens.
On February 5, 2005, Jean issued to Arlene, Joseph, Jayde and Wilfredo notices of dismissal for cause stating therein that evidence that they
had conspired with each other to commit theft against company property was too glaring to ignore. Blue Sky had lost its trust and confidence on
them and as an act of self-preservation, their termination from service was in order.
On February 8, 2005, Arlene, Joseph, Helario, Jayde and Wilfredo filed with the National Labor Relations Commission (NLRC) a complaint for
illegal dismissal and suspension, underpayment of overtime pay, and non-payment of emergency cost of living allowance (ECOLA), with prayers
for reinstatement and payment of full backwages.
Meanwhile, an entrapment operation was conducted by the police during which Jayde and Helario were caught allegedly attempting to sell to an
operative an ultrasound probe worth around P400,000.00 belonging to Blue Sky. Though eventually, Jayde and Helario executed affidavits of
desistance stating that their dismissal was for cause.
The Labor Arbiter denied the claims of the respondents of illegal suspension and dismissal since they failed in their duties to exercise utmost
protection, care, or custody of respondent's property. Hence, their dismissal from the service is warranted.
The first decision of the NLRC ruled that respondents were not holding positions of trust and must therefore be reinstated and be paid their
backwages. Their second decision on the other hand reversed the previous one which in turn reinstated the Labor Arbiters dismissal of the
complaint saying that respondents were holding positions of trust and that the loss of the companys property are substantially proven. The CA
on the other hand found merit on their claims, though found respondents to have positions of trust and confidence, petitioner in this case failed
to sufficiently establish the charge against respondents which was the basis for its loss of trust and confidence that warranted their dismissal.
Issue:
Whether or not respondents Blas and Silvano committed a breach of trust
Ruling:
The rule is long and well settled that, in illegal dismissal cases like the one at bench, the burden of proof is upon the employer to show that the
employee's termination from service is for a just and valid cause. The employer's case succeeds or fails on the strength of its evidence and not
Page 209
LABOR RELATIONS
210

on the weakness of that adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in
case of doubt in the evidence presented by them. Often described as more than a mere scintilla, the quantum of proof is substantial evidence
which is understood as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other equally
reasonable minds might conceivably opine otherwise. Failure of the employer to discharge the foregoing onus would mean that the dismissal is
not justified and therefore illegal.
We find no error in the CA's findings that the petitioners had not adequately proven by substantial evidence that Arlene and Joseph indeed
participated or cooperated in the commission of theft relative to the six missing intensifying screens so as to justify the latter's termination from
employment on the ground of loss of trust and confidence.
We note that the parties disagree as to what tasks were actually and regularly performed by Arlene and Joseph. They are at odds as to the issue
of whether or not Arlene and Joseph had custody of the missing screens. We observe though that neither of the parties presented any
documentary evidence, such as employment contracts, to establish their claims relative to the actual nature of Arlene and Joseph's daily tasks.
The petitioners also argue that if Arlene and Joseph had not been grossly negligent in the performance of their duties, Blue Sky would not have
incurred the loss. We observe though that in the notices sent to Arlene and Joseph, first charging them with theft, and later, informing them of
their dismissal from service, gross negligence was not stated therein as a ground. Hence, Arlene and Joseph could not have defended
themselves against the charge of gross negligence. They cannot be dismissed on that ground lest due process be violated.
Other Matters: (For Discussion Purposes)
Impropriety of the Preventive Suspension
The purpose of the suspension is to prevent an employee from causing harm or injury to his colleagues and to the employer. The maximum
period of suspension is 30 days, beyond which the employee should either be reinstated or be paid wages and benefits due to him.
While we do not agree with Blue Sky's subsequent decision to terminate them from service, we find no impropriety in its act of imposing
preventive suspension upon the respondents since the period did not exceed the maximum imposed by law and there was a valid purpose for
the same.
In lieu of reinstatement, separation pay
If reinstatement proves impracticable, and hardly in the best interest of the parties, perhaps due to the lapse of time since the employee's
dismissal, or if the employee decides not to be reinstated, the latter should be awarded separation pay in lieu of reinstatement.
In the case at bar, Arlene and Joseph were dismissed from service on February 5, 2005. We find that the lapse of more than seven years
already renders their reinstatement impracticable. Further, from the stubborn stances of the parties, to wit, the petitioners' insistence that
dismissal was valid on one hand, and the respondents' express prayer for the payment of separation pay on the other, we find that
reinstatement would no longer be in the best interest of the contending parties.
Liability of Corporate Officers
As a general rule, a corporate officer cannot be held liable for acts done in his official capacity because a corporation, by legal fiction, has a
personality separate and distinct from its officers, stockholders, and members. In illegal dismissal cases, corporate officers may only be held
solidarily liable with the corporation if the termination was done with malice or bad faith. We find that the aforementioned circumstance did not
obtain in the case of Jose (vice-president) and Linda (secretary) relative to Arlene and Joseph's dismissal from service.
92. Internation management Services vs. Logarta, G.R. No. 163657, April 18, 2012
Facts:
Recruitment agency, International Management Services (IMS), owned and operated by Marilyn C. Pascual, deployed respondent Roel P.
Logarta to work for Petrocon Arabia Limited (Petrocon) in Alkhobar, Kingdom of Saudi Arabia, in connection with general engineering services of
Petrocon for the Saudi Arabian Oil Company (Saudi Aramco). Respondent was employed for a period of two (2) years, commencing on October
2, 1997, with a monthly salary of eight hundred US Dollars (US$800.00).
On April 29, 1998, Saudi Aramco notified Petrocon that due to changes in the general engineering services work forecast for 1998, the manhours that were formerly allotted to Petrocon is going to be reduced by 40% which constrained Petrocon to reduce its personnel.
Thus, on June 1, 1998, Petrocon gave respondent a written notice informing the latter that due to the lack of project works related to his
expertise, he is given a 30-day notice of termination, and that his last day of work with Petrocon will be on July 1, 1998. Petrocon also informed
respondent that all due benefits in accordance with the terms and conditions of his employment contract will be paid to respondent, including his
ticket back to the Philippines.
Before his departure from Saudi Arabia, respondent received his final paycheck from Petrocon amounting SR7,488.57.
Page 210
LABOR RELATIONS
211

Upon his return, respondent filed a complaint with the Regional Arbitration Branch VII, National Labor Relations Commission (NLRC), Cebu City,
against petitioner as the recruitment agency which employed him for employment abroad. In filing the complaint, respondent sought to recover
his unearned salaries covering the unexpired portion of his employment contract with Petrocon on the ground that he was illegally dismissed.
The Labor Arbiter rendered judgment in favor of the respondent and ordered petitioner to pay the peso equivalent of US$5,600.00 based on the
rate at the time of actual payment, as payment of his wages for the unexpired portion of his contract of employment. The NLRC on appeal
affirmed the Labor Arbiters decision but reduced the award to only US$4,800.00 or its peso equivalent at the time of payment. The CA likewise
dismissed the petition and affirmed the NLRC decision.
Issue:
Whether or not respondents dismissal through retrenchment illegal.
Ruling:
No. Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on
salaries and wages. It is one of the economic grounds to dismiss employees and is resorted by an employer primarily to avoid or minimize
business losses.
Retrenchment programs are purely business decisions within the purview of a valid and reasonable exercise of management prerogative. It is
one way of downsizing an employer's workforce and is often resorted to by the employer during periods of business recession, industrial
depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders, shortage of materials, conversion of the plant
for a new production program, or introduction of new methods or more efficient machinery or automation. It is a valid management prerogative,
provided it is done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and
jurisprudence.
Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or overseas Filipino worker under Article 283 of the
Labor Code.
Thus, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence, to wit:
(1)That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis,
(2)That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to
(3)That the employer pays the retrenched employees separation pay equivalent to one month pay or at least 1/2 month pay for every year of
(4)That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or
circumvent the employees' right to security of tenure; and
(5)That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the
employees, such as status,efficiency, seniority, physical fitness, age, and financial hardship for certain workers. 28
Applying the above-stated requisites for a valid retrenchment in the case at bar, it is apparent that the first, fourth and fifth requirements were
complied with by respondent's employer. However, the second and third requisites were absent when Petrocon terminated the services of
respondent.
As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to retrench its employees in good faith and the
considerable reduction of work allotments of Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the number of its personnel.
As for the notice requirement, however, contrary to petitioner's contention, proper notice to the DOLE within 30 days prior to the intended date of
retrenchment is necessary and must be complied with despite the fact that respondent is an overseas Filipino worker. In the present case,
although respondent was duly notified of his termination by Petrocon 30 days before its effectivity, no allegation or proof was advanced by
petitioner to establish that Petrocon ever sent a notice to the DOLE 30 days before the respondent was terminated. Thus, this requirement of the
law was not complied with.
In the case at bar, despite the fact that respondent was employed by Petrocon as an OFW in Saudi Arabia, still both he and his employer are
subject to the provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino workers, whether employed
locally or overseas, enjoy the protective mantle of Philippine labor and social legislations.
Page 211
LABOR RELATIONS
212

Also, respondent is entitled to the payment of his separation pay. However, this Court disagrees with the conclusion of the Labor Arbiter, the
NLRC and the CA, that respondent should be paid his separation pay in accordance with the provision of Section 10 of R.A. No. 8042. A plain
reading of the said provision clearly reveals that it applies only to an illegally dismissed overseas contract worker or a worker dismissed from
overseas employment without just, valid or authorized cause.
In the case at bar, notwithstanding the fact that respondent's termination from his employment was procedurally infirm, having not complied with
the notice requirement, nevertheless the same remains to be for a just, valid and authorized cause, i.e., retrenchment as a valid exercise of
management prerogative. To stress, despite the employer's failure to comply with the one-month notice to the DOLE prior to respondent's
termination, it is only a procedural infirmity which does not render the retrenchment illegal. In Agabon v. NLRC, this Court ruled that when the
dismissal is for a just cause, the absence of proper notice should not nullify the dismissal or render it illegal or ineffectual. Instead, the employer
should indemnify the employee for violation of his statutory rights.
Consequently, it is Article 283 of the Labor Code and not Section 10 of R.A. No. 8042 that is controlling. Thus, respondent is entitled to payment
of separation pay equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher.
Considering that respondent was employed by Petrocon for a period of eight (8) months, he is entitled to receive one (1) month pay as
separation pay. In addition, pursuant to current jurisprudence, for failure to fully comply with the statutory due process of sufficient notice,
respondent is entitled to nominal damages in the amount P50,000.00.
93. Jiao vs. NLRC, G.R. No. 182331, April 18, 2012
Facts:
The petitioners were regular employees of the Philippine Banking Corporation (Philbank), each with at least ten years of service in the company.
Pursuant to its Memorandum dated August 28, 1970, Philbank established a Gratuity Pay Plan (Old Plan) for its employees. The Old Plan
provided:
1. Any employee who has reached the compulsory retirement age of 60 years, or who wishes to retire or resign prior to the attainment of such
age or who is separated from service by reason of death, sickness or other causes beyond his/her control shall for himself or thru his/her heirs
file with the personnel office an application for the payment of benefits under the plan
On March 8, 1991, Philbank implemented a new Gratuity Pay Plan (New Gratuity Plan). In particular, the New Gratuity Plan stated thus:
x x x An Employee who is involuntarily separated from the service by reason of death, sickness or physical disability, or for any authorized cause
under the law such as redundancy, or other causes not due to his own fault, misconduct or voluntary resignation, shall be entitled to either one
hundred percent (100%) of his accrued gratuity benefit or the actual benefit due him under the Plan, whichever is greater. 3[7]
In February 2000, Philbank merged with Global Business Bank, Inc. (Globalbank), with the former as the surviving corporation and the latter as
the absorbed corporation, but the bank operated under the name Global Business Bank, Inc. As a result of the merger, complainants respective
positions became redundant. A Special Separation Program (SSP) was implemented and the petitioners were granted a separation package
equivalent to one and a half months pay (or 150% of one months salary) for every year of service based on their current salary. Before the
petitioners could avail of this program, they were required to sign two documents, namely, an Acceptance Letter and a Release, Waiver,
Quitclaim (quitclaim).
As their positions were included in the redundancy declaration, the petitioners availed of the SSP, signed acceptance letters and executed
quitclaims in Globalbanks favor in consideration of their receipt of separation pay equivalent to 150% of their monthly salaries for every year of
service.
Subsequently, the petitioners filed separate complaints for non-payment of separation pay with prayer for damages and attorneys fees before
the National Labor Relations Commission (NLRC)
The petitioners asserted that, under the Old Plan, they were entitled to an additional 50% of their gratuity pay on top of 150% of one months
salary for every year of service they had already received. They insisted that 100% of the 150% rightfully belongs to them as their separation
pay. Thus, the remaining 50% was only half of the gratuity pay that they are entitled to under the Old Plan.
3
Page 212
LABOR RELATIONS
213

The petitioners further argued that the quitclaims they signed should not bar them from claiming their full entitlement under the law. They also
claimed that they were defrauded into signing the same without full knowledge of its legal implications.
Issues:
The petitioners are now before this Court raising the following errors supposedly committed by the CA:
In holding that the bank had abandoned the old plan (referring to the old Gratuity Pay Plan) and replaced it with a Special Separation Program
under which [the] petitioners would be receiving more than the rate in the old plan and higher than the legal rate for redundant employees.
In holding that the benefits under the Special Separation Program legally replaced not only the gratuity pay plan to which [the] petitioners were
entitled under the old and new Gratuity Pay Plans but also all other benefits including separation pay under the law.
In not holding that when [the] petitioners were separated due to redundancy they were entitled per provision of Article 283 of the Labor Code to
separation pay equivalent to one month pay for every year of service.
In holding that [the] petitioners are bound under the Acceptance and Release, Waiver and Quitclaim that they had executed and [cannot]
question the same, hence they [cannot] claim benefits in addition to those they had received from the bank.
Ruling:
The petitioners receipt of separation pay equivalent to their one and a half months salary for every year of service as provided in the SSP and
the New Gratuity Plan more than sufficiently complies with the Labor Code, which only requires the payment of separation pay at the rate of one
month salary for every year of service.
Globalbanks right to replace the Old Plan and the New Gratuity Plan is within legal bounds as the terms thereof are in accordance with the
provisions of the Labor Code and complies with the minimum requirements thereof.
Contrary to the petitioners claim, they had no vested right over the benefits under the Old Plan considering that none of the events
contemplated thereunder occurred prior to the repeal thereof by the adoption of the New Gratuity Plan. Such right accrues only upon their
separation from service for causes contemplated under the Old Plan and the petitioners can only avail the benefits under the plan that is
effective at the time of their dismissal. In this case, when the merger and the redundancy program were implemented, what was in effect were
the New Gratuity Plan and the SSP; the petitioners cannot, thus, insist on the provisions of the Old Plan which is no longer existent.
The SSP did not revoke or supersede the New Gratuity Plan.
The SSP was not intended to supersede the New Gratuity Plan. On the contrary, the SSP was issued to make the benefits under the New
Gratuity Plan available to employees whose positions had become redundant because of the merger between Philbank and Globalbank, subject
to compliance with certain requirements such as age and length of service, and to improve such benefits by increasing or rounding it up to an
amount equivalent to the affected employees one and a half monthly salary for every year of service. In other words, the benefits to which the
redundated employees are entitled to, including the petitioners, are the benefits under the New Gratuity Plan, albeit increased by the SSP.
Considering that the New Gratuity Plan still stands and has not been revoked by the SSP, does this mean that the petitioners can claim the
benefits thereunder in addition to or on top of what is required under the Article 283 of the Labor Code?
For as long as the minimum requirements of the Labor Code are met, it is within the management prerogatives of employers to come up with
separation packages that will be given in lieu of what is provided under the Labor Code.
Article 283 of the Labor Code provides only the required minimum amount of separation pay, which employees dismissed for any of the
authorized causes are entitled to receive. Employers, therefore, have the right to create plans, providing for separation pay in an amount over
and above what is imposed by Article 283. There is nothing therein that prohibits employers and employees from contracting on the terms of
employment, or from entering into agreements on employee benefits, so long as they do not violate the Labor Code or any other law, and are
not contrary to morals, good customs, public order, or public policy.
In the absence of proof that any of the vices of consent are present, the petitioners acceptance letters and quitclaims are valid; thus, barring
them from claiming additional separation pay.
The Court, in other cases, has upheld quitclaims if found to comply with the following requisites: (1) the employee executes a deed of quitclaim
voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and
(4) the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized
by law.
We hold that Metrobank cannot be held liable for the petitioners claims.
Page 213
LABOR RELATIONS
214

94. Realda vs. New Age Graphics Inc., G.R. No. 192190, April 25, 2012
Facts:
Petitioner Realda was dismissed by Respondent New Age Graphics Inc. for unjustified refusal to render overtime work, unexplained failure to
observe prescribed work standards, habitual tardiness and chronic absenteeism despite warning and non-compliance with the directive for him
to explain his numerous unauthorized absences. The Court of Appeals recognized the existence of just causes for petitioners dismissal,
however, the appellate court found that the respondent failed to observe the procedural requirements of due process and, as a consequence,
awarded the petitioner P5,000.00 as Nominal Damages.
Issues:
WoN the dismissal based on the grounds cited constituted just causes; and
WoN the amount awarded as Nominal Damages of P5,000.00 was valid
Ruling:
First, the petitioners arbitrary defiance to Graphics, Inc.s order for him to render overtime work constitutes willful disobedience. Taking this in
conjunction with his inclination to absent himself and to report late for work despite being previously penalized, the CA correctly ruled that the
petitioner is indeed utterly defiant of the lawful orders and the reasonable work standards prescribed by his employer.
Second, the petitioners failure to observe Graphics, Inc.s work standards constitutes inefficiency that is a valid cause for dismissal. Failure to
observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the alloted
reasonable period, or by producing unsatisfactory results. As the operator of Graphics, Inc.s printer, he is mandated to check whether the
colors that would be printed are in accordance with the clients specifications and for him to do so, he must consult the General Manager and the
color guide used by Graphics, Inc. before making a full run. Unfortunately, he failed to observe this simple procedure and proceeded to print
without making sure that the colors were at par with the clients demands. This resulted to delays in the delivery of output, client dissatisfaction,
and additional costs on Graphics, Inc.s part.
While a penalty in the form of suspension had already been imposed on the petitioner for his habitual tardiness and repeated absenteeism, the
principle of totality of infractions sanctions the act of Graphics, Inc. of considering such previous infractions in decreeing dismissal as the
proper penalty for his tardiness and unauthorized absences incurred afterwards, in addition to his refusal to render overtime work and conform
to the prescribed work standards.
This Court cannot likewise agree to the petitioners attempt to brush aside his refusal to render overtime work as inconsequential when
Graphics, Inc.s order for him to do so is justified by Graphics, Inc.s contractual commitments to its clients. Such an order is legal under Article
89 of the Labor Code and the petitioners unexplained refusal to obey is insubordination that merits dismissal from service.
Nonetheless, while the CA finding that the petitioner is entitled to nominal damages as his right to procedural due process was not respected
despite the presence of just causes for his dismissal is affirmed, this Court finds the CA to have erred in fixing the amount that the Company is
liable to pay. The CA should have taken cognizance of the numerous cases decided by this Court where the amount of nominal damages was
fixed at P30,000.00 if the dismissal was for a just cause.
95. Kakampi and Its Members Panuelos vs. Kingspoint Express & Logistics, G.R. No. 194813, April 25, 2012
Facts:
Petitioners were former drivers of the respondent Kingspoint Express, a sole proprietorship under the name of Co which is engaged in the
business of transporting goods. They were dismissed from service on January 20, 2006 on the grounds of serious misconduct, dishonesty, loss
of trust and confidence and commission of acts inimical to the interest of Kingspoint Express.
Kingspoint Express issued separate notices to explain to the individual petitioners on January 16, 2006 the charges of dishonesty, serious
misconduct and loss of confidence by filing with the NLRC false, malicious and fabricated cases against the company, and their allegedly
unwarranted refusal to undergo drug testing. They were required to submit their answer to the charges within forty-eight (48) hours from receipt
of the notices with a warning that failure to do so would mean waiver of their answer. They were also placed under preventive suspension in the
meantime.
Page 214
LABOR RELATIONS
215

Petitioners failed to submit their written explanation within the stated period. Subsequently, Kingspoint Express issued to them separate yet
uniformly worded notices on January 20, 2006, informing them of their dismissal for the abovementioned charges based on the following acts:
fabrication of baseless money claims against the company, misleading fellow co-workers to sign the malicious complaint for money claims
against the company, refusal to undergo the company's general drug test, and extorting money from co-workers to fund activities that they were
never fully informed of. Also, petitioner Dacara was dismissed for consummating his sexual relations with Cos helper inside her residence and
thus impregnating the help.
A complaint for illegal dismissal was subsequently filed, alleging that the charges against them were fabricated and that their dismissal was
prompted by Kingspoint Express' aversion to their union activities. The Labor Arbiter ruled in favor of the petitioners as the charges are
purportedly mere unsubstantiated allegations. This was affirmed by the NLRC on appeal but the latter reversed itself on a subsequent MR filed
by Kingspoint. The CA initially reversed the NLRCs ruling but on an MR, they too reversed their earlier ruling and favored Kingspoint. Thus, this
petition for certiorari before the SC.
Issue:
WON the dismissal was valid.
Ruling:
Yes, the dismissal was valid. It is fundamental that in order to validly dismiss an employee, the employer is required to observe both substantive
and procedural due process the termination of employment must be based on a just or authorized cause and the dismissal must be effected
after due notice and hearing.
As to the substantive requirements of due process, the employees' refusal to submit themselves to drug test is a just cause for their dismissal.
An employer may terminate an employment on the ground of serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work. Willful disobedience requires the concurrence of two elements: (1) the employee's
assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and, (2) the order violated must have been
reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. Both elements are
present in this case.
As to the first element, the dismissed employees did not deny their refusal to undergo drug testing nor did they explain their refusal. The utter
lack of reason or justification for their insubordination indicates that it was prompted by mere obstinacy, hence, willful and warranting of
dismissal. As to the second element, the subject order is relevant in the performance of their functions as drivers of Kingspoint Express. As the
NLRC correctly pointed out, drivers are indispensable to Kingspoint Express' primary business of rendering door-to-door delivery services. It is
common knowledge that the use of dangerous drugs has adverse effects on driving abilities that may render the dismissed employees incapable
of performing their duties to Kingspoint Express and acting against its interests, in addition to the threat they pose to the public.
The existence of a single just cause is enough to order their dismissal and it is now inconsequential if the other charges against them do not
merit their dismissal from service. Nonetheless, while Kingspoint Express had reason to sever their employment relations, this Court finds its
supposed observance of the requirements of procedural due process pretentious. While Kingspoint Express required the dismissed employees
to explain their refusal to submit to a drug test, the two (2) days afforded to them to do so cannot qualify as "reasonable opportunity", which the
Court construed in King of Kings Transport, Inc. v. Mamac as a period of at least five (5) calendar days from receipt of the notice.
Thus, even if Kingspoint Express' defective attempt to comply with procedural due process does not negate the existence of a just cause for
their dismissal, Kingspoint Express is still liable to indemnify the dismissed employees, with the exception of Panuelos, Dizon and Dimabayao,
who did not appeal the dismissal of their complaints, with nominal damages in the amount of P30,000.00.
Page 215
LABOR RELATIONS
216

SUSPENSION OF BUSINESS OPERATIONS
1. JPL Marketing Promotion vs. Court of Appeals, G.R. No. 151966, July 8, 2005
Facts:
Petitioner is the employer of private respondents Gonzales, Abesa and Aninipot. The three are assigned as attendants in various firms where
the products of California Marketing Corp., one of petitioners clients, are being displayed.
On 13 August 1996, petitioner issued a memorandum to the three employees informing them that CMC would stop its direct merchandising
activity after two days. Petitioner then advised them to wait for further notice as they would be transferred to other clients.
Without waiting for six months, the three got employed with some other employer. However, on 17 October 1996, Abesa and Gonzales filed
before the National Labor Relations Commission Regional Arbitration Branch (NLRC) complaints for illegal dismissal, praying for separation pay,
13th month pay, service incentive leave pay and payment for moral damages. Aninipot filed a similar case thereafter.
The Labor Arbiter dismissed the complaint. Private respondents appealed to the NLRC which agreed with the Labor Arbiter's finding that when
private respondents filed their complaints, the six-month period had not yet expired, and that CMC's decision to stop its operations in the areas
was beyond the control of petitioner, thus, there was no illegal dismissal committed by petitioner.
Aggrieved, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals, imputing grave abuse of
discretion on the part of the NLRC. It claimed that private respondents are not by law entitled to separation pay, service incentive leave pay and
13th month pay. The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution.
Issue:
Were the private respondents illegally dismissed which would entitle them to claim separation pay?
Ruling:
The common denominator of the instances where payment of separation pay is warranted is that the employee was dismissed by the employer.
In the instant case, there was no dismissal to speak of. Private respondents were simply not dismissed at all, whether legally or illegally. What
they received from petitioner was not a notice of termination of employment, but a memo informing them of the termination of CMC's contract
with petitioner. More importantly, they were advised that they were to be reassigned. At that time, there was no severance of employment to
speak of. In addition, the doctrine enunciated in the case of Serrano 37 cited by private respondents has already been abandoned by our ruling
in Agabon v. National Labor Relations Commission. There we ruled that an employer is liable to pay indemnity in the form of nominal damages
to a dismissed employee if, in effecting such dismissal, the employer failed to comply with the requirements of due process. However, private
respondents are not entitled to the payment of damages considering that there was no violation of due process in this case.
2. Pido vs NLRC, G.R. No. 169812, February 23, 2007

Facts:
Federito B. Pido was employed by Cherubim Security and General Services, Inc. as a security guard. He was assigned at the Ayala Museum,
but was later transferred to the Tower and Exchange Plaza of Ayala Center where he worked as a computer operator at the Console Room. 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 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. Alcantara filed a complaint for Gross
Misconduct, recommended that petitioner be relieved from his post, and that immediate disciplinary action against him be taken.
Respondent thus conducted an investigation on January 25, 2000 during which petitioner echoed his tale in his January 21, 2000 information
report.
Page 216
LABOR RELATIONS
217

Petitioner was later to claim that he was suspended by respondent following his argument with Alcantara.
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 employee Rosario K. Balais 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 for separation pay. The NLRC, on appeal, ruled reinstatement without granting the other monetary claims. The ruling of
the NLRC was affirmed by the Court of Appeals, hence the petition with the Supreme Court.
Issue:
1. Whether the petitioners nine-month suspension is tantamount to constructive dismissal.
2. Whether the petitioner should be paid his backwages aside from his separation pay.
3. Whether the payment of separation pay is more viable than the order of reinstatement.
Ruling:
it is 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),
SEC. 8. Preventive suspension. - The employer may place the worker concerned under preventive suspension if his continued employment
poses a serious and imminent threat to the life or property of the employer or of his co-workers.
SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the
worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the
period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the
amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker.
Respondent did not inform petitioner that it was extending its investigation, nor did it pay him his wages and other benefits after the lapse of the
30-day period of suspension. Neither did respondent issue an order lifting petitioners suspension, or any official assignment, memorandum or
detail order for him to assume his post or another post. Respondent merely chose to dawdle with the investigation, in absolute disregard of
petitioners welfare.
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. The Supreme Court ruled that the preventive suspension which lasted for nine months
amounted to constructive dismissal.
Petitioner, who is a regular employee of respondent, is entitled to reinstatement without loss of seniority and payment of backwages from the
time his compensation was withheld up to the time of his actual reinstatement by virtue of Art. 279.
The Court also ruled that there exists no exception to the general rule that award of separation pay would be proper in lieu of reinstatement.
Respondent is ordered to reinstate petitioner together with the payment of the corresponding backwages.
3. Megaforce Security & Allied Services vs. Lactao, G.R. No. 160940, July 21, 2008
Facts:
Page 217
LABOR RELATIONS
218

On April 28, 1998, Megaforce hired Lactao as a security guard. He was detailed at Merville Park Subdivision in Paraaque City. On April 4,
2000, he filed with the Arbitration Branch of the NLRC a complaint against Megaforce for underpayment of wages, non-payment of overtime pay,
service incentive leave pay and 13th month pay. On May 3, 2000, Lactao was reassigned to ABB Industry, Inc. in Sucat, Paraaque City but
wasa recalled by Megaforce directing him to report to the Headquarters for proper disposition and new assignment.
When Lactao reported to the Headquarters but he was not given a new assignment. Believing he was terminated, Lactao amended his
complaint on June 7, 2000 to one for illegal dismissal with prayer for reinstatement with the same prayer for underpayment of wages, nonpayment of overtime pay, service incentive leave pay and 13th month pay, plus moral and exemplary damages and attorney's fees. Lactao
claims that in retaliation to his filing of the complaint Megaforce constructively dismissed him by relieving him from his post and not giving him a
new assignment.
In its Position Paper , Megaforce denied the illegal dismissal charge. The Labor Arbiter dismissed the complaint for lack of merit. On appeal, the
NLRC set aside the LAs decision, ruling that Lactao was constructively dismissed. Hence, the present petition.
Issue:
WHETHER OR NOT LACTAO WAS CONSTRUCTIVELY DISMISSED MAKING THE DISMISSAL ILLEGAL.
Ruling:
Megaforce contends that it is not guilty of illegal dismissal because Lactao was merely recalled from his post and the failure to give him a new
assignment within seven days from his recall is not constructive dismissal because a security guard may be placed on "floating status" for a
period not exceeding six months under prevailing jurisprudence; Lactao never reported back for reassignment and his refusal to report back to
work should not be taken against it.
Lactao insists that he was constructively dismissed when he was recalled from his post at ABB Industry, Inc. without being informed that he was
being placed on "floating status" or given a new assignment.
YES. In cases involving security guards, a relief and transfer order in itself does not sever employment relationship between a security guard
and his agency. 16 An employee has the right to security of tenure, but this does not give him such a vested right in his position as would
deprive the company of its prerogative to change his assignment or transfer him where his service, as security guard, will be most beneficial to
the client. Temporary "off-detail" or the period of time security guards are made to wait until they are transferred or assigned to a new post or
client does not constitute constructive dismissal as their assignments primarily depend on the contracts entered into by the security agencies
with third parties. 18 Indeed, the Court has repeatedly recognized that "off-detailing" is not equivalent to dismissal, so long as such status does
not continue beyond a reasonable time; when such a "floating status" lasts for more than six months, the employee may be considered to have
been constructively dismissed.
However, in the present case, while the charge of illegal dismissal may have been premature because Lactao has not been given a new
assignment or temporary "off-detail" for a period of seven days only when he amended his complaint, the continued failure of Megaforce to offer
him a new assignment during the proceedings of the case before the LA and beyond the reasonable six-month period makes it liable for
constructive dismissal.
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it would foreclose any choice by him except to forego his continued employment. It exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in
pay.
The Court cannot accept the contention of Megaforce that Lactao did not report to work after his recall and had abandoned his job since it failed
to present credible proof of any act on the part of Lactao to abandon his employment. Moreover, it is a settled doctrine that the filing of a
complaint for illegal dismissal is inconsistent with abandonment of employment. An employee who takes steps to protest his dismissal cannot
logically be said to have abandoned his work. The filing of such complaint is proof enough of his desire to return to work, thus negating any
suggestion of abandonment.
Under Article 279 of the Labor Code, as amended, an employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges; to his full backwages, inclusive of allowances; and to other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Thus, Lactao is entitled to
reinstatement and backwages as a necessary consequence.
Page 218
LABOR RELATIONS
219

4. National Mines and Allied Workers Union vs. Marcopper Mining Corp., G.R. No. 174641, Nov. 11, 2008
Facts:
Department of Environment and Natural Resources (DENR) ordered the indefinite suspension of MARCOPPER's operations for causing
damage to the environment of the Province of Marinduque by spilling the company's mine waste or tailings from an old underground impounding
area into the Boac River, in violation of its Environmental Compliance Certificate.
NAMAWU was the exclusive bargaining representative of the rank-and-file workers of MARCOPPER. filed a complaint with the Regional
Arbitration Branch against MARCOPPER for nonpayment of wages, separation pay, damages, and attorney's fees; the case is hereinafter
referred to as the "environmental incident case."NAMAWU claimed that due to the indefinite suspension of MARCOPPER's operations, its
members were not paid the wages due them for six months (from April 12, 1996 to October 12, 1996). It further claimed that its members are
also entitled to be paid their separation pay pursuant to their collective bargaining agreement with MARCOPPER.
MARCOPPER denied liability, contending that NAMAWU had not been authorized by the individual employees - the real parties-in-interest - to
file the complaint; and that the complaint should be dismissed for lack of certification of non-forum shopping, for the pendency of another action
between the same parties, and for lack of factual and legal basis.
Labor Arbiter Pedro C. Ramos ruled in NAMAWU's favor. MARCOPPER appealed the decision to the NLRC. In this appeal, it also moved that it
be allowed not to post an appeal bond for 615 NAMAWU members - former MARCOPPER employees who had been dismissed effective March
7, 1995 due to an earlier illegal strike. MARCOPPER, however, posted the required bond for three non-striking employees. The NLRC
dismissed MARCOPPER's appeal. The NLRC subsequently denied MARCOPPER's motion for reconsideration. MARCOPPER thus sought
relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court. The CA granted MARCOPPER's petition in the currently
assailed decision promulgated on October 14, 2004. Accordingly, it nullified the NLRC resolution of February 28, 2002 and the order dated April
16, 2002, and ordered the NLRC to give due course to MARCOPPER's appeal. The CA found the non-filing of the appeal bond for the 615
NAMAWU members covered by the Labor Arbiter's award to be justified since their employment had been terminated as early as March 7, 1995,
i.e., prior to the suspension of operations for which wages and separation pay were being claimed. The CA's denial of NAMAWU's motion for the
reconsideration of the CA's October 14, 2004 decision.
Issue:S:
1. WON there is necessity for the filing of an appeal bond considering that the employment of petitioner NAMAWU's members was terminated
even before the issuance by the DENR of its order on April 1, 1996.
2. WON the employees are entitled to their wages due them for six months? WON they are entitled to separation pay?
Ruling:
On the First Issue
The employment of the NAMAWU officers and members had been declared terminated on March 7, 1995 as a result of their failure to return to
work after their strike of February 27, 1995. Thereafter, the illegal strike litigation commenced, resulting in a decision by the NLRC on November
11, 1996 declaring the strike illegal.
MARCOPPER had every reason to claim in its April 10, 2000 appeal to the NLRC that it should be excused from filing an appeal bond with
respect to the NAMAWU members who were no longer company employees. The CA decision decreeing the termination of employment of those
involved in the illegal strike case had already been issued at that time. We subsequently ruled on the same issue during the time the
environmental incident case was pending before the NLRC. Thus, when the NLRC dismissed MARCOPPER's appeal for failure to file the
requisite appeal bond corresponding to the 615 NAMAWU members, the termination of employment of these NAMAWU members was already a
settled matter that the NLRC was in no position to disregard. In this light, the CA was correct in reversing the dismissal of MARCOPPER's
appeal for failure to file an appeal bond. Pursued to its logical end, the CA conclusions should lead to the dismissal of NAMAWU's complaint
with respect to its 615 previously dismissed members.
On the Second Issue
The suspension of MARCOPPER's operations was decreed in an Ex-Parte Order dated April 1, 1996 issued by the Pollution Adjudication Board
of the DENR. Separately from this Order, the DENR Secretary ordered on June 21, 1996 the cancellation of MARCOPPER's ECC without which
MARCOPPER could not continue to undertake its mining operations. Thus, as of that date (June 21, 1996), the temporary suspension of
operations that started on April 12, 1996 became permanent so that MARCOPPER did not have to wait for the end of the six-month suspension
of operations before the services of the three employees were deemed terminated. In Labor Code terms, the cancellation of the ECC on June
Page 219
LABOR RELATIONS
220

21, 1996 amounted to a company closure governed by Article 283 of the Labor Code - the provision that governs the relationship of employers
and employees in closure situations.
While the mine tailing leakage and pollution of the Boac River cannot but affect the health and safety of those in the MARCOPPER vicinity,
particularly its employees, we find that the Department of Labor and Employment (DOLE) Regional Director - at whose initiative a suspension of
operation must originate for the above-quoted provision to apply - did not act as envisioned by the above rule. Specifically, there was no ruling or
directive from the DOLE that the environmental incident was a workplace health and safety concern that required a suspension of operation.
There is likewise nothing in the laws applicable to pollution, specifically, P.D. No. 984 and P.D. No. 1586 and their implementing rules, that speak
of the consequences of a DENR-ordered suspension of operations on employment relationships. Neither does the CBA between MARCOPPER
and NAMAWU provide for the consequences of a suspension of operation due to environmental causes. Under the circumstances, we can only
conclude that the general "no work, no pay" rule should prevail with respect to employees' wages during the suspension period, subject to
existing CBA terms on leave credits and similar benefits of employees.
Because the initial suspension of operations that the DENR imposed eventually turned into an involuntary closure as discussed above, Article
283 of the Labor Code comes into play entitling the three remaining employees the payment of separation pay computed under the terms of that
Article. The termination of employment date, for separation pay purposes, should be computed from June 21, 1996 and not from October 12,
1996 (or six months from the April 12, 1996 suspension of operation date); June 21, 1996 must be the closure date as it is from this date that
MARCOPPER, by law, ceased to have any authority to conduct its mining operations.
In the absence of any showing that NAMAWU could represent "other similarly situated employees" who are not its members, we cannot
consider these other employees (whose circumstances have never been discussed and who all remain unnamed) to be covered by the terms of
this Decision.
5. Eagle Star Security Services Inc. vs. Mirando et al., G.R. No. 179512, July 30, 2009
Facts:
Mirando, who was hired by Eagle Star Security Services, Inc. as a security guard on July 29, 1997, was posted at the Heroes Hill Branch of
Equitable-PCI Bank (now Banco de Oro-EPCI Bank) with a 9:00 a.m.-to-5:00 p.m. shift and a daily wage of P250.00.
On December 14, 2001, respondent was made to sign a duty schedule for December 15 (a Saturday). When he reported for work on December
15, 2001, he was told by the detachment commander, (Endencio), not to report for duty per instruction of the head office. Respondent thus
called up the head office and was that he was removed from duty by (Agodilla), petitioners operations manager.As respondent was thereafter
no longer asked to report for duty, he filed on December 18, 2001 a complaint for illegal dismissal. He later amended his complaint on February
1, 2002 to include a prayer for reinstatement and payment of full backwages, damages and attorneys fees.
Responding to the complaint, petitioner alleged that respondent went on absence without official leave (AWOL) on December 16, 2001 and had
not since reported for work, drawing it to send him a notice on December 26, 2001 to explain his absence, but he failed to respond thereto.
Respondent argues that the present petition must be treated as a "mere scrap of paper" since the one who signed it was "not properly
authorized by the [p]etitioner to file [it] before this [Court]."
Issues:
Whether or not the person who signed the present petition was duly authorized.
Whether or not he was illegally dismissed.
Ruling:
The petition must be denied.
There is no proof that petitioners representative Reynaldo G. Tauro was authorized to file the petition on its behalf.The Board Resolution which
was adopted during petitioners Special Board Meeting of May 20, 2006, states:
RESOLVED as it is hereby resolved that the corporation shall elevate on Certiorari before the Court of Appeals NLRC NCR Case No. 039872-04
entitled "Bonifacio L. Mirando, complainant, versus Eagle Star Security Services, Inc., respondent."
Page 220
LABOR RELATIONS
221

RESOLVED further as it is hereby resolved that Mr. REYNALDO G. TAURO, shall be appointed as authorized representative of the Corporation,
to represent and sign in behalf of the corporation the Verification and Certification of the petition for afore-mentioned case.
Clearly, it was adopted for the purpose of authorizing Tauro to file petitioners petition for "Certiorari before the Court of Appeals." Despite
petitioners awareness in its Reply to respondents Comment filed before this Court of the defect in Tauro authority to sign for and in its behalf
the Verification and Certification against Non-Forum Shopping, it failed even to belatedly file the requisite authority.
Fuentebella and Rolling Hills Memorial Park v. Castro,on the requirement of a certification against forum shopping, explains:
The reason for this is that the principal party has actual knowledge whether a petition has previously been filed involving the same case or
substantially the same issues. If, for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been duly
authorized.
. . . Where the petitioner is a corporation, the certification against forum shopping should be signed by its duly authorized director or
representative [I]f the real party-in-interest is a corporate body, an officer of the corporation can sign the certification against forum shopping
as long as he is authorized by a resolution of its board of directors.
A certification without the proper authorization is defective and constitutes a valid cause for the dismissal of the petition. (Petitioners discourse
on relaxation of technical rules of procedure in the interest of substantial justice does not impress. While there have been instances when the
Court dispensed with technicalities on the basis of special circumstances or compelling reasons, there is no such circumstance or reason in the
present case which warrants the liberal application of technical rules.
AT ALL EVENTS, on the merits, the appellate court did not commit any reversible error in affirming the congruent findings of the Labor Arbiter
and the NLRC that respondent was illegally dismissed.
The persistence of respondent to resume his duties, not to mention his immediate filing of the illegal dismissal complaint, should dissipate any
doubt that he did not abandon his job.
Clutching at straws, petitioner argues that respondent was on temporary "off-detail," the period of time a security guard is made to wait until he
is transferred or assigned to a new post or client; and since petitioners business is primarily dependent on contracts entered into with third
parties, the temporary "off-detail" of respondent does not amount to dismissal as long as the period does not exceed 6 months, following Art.
286 of the Labor Code.
Petitioners citation of Article 286 of the Labor Code reading:
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 employee of a military or civic duty shall not terminate employment. In all such cases, the
employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later
than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty. (Emphasis in the original;
underscoring supplied) is misplaced. Philippine Industrial Security Agency v. Dapiton teaches:
We stress that Article 286 applies only when there is a bonafide suspension of the employers operation of a business or undertaking for a
period not exceeding six (6) months. In such a case, there is no termination of employment but only a temporary displacement of employees,
albeit the displacement should not exceed six (6) months. The paramount consideration should be the dire exigency of the business of the
employer that compels it to put some of its employees temporarily out of work. In security services, the temporary "off-detail" of guards takes
place when the security agencys clients decide not to renew their contracts with the security agency, resulting in a situation where the available
posts under its existing contracts are less than the number of guards in its roster.
In the present case, there is no showing that there was lack of available posts at petitioners clients or that there was a request from the clientbank, where respondent was last posted and which continued to hire petitioners services, to replace respondent with another. Petitioner
suddenly prevented him from reporting on his tour of duty at the bank on December 15, 2001 and had not thereafter asked him to report for duty.
WHEREFORE, the petition is DENIED.
6. Nationwide Security & Allied Services v. Valderama, G.R. No. 186614, February 23, 2011
Facts:
In this case, petitioner and respondent presented two different sides of the story.
RESPONDENT VALDERAMAS SIDE OF THE STORY
PETITIONERS SIDE OF THE STORY
Page 221
LABOR RELATIONS
222

Valderama was hired by petitioner as security guard at the
Philippine Heart Center. After he was relived from his job, no
further assignment was given to him. Thus, he filed a complaint
for constructive dismissal and nonpayment of 13th month pay,
with prayer for damages against petitioner.
Valderama was not constructively or illegally dismissed, but had

voluntarily resigned.
Respondent violated security rules of the work place.
Furthermore, he was charged with conduct unbecoming which he
was required to explain. For this, he was suspended for 7 days.
Respondent displayed his discourteous and rude attitude upon his
superior. He said to him in a high pitch "ano ba sir, personalan ba
ito, sabihin mo lang kung ano gusto mo." Petitioner required him
to explain why no disciplinary action should be meted against him.
Seven security guards, including Valderama were made to explain
their failure to report for duty without informing the office despite
the instruction during their formation day which was held a day
before.
Detachment Commander, Roy Datiles, reported that Valderama
confronted and challenged him in a high pitch and on top of his
voice rudely showing discourtesy and rudeness. Being his
superior, Datiles recommended the relief of Valderama. By order
of the Operations Manager, he was relieved from his post at the
Philippine Heart Center. He was then directed to report to the
office where he got his cash bond and firearm deposit.
Despite his voluntary resignation, petitioner sent him a letter
through registered mail to report for the office and give information
on whether or not he was still interested for report for duty or not.
Valderama did not bother to reply. Neither did he report to the
office.
The Labor Arbiter rendered a decision saying that Valderama was constructively dismissed. It said that the petitioners defense is
unsubstantiated.
On appeal, the NLRC modified the LA decision. It declared that respondent was neither constructively terminated nor did he voluntarily resign.
As such, respondent remained an employee of petitioner. The NLRC thus ordered respondent to immediately report to petitioner and assume
his duty.
Respondent went to the CA via certiorari. CA rendered a Decision setting aside the resolutions of the NLRC and reinstating that of the LA. In
gist, the CA sustained respondent's claim of constructive dismissal.
Issue:
Whether or not the respondent was constructively dismissed?
Ruling:
In cases involving security guards, a relief and transfer order in itself does not sever employment relationship between a security guard and his
agency. An employee has the right to security of tenure, but this does not give him a vested right to his position as would deprive the company of
its prerogative to change his assignment or transfer him where his service, as security guard, will be most beneficial to the client. Temporary "offdetail" or the period of time security guards are made to wait until they are transferred or assigned to a new post or client does not constitute
constructive dismissal, so long as such status does not continue beyond six months.
The onus of proving that there is no post available to which the security guard can be assigned rests on the employer.
When a security guard is placed on a "floating status," he does not receive any salary or financial benefit provided by law. Due to the grim
economic consequences to the employee, the employer should bear the burden of proving that there are no posts available to which the
employee temporarily out of work can be assigned.
Petitioner claims that respondent abandoned his job. The jurisprudential rule on abandonment is constant. It is a matter of intention and cannot
lightly be presumed from certain equivocal acts. To constitute abandonment, two elements must concur:
(1) The failure to report for work or absence without valid or justifiable reason
(2) A clear intent, manifested through overt acts, to sever the employer-employee relationship.
In this case, petitioner failed to establish clear evidence of respondent's intention to abandon his employment. Except for petitioner's bare
assertion that respondent did not report to the office for reassignment, no proof was offered to prove that respondent intended to sever the
employer-employee relationship. Besides, the fact that respondent filed the instant complaint negates any intention on his part to forsake his
work. It is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee
who takes steps to protest his dismissal cannot by logic be said to have abandoned his work.
Page 222
LABOR RELATIONS
223

Similarly, we cannot accept petitioner's argument that respondent voluntarily resigned. Resignation is the voluntary act of an employee who is in
a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice
but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing the
office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the
employee before and after the alleged resignation must be considered in determining whether, he or she, in fact, intended to sever his or her
employment. In this case, petitioner was firm in asserting that respondent voluntarily resigned. Oddly, it failed to present the alleged resignation
letter of respondent.
Jurisprudence is trite with pronouncements that the temporary inactivity or "floating status" of security guards should continue only for six
months. Otherwise, the security agency concerned could be liable for constructive dismissal.[24] The failure of petitioner to give respondent a
work assignment beyond the reasonable six-month period makes it liable for constructive dismissal.
If there is a surplus of security guards caused by lack of clients or projects, the security agency may resort to retrenchment upon compliance
with the requirements set forth in the Labor Code. In this way, the security agency will not to be held liable for constructive dismissal and be
burdened with the payment of backwages.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges; to his full backwages, inclusive of allowances; and to other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.
PETITION DENIED. RESPONDENT WAS ILLEGALLY DISMISSED BY PETITIONER.
7. Nippon Housing Phils. vs. Leynes, G.R. No. 177816, August 3, 2011
Facts:
Petitioner, originally engaged in the business of providing building maintenance From its original ventured into building management and gained
Bay Gardens Condominium Project (the Project) of the Bay Gardens Condominium Corporation (BGCC) as its first and only building
maintenance client. In this regard, petitioner hired respondent Maiah Angela Leynes on 26 March 2001 for the position of Property Manager,
with a salary of P40,000.00 per month. Her responsibilities include surveying the requirements of the government and the client for said project,
the formulation of house rules and regulations, the preparation of the annual operating and capital expenditure budget, hiring and deployment of
manpower, salary and position determination as well as the assignment of the schedules and responsibilities of employees.
Leynes had a misunderstanding with the building engineer of the project (Cantuba) and barred the latters entry to the site. The Engr. also
accused the former of conceit, pride and poor managerial skills. Takada, the NHPI's Vice President issued a memorandum attributing the
incident to "simple personal differences" and directing Leynes to allow Engr. Cantuba to report back for work. Disappointed with this
management decision, she submitted a letter to NHPIs President (Ota) asking for an emergency leave of absence for the supposed purpose of
coordinating with her lawyer regarding her resignation letter. NHPI offered the Property Manager position to Engr. Carlos Jose as a
consequence Leynes' signification of her intention to resign. However, she sent another letter expressing her intention to return to work and to
call off her planned resignation. However, she received a letter from the management to report instead to the main office as one in a floating
status because someone already occupies her post.
Aggrieved, Leynes filed a complaint against petitioner for illegal dismissal, unpaid salaries, benefits, damages and attorney's fees. The Labor
arbiter found that the petitioners act of putting Leynes on a floating status was equivalent to termination without just cause. The NLRC ruled that
NHPI's placement of Leynes on floating status was necessitated by the client's contractually guaranteed right to request for her relief. However,
this was later on reversed by the CA, hence, this present petition before the SC.
Issue:
WON petitioners' decision to place respondent on floating status is tantamount to constructive dismissal. (Alternative: what is the effect of
withdrawn resignation?)
Ruling:
No, the placement of Leynes on a floating status due to redundancy is valid. There is no constructive dismissal. The factual antecedents suggest
that NHPI's immediate hiring of Engr. Jose as the new Property Manager for the Project was brought about by Leynes' own rash announcement
of her intention to resign from her position. Although she subsequently changed her mind and sent Reyes a letter by telefax announcing the
reconsideration of her planned resignation and her intention to return to work, Leynes evidently had only herself to blame for precipitately setting
in motion the events which led to NHPI's hiring of her own replacement.
Page 223
LABOR RELATIONS
224

The record, moreover, shows that NHPI simply placed her on floating status "until such time that another project could be secured" for
her. Traditionally invoked by security agencies when guards are temporarily sidelined from duty while waiting to be transferred or assigned to a
new post or client, Article 286 of the Labor Code has been applied to other industries when, as a consequence of the bona fide suspension of
the operation of a business or undertaking, an employer is constrained to put employees on floating status for a period not exceeding six
months. In brushing aside respondents' reliance on said provision to justify the act of putting Leynes on floating status, the CA ruled that no
evidence was adduced to show that there was a bona fide suspension of NHPI's business. What said court clearly overlooked, however, is the
fact that NHPI had belatedly ventured into building management and, with BGCC as its only client in said undertaking, had no other Property
Manager position available to Leynes.
The rule is settled, however, that "off-detailing" is not equivalent to dismissal, so long as such status does not continue beyond a reasonable
time and that it is only when such a "floating status" lasts for more than six months that the employee may be considered to have been
constructively dismissed. A complaint for illegal dismissal filed prior to the lapse of said six-month and/or the actual dismissal of the employee is
generally considered as prematurely filed.
Since the petitioner has no other client for the building management side of its business, it acted within its prerogatives when it eventually
terminated Leynes' services on the ground of redundancy. One of the recognized authorized causes for the termination of employment,
redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business
enterprise. A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of
business, dropping of a particular product line previously manufactured by the company or phasing out of service activity priorly undertaken by
the business An employer has no legal obligation to keep more employees than are necessary for the operation of its business.
Considering that Leynes was terminated from service upon an authorized cause, we find that the CA likewise erred in faulting NHPI for
supposedly failing to notify said employee of the particular act or omission leveled against her and the ground/s for which she was dismissed
from employment. Where dismissal, however, is for an authorized cause like redundancy, the employer is, instead, required to serve a written
notice of termination on the worker concerned and the DOLE, at least one month from the intended date thereof. For its failure to comply
strictly with the 30-day minimum requirement for said notice and effectively violating Leynes' right to due process, NHPI should be held liable to
pay nominal damages in the sum of P50,000.00.
Page 224
LABOR RELATIONS
225

DISEASE AS A GROUND FOR TERMINATION
1. Sy vs. Court of Appeals, G.R. No. 142293, February 27, 2003
Facts:
Private respondent Jaime Sahot has been working for petitioners family-owned trucking business named Vicente Sy Trucking starting in 1958.
Since that time, the family business has changed names, first from T. Paulino Trucking Service, then to 6Bs Trucking Corporation, and finally to
SBT Trucking Corporation. Throughout all these changes and for 36 years, Sahot remained with the business.
When Sahot was already 59 years old, he had recurring absences due to his suffering various ailments. His left thigh, in particular, has been
causing him pain, which greatly affected his performance as a driver. After inquiring with the SSS regarding his medical and retirement benefits,
he found that his premium payments had not been remitted by his employer.
Later, he filed a week-long leave during which time he was medically examined and treated for several illnesses. Upon the advice of SBT
Trucking Service management, he filed a formal request for extension of his leave. It was at this time that Sahot was first threatened of
termination from work, with his employers later carrying out this threat by dismissing him.
Issue:
Whether or not there was valid dismissal
Ruling:
Article 277(b) of the Labor Code puts the burden of proving that the dismissal of an employee was for a valid or authorized cause on the
employer, without distinction whether the employer admits or does not admit the dismissal. For an employees dismissal to be valid, (a) the
dismissal must be for a valid cause and (b) the employee must be afforded due process.
Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease. However, in order to validly terminate
employment on this ground, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires a medical certificate.
This requirement cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity
or extent of the employees illness and thus defeat the public policy in the protection of labor.
In the case at bar, the employer clearly did not comply with the medical certificate requirement before Sahots dismissal was effected.
In addition, there is likewise the determination if the procedural aspect of due process had been complied with by the employer.
From the records, it clearly appears that procedural due process was not observed in the separation of private respondent by the management
of the trucking company. The employer is required to furnish an employee with two written notices before the latter is dismissed: (1) the notice to
apprise the employee of the particular acts or omissions for which his dismissal is sought, which is the equivalent of a charge; and (2) the notice
informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be heard on
his defense. These, the petitioners failed to do, even only for record purposes. What management did was to threaten the employee with
dismissal, then actually implement the threat when the occasion presented itself because of private respondents painful left thigh.
All told, both the substantive and procedural aspects of due process were violated. Clearly, therefore, Sahots dismissal is tainted with invalidity.
2. Manly Express vs. Payong, G.R. No. 167462, October 25, 2005
Facts:
Sometime in December 1999, Romualdo Payong, Jr., was complaining of eyesight problems. He was brought to an eye specialist by private
respondent Manly Express, Inc. and/or Siy Eng T. Ching, he was diagnosed to be suffering from eye cataract. Despite having the cataract
Page 225
LABOR RELATIONS
226

removed in January of 2000, he was disallowed to return to his work by Ching. Much later, on August 1, 2000, he was given a letter of
termination of employment. Thus, a complaint for illegal dismissal with money claims was filed against Manly.
Issue:
Whether or not the dismissal on the ground of disease was valid.
Ruling:
In order to validly terminate employment on this ground, Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code
requires:
Sec. 8. Disease as a ground for dismissal. Where the employee suffers from a disease and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a
competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months
even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but
shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of
his normal health.
The rule is explicit. For a dismissal on the ground of disease to be considered valid, two requisites must concur: (a) the employee suffers from a
disease which cannot be cured within six months and his continued employment is prohibited by law or prejudicial to his health or to the health
of his co-employees, and (b) a certification to that effect must be issued by a competent public health authority.
In the present case, there was no proof that Payongs continued employment was prohibited by law or prejudicial to his health and that of his
co-employees. No medical certificate by a competent public health authority was submitted that Payong was suffering from a disease that
cannot be cured within a period of six months. In the absence of such certification, Payongs dismissal must necessarily be declared illegal.
The burden of proving the validity of the dismissal rests on the employer. As such, the employer must prove that the requisites for a valid
dismissal due to a disease have been complied with. In the absence of the required certification by a competent public health authority, this
Court has ruled against the validity of the employees dismissal.
The Supreme Court also note that Manly failed to comply with the procedure for terminating an employee. In dismissing an employee, the
employer has the burden of proving that the employee has been served two notices: (1) one to apprise him of the particular acts or omissions for
which his dismissal is sought, and (2) the other to inform him of his employers decision to dismiss him. The first notice must state that dismissal
is sought for the act or omission charged against the employee, otherwise, the notice cannot be considered sufficient compliance with the rules.
Payongs dismissal did not comply with both the substantive and procedural aspects of due process. Clearly, his dismissal is tainted with
invalidity.
3. Duterte vs. Kingswood Trading Co., G.R. No. 160325, October 4, 2007
Facts:
Petitioner was hired as truck/trailer driver by respondent Kingswood Trading Company, Inc. (KTC) of which co-respondent Filemon Lim is the
President. Petitioner was on the 6:00 a.m. 6:00 p.m. shift. He averaged 21 trips per month, getting P700 per trip. When not driving, petitioner
was assigned to clean and maintain respondent KTCs equipment and vehicles for which he was paid P125 per day. Regularly, petitioner would
be seconded by respondent Filemon Lim to drive for one of KTCs clients, the Philippine National Oil Corporation, but always subject to
respondents convenience. On November 8, 1998, petitioner had his first heart attack and was confined for two weeks at the Philippine Heart
Center (PHC). This was confirmed by respondent KTC which admitted that petitioner was declared on sick leave with corresponding notification.
A month later, petitioner returned to work armed with a medical certificate signed by his attending physician at the PHC, attesting to petitioners
fitness to work. However, said certificate was not honored by the respondents who refused to allow petitioner to work. In February 1999,
petitioner suffered a second heart attack and was again confined at the PHC. Upon release, he stayed home and spent time to recuperate.
Petitioner attempted to report back to work but was told to look for another job because he was unfit. Respondents refused to declare petitioner
fit to work unless physically examined by the company physician. Respondents promise to pay petitioner his separation pay turned out to be an
empty one. Instead, petitioner was presented, for his signature, a document as proof of his receipt of the amount of P14,375.00 as first
installment of his Social Security System (SSS) benefits. Having received no such amount, petitioner refused to affix his signature thereon and
Page 226
LABOR RELATIONS
227

instead requested for the necessary documents from respondents to enable him to claim his SSS benefits, but the latter did not heed his
request.
Ruling:
The law is unequivocal: the employer, before it can legally dismiss its employee on the ground of disease, must adduce a certification from a
competent public authority that the disease of which its employee is suffering is of such nature or at such a stage that it cannot be cured within a
period of six months even with proper treatment. Here, the record does not contain the required certification. And when the respondents asked
the petitioner to look for another job because he was unfit to work, such unilateral declaration, even if backed up by the findings of its company
doctors, did not meet the quantum requirement mandated by the law, i.e., there must be a certification by a competent public authority. The
requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral
and arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public policy on the protection
of labor. All told, we rule and so hold that petitioners dismissal did not comply with both the substantive and procedural aspects of due process.
Clearly, his dismissal is tainted with invalidity.
WHEREFORE, the assailed decision of the CA is REVERSED and SET ASIDE. SO ORDERED.
4. Villaruel vs. Yeo Han Guan, G.R. No. 169191, June 1, 2011
Facts:
Petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in
the business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over a period of almost
twenty (20) years, the company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's complaint in 1999, the
company was operating under the name of Yuhans Enterprises. Despite the changes in the company's name, petitioner remained in the employ
of respondent. Petitioner further alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he
reported for work but was no longer permitted to go back because of his illness; he asked that respondent allow him to continue working but be
assigned a lighter kind of work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the
said amount corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation pay computed from his first
day of employment in June 1963, but respondent refused. Aside from separation pay, petitioner prayed for the payment of service incentive
leave for three years as well as attorney's fees.
The Labor Arbiter found for the respondent, granting him separation pay from the June 1963 up to the time of separation, and service incentive
leave equivalent to 15 days. The NLRC affirmed. On appeal, the CA reversed the NLRC on the issue of separation pay.
Issue:
The assigned errors in the instant petition essentially boil down to the question of whether petitioner is entitled to separation pay under the
provisions of the Labor Code, particularly Article 284 thereof, which reads as follows:
An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation
pay equivalent to at least one (1) month salary or to one-half () month salary for every year of service whichever is greater, a fraction of at
least six months being considered as one (1) whole year.
Held:
A plain reading of the abovequoted provision clearly presupposes that it is the employer who terminates the services of the employee found to
be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his
co-employees. It does not contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the reason
why Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of
the employee unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical treatment.
On the other hand, the Court agrees with the CA in its observation of the following circumstances as proof that respondent did not terminate
petitioner's employment: first, the only cause of action in petitioner's original complaint is that he was offered a very low separation
pay; second, there was no allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper; and, third,
there was no prayer for reinstatement.
Page 227
LABOR RELATIONS
228

In consonance with the above findings, the Court finds that petitioner was the one who initiated the severance of his employment relations with
respondent. It is evident from the various pleadings filed by petitioner that he never intended to return to his employment with respondent on the
ground that his health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for him to return to work.
This is tantamount to resignation.
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment.
It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award of separation pay is also authorized in
the situations dealt with in Article 283 [16] of the same Code and under Section 4 (b), Rule I, Book VI of the Implementing Rules and
Regulations of the said Code [17] where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, this Court has
allowed grants of separation pay to stand as a measure of social justice where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. [18] However, there is no provision in the Labor Code which grants separation pay to
voluntarily resigning employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay,
except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or policy. [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 employer.
Since petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, he is not entitled to separation
pay under the provisions of the Labor Code.
The foregoing notwithstanding, this Court, in a number of cases, has granted financial assistance to separated employees as a measure of
social and compassionate justice and as an equitable concession. Taking into consideration the factual circumstances obtaining in the present
case, the Court finds that petitioner is entitled to this kind of assistance.
In this regard, the Court finds credence in petitioner's contention that he is in the employ of respondent for more than 35 years. In the absence
of a substantial refutation on the part of respondent, the Court agrees with the findings of the Labor Arbiter and the NLRC that respondent
company is not distinct from its predecessors but, in fact, merely continued the operation of the latter under the same owners and the same
business venture. The Court further notes that there is no evidence on record to show that petitioner has any derogatory record during his long
years of service with respondent and that his employment was severed not by reason of any infraction on his part but because of his failing
physical condition. Add to this the willingness of respondent to give him financial assistance. Hence, based on the foregoing, the Court finds that
the award of P50,000.00 to petitioner as financial assistance is deemed equitable under the circumstances.
Page 228
LABOR RELATIONS
229

OTHER CAUSES OF SEVERANCE OF EMPLOYMENT RELATION
1. Pantranco North Express vs. NLRC, 259 SCRA 161 [1996]

Facts:
Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the Pantranco Employees Association, PTGWO. He
continued in petitioners employ until August 12, 1989, when he was retired at the age of 52 after having rendered twenty five years service. The
basis of his retirement was the compulsory retirement provision of the collective bargaining agreement between the petitioner and the
aforenamed union. Private respondent received P49, 300.00 as retirement pay.
Private respondent filed a complaint for illegal dismissal against petitioner with the Sub-Regional Arbitration Branch of the respondent
Commission in Dagupan City. The complaint was consolidated with two other cases of illegal dismissal having similar facts and issues, filed by
other employees, non union members.
Issue:
Is a Collective Bargaining Agreement provision allowing compulsory retirement before age 60 but after twenty five years of service legal and
enforceable?
Who has jurisdiction over a case involving such a question -- the labor arbiter or arbitrators authorized by such CBA?
Ruling:
On the first issue:
The bone of contention in this case is the provision on compulsory retirement after 25 years of service. Article XI, Section 1 (e) (5) of the May 2,
1989 Collective Bargaining Agreement between petitioner company and the union states:
"Section 1.
The COMPANY shall formulate a retirement plan with the following main features:
xxx xxx xxx
(e)
The COMPANY agrees to grant the retirement benefits herein provided to regular employees who may be separated from the
COMPANY for any of the following reasons:
xxx xxx xxx
Upon reaching the age of sixty (60) years or upon completing twenty-five (25) years of service to the COMPANY, whichever comes first, and the
employee shall be compulsory retired and paid the retirement benefits herein provided."
Art. 287 of the Labor Code as worded permits employers and employees to fix the applicable retirement age at below 60 years. Moreover,
providing for early retirement does not constitute diminution of benefits. In almost all countries today, early retirement, i.e., before age 60, is
considered a reward for services rendered since it enables an employee to reap the fruits of his labor particularly retirement benefits, whether
lump-sum or otherwise at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and
longer. As a matter of fact, one of the advantages of early retirement is that the corresponding retirement benefits, usually consisting of a
substantial cash windfall, can early on be put to productive and profitable uses by way of income-generating investments, thereby affording a
more significant measure of financial security and independence for the retiree who, up till then, had to contend with life's vicissitudes within the
parameters of his fortnightly or weekly wages. Thus we are now seeing many CBAs with such early retirement provisions. And the same
cannot be considered a diminution of employment benefits.
It is also further argued that, being a union member, private respondent is bound by the CBA because its terms and conditions constitute the law
between the parties. The 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. It binds not only the union but also its members. Thus, the
Solicitor General said:
"Private respondent cannot therefore claim illegal dismissal when he was compulsory retired after rendering twenty-five (25) years of service
since his retirement is in accordance with the CBA."
A CBA incorporates the agreement reached after negotiations between employer and bargaining agent with respect to terms and conditions of
employment. A CBA is not an ordinary contract. "(A)s a labor contract within the contemplation of Article 1700 of the Civil Code of the
Page 229
LABOR RELATIONS
230

Philippines which governs the relations between labor and capital, (it) is not merely contractual in nature but impressed with public interest, thus
it must yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to
serve."
Being a product of negotiation, the CBA between the petitioner and the union intended the provision on compulsory retirement to be beneficial to
the employees-union members, including herein private respondent. When private respondent ratified the CBA with the union, he not only
agreed to the CBA but also agreed to conform to and abide by its provisions. Thus, it cannot be said that he was illegally dismissed when the
CBA provision on compulsory retirement was applied to his case.
On the second issue:
In Sanyo Philippines Workers Union PSSLU vs. Caizares, a case cited by the petitioner, this Court ruled:
x x x Hence, only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an agreement regarding the dismissal of private respondents.
No grievance between them exists which could be brought to a grievance machinery. The problem or dispute in the present case is between the
union and the company on the one hand and some union and non-union members who were dismissed, on the other hand. The dispute has to
be settled before an impartial body. The grievance machinery with members designated by the union and the company cannot be expected to
be impartial against the dismissed employees. Due process demands that the dismissed workers grievances be ventilated before an impartial
body. Since there has already been an actual termination, the matter falls within the jurisdiction of the Labor Arbiter."
Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between the union and petitioner company because both
have previously agreed upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was only private respondent on his own
who questioned the compulsory retirement. Thus, the case is properly denominated as a "termination dispute" which comes under the
jurisdiction of labor arbiters.
2. Phil. Airlines vs. Airline Pilots Asso. Of Phils., G.R. No. 143686, January 15, 2002
Facts:
This case was stemmed from petitioner's act of unilaterally retiring airline pilot Captain Albino Collantes own Retirement Plan. Contending, inter
alia, that the retirement of Captain Collantes constituted illegal dismissal and union busting. The Secretary of the DOLE assumed jurisdiction
over the labor dispute. Base on his decision, PAL should first consult the pilot concerned before implementing his retirement.
Issue:
Is the decision of the Secretary of DOLE correct in saying that in the exercise of retiring their employees, the employer should first consult their
employee concerned before implementing the retirement?
Ruling:
NO. The retirement of an employee may be done upon initiative and option of the management. Surely, the requirement to consult the pilots
prior to their retirement defeats the exercise by management of its option to retire the said employees. It gives the pilot concerned an undue
prerogative to assail the decision of management. Due process only requires that notice be given to the pilot of petitioner's decision to retire him.
Hence, the Secretary of Labor overstepped the boundaries of reason and fairness when he imposed on petitioner the additional requirement of
consulting each pilot prior to retiring him.
Furthermore, when the Secretary of Labor and Employment imposed the added requirement that petitioner should consult its pilots prior to
retirement, he resolved a question which was outside of the issues raised, thereby depriving petitioner an opportunity to be heard on this point.
3. Cainta Catholic School vs. Cainta Catholic School Employees Union, G.R. No. 151021, May 4, 2006 citing 1996 Pantranco North
Express
Facts:
Page 230
LABOR RELATIONS
231

On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta Catholic School (School) and the Cainta Catholic
School Employees Union (Union) effective 1 January 1986 to 31 May 1989.
On 15 October 1993, the School retired Llagas and Javier, who had rendered more than twenty (20) years of continuous service, pursuant to
Section 2, Article X of the CBA, to wit:
An employee may be retired, either upon application by the employee himself or by the decision of the Director of the School, upon reaching
the age of sixty (60) or after having rendered at least twenty (20) years of service to the School the last three (3) years of which must be
continuous.
Three (3) days later, the Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB). On 8 November 1993, the
Union struck and picketed the Schools entrances.
On 27 July 1994, the Union filed a complaint 9 for unfair labor practice before the NLRC. Three (3) issues were passed upon by the NLRC,
namely: (1) whether the retirement of Llagas and Javier is legal; (2) whether the School is guilty of unfair labor practice; and (3) whether the
strike is legal.
The NLRC ruled that the retirement of Llagas and Javier is legal as the School was merely exercising an option given to it under the CBA. The
NLRC dismissed the unfair labor practice charge against the School for insufficiency of evidence. Furthermore, it was found that the strike
declared by the Union from 8 to 12 November 1993 is illegal, thereby declaring all union officers to have lost their employment status.
In reversing the decision of the NLRC, the Court of Appeals construed the retirement of Llagas and Javier as an act amounting to unfair labor
practice when viewed against the backdrop of the relevant circumstances obtaining in the case.
Issue:
The key issue remains whether the forced retirement of Llagas and Javier was a valid exercise of management prerogative. Undoubtedly, the
retirement of the two (2) union officers triggered the declaration of strike by the Union, and the ruling on whether the strike was legal is highly
dependent on whether the retirement was valid.
Ruling:
We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier, arising as it did
from a management prerogative granted by the mutually-negotiated CBA between the School and the Union.
Pursuant to the existing CBA, the School has the option to retire an employee 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 employee to be terminated may be unwilling to part from service, there are eminently higher standards
to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. In those two instances, it is indispensable
that the employer 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 employer and the employee whereby the latter after
reaching a certain age agrees and/or consents to sever his employment with the former.
Article 287 of the Labor Code, as amended, governs retirement of employees, stating:
ART. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or
other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any
collective bargaining agreement and other agreements: Provided, however, That an employees retirement benefits under any collective
bargaining agreement and other agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who
has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
The CBA in the case at bar established 60 as the compulsory retirement age. However, it is not alleged that either Javier or Llagas had reached
the compulsory retirement age of 60 years, but instead that they had rendered at least 20 years of service in the School, the last three (3) years
continuous. Clearly, the CBA provision allows the employee to be retired by the School even before reaching the age of 60, provided that he/she
had rendered 20 years of service. Would such a stipulation be valid? Jurisprudence affirms the position of the School.
Page 231
LABOR RELATIONS
232

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 retire employees 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 employees after one month of service
cannot be upheld. Neither will the Court sustain a retirement clause that entitles the retiring employee 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 Progressive. Twenty years is a more than ideal length of service an employee can
render to one employer. Under ordinary contemplation, a CBA provision entitling an employee to retire after 20 years of service and accordingly
collect retirement benefits is reward for services rendered since it enables an employee to reap the fruits of his labor particularly retirement
benefits, whether lump-sum or otherwise at an earlier age, when said employee, in presumably better physical and mental condition, can
enjoy them better and longer.
Nonetheless, the premise warrants considering whether management may be precluded from retiring an employee whom it is entitled to retire
upon a determination that the true cause for compulsory retirement is the employees union activities.
The law and this Court frowns upon unfair labor practices by management, including so-called union-busting. Such illegal practices will not be
sustained by the Court, even if guised under ostensibly legal premises. But with respect to an active unionized employee who claims having lost
his/her job for union activities, there are different considerations presented if the termination is justified under just or authorized cause under the
Labor Code; and if separation from service is effected through the exercise of a duly accorded management prerogative to retire an employee.
There is perhaps a greater imperative to recognize the management prerogative on retirement than the prerogative to dismiss employees for
just or authorized causes. For one, there is a greater subjectivity, not to mention factual dispute, attached to the concepts of just or authorized
cause than retirement which normally contemplates merely the attainment of a certain age or a certain number of years in the service. It would
be easier for management desirous to eliminate pesky union members to abuse the prerogative of termination for such purpose since the
determination of just or authorized cause is rarely a simplistic question, but involves facts highly prone to dispute and subjective interpretation.
On the other hand, the exercise by management of its retirement prerogative is less susceptible to dubitability as to the question whether an
employee could be validly retired. The only factual matter to consider then is whether the employee 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 employee, no matter the degree of involvement of said employee
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 employees can be judicially interfered on a showing that the employee 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, 34 that the exercise by the employer of a valid and duly
established prerogative to retire an employee does not constitute unfair labor practice.
4. Jaculbe vs. Silliman University, G.R. No. 156934, March 16, 2007
Facts:
Respondent, through its Human Resources Development Office, informed petitioner that she was approaching her 35th year of service with the
university and was due for automatic retirement on November 18, 1993, at which time she would be 57 years old. This was pursuant to
Page 232
LABOR RELATIONS
233

respondents retirement plan for its employees which provided that its members could be automatically retired "upon reaching the age of 65 or
after 35 years of uninterrupted service to the university." Respondent required certain documents in connection with petitioners impending
retirement.
Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be
allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS pension. But respondent stood pat on
its decision to retire her, citing "company policy."
On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for "termination of service with
preliminary injunction and/or restraining order."
On November 18, 1993, respondent compulsorily retired petitioner.
Issue:S
1) did respondents retirement plan imposing automatic retirement after 35 years of service contravene the security of tenure clause in the 1987
Constitution and the Labor Code?
2) did respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in its retirement plan?
Labor Arbiter: found respondent guilty of illegal dismissal and ordered that petitioner be reinstated and paid full backwages.
NLRC: reversed the labor arbiters decision and dismissed the complaint for lack of merit and likewise denied petitioners motion for
reconsideration.
CA: affirmed the NLRC.
Hence this petition.
Ruling:
AFFIRMATIVE.
Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per se repugnant to the
constitutional guaranty of security of tenure. Article 287 of the Labor Code provides:
ART. 287. Retirement - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or
other applicable employment contract. Xxx
By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. However,
after reviewing the assailed decision together with the rules and regulations of respondents retirement plan, we find that the plan runs afoul of
the constitutional guaranty of security of tenure contained in Article XIII, also known as the provision on Social Justice and Human Rights.
The CA, in ruling against petitioner, premised its decision to uphold the retirement plan on her voluntary participation therein:
The petitioner in this case may, however, argue that the Pantranco case is not applicable in the case at bar as the controversy in the said case
involves a compulsory retirement on the basis of the length of service rendered by the employee as agreed in an existing CBA, whereas in the
present case, the private respondent compulsorily retired the petitioner not based on a CBA but on the retirement scheme provided for in the
private respondents retirement plan. Nonetheless, this argument must fail. The contract fixing for retirement age as allowed under Article 287 of
the Labor Code does not exclusively refer to CBA which provides for an agreed retirement age. The said provision explicitly allows, as well,
other applicable employment contract to fix retirement age.
The records disclose that the private respondents Retirement Plan has been in effect for more than 30 years. The said plan is deemed
integrated into the employment contract between private respondent and its employees as evidenced by the latters voluntary contribution
through monthly salary deductions. Previous retirees have already enjoyed the benefits of the retirement plan, and ever since the said plan was
effected, no questions or disagreement have been raised, until the same was made to apply to the petitioner. The problem with this line of
reasoning is that a perusal of the rules and regulations of the plan shows that participation therein was not voluntary at all.
Rule III of the plan, on membership, stated:
SECTION 1 MEMBERSHIP
Page 233
LABOR RELATIONS
234

All full-time Filipino employees of the University will automatically become members of the Plan, provided, however, that those who have retired
from the University, even if rehired, are no longer eligible for membership in the Plan. A member who continues to serve the University cannot
withdraw from the Plan.
xxx xxx xxx
SECTION 2 EFFECTIVITY OF MEMBERSHIP
Membership in the Plan starts on the day a person is hired on a full-time basis by the University.
SECTION 3 TERMINATION OF MEMBERSHIP
Termination of membership in the Plan shall be upon the death of the member, resignation or termination of employees contract by the
University, or retirement from the University.
Rule IV, on contributions, stated:
The Plan is contributory. The University shall set aside an amount equivalent to 3% of the basic salaries of the faculty and staff. To this shall be
added a 5% deduction from the basic salaries of the faculty and staff.
A member on leave with the University approval shall continue paying, based on his pay while on leave, his leave without pay should pay his
contributions to the Plan. However, a member, who has been on leave without pay should pay his contributions based on his salary plus the
Universitys contributions while on leave or the full amount within one month immediately after the date of his reinstatement. Provided[,] further
that if a member has no sufficient source of income while on leave may pay within six months after his reinstatement.
From the language of the foregoing retirement plan rules, the compulsory nature of both membership in and contribution to the plan debunked
the CAs theory that petitioners "voluntary contributions" were evidence of her willing participation therein. It was through no voluntary act of her
own that petitioner became a member of the plan. In fact, the only way she could have ceased to be a member thereof was if she stopped
working for respondent altogether. Furthermore, in the rule on contributions, the repeated use of the word "shall" ineluctably pointed to the
conclusion that employees had no choice but to contribute to the plan (even when they were on leave).
According to the assailed decision, respondents retirement plan "ha(d) been in effect for more than 30 years." What was not pointed out,
however, was that the retirement plan came into being in 1970 or 12 years after petitioner started working for respondent. In short, it was not
part of the terms of employment to which petitioner agreed when she started working for respondent. Neither did it become part of those terms
shortly thereafter, as the CA would have us believe.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after
reaching a certain age agrees to sever his or her employment with the former. In Pantranco North Express, Inc. v. NLRC, to which both the CA
and respondent refer, the imposition of a retirement age below the compulsory age of 65 was deemed acceptable because this was part of the
CBA between the employer and the employees. The consent of the employees, as represented by their bargaining unit, to be retired even
before the statutory retirement age of 65 was laid out clearly in black and white and was therefore in accord with Article 287.
In this case, neither the CA nor the respondent cited any agreement, collective or otherwise, to justify the latters imposition of the early
retirement age in its retirement plan, opting instead to harp on petitioners alleged "voluntary" contributions to the plan, which was simply untrue.
The truth was that petitioner had no choice but to participate in the plan, given that the only way she could refrain from doing so was to resign or
lose her job. It is axiomatic that employer and employee do not stand on equal footing, a situation which often causes an employee to act out of
need instead of any genuine acquiescence to the employer. This was clearly just such an instance.
Not only was petitioner still a good eight years away from the compulsory retirement age but she was also still fully capable of discharging her
duties as shown by the fact that respondents board of trustees seriously considered rehiring her after the effectivity of her "compulsory
retirement."
As already stated, an employer is free to impose a retirement age less than 65 for as long as it has the employees consent. Stated conversely,
employees are free to accept the employers offer to lower the retirement age if they feel they can get a better deal with the retirement plan
presented by the employer. Thus, having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely
assented to by her, respondent was guilty of illegal dismissal.
At this point, reinstatement is out of the question. Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age.
For this reason, we grant her separation pay in lieu of reinstatement. It is also for this reason that we modify the award of backwages in her
favor, to be computed from the time of her illegal dismissal on November 18, 1993 up to her compulsory retirement age.
WHEREFORE, the petition is hereby GRANTED.
Page 234
LABOR RELATIONS
235
5. Globe Telecom vs. Crisologo, G.R. No. 17644, August 10, 2007
Facts:
Respondent Jenette Marie B. Crisologo, a lawyer, joined Globe Telecom (Globe) on November 3, 1998 as a manager in its corporate legal
services department.[6] Her tasks included negotiating, drafting and reviewing the companys supply contracts.[7]
On April 5, 2002, respondent (who was then pregnant) was rushed to the Makati Medical Center due to profuse bleeding. It was later diagnosed
as a possible miscarriage.[8]
After a week-long absence, respondent reported back to work on April 12, 2002.[9] On the same day, she tendered her resignation letter
explaining that she was advised by her doctor to rest for the duration of her pregnancy.[10] She also requested permission to exhaust her
unused leaves until the effective date of her resignation on May 30, 2002.[11] Globe accepted her resignation.
On April 30, 2002, respondent called on her immediate supervisor, petitioner Ma. Caridad Gonzales.[12] In the course of their conversation,
petitioner Gonzales casually informed respondent of an e-mail circulating within the company[13] to the effect that she (respondent) allegedly
solicited money from one of the companys suppliers.[14] Because the e-mail was not forwarded to her (being its subject), respondent requested
a copy and an opportunity to confront the person(s) responsible. Petitioner Gonzales declined as there was no longer any reason to pursue the
matter.[15]
On May 2, 2002, respondent sent petitioner Gonzales a letter complaining of her ill-treatment by the company after she submitted her
resignation letter.[16] She also confided that she resigned only because the e-mail damaged her name and reputation.[17] For that reason, she
requested petitioner Gonzales to issue a certification clearing her of any wrongdoing, misconduct or transgression.[18]
Petitioner Gonzales reminded respondent that, as a former executive, she should have been familiar with the company's standard operating
procedure with regard to former employees. All employees basically undergo the same procedure upon separation from the company.[19]
Gonzales also requested respondent to settle her debts and accountabilities to the company.[20] Meanwhile, Globe issued a certification
attesting to respondents employment in the company from November 3, 1998 to May 30, 2002.[21]
On May 2, 2002, respondent sent petitioners another letter. She insinuated that petitioners forced her to resign and reiterated her demand that
Globe clear her name.[22] Petitioner Gonzales informed respondent that she had to settle her obligations to Globe first before it could issue the
requested clearance.[23]
Believing that Globe would not comply with her demands, respondent filed a complaint for illegal dismissal against petitioners on July 3, 2002.
[24] According to respondent, petitioners fired her on the basis of a rumor whose veracity was never proven.[25] She was neither furnished a
copy of the e-mail nor allowed to confront the person(s) who circulated it. Petitioner Gonzales immediately closed the matter with finality without
conducting any inquiry.[26] Furthermore, petitioners failed not only to adduce clear and substantial proof of loss of confidence but also to
observe due process[27] as petitioner Gonzales summarily forced her to resign.[28]
Petitioners, on the other hand, contended that respondents clear and unequivocal resignation letter showed her unconditional desire to resign.
[29]
Ruling:
To support their contention that respondent voluntarily resigned, petitioners presented her resignation letter dated April 12, 2002[46]:
This is to inform you that as per my doctors advice, I have to take a long rest due to a very difficult pregnancy and other health reasons. I am
therefore tendering my resignation effective 30 May 2002 and would like to request that I be allowed to exhaust all leaves due to me until such
date. Furthermore, I hereby undertake to turn over all my pending work to other lawyers until said effective date of my termination.
Thank you very much.[47] (emphasis supplied)
Respondent personally drafted her resignation letter in a clear, concise and categorical language. Its content, as quoted above, confirmed her
unequivocal intent to resign.
Page 235
LABOR RELATIONS
236

An employee of respondents accomplished educational background and professional standing will not easily relinquish her legal rights unless
she intends to.[48] Respondents resignation letter without doubt proved petitioners assertion that she voluntarily resigned from her job.
Moreover, the resignation letter was submitted by respondent and was accepted by Globe on April 12, 2002. This fact alone completely negated
her claim that petitioners coerced her to resign on April 30, 2002. Indeed, how could she have been forced to resign on that date when she had
already tendered her resignation more than two weeks earlier?
Respondent Could Not Have Been Coerced or Intimidated. Coercion exists when there is a reasonable or well-grounded fear of an imminent evil
upon a person or his property or upon the person or property of his spouse, descendants or ascendants.[51] No such situation existed in this
case. As a matter of fact, respondents resignation letter[52] and May 2, 2002 letter[53] both contained expressions of gratitude. In her May 2,
2002 letter, she told petitioner Gonzales:
I wish to express my appreciation for the training you readily gave me while I was under your supervision.[54]
In St. Michael Academy v. NLRC,[55] we held that expressions of gratitude cannot possibly come from an employee who is just forced to resign
as they belie allegations of coercion.[56] Moreover, the May 2, 2002 letter was sent after respondents April 30, 2002 conversation with petitioner
Gonzales. Indeed, if something untoward really took place in the course of that conversation, experience dictates that respondent would not
have bothered to thank petitioner Gonzales. Therefore, respondents assertion that she was forced to resign was simply not true.
6. BMG Records Phils et al., vs. Aparecio, et al., G.R. No. 153290, September 5, 2007, citing Phil Today vs. NLRC, 267 SCRA 202 [1996]
Facts:
Petitioner BMG Records (Phils.), Inc. (BMG) is engaged in the business of selling various audio records nationwide. On September 2, 1990, it
hired private respondent Aida C. Aparecio (Aparecio) as one of the promo girls in its Cebu branch. For working from Monday to Sunday, she
received a salary of P181.00 per day.
On May 25, 1998, Aparecio filed a complaint against BMG and its Branch Manager, Jose Yap, Jr., co-petitioner herein, for illegal dismissal and
non-payment of overtime pay, holiday pay, premium pay for rest day, 13th month pay, service incentive leave, and separation pay.[5] In her
Position Paper, she alleged: That she was illegally dismissed or terminated [from] employment on April 30, 1998; that before said date[,]
however, she was asked by respondent to resign and will be paid (sic) all her benefits due like a one-month pay for every year of service,
payment of services rendered, overtime and holiday pay, rest day, 13th month, service incentive leave and separation pay and to [execute] a
letter of resignation; That in view of respondents insistence to prepare and [execute] a letter-resignation[,] even without proper accounting of
any accountability, the complainant was lured, induced and compelled to submit a letter of resignation believing on respondents promise and
assurance to pay all the benefits due her as aforesaid; That after executing said resignation letter, the respondent did not make good its promise
and [instead] did an accounting by themselves in the absence of herein complainant and arrived on a computation that complainants liability per
their accounting reached to the staggering amount of P8,000.00; that since they offered to pay a separation pay of only P12,000.00, minus
complainants alleged accountability of P8,000.00, they are ready to pay the balance thereof any time; That herein complainant was under
respondents employ for seven (7) years, seven (7) months and twenty-eight (28) days when illegally terminated [from] her employment xxx.
Petitioners, however, proffer a different version of the facts. They narrate that Aparecio was initially performing well as an employee but as years
passed by she seemed to be complacent in the performance of her job and had been comparing the salaries of promo girls in other companies.
It appeared that she was no longer interested in her job. In April 1998, Aparecio and two other promo girls, Jovelina V. Soco and Veronica P.
Mutya, intimated to their supervisor that they were intending to resign and were requesting for some financial assistance. BMG made it clear
that, as a company policy, an employee who resigns from service is not entitled to financial assistance, but considering the length of their
service and due to humanitarian consideration it would accede to the request after they secure their respective clearances. Forthwith, the three
employees tendered their resignations, which were accepted. When they processed the required individual clearance, it was found out that they
had incurred some shortages after inventory. Per agreement, said shortages were deducted from the amounts due them. Thus, Soco and Mutya
received their last salary, a proportion of the 13th month pay, tax refund and financial assistance less the deductions, and they executed their
releases and quitclaims. Except for the financial assistance, Aparecio also obtained the same yet refused to sign the release and quitclaim,
protesting the amount of P9,170.12 deducted from the financial assistance. She was adamant but BMG stood by the previous agreement.
Ruling:
After careful analysis, this Court finds and so holds that the submissions of Aparecio in all her pleadings failed to substantiate the allegation that
her consent was vitiated at the time she tendered her resignation and that petitioners are guilty of illegal dismissal.
Page 236
LABOR RELATIONS
237

In a nutshell, Aparecio submits that fraud, undue influence, intimidation, and/or mistake were attendant upon her resignation from BMG. As her
consent was allegedly vitiated, the act of resigning became involuntary; hence, petitioners are guilty of illegal dismissal.
The argument is not tenable.
Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of
the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish
must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in
determining whether in fact, he or she intended to sever from his or her employment.
Thus, this Court agrees with petitioners contention that the circumstances surrounding Aparecios resignation should be given due weight in
determining whether she had intended to resign. In this case, such intent is very evident:
First, Aparecio already communicated to other people that she was about to resign to look for a better paying job since she had been
complaining that employees like her in other companies were earning much more;
Second, prior to the submission of her resignation letter, Aparecio and two other promo girls, Soco and Mutya, approached their supervisor,
intimated their desire to resign, and requested that they be given financial assistance, which petitioners granted on the condition that deductions
would be made in case of shortage after inventory;
Third, Aparecio, Soco, and Mutya submitted their duly signed resignation letters, which were accepted by petitioners; and
Fourth, Aparecio already initiated the processing of her clearance; thus, she was able to receive her last salary, 13th month pay, and tax refund
but refused to receive the financial assistance less the deductions made.
The foregoing facts were affirmatively narrated and attested to in the notarized affidavit of Soco and Cinco and have remained incontrovertible
as they were never denied by Aparecio. The NLRC, thus, erred when it did not give probative weight to their testimonies even if belatedly
presented in petitioners motion for reconsideration.
Now, the acceptance by petitioners of Aparecios resignation rendered the same effective. Upon such acceptance, it may not be unilaterally
withdrawn without the consent of petitioners. When the employee later signified the intention of continuing his or her work, it was already up to
the employer to accept the withdrawal of his or her resignation. The mere fact that the withdrawal was not accepted does not constitute illegal
dismissal, the acceptance of the withdrawal of the resignation being the employers sole prerogative. As held in Intertrod Maritime, Inc. v. NLRC:
Once an employee resigns and his resignation is accepted, he no longer has any right to the job. If the employee later changes his mind, he
must ask for approval of the withdrawal of his resignation from his employer, as if he were re-applying for the job. It will then be up to the
employer to determine whether or not his service would be continued. If the employer accepts said withdrawal, the employee retains his job. If
the employer does not x x x the employee cannot claim illegal dismissal for the employer has the right to determine who his employees will be.
To say that an employee who has resigned is illegally dismissed, is to encroach upon the right of employers to hire persons who will be of
service to them.
A resigned employee who desires to take his job back has to re-apply therefor, and he shall have the status of a stranger who cannot unilaterally
demand an appointment. He cannot arrogate unto himself the same position which he earlier decided to leave. To allow him to do so would be to
deprive the employer of his basic right to choose whom to employ. Such is tantamount to undue oppression of the employer. It has been held
that an employer is free to regulate, according to his own discretion and judgment, all aspects of employment including hiring. The law, in
protecting the rights of the laborer, impels neither the oppression nor self-destruction of the employer.
7. Blue Angel Manpower and Security Services vs. CA, G.R. No. 161196, July 28, 2008
Facts:
Blue Angel, a messengerial and security agency, hired private respondents Romel Castillo, Wilson Ciriaco, Gary Garces, and Chesterfield
Mercader as security guards and detailed them at the National College of Business and Arts (NCBA) in Cubao, Quezon City.
Page 237
LABOR RELATIONS
238

Castillo and Mercader, later joined by Ciriaco and Garces, filed a complaint for illegal deductions and other money claims against Blue Angel.
Eventually, they amended their complaint to include illegal dismissal. According to the four guards, they were required, while still with Blue
Angel, to work from 7:00 a.m. to 7:00 p.m. without overtime and premium holiday pay, among other benefits. They also alleged receiving only
PhP 5,000 a month or PhP 166 per day and, from this amount, Blue Angel deducted PhP 100 as cash bond. They further averred that Blue
Angel, when apprised of their original complaint, illegally terminated Garces and Ciriaco, respectively, and Castillo and Mercader. 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.
Issue:
Whether or not private respondents were illegally dismissed
Ruling:
We rule that the resignations were involuntary and the termination of private respondents was illegal.
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 Angel's 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.
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.
8. Guerzon Jr et al vs. Pasig Industries Inc., et al., G.R. No. 170266, Sept. 12, 2008
Facts:
Petitioners were employees of respondent Pasig Industries, Inc. (PII) stationed in its Makati office. Guerzon was PII's export/import manager for
21 years; Cruz was the company's chief accountant for 20 years and Bauyon was a member of PII's accounting staff since 1989.
In 1995, respondent Yoshikitsu Fujita informed petitioners that PII's parent company had decided to close the Makati office. To streamline
operations, functions performed by the Makati office would be transferred to its facilities in the Bataan Export Processing Zone. For this reason,
petitioners were given the option to resign, in which case they would be entitled to a special separation package (SSP) equivalent to one-month
basic salary for each year of service.
Petitioners decided to resign but requested a recomputation of their respective separation pay based on the monthly gross pay ( i.e., basic pay
plus all allowances).
Despite voluntarily availing of the SSP, petitioners filed a complaint for illegal dismissal and payment of separation pay, retirement benefits, leave
pay and 13th month pay against PII, its president Masahiro Fukada and Fujita in the National Labor Relations Commission (NLRC).
Because petitioners filed the complaint two days after they were "terminated," the labor arbiter found respondents guilty of illegal dismissal.
Accordingly, he awarded backwages, separation pay and attorneys' fees to petitioners.
Respondents appealed.
The NLRC found that petitioners voluntarily accepted the terms of the SSP offered by PII. It noted that they negotiated to improve PII's offered
SSP. Thus, the NLRC reversed the decision of the labor arbiter.
Page 238
LABOR RELATIONS
239

Aggrieved, petitioners filed a petition for certiorari in the Court of Appeals (CA) asserting that the NLRC committed grave abuse of discretion in
reversing the decision of the labor arbiter.
Hence, petitioners availed of this recourse contending that the CA erred in affirming the decision of the NLRC. Respondents allegedly failed to
prove that PII had been incurring losses to justify its reorganization. They claimed they were dismissed without just or authorized cause.
Issues:
Whether or not the petitioners were illegally dismissed.
Is the streamlining an authorized cause for the termination of the petitoners?
Ruling:
The petitioners were NOT illegally dismissed. As they voluntarily resigned from PII.
Petitioners held responsible positions in PII. Employees of their educational backgrounds and professional standing do not easily relinquish their
legal rights unless they intend to. In fact, petitioners even bargained to improve the terms of the SSP and, after successfully doing so, voluntarily
resigned from PII.
Consequently, whether the streamlining of PII's operations constituted an authorized cause for petitioners' termination became immaterial in
view of their voluntary resignation.
9. Suarez Jr. et al., vs. National Steel Corp., G.R. No. 150180, Oct. 17, 2008
Facts:
National Steel Corporation was engaged in the business of manufacturing steel products needed for pipe making, ship building, can-making and
production of appliances. Sometime in 1994, respondent suffered substantial financial losses due to an increase in the volume of steel products
manufactured by foreign countries. With this development, respondent adopted an organizational streamlining program that resulted in the
retrenchment of seven hundred (700) employees in its main plant in Iligan City, among whom were herein petitioners.
One month prior to its effectivity, respondent sent out individual notices to the seven hundred (700) employees affected by the retrenchment,
including petitioners. The notices specifically stated that their services were terminated effective on said date and they will each receive a
separation package in accordance with the retrenchment program. The separation package consisted of the following: (1) separation pay
equivalent to two (2) months salary for every year of service; (2) leave balance credits; (3) 13 th month pay; and (4) uniform plus rice subsidy
differential. After having been paid their separation benefits, the employees, including herein petitioners, each executed and signed a release
and quitclaim, written in English and containing a translation in the Visayan dialect in the same document.
Nothing was heard from the retrenched employees, until about two and half years after their separation from the company, when herein
petitioners wrote respondent demanding payment of retirement benefits under the CBA. They claimed that they were qualified for optional
retirement after having rendered services for at least ten (10) years when they were retrenched. Respondent rejected petitioners' claim, forcing
petitioners to file a complaint for payment of retirement benefits against respondent.
The Labor Arbiter dismissed the complaint for lack of merit. Upon appeal, NLRC granted the appeal and reversed the ruling of the Labor Arbiter.
By way of Petition for Certiorari, CA declared that petitioners were no longer entitled to retirement benefits after having received the separation
pay, and were precluded from claiming such benefits because of their quitclaims.
Issue:
Whether or not petitioners (retrenched employees) can still recover retirement benefits in addition to their separation pay.
Ruling:
No, petitioners are no longer entitled to recover retirement benefits. Having been separated from employment due to an authorized cause,
petitioners are barred from receiving retirement benefits pursuant to Article X(E) of respondent's retirement plan. With the inclusion of such
provision in the retirement plan, respondent categorically disallows payment of retirement benefits to retrenched employees. They are only
entitled to payment of separation pay in accordance with Article 283 of the Labor Code.
Page 239
LABOR RELATIONS
240

The CA committed no error in considering the affidavits as contemporaneous and subsequent acts from which the intention of the parties to the
CBA can be inferred. While the CBA, on its face, does not contain an express prohibition of payment of retirement benefits to retrenched
employees, the parties may still prove it by means of contemporaneous and subsequent acts of the parties to the agreement, such as the
execution of the affidavits. In their affidavits, they attested that under the CBA, an employee who is separated pursuant to a retrenchment
program and who received the corresponding separation package is completely proscribed from demanding and claiming payment of retirement
benefits.
Further, petitioners voluntarily executed and signed a release and quitclaim after receiving their separation package, acknowledging full and final
payment of all benefits that they may be entitled to in relation to their employment.
Thus, Petition for review is denied.
10. Goodrich Mfg Corp vs. Ativo et al., G.R. No. 188002, Feb. 1, 2010
Facts:
Emerlina Ativo et al., are former employees of petitioner Goodrich Manufacturing Corporation (Goodrich) assigned as machine or maintenance
operators. In the last quarter of 2004, Goodrich suffered financial constraints and gave all its employees the option to voluntarily resign from the
company. Respondents were among those who availed of that option and were paid their separation pay. Ativo et al., executed their waivers and
quitclaims. However, they changed their minds and filed for illegal dismissal against Goorichwith prayer for payment of their full monetary
benefits before the NLRC. The Labor Arbiter held that there was no illegal dismissal but ruled that Goodrich was still liable for the employees
SIL, ECOLA, and 13th month pay, and that the separation pay was insufficient. Mutually unhappy, both parties appealed to the NLRC which
reversed the LAs decision. The NLRC said that the considerations they received are not unreasonable, vis--vis the awards granted [to] them in
the assailed Decision. Notably, the awards even include the 13th month pays for 2002 and 2003 which, by respondents proof appear already
paid. We also noted that complainants are not shown to have signed the deeds of waiver and quitclaim involuntarily, without understanding the
implication and consequences thereof. The case was brought before the CA which renderred a decision in favor of Ativo et. al., holding that they
are entitled to receive their unpaid 13th month pay, SIL, and ECOLA. And so the issue is now before the Supreme Court.
Issue:
W/N the release, waiver and quitclaim signed by respondents are valid and binding; and whether respondents may still receive the deficiency
amounts due them.
Ruling:
The release, waiver and quitclaim are valid and binding. Capital wins this time.
Requisites of a valid quitclaim
It is true that the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by
unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees. In certain cases, however, the Court
has given effect to quitclaims executed by employees if the employer is able to prove the following requisites, to wit:
(1) the employee executes a deed of quitclaim voluntarily;
(2) there is no fraud or deceit on the part of any of the parties;
(3) the consideration of the quitclaim is credible and reasonable; and
(4) the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized
by law.
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable
settlement, it is binding on the parties and may not later be disowned simply because of a change of mind.
In their Comment19 dated October 1, 2009, respondents themselves admitted that they were not coerced to sign the quitclaims. They, however,
maintain that two (2) reasons moved them to sign the said documents: first, they believed Goodrich was terminating its business on account of
financial hardship; and second, they thought petitioners will pay them the full amount of their compensation. 21 Respondents insist that they were
deceived into signing the quitclaims when they learned that they were not paid their full monetary benefits and after discovering that the
company did not really close shop, but instead only assumed a different company name.
Page 240
LABOR RELATIONS
241

Quitclaims were simple, clear and unequivocal
The records of the case are bereft of any substantial evidence to show that respondents did not know that they were relinquishing their right
short of what they had expected to receive and contrary to what they have so declared. Put differently, at the time they were signing their
quitclaims, respondents honestly believed that the amounts received by them were fair and reasonable settlements of the amounts which they
would have received had they refused to voluntarily resign from the said company.
Respondents were not deceived
Ativo and company claim that they were deceived because petitioners did not really terminate their business since Mr. Chua Goy had set up
another company with the same line of business as Goodrich. Such contention, however, was not proven during the hearing before the Labor
Arbiter and the NLRC. Hence, such claim is based only on respondents surmises and speculations which, unfortunately, can never be used as
a valid and legal ground to repudiate respondents quitclaims.
Considerations received were not grossly inadequate
As correctly pointed out by the NLRC, the total awards computed by the Labor Arbiter will definitely even be lesser after deducting the 13th
month pay for the years 2002 and 2003, which have already been received by the respondents prior to the filing of their complaints, but which
the Labor Arbiter still included in his computation. The difference between the amounts expected from those that were received may, therefore,
be considered as a fair and reasonable bargain on the part of both parties.
Petition is granted. CA decision is reversed and set aside. The NLRCs decision is reinstated.
11. Korean Air Co. Ltd. v. Yuson, G.R. No. 170369, June 16, 2010
Facts:
Korean Air hired Yuson as reservations agent. Korean Air promoted Yuson to assistant manager in 1993, and to passenger sales manager in
1999.
In April 2001, Yuson requested Korean Air that she be transferred from the passenger sales department to the cargo department, and so Korean
Air temporarily transferred Yuson to the cargo department as "cargo dispatch." Yuson continued to receive the same compensation and exercise
the same authority as passenger sales manager.
In order to cut costs, Korean Air offered its employees an early retirement program (ERP). Yuson accepted the offer for early retirement.
Suk (manager) informed Yuson that she was excluded from the ERP because she was retiring on 8 January 2002. Yuson claimed that Korean
Air was bound by the perfected contract and accused the company of harassment and discrimination.
On 28 November 2001, Yuson filed with the arbitration branch of the NLRC a complaint against Korean Air and Suk for payment of benefit under
the ERP, moral damages, exemplary damages, and attorney's fees.
LA denied for lack of merit Yuson's claims and held that the ERP memorandum included only rank-and-file, and excluded managerial,
employees and such memo was reserved to Korean Air discretion in approving applications for the ERP and that approval of applications for the
ERP was a valid exercise of Korean Air's management prerogative.
A compromise agreement was entered into between Korean Air and Yuson, on 14 February 2003, whereby the agreement included among
others the payment of P1,671,546.92, representing her retirement benefit pursuant to Article 287 of the Labor Code, as amended.
NLRC affirmed LA decision, however CA set aside the decision.
Issue:
WON Yuson may still claim benefit under the ERP.
Ruling: No, Yuson may no longer claim the benefit under the ERP.
Third paragraph of Article 287 states that:
Page 241
LABOR RELATIONS
242

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who
has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
On 14 February 2003, Yuson accepted P1,671,546.92 as retirement benefit under Article 287. Her claim for benefit under the ERP became moot
when she availed of the optional retirement under Article 287 and accepted the benefit. By her acceptance of the benefit, Yuson is deemed to
have opted to retire under Article 287.
The Court of Appeals held that Yuson may claim benefit under the ERP because "the offer was certain and the acceptance is absolute; hence,
there is a valid contract pursuant to the last paragraph of Article 1315 of the New Civil Code."
The Court disagrees.
In the present case, the offer is not certain: (1) the 21 August 2001 memorandum clearly states that, "MNLSM Management, on its discretion, is
hereby offering the said early retirement program to its staff"; (2) applications for the ERP were forwarded to the head office for approval, and
further acts on the offeror's part were necessary before the contract could come into existence; and (3) the 21 August 2001 memorandum clearly
states Korean Air's intention, which was, "to prevent further losses." Korean Air could not have intended to ministerially approve all applications
for the ERP.
12. Cercado v. Uniprom Inc., G.R. No. 188154, October 13, 2010
Facts:
Petitioner Lourdes A. Cercado (Cercado) started working for respondent UNIPROM on December 15, 1978 as a ticket seller assigned at Fiesta
Carnival, Araneta Center, Quezon City. Later on, she was promoted as cashier and then as clerk typist. UNIPROM instituted an Employees
Non-Contributory Retirement Plan which provides that any participant with twenty (20) years of service, regardless of age, may be retired at his
option or at the option of the company. It amended the retirement plan in compliance with Republic Act (R.A.) No. 7641. Under the revised
retirement plan, UNIPROM reserved the option to retire employees who were qualified to retire under the program.
UNIPROM implemented a company-wide early retirement program for its 41 employees, including herein petitioner, who, at that time, was 47
years old, with 22 years of continuous service to the company. She was offered an early retirement package amounting to P171,982.90, but she
rejected the same. UNIPROM exercised its option under the retirement plan, and decided to retire Cercado effective at the end of business
hours on February 15, 2001. A check of even date in the amount of P100,811.70, representing her retirement benefits under the regular
retirement package, was issued to her. Cercado refused to accept the check. UNIPROM nonetheless pursued its decision and Cercado was no
longer given any work assignment after February 15, 2001. This prompted Cercado to file a complaint for illegal dismissal before the Labor
Arbiter (LA), alleging, among others, that UNIPROM did not have a bona fide retirement plan, and that even if there was, she did not consent
thereto.
The National Labor Relations Commission (NLRC) affirmed the LAs decision that Cercado was illegally dismissed. However, the CA set aside
the decisions of the LA and the NLRC. Hence, this petition.
Issue:S:
Whether UNIPROM has a bona fide retirement plan
Whether petitioner was validly retired pursuant thereto
Ruling:
The assailed retirement plan of UNIPROM is not embodied in a CBA or in any employment contract or agreement assented to by petitioner and
her co-employees. On the contrary, UNIPROMs Employees Non-Contributory Retirement Plan was unilaterally and compulsorily imposed on
them. This is evident in the following provisions of the 1980 retirement plan and its amended version in 2000:
ARTICLE III
ELIGIBILITY FOR PARTICIPATION
Page 242
LABOR RELATIONS
243

Section 1. Any regular employee, as of the Effective Date, shall automatically become a Participant in the Plan, provided the Employee was
hired below age 60.
Verily, petitioner was forced to participate in the plan, and the only way she could have rejected the same was to resign or lose her job. The
assailed CA Decision did not really make a finding that petitioner actually accepted and consented to the plan. The law demands more than a
passive acquiescence on the part of employees, considering that an employers early retirement age option involves a concession of the
formers constitutional right to security of tenure.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after
reaching a certain age, agrees to sever his or her employment with the former.
Acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. While an employer may
unilaterally retire an employee earlier than the legally permissible ages under the Labor Code, this prerogative must be exercised pursuant to a
mutually instituted early retirement plan. In other words, only the implementation and execution of the option may be unilateral, but not the
adoption and institution of the retirement plan containing such option. For the option to be valid, the retirement plan containing it must be
voluntarily assented to by the employees or at least by a majority of them through a bargaining representative.
Hence, consistent with the Courts ruling in Jaculbe case, having terminated petitioner merely on the basis of a provision in the retirement plan
which was not freely assented to by her, UNIPROM is guilty of illegal dismissal.
13. Bilbao vs. Saudi Arabian Airlines, G.R. No. 183915, December 14, 2011
Facts
Bilbao was a former employee of respondent Saudia, having been hired as a Flight Attendant on May 13, 1986 until her separation from Saudia
in September 2004. During the course of her employment, Bilbao was assigned to work at the Manila Office, although the nature of her work as
a flight attendant entailed regular flights from Manila to Jeddah, Saudi Arabia, and back. On August 25, 2004, the In-Flight Service Senior
Manager of Saudia assigned in Manila received an inter-office Memorandum dated August 17, 2004 from its Jeddah Office regarding the
transfer of 10 flight attendants from Manila to Jeddah effective September 1, 2004. The said memorandum explained that such transfer was
made due to operational requirements. [3] Bilbao was among the 10 flight attendants to be transferred.Bilbao initially complied with the
transfer order and proceeded to Jeddah for her new assignment. However, on September 7, 2004, she opted to resign and relinquish her post
by tendering a resignation letter.
On October 28, 2004, Bilbao executed and signed an Undertaking [5] similar to that of a Receipt, Release and Quitclaim wherein she
acknowledged receipt of a sum of money as full and complete end-of-service award with final settlement and have no further claims whatsoever
against Saudi Arabian Airlines. [6]
In spite of this signed Undertaking, however, on July 20, 2005, Bilbao filed with the NLRC a complaint for reinstatement and payment of full
backwages; moral, exemplary and actual damages; and attorneys fees. For her part, Bilbao maintained that her resignation from Saudia was
not voluntary. Upon the other hand, Saudia averred that the resignation letters from Bilbao and her co-complainants were voluntarily made
since they were actually hand-written and duly signed. Saudia asserted that Bilbao and her co-complainants were not subjected to any force,
intimidation, or coercion when they wrote said resignation letters and even their undertakings, after receiving without protest a generous
separation package despite the fact that employees who voluntarily resign are not entitled to any separation pay. Saudia also added that the
transfer of flight attendants from their Manila Office to the Jeddah Office was a valid exercise of its management prerogative.
On August 31, 2006, Labor Arbiter Reyes rendered a Decision [7] declaring that Bilbao, together with co-complainants Centi-Mandanas and
Castells, was illegally dismissed . Saudia filed an appeal before the NLRC , Bilbao followed suit and also appealed before the NLRC . On June
25, 2007, the NLRC granted Saudias appeal, and reversed and set aside the decision of the Labor Arbiter Likewise, the Motion for
Reconsideration of Maria Joy Teresa Bilbao is DENIED. Bilbao went to the Court of Appeals via a petition for certiorari . the Court of Appeals
affirmed the Resolutions of the NLRC dated June 25, 2007 and October 26, 2007, and held that the resignation of Bilbao was of her own free
will and intelligent act. Bilbao filed a motion for reconsideration which was denied by the Court of Appeals.
Issue:
Did Ms. Bilbao vountarilty resign from Saudi Arabian Airlines
Page 243
LABOR RELATIONS
244

Ruling:
After a review of the case, we uphold the findings of the Court of Appeals that Bilbao voluntarily resigned from her employment with Saudia. Her
resignation letter and undertaking that evidenced her receipt of separation pay, when taken together with her educational attainment and the
circumstances surrounding the filing of the complaint for illegal dismissal, comprise substantial proof of Bilbaos voluntary resignation.
Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of
the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish
must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in
determining whether he or she, in fact, intended to sever his or her employment.
In the instant case, Bilbao tendered her resignation letter a week after her transfer to the Jeddah office. In the said letter, Bilbao expressed her
gratitude for the support which Saudia had given her for her eighteen years of service. Clearly, her use of words of appreciation and gratitude
negates the notion that she was forced and coerced to resign. Besides, the resignation letter was hand-written by Bilbao on a Saudia form and
was in English, a language she is conversant in. Additionally, instead of immediately filing a complaint for illegal dismissal after she was
allegedly forced to resign, Bilbao executed an Undertaking in favor of Saudia, wherein she declared that she received her full and complete endof-service award with final settlement. What is more, Bilbao waited for more than 10 months after her separation from Saudia to file a complaint
for illegal dismissal.
Despite the foregoing circumstances, Bilbao maintains that she was forced and coerced into writing the said resignation letter in the form
prepared by Saudia, and that she was left with no other option but to resign. Saudia, on the other hand, claims that Bilbaos resignation was
voluntary, thus, there could be no illegal dismissal. Even assuming that Saudia prepared the form in which Bilbao wrote her resignation letter as
claimed, this Court is not convinced that she was coerced and intimidated into signing it. Bilbao is no ordinary employee who may not be able to
completely comprehend and realize the consequences of her acts. She is an educated individual. It is highly improbable that with her long
years in the profession and her educational attainment, she could be tricked and forced into doing something she does not intend to do. Under
these circumstances, it can hardly be said that Bilbao was coerced into resigning from Saudia.
Besides, Bilbao did not adduce any competent evidence to prove that she was forced or threatened by Saudia. It must be remembered that for
intimidation to vitiate consent, the following requisites must be present: (1) that the intimidation caused the consent to be given; (2) that the
threatened act be unjust or unlawful; (3) that the threat be real or serious, there being evident disproportion between the evil and the resistance
which all men can offer, leading to the choice of doing the act which is forced on the person to do as the lesser evil; and (4) that it produces a
well-grounded fear from the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury to his
person or property. [19] In the instant case, Bilbao did not prove the existence of any one of these essential elements. Anent the Undertaking
signed by Bilbao, this Court is of the opinion that the same was validly and voluntarily executed. Indeed, not all waivers and quitclaims are
invalid as against public policy. There are legitimate waivers and quitclaims that represent a voluntary and reasonable settlement of workers
claims which should be respected by the courts as the law between the parties. [20] And if such agreement was voluntarily entered into and
represented a reasonable settlement, it is binding on the parties and should not later be disowned. Clearly then, Bilbaos claim that she was
illegally dismissed cannot be sustained. There is no showing that the Undertaking and resignation letter were executed by Bilbao under force or
intimidation. Bilbaos claims for reinstatement, payment of backwages without loss of seniority rights and with interest, moral and exemplary
damages, and attorneys fees must inevitably fail.
14. San Miguel Properties vs. Gucaban, G.R. No. 153982, July 18, 2011
Facts:
Respondent Gucaban, civil engineer, joined the workforce of petitioner San Miguel Properties Philippines, Inc. (SMPI) in 1991. Initially engaged
as a construction management specialist, she, by her satisfactory performance on the job, was promoted in 1994 and 1995, respectively, to the
position of technical services manager, and then of project development manager. As project development manager, she also sat as a member
of the company's management committee. She had been in continuous service in the latter capacity until her severance from the company in
February 1998.
In her complaint for illegal dismissal, Gucaban alleged that her separation from service was practically forced upon her by management. She
claimed that on January 27, 1998, she was informed by SMPI's President and Chief Executive Officer that the company was planning to
reorganize its manpower in order to cut on costs, and that she must file for resignation or otherwise face termination.
Page 244
LABOR RELATIONS
245

Gucaban complained of the ugly treatment which she had since received from Gonzalez and the management supposedly on account of her
refusal to sign the resignation letter. She claimed she had been kept off from all the meetings of the management committee. Her performance
of duties had been reported to be negligent and unsatisfactory. She found said report to be unfounded and unfair, because no less than the
company's Vice-President for Property Management in a subsequent memorandum, had actually vouched for her competence and efficiency on
the job. It was supposedly the extreme humiliation and alienation that impelled her to submit a signed resignation letter on February 18, 1998.
Gucaban surmised that she had merely been tricked by SMPI into filing her resignation letter because it never actualized its reorganization and
streamlining plan; on the contrary, SMPI allegedly expanded its employee population and also made new appointments and promotions to
various other positions. She felt that she had been dismissed without cause and, hence, prayed for reinstatement and payment of backwages
and damages.
The Labor Arbiter dismissed the complaint for lack of merit, finding no proven force, coercion, intimidation or any other circumstance which could
otherwise invalidate Gucaban's resignation. He likewise dismissed her claim that SMPI merely feigned the necessity of reorganization in that
while the company indeed made new other appointments following Gucaban's resignation, still, this measure was an implementation of its
reorganization plan.
Gucaban appealed to the NLRC which reversed the ruling of the Labor Arbiter. Finding that Gucaban has been illegally dismissed, it ordered her
reinstatement without loss of seniority rights and with full backwages, as well as ordered the award of damages and attorney's fees. It elevated
the matter to the Court of Appeals via a petition for certiorari.
The Court of Appeals issued the assailed Decision finding partial merit in the petition. It affirmed the NLRC's finding of illegal/constructive
dismissal, but modified the monetary award.
Issue:
Whether or not the resignation of Gucaban was tendered voluntarily.
Ruling:
Resignation the formal pronouncement or relinquishment of a position or office is the voluntary act of an employee who is in a situation
where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and he has then no other choice but to
disassociate himself from employment. The intent to relinquish must concur with the overt act of relinquishment; hence, the acts of the employee
before and after the alleged resignation must be considered in determining whether he in fact intended to terminate his employment. In illegal
dismissal cases, fundamental is the rule that when an employer interposes the defense of resignation, on him necessarily rests the burden to
prove that the employee indeed voluntarily resigned. Guided by these principles, we agree with the Court of Appeals that with the availing
evidence, SMPI was unable to discharge this burden.
The question of whether or not there was such reorganization plan in place at the time of Gucaban's separation from the company, is material to
the determination of whether her resignation was of her own volition as claimed by SMPI, inasmuch as the facts of this case tell that Gucaban
could not have filed for resignation had Gonzalez not communicated to her the alleged reorganization plan for the company.
True, while a reorganization of SMPI's corporate structure might have indeed taken place as shown by the notices, nevertheless, it happened
only in the latter part of 1999 or more than a year after Gucaban's separation from the company and incidentally, after she filed the instant
complaint.
It is not difficult to see that, shortly prior to and at the time of Gucaban's alleged resignation, there was actually no genuine corporate
restructuring plan in place as yet. In other words, although the company might have been suffering from losses due to market decline as alleged,
there was still no concrete plan for a corporate reorganization at the time Gonzalez presented to Gucaban the seemingly last available
alternative options of voluntary resignation and termination by abolition of her office.
It is then understandable for Gucaban, considering the attractive financial package which SMPI admittedly offered to her, to opt for resignation
instead of suffer termination a consequence the certainty of which she was made to believe.
As respondent was dismissed without cause, the NLRC ruling is correct that she is entitled to reinstatement and backwages, the latter to be
computed from her dismissal up to the time of her actual reinstatement pursuant to Art. 279 of the Labor Code.
However, there is the possibility that Gucaban's rejoining SMPI's workforce would only exacerbate the tension and strained relations which in
the first place had given rise to this incident. Thus, the ruling of the Court of Appeals is modified in this respect. In lieu of reinstatement, an
award of separation pay is in order, equivalent to one (1) month salary for every year of service.
Page 245
LABOR RELATIONS
246
15. Skippers United Pacific vs. Doza, G.R. No. 175558, February 8, 2012
Facts:
Petitioner deployed De Gracia, Lata and Aprosta to work on board the vessel MV Wisdom Star.
On December 3 1998, Skippers alleges that De Garcia smelling strongly of alcohol, went to the cabin of Gabriel Oleszek, MV Wisdom Stars
Master. Skippers claims that he was rude and shouted noisily to the master. De Gracia left the masters cabin after a few minutes and was heard
shouting very loudly somewhere down the corridors. The incident was evidenced by the Captains Report sent on said date.
Furthermore, Skippers also claim that on January 22, 1999, Aprosta, De Gracia, Lata and Daza arrived in the masters cabin and demanded
immediate repatriation because they were not satisfied with the ship. De Gracia, et al. threatened that they may become crazy any moment and
demanded for all outstanding payments due to them. The incident is evidenced by a telex of Cosmoship MV Wisdom to skippers but had
conflicting dates.
De Gracia claims that Skippers failed to remit their respective allotments, compelling them to vent their grievances with the Romanian Seafarers
Union. On January 28, 1999, the Filipino seafarers were unceremoniously discharged and immediately repatriated. Upon arrival in the
Philippines, they filed a complaint for illegal dismissal with the LA.
The LA dismissed the seafarers complaint as the seafarers demand for immediate repatriation due to the dissatisfaction with the ship is
considered a voluntary pre-termination of employment. Such act was deemed akin to resignation recognized under Article 285 of the LC. The LA
gave credence to the telex of the masters report that the seafarers indeed demanded immediate repatriation.
The NLRC agreed with the LAs decision.
The CA however reversed the LAs and the NLRCs decision. The Court deemed the telex message as a self-serving document that does not
satisfy the requirement of substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify
the conclusion that petitioners indeed voluntarily demanded their immediate repatriation.
Aggrieved, Skippers appeals the case with the Supreme Court.
Issue:
Whether or not the seafarers demand for immediate repatriation can be considered an act of voluntary resignation.
Ruling:
For a worker's dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality of the manner of
dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due process.
Procedural due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish the employee
with two written notices before the termination of employment can be effected: (1) the first notice apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the second notice informs the employee of the employer's decision to dismiss him. Before
the issuance of the second notice, the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. It is not
necessary that an actual hearing be conducted.
Substantive due process, on the other hand, requires that dismissal by the employer be made under a just or authorized cause under Articles
282 to 284 of the Labor Code.
In this case, there was no written notice furnished to De Gracia, et al., regarding the cause of their dismissal. Cosmoship furnished a written
notice (telex) to Skippers, the local manning agency, claiming that De Gracia, et al., were repatriated because the latter voluntarily preterminated their contracts. This telex was given credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination
of the employment contract "akin to resignation" and no illegal dismissal. However, as correctly ruled by the CA, the telex message is "a biased
and self-serving document that does not satisfy the requirement of substantial evidence." If, indeed, De Gracia, et al., voluntarily pre-terminated
their contracts, then De Gracia, et al., should have submitted their written resignations.
Page 246
LABOR RELATIONS
247

Article 285 of the Labor Code recognizes termination by the employee of the employment contract by "serving written notice on the employer at
least one (1) month in advance." Given that provision, the law contemplates the requirement of a written notice of resignation. In the absence of
a written resignation, it is safe to presume that the employer terminated the seafarers. In addition, the telex message relied upon by the Labor
Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22 January 1999, giving doubt to the veracity and authenticity of the document.
In 22 January 1998, De Gracia, et al., were not even employed yet by the foreign principal.
Page 247
LABOR RELATIONS
248

PRESCRIPTION OF CLAIMS
CASES:
1. Ludo & Luym Corp. vs Saornido, G.R. No. 140960, January 20, 2003
Facts:
Petitioner LUDO & LUYM CORPORATION is engaged in the manufacture of coconut oil, corn starch, glucose and related products. It operates a
manufacturing plant and a wharf where raw materials and finished products are shipped out.
LUDO engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for the loading and unloading of its finished products at the
wharf. Accordingly, several arrastre workers were deployed by CLAS to perform the services needed by LUDO.
These arrastre workers were subsequently hired, on different dates, as regular rank-and-file employees of LUDO every time the latter needed
additional manpower services. Said employees thereafter joined respondent union, the LUDO Employees Union (LEU), which acted as the
exclusive bargaining agent of the rank-and-file employees.
Respondent union entered into a collective bargaining agreement with LUDO which provides certain benefits to the employees, the amount of
which vary according to the length of service rendered by the availing employee.
Thereafter, the union requested LUDO to include in its members period of service the time during which they rendered arrastre services to
LUDO through the CLAS so that they could get higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary
arbitration.
Issue:
Whether or not benefits consisting of salary increases, vacation leave and sick leave benefits for the years 1977 to 1987 are already barred by
prescription when private respondents filed their case in January 1995;
Ruling: No.
As regards petitioners contention that the money claim in this case is barred by prescription, we hold that this contention is without merit. So is
petitioners stance that the benefits claimed by the respondents, i.e., sick leave, vacation leave and 13th-month pay, had already prescribed,
considering the three-year period for the institution of monetary claims. Such determination is a question of fact which must be ascertained
based on the evidence, both oral and documentary, presented by the parties before the Voluntary Arbitrator. In this case, the Voluntary Arbitrator
found that prescription has not as yet set in to bar the respondents claims for the monetary benefits awarded to them. Basic is the rule that
findings of fact of administrative 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. Here, the Voluntary Arbitrator received the evidence of the parties firsthand. No compelling reason has been shown for us to diverge from the findings of the Voluntary Arbitrator, especially since the appellate court
affirmed his findings, that it took some time for respondent employees to ventilate their claims because of the repeated assurances made by the
petitioner that it would review the company records and determine therefrom the validity of the claims, without expressing a categorical denial of
their claims. As elucidated by the Voluntary Arbitrator:
The respondents had raised prescription as defense. The controlling law, as ruled by the High Court, is:
"The cause of action accrues until the party obligated refuses xxx to comply with his duty. Being warded off by promises, the workers not having
decided to assert [their] right[s], [their] causes of action had not accrued" (Citation omitted.)
Since the parties had continued their negotiations even after the matter was raised before the Grievance Procedure and the voluntary arbitration,
the respondents had not refused to comply with their duty. They just wanted the complainants to present some proofs. The complainants cause
of action had not therefore accrued yet. Besides, in the earlier voluntary arbitration case aforementioned involving exactly the same issue and
employees similarly situated as the complainants, the same defense was raised and dismissed by Honorable Thelma Jordan, Voluntary
Arbitrator.
Page 248
LABOR RELATIONS
249

2. Degamo vs. Avantgarde Shipping corp., G.R. no. 154460, November 22, 2005
Facts:
On November 8, 1994, respondent Avantgarde Shipping Corporation, acting in behalf of its foreign principal, respondent Sembawang Johnson
Management, Pte., Ltd., hired petitioner Lauro Degamo as Oiler of the vessel Nippon Reefer. While working in the vessels engine room, a
spanner dropped and hit petitioner on his right thigh. He required surgery and hospitalization. He was repatriated to the Philippines on March 4,
1995.
Petitioner was again operated and Avantgarde paid all his hospital bills and promised to work out his sickness benefit with Sembawang as soon
as he was declared fit to work. On September 11, 1997, petitioner was declared fit to work.
On December 24, 1997, petitioner asked Avantgarde to pay his sickness benefits. On January 6, 1998, Avantgarde replied that it could no longer
act on petitioners claim as he had deviated from the legal procedure and, should he wish, he could personally follow-up with Sembawang. On
March 4, 1998 and May 5, 1998, petitioner wrote a letter to Sembawang regarding his claim. Sembawang did not reply.
On March 2, 2001, petitioner lodged a complaint for payment of disability benefits and other money claims against the respondents. The labor
arbiter dismissed the case without prejudice, stating that the action had already prescribed. On appeal, the National Labor Relations Commission
(NLRC) likewise ruled that petitioners cause of action had prescribed.
Issue:
Whether petitioners cause of action had already prescribed.
Arguments:
Petitioner, citing Article 1155 of the New Civil Code, contends that his cause of action had not prescribed as the running of the prescriptive period
was tolled by his extrajudicial demand for unpaid sickness benefits on December 24, 1997.
Respondents counter that the Civil Code provision on extinctive prescription applies only to obligations that are intrinsically civil in nature and is
inapplicable to labor cases. Respondents assert that petitioners demand was made more than one year from his date of arrival in the
Philippines, contrary to what is prescribed in Section 28 of the Philippine Overseas Employment Administration (POEA) Memorandum Circular
No. 55, Series of 1996. They add that the institution of the action was beyond the three-year period prescribed in Article 291 of the Labor Code
as his employment with the respondents ended on March 4, 1995 but the complaint was filed only on March 2, 2001.
Ruling: Yes.
We note that POEA Circular No. 55, Series of 1996 became effective only on January 1, 1997 while the employment contract between the
parties was entered earlier on November 8, 1994. The earlier standard employment contract issued by the POEA did not have a provision on
prescription of claims. Hence, the applicable provision in this case is Article 291 of the Labor Code which we shall now discuss.
In Cadalin v. POEAs Administrator, we held that Article 291 covers all money claims from employer-employee relationship and is broader in
scope than claims arising from a specific law. It is not limited to money claims recoverable under the Labor Code, but applies also to claims of
overseas contract workers.
Article 291 provides that all money claims arising from employer-employee relations shall be filed within three years from the time the cause of
action accrued, otherwise, these shall be forever barred. A cause of action accrues upon the categorical denial of claim. Petitioners cause of
action accrued only on January 6, 1998, when Avantgarde denied his claim and so breached its obligation to petitioner. Petitioner could not have
a cause of action prior to this because his earlier requests were warded off by indefinite promises. The complaint filed on March 2, 2001 is
beyond the three-year period mandated by the Labor Code.
3. Intercontinental Broadcasting Corp. vs. Panganiban, G.R. No. 151407, February 6, 2007
Facts:
Page 249
LABOR RELATIONS
250

Respondent Ireneo Panganiban was employed as Assistant General Manager of the petitioner Intercontinental Broadcasting Corporation from
May 1986 until his preventive suspension on August 26, 1988. Respondent resigned from his employment on September 2, 1988. On April 12,
1989, respondent filed with the trial court a case against the members of the Board of Administrators (BOA) of petitioner alleging, among others,
non-payment of his unpaid commissions.
A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack of jurisdiction, as respondent's claim was a labor
money claim, but this was denied by the RTC.
Thus, Santiago filed a petition for certiorari with the CA, which granted Santiago's petition for lack of jurisdiction and set aside the RTC's Orders.
Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July 1992. He resigned in April 1993.
On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal, separation pay, retirement benefits, unpaid commissions,
and damages.
Issue:
Whether or not respondent's claim for unpaid commissions has already prescribed.
Ruling: Yes.
The applicable law in this case is Article 291 of the Labor Code which provides that "all money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be
forever barred." The term "money claims" covers all money claims arising from an employer-employee relation.
Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the absence of an equivalent Labor Code
provision for determining whether the said period may be interrupted, Article 1155 of the Civil Code may be applied.
Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written
acknowledgment of the debt by the debtor. On this point, the Court ruled that although the commencement of a civil action stops the running of
the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as
though no action had been commenced at all.
Hence, while the filing of the civil could have interrupted the running of the three-year prescriptive period, its consequent dismissal by the CA due
to lack of jurisdiction effectively canceled the tolling of the prescriptive period within which to file his money claim, leaving respondent in exactly
the same position as though no civil case had been filed at all. The running of the three-year prescriptive period not having been interrupted by
the filing of the civil case, respondent's cause of action had already prescribed on September 2, 1991, three years after his cessation of
employment on September 2, 1988. Consequently, when respondent filed his complaint for illegal dismissal, separation pay, retirement benefits,
and damages in July 24, 1996, his claim, clearly, had already been barred by prescription.
4. Far East Agricultural Supply vs. Lebatique, G.R. No. 162813, February 12, 2007
Facts:
Petitioner Far East hired on March 4, 1996 private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50. He delivered
animal feeds to the companys clients. On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22,
2000, when he was required to make a second delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far Easts General
Manager and petitioner Alexander Uy, suspended Lebatique apparently for illegal use of company vehicle. Even so, Lebatique reported for work
the next day but he was prohibited from entering the company premises.
On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public Assistance and Complaints
Unit concerning the nonpayment of his overtime pay. According to Lebatique, two days later, he received a telegram from petitioners requiring
him to report for work. When he did the next day, January 29, 2000, Alexander asked him why he was claiming overtime pay. Lebatique
explained that he had never been paid for overtime work since he started working for the company. He also told Alexander that Manuel had
fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for another job. On March 20, 2000, Lebatique filed a
complaint for illegal dismissal and nonpayment of overtime pay.
Page 250
LABOR RELATIONS
251

Petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is field personnel whose time outside the company
premises cannot be determined with reasonable certainty. According to petitioners, the drivers do not observe regular working hours unlike the
other office employees. The drivers may report early in the morning to make their deliveries or in the afternoon, depending on the production of
animal feeds and the traffic conditions. Petitioners also aver that Lebatique worked for less than eight hours a day.
Respondent, on his part claims that he is not a field personnel, thus, he is entitled to overtime pay and service incentive leave pay.
Issue:
Whether or not Lebatique is estopped from claiming that he was illegally dismissed since his complaint before the DOLE was only on the
nonpayment of his overtime pay;
Ruling:
All money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued;
otherwise, they shall be forever barred. Further, if it is established that the benefits being claimed have been withheld from the employee for a
period longer than three years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription.
The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three years
before the filing of the complaint.
Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences at the time he
was terminated. On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March 1996 is a different matter. In
the case of overtime pay, he can only demand for the overtime pay withheld for the period within three years preceding the filing of the complaint
on March 20, 2000.
5. Victory Liner, Inc. vs. Race, G.R. No. 164820, March 28, 2007
Facts:
In June 1993, respondent was employed by the petitioner as a bus driver. On the night of 24 August 1994, the bus he was driving was bumped
by a Dagupan-bound bus. As a consequence thereof, respondent suffered a fractured left leg and was rushed to the Country Medical and
Trauma Center in Tarlac City where he was operated on and confined from 24 August 1994 up to 10 October 1994. One month after his release
from the said hospital, the respondent was confined again for further treatment of his fractured left leg at the Specialist Group Hospital in
Dagupan City. His confinement therein lasted a month. Petitioner shouldered the doctors professional fee and the operation, medication and
hospital expenses of the respondent in the aforestated hospitals.
In January 1998, the respondent, still limping heavily, went to the petitioners office to report for work. He was, however, informed by the
petitioner that he was considered resigned from his job. Respondent refused to accede and insisted on having a dialogue with the petitioners
officer named Yolanda Montes. During their meeting, Montes told him that he was deemed to have resigned from his work and to accept a
consideration of P50,000.00. Respondent rejected the explanation and offer. Thereafter, before Christmas of 1998, he again conversed with
Montes who reiterated to him that he was regarded as resigned but raised the consideration therein to P100,000.00. Respondent rebuffed the
increased offer. On 30 June 1999, respondent, through his counsel, sent a letter to the petitioner demanding employment-related money claims.
There being no response from the petitioner, the respondent filed before the Labor Arbiter on 1 September 1999 a complaint for (1) unfair labor
practice; (2) illegal dismissal; (3) underpayment of wages; (4) nonpayment of overtime and holiday premium, service incentive leave pay,
vacation and sick leave benefits, 13th month pay; (5) excessive deduction of withholding tax and SSS premium; and (6) moral and exemplary
damages and attorneys fees.
In its Position Paper dated 27 March 2000, petitioner claimed that the respondents cause of action against petitioner had already prescribed
because when the former instituted the aforesaid complaint on 1 September 1999, more than five years had already lapsed from the accrual of
his cause of action on 24 August 1994.
Issue:
Whether or not the cause of action of respondent has already prescribed;
Ruling:
Page 251
LABOR RELATIONS
252

In illegal dismissal cases, the employee concerned is given a period of four years from the time of his dismissal within which to institute a
complaint. This is based on Article 1146 of the New Civil Code which states that actions based upon an injury to the rights of the plaintiff must be
brought within four years.
The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker. It is settled that in illegal
dismissal cases, the cause of action accrues from the time the employment of the worker was unjustly terminated. Thus, the four-year
prescriptive period shall be counted and computed from the date of the employees dismissal up to the date of the filing of complaint for unlawful
termination of employment.
Proceeding therefrom, we shall now discuss and determine when the respondents cause of action accrued in order to ascertain whether the
same had already prescribed.
It is error to conclude that the employment of the respondent was unjustly terminated on 10 November 1994 because he was, at that time, still
confined at the Specialist Group Hospital, Dagupan City, for further treatment of his fractured left leg. He must be considered as merely on sick
leave at such time. Likewise, the respondent cannot also be deemed as illegally dismissed from work upon his release from the said hospital in
December 1994 up to December 1997 since the records show that the respondent still reported for work to the petitioner and was granted sick
and disability leave by the petitioner during the same period.
The respondent must be considered as unjustly terminated from work in January 1998 since this was the first time he was informed by the
petitioner that he was deemed resigned from his work. During that same occasion, the petitioner, in fact, tried to convince the respondent to
accept an amount of P50,000.00 as a consolation for his dismissal but the latter rejected it. Thus, it was only at this time that the respondents
cause of action accrued. Consequently, the respondents filing of complaint for illegal dismissal on 1 September 1999 was well within the fouryear prescriptive period.
It is also significant to note that from 10 November 1994 up to December 1997, the petitioner never formally informed the respondent of the fact
of his dismissal either through a written notice or hearing. Indeed, it cannot be gainfully said that respondent was unlawfully dismissed on 10
November 1994 and that the cause of action accrued on that date.
6. J.K. Mercado & Sons Agricultural Enterprises vs. Sto. Tomas, G.R. No. 158084, August 29, 2008
Facts:
On December 3, 1993, the Regional Tripartite Wages and Productivity Board, Region XI, issued Wage Order No. RTWPB-XI-03, granting a Cost
of Living Allowance (COLA) to covered workers.
On January 28, 1994, petitioner filed an application for exemption from the coverage of the aforesaid wage order. Thus, however, was denied by
the regional wage board in an Order dated April 11, 1994,
Notwithstanding the said order, private respondents were not given the benefits due them under Wage Order No. RTWPB-XI-03. On July 10,
1998, private respondents filed an Urgent Motion for Writ of Execution, and Writ of Garnishment in RTWPB-XI-03-CBBE-94 NWPBC Case No.
E-95-087 Case No. R1100 seeking the enforcement of subject wage order against several entities including herein petitioner.
On October 7, 1998, the OIC-Regional Director, Region XI, issued a Writ of Execution for the enforcement of the Order dated April 11, 1994 of
the Regional Tripartite Wages and Productivity Board.
On November 17, 1998 and November 23, 1998, respectively, petitioner filed a Motion to Quash the Writ of Execution and a Supplemental
Motion to the Motion to Quash. Petitioner argued that herein private respondents right had already prescribed due to their failure to move for the
execution of the April 11, 1994 Order within the period provided under Article 291 of the Labor Code, as amended, or within three (3) years from
the finality of the said order.
Issue:
Whether or not the claim of respondents have already prescribed.
Ruling:
Page 252
LABOR RELATIONS
253

Art. 291 of the Labor Code applies to money claims in general and provides for a 3-year prescriptive period to file them.
On the other hand, respondent employees money claims in this case had been reduced to a judgment, in the form of a Wage Order, which has
become final and executory. The prescription applicable, therefore, is not the general one that applies to money claims, but the specific one
applying to judgments. Thus, the right to enforce the judgment, having been exercised within five years, has not yet prescribed.
Stated otherwise, a claimant has three years to press a money claim. Once judgment is rendered in her favor, she has five years to ask for
execution of the judgment, counted from its finality. This is consistent with the rule on statutory construction that a general provision should yield
to a specific one and with the mandate of social justice that doubts should be resolved in favor of labor.
7. Reyes vs. Nlrc, G.R. No. 180551, February 10, 2009

Facts:
The present Petition arose from a Complaint for illegal dismissal with claims for moral and exemplary damages and attorneys fees filed by
petitioner against respondents Coca Cola Bottlers Philippines (CCBP) and Rotaida Taguibao (Taguibao) before the Labor Arbiter on 14 June
2004. Respondent CCBP is a corporation engaged in the business of production and distribution of carbonated drinks, and Taguibao is its
Human Resource Manager.
In his Complaint, petitioner alleged that he was first employed by respondent CCBP, through Interserve Manpower Agency (Interserve), as a
Leadman in February 1988. Petitioner was initially assigned to the Mendiola Sales Office of respondent CCBP. Petitioners employment
contract was renewed every five months and he was assigned a different task every time. Such an arrangement continued until petitioner was
directly hired by respondent CCBP as a Route Salesman on 15 September 2000. Exactly one year from the time of petitioners employment as
a Route Salesman, respondent CCBP, thru Taguibao, terminated his services on 15 September 2001. Since he already acquired the status of a
regular employee, petitioner asserted that his dismissal from employment without the benefit of due process was unlawful.
Issue:
Whether or not respondents claim for backwages has already prescribed.
Ruling:
The Court was more emphatic in Philippine Industrial Security Agency Corporation v. Dapiton, when it ruled that backwages had to be paid by
the employer as part of the price or penalty he had to pay for illegally dismissing his employee . It was to be computed from the time of the
employees illegal dismissal (or from the time his compensation was withheld from him) up to the time of his reinstatement.
One of the natural consequences of a finding that an employee has been illegally dismissed is the payment of backwages corresponding to the
period from his dismissal up to actual reinstatement. The statutory intent of this matter is clearly discernible. The payment of backwages allows
the employee to recover from the employer that which he has lost by way of wages as a result of his dismissal. Logically, it must be computed
from the date of petitioners illegal dismissal up to the time of actual reinstatement. There can be no gap or interruption, lest we defeat the very
reason of the law in granting the same. That petitioner did not immediately file his Complaint should not affect or diminish his right to
backwages, for it is a right clearly granted to him by law -- should he be found to have been illegally dismissed -- and for as long as his cause of
action has not been barred by prescription.
The law fixes the period of time within which petitioner could seek remedy for his illegal dismissal and for as long as he filed his Complaint within
the prescriptive period, he shall be entitled to the full protection of his right to backwages. In illegal dismissal cases, the employee concerned is
given a period of four years from the time of his illegal dismissal within which to institute the complaint. This is based on Article 1146 of the New
Civil Code which states that actions based upon an injury to the rights of the plaintiff must be brought within four years. The four-year
prescriptive period shall commence to run only upon the accrual of a cause of action of the worker. Here, petitioner was dismissed from service
on 15 September 2001. He filed his complaint for illegal dismissal on 14 June 2004. Clearly, then, the instant case was filed within the
prescriptive period.
8. LWV Construction Corp. vs. Dupo, G.R. No. 172342, July 13, 2009
Page 253
LABOR RELATIONS
254

Facts:
Petitioner, a domestic corporation which recruits Filipino workers, hired respondent Marcelo Dupo as Civil Structural Superintendent to work in
Saudi Arabia for its principal, Mohammad Al-Mojil Group/Establishment (MMG). On February 26, 1992, respondent signed his first overseas
employment contract, renewable after one year. It was renewed five times on the following dates: May 10, 1993, November 16, 1994, January
22, 1996, April 14, 1997, and March 26, 1998. All were fixed-period contracts for one year. The sixth and last contract stated that respondents
employment starts upon reporting to work and ends when he leaves the work site. Respondent left Saudi Arabia on April 30, 1999 and arrived in
the Philippines on May 1, 1999. Respondent then has signed 6 overseas contracts and worked for seven years in Saudi Arabia.
On July 6, 1999, respondent through a letter resigned from his work and asked MMG to give him his long service award in accordance with the
Article 87 of Saudi Law which states that;
Article 87
Where the term of a labor contract concluded for a specified period comes to an end or where the employer cancels a contract of unspecified
period, the employer shall pay to the workman an award for the period of his service to be computed on the basis of half a months pay for each
of the first five years and one months pay for each of the subsequent years. The last rate of pay shall be taken as basis for the computation of
the award. For fractions of a year, the workman shall be entitled to an award which is proportionate to his service period during that year.
Furthermore, the workman shall be entitled to the service award provided for at the beginning of this article in the following cases:
If he is called to military service.
If a workman resigns because of marriage or childbirth.
If the workman is leaving the work as a result of a force majeure beyond his control. (Emphasis supplied.)
However, MMG did not reply to the letter of the respondent Dupo which led to the filing of the case before the labor arbiter for the payment of the
long service award in the amount of US$12,640.33.
On the other hand, petitioner presented two defenses namely payment and prescription. Firstly, petitioner said the long service award has
already been paid every time each of the contracts of employment of the respondent comes to an end, since, the contract is for a fixed period of
time. In effect, the severance pay received by the respondent every time each of the 6 contracts of employment comes to an end, is also the
longevity service award. Petitioner claimed that long service award is the same with severance pay. Secondly, petitioner insists that prescription
barred respondents claim for long service award because under Article 13 of the Saudi Labor Law it provides that no case or claim relating to
any of the rights provided for under said law shall be heard after the lapse of 12 months from the date of the termination of the contract.
Respondents sixth contract ended on April 30, 1999 the date he left his work which was also in effect the date of the termination of his contract,
and he filed the case on December 11, 2000 which is 1 year and seven months from the date of the termination of his contract.
The labor arbiter, NLRC, and CA decided all in favor of the respondent.
Issues:
Whether or not CA erred in ruling that respondent is entitled to long service pay which is different from severance pay.
2. Whether or not the cause of action has prescribed.
Ruling:
SC said that CA has committed an error in ruling that the long service pay is different from severance pay. According to SC the severance pay
received by the respondent at the end of each of the six contracts of employment is equivalent to the long service pay. This is the reason why the
formula in computing the severance pay is the same with the computation of the long service award. Moreover, SC said that respondents
employment contracts expressly stated that his employment ended upon his departure from work. Each year he departed from work and
successively new contracts were executed before he reported for work anew. His service was not cumulative. Pertinently, in Brent School, Inc. v.
Zamora, we said that a fixed term is an essential and natural appurtenance of overseas employment contracts as in this case. We also said in
that case that under American law, [w]here a contract specifies the period of its duration, it terminates on the expiration of such period. A
contract of employment for a definite period terminates by its own terms at the end of such period. As it is, Article 72 of the Saudi Labor Law is
also of similar import.
It reads:
A labor contract concluded for a specified period shall terminate upon the expiry of its term. If both parties continue to enforce the contract,
thereafter, it shall be considered renewed for an unspecified period.
SC ruled that the claim has not yet prescribed because the law that should be applied on prescription is not the Saudi Law which grants 12
months period of time to file the claim from the time of the termination of contract but it should be the Labor Code particularly ART. 291. Money
claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3)
Page 254
LABOR RELATIONS
255

years from the time the cause of action accrued; otherwise they shall be forever barred. The reason is because prescription is a procedural law
and under the conflict of laws rules of the Philippines the procedural law of the lex fori or law of the forum (law of the place where the case is
filed) must be applied. However, an argument can be raised that even if the conflict of laws rule provides that the procedural law of the lex fori
must be followed, Sec. 48 of our Code of Civil Procedure which is a borrowing statute provides that If by the laws of the state or country where
the cause of action arose, the action is barred, it is also barred in the Philippine Islands. Section 48 has not been repealed or amended by the
Civil Code of the Philippines. Article 2270 of said Code repealed only those provisions of the Code of Civil Procedure as to which were
inconsistent with it. There is no provision in the Civil Code of the Philippines, which is inconsistent with or contradictory to Section 48 of the
Code of Civil Procedure (Paras, Philippine Conflict of Laws, 104 [7 th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil Procedure] cannot be enforced ex proprio vigore insofar as it
ordains the application in this jurisdiction of [Article] 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forums public policy. To enforce the one-year prescriptive period of
the Saudi Law as regards the claims in question would contravene the public policy on the protection to labor.
Respondents complaint was filed well within the three-year prescriptive period under Article 291 of our Labor Code. This point, however, has
already been mooted by SCs finding that respondents service award had been paid, albeit the payroll termed such payment as severance pay.
Petition is Granted.
9. PLDT v. Pingol, G.R. No. 182622, September 8, 2010

Facts:
In 1979, respondent Roberto R. Pingol (Pingol) was hired by petitioner PLDT in 1979, as a maintenance technician. On April 13, 1999, while still
under the employ of PLDT, Pingol was admitted at The Medical City, Mandaluyong City, for paranoid personality disorder due to financial and
marital problems. He was discharged from the hospital. Thereafter, he reported for work but frequently absented himself due to his poor mental
condition.
Pingol was absent from work without official leave from September 16, 1999 to December 31, 1999. PLDT, sent him notices with a stern warning
that he would be dismissed from employment if he continued to be absent without official leave pursuant to PLDT Systems Practice A-007 which
provides that Absence without authorized leaves for seven (7) consecutive days is subject to termination from the service. January 1, 2000,
PLDT terminated his services on the grounds of unauthorized absences and abandonment of office.
On March 29, 2004, four years later, Pingol filed a Complaint for Constructive Dismissal and Monetary Claims[6] against PLDT . In his complaint,
he alleged that he was hastily dismissed from his employment on January 1, 2000. In response, PLDT filed a motion to dismiss claiming,
among others, that respondents cause of action had already prescribed as the complaint was filed four (4) years and three (3) months after his
dismissal.
Labor Arbiter (LA) issued an order granting petitioners Motion to Dismiss on the ground of prescription. As correctly cited by (PLDT), as ruled by
the Supreme Court in the case of Callanta vs. Carnation Phils., 145 SCRA 268, the complaint for illegal dismissal must be filed within four (4)
years from and after the date of dismissal.
The NLRC in its November 15, 2006 Resolution reversed the LAs resolution and favored Pingol. Let the entire records of the case be
REMANDED to the Labor Arbiter a quo for further proceedings.
Issues:
Whether or not respondent Pingol filed his complaint for constructive dismissal and money claims within the prescriptive period of four (4) years
as provided in Article 1146 of the Civil Code[11][12] respectively and three (3) years as provided in Article 291 of the Labor Code,
When is the pivotal date when the cause of action of respondent Pingol accrued?
Ruling:
Parties apparently do not dispute the applicable prescriptive period. Article 1146 of the New Civil Code provides:
Art. 1146. The following actions must be instituted within four years:
Page 255
LABOR RELATIONS
256

(1) Upon an injury to the rights of the plaintiff;
In Callanta v. Carnation,[16] when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the
legality of one's dismissal from employment constitutes, in essence, an action predicated "upon an injury to the rights of the plaintiff," as
contemplated under Art. 1146 of the New Civil Code, which must be brought within four (4) years.
With regard to the prescriptive period for money claims, Article 291 of the Labor Code states:
Article 291. Money Claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed
within three (3) years from the time the cause of action accrued; otherwise they shall be barred forever.
It is a settled jurisprudence that a cause of action has three (3) elements, to wit: (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or
omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the
plaintiff.
Pingol asserts that his complaint was filed within the prescriptive period of four (4) years. He claims that his cause of action did not accrue on
January 1, 2000 because he was not categorically and formally dismissed or his monetary claims categorically denied by petitioner PLDT on said
date. Further, respondent Pingol posits that the continuous follow-up of his claim with petitioner PLDT from 2001 to 2003 should be considered
in the reckoning of the prescriptive period.
Petitioner PLDT, on the other hand, contends that respondent Pingol was dismissed from the service on January 1, 2000 and such fact was even
alleged in the complaint he filed before the LA. He never contradicted his previous admission that he was dismissed on January 1, 2000. Such
admitted fact does not require proof.
The Court agrees with petitioner PLDT. Judicial admissions made by parties in the pleadings, or in the course of the trial or other proceedings in
the same case are conclusive and so does not require further evidence to prove them. These admissions cannot be contradicted unless
previously shown to have been made through palpable mistake or that no such admission was made.[18] In Pepsi Cola Bottling Company v.
Guanzon,] it was written: that the dismissal of the private respondent's complaint was still proper since it is apparent from its face that the action
has prescribed. Private respondent himself alleged in the complaint that he was unlawfully dismissed in 1979 while the complaint was filed only
on November 14, 1984. xxx (Emphasis supplied. Citations omitted.)
Pingol himself alleged the date January 1, 2000 as the date of his dismissal in his complaint[20] filed on March 29, 2004, exactly four (4) years
and three (3) months later. Respondent never denied making such admission or raised palpable mistake as the reason therefor. Thus, the
petitioner correctly relied on such allegation in the complaint to move for the dismissal of the case on the ground of prescription.
The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary claim accrues. Thus, the general law on
prescription applies. Article 1150 of the Civil Code states:
Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from
the day they may be brought. (Emphasis supplied)
The day the action may be brought is the day a claim starts as a legal possibility. In the present case, January 1, 2000 was the date that
respondent Pingol was not allowed to perform his usual and regular job as a maintenance technician. Respondent Pingol cited the same date of
dismissal in his complaint before the LA. As, thus, correctly ruled by the LA, the complaint filed had already prescribed.
Respondent claims that between 2001 and 2003, he made follow-ups with PLDT management regarding his benefits. This, to his mind, tolled the
running of the prescriptive period. The rule in this regard is covered by Article 1155 of the Civil Code. Its applicability in labor cases was upheld
in the case of International Broadcasting Corporation v. Panganiban where it was written:
Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the absence of an equivalent Labor Code
provision for determining whether the said period may be interrupted, Article 1155 of the Civil Code may be applied, to wit:
ART. 1155. The prescription of actions is interrupted when they are filed before the Court, when there is a written extrajudicial demand by the
creditors, and when there is any written acknowledgment of the debt by the debtor. Thus, the prescription of an action is interrupted by (a) the
filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor.
Pingol never made any written extrajudicial demand. Neither did petitioner make any written acknowledgment of its alleged obligation . Thus, the
claimed follow-ups could not have validly tolled the running of the prescriptive period. It is worthy to note that respondent never presented any
proof to substantiate his allegation of follow-ups.
Page 256
LABOR RELATIONS
257

Unfortunately, respondent Pingol has no one but himself to blame for his own predicament. By his own allegations in his complaint, he has
barred his remedy and extinguished his right of action. Although the Constitution is committed to the policy of social justice and the protection of
the working class, it does not necessary follow that every labor dispute will be automatically decided in favor of labor. The management also has
its own rights. Out of Its concern for the less privileged in life, this Court, has more often than not inclined, to uphold the cause of the worker in
his conflict with the employer. Such leaning, however, does not blind 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 applicable law and doctrine.
10. Medline Management Inc. vs. Roslinda, G.R. No. 168715, September 15, 2010
Facts:
Petitioner Medline Management, Inc. (MMI), on behalf of its foreign principal, petitioner Grecomar Shipping Agency (GSA), hired Juliano
Roslinda (Juliano) to work on board the vessel MV "Victory." Juliano was previously employed by the petitioners under two successive separate
employment contracts of varying durations. His latest contract was approved by the POEA on September 9, 1998 for a duration of nine
months. In accordance with which, he boarded the vessel MV "Victory" on October 25, 1998 as an oiler and, after several months of extension,
was discharged on January 20, 2000.
Months after his repatriation, or on March 6, 2000, Juliano consulted Dr. Pamela R. Lloren (Dr. Lloren) of Metropolitan Hospital. He complained
about abdominal distention which is the medical term for a patient who vomits previously ingested foods. From March 8 to August 24, 2000,
Juliano has undergone Hemodialysis, a method of removing waste products such as creatinine and urea, as well as freeing water from the
blood, when the kidneys are in renal failure.
On August 27, 2001, Juliano died. On September 4, 2003, his wife Gliceria Roslinda and son Ariel Roslinda, respondents herein, filed a
complaint against MMI and GSA for payment of death compensation, reimbursement of medical expenses, damages, and attorney's fees before
the Labor Arbitration Branch of the NLRC.
Instead of filing an answer, they filed a Motion to Dismiss on the grounds of prescription, lack of jurisdiction and prematurity. Petitioners
contended that the action has already prescribed because it was filed three years, seven months and 22 days from the time the deceased
seafarer reached the point of hire.
Issue:
Whether or not the claim is not yet barred by prescription despite the fact that it was filed beyond the one-year prescriptive period provided by
the POEA Standard Employment Contract.
Ruling:
The employment contract signed by Juliano stated that "Upon approval, the same shall be deemed an integral part of the Standard Employment
Contract (SEC) for seafarers." Section 28 of the POEA SEC states:
SECTION 28.JURISDICTION
XXX
Recognizing the peculiar nature of overseas shipboard employment, the employer and the seafarer agree that all claims arising from this
contract shall be made within one (1) year from the date of the seafarer's return to the point of hire. (Emphasis supplied)
On the other hand, the Labor Code states:
ART. 291.Money claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be
filed within three (3) years from the time the cause of action accrued; otherwise they shall forever be barred.
In Southeastern Shipping v. Navarra, Jr., we ruled that "Article 291 is the law governing the prescription of money claims of seafarers, a class of
overseas contract workers. This law prevails over Section 28 of the Standard Employment Contract for Seafarers which provides for claims to be
brought only within one year from the date of the seafarer's return to the point of hire." We further declared that "for the guidance of all, Section
28 of the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period within which the seafarers may file their money
claims, is hereby declared null and void. The applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers and
more in accord with the State's declared policy to afford full protection to labor. The prescriptive period in the present case is thus three years
from the time the cause of action accrues."
In the present case, the cause of action accrued on August 27, 2001 when Juliano died. Hence, the claim has not yet prescribed, since the
complaint was filed with the arbitration branch of the NLRC on September 4, 2003.
Page 257
LABOR RELATIONS
258

11. University of East vs. University of East Employees Assoc., G.R. No. 179593, September 14, 2011
Facts:
Petitioner University of the East (UE) is an educational institution duly organized and existing under Philippine laws. On the other hand,
respondent University of the East Employees' Association (UEEA) is a duly registered labor union of the rank-and-file employees of UE.
It appears from the records that prior to school year (SY) 1983-1984, the 70% incremental proceeds from tuition fee increases as mandated by
Presidential Decree No. 451 (P.D. No. 451), as amended, was distributed by UE in proportion to the average number of academic and nonacademic personnel. The distribution scheme became the subject of an Agreement dated October 18, 1983 signed by the management, faculty
association and respondent. Starting SY 1994-1995, however, the 70% incremental proceeds from the tuition fee increase was distributed by UE
to its covered employees based on a new formula of percentage of salary.
On June 19, 1995, a tripartite meeting was held among the representatives of management, faculty union and UEEA. In the said meeting, it was
agreed that the distribution of the incremental proceeds would now be based on percentage of salary, and not anymore on the average number
of personnel. The Minutes of the June 19, 1995 meeting was signed and attested to by UEEA officers who attended.
On April 27, 1999, UEEA filed a complaint before the NLRC for non-payment/underpayment of the rank-and-file employees' share of the tuition
fee increases against UE pursuant to P.D. No. 451, as amended, and Republic Act (R.A.) No. 6728 otherwise known as Government Assistance
to Students and Teachers in Private Education Act.
UE asserted that the claim of the UEEA was already barred since it was filed three (3) years from the time its supposed cause of action accrued.
ISSUE:
Whether or not prescription has already set in.
RULING:
The Court agrees with UE and holds that UEEA's right to question the distribution of the incremental proceeds for SY 1994-1995 has already
prescribed. Article 291 of the Labor Code provides that money claims arising from an employer-employee relationship must be filed within three
(3) years from the time the cause of action accrued. In the present case, the cause of action accrued when the distribution of the incremental
proceeds based on percentage of salary of the covered employees was discussed in the tripartite meeting held on June 19, 1995. UEEA did not
question the manner of its distribution and only on April 27, 1999 did it file an action based therein. Hence, prescription had set in.
Page 258

Labor Cases

Uploaded by

Copyright:

Available Formats

Labor Cases

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Labor Cases

Uploaded by

Copyright:

Available Formats

1

Atty. Jefferson M. Marquez

2. Manila Golf Club vs. IAC, 237 SCRA 207

Atty. Jefferson M. Marquez

3. Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [1996]

4. Carungcong vs. Sunlife, 283 SCRA 319

Atty. Jefferson M. Marquez

5. Ramos vs CA, 380 SCRA 467

Atty. Jefferson M. Marquez

7. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]

Atty. Jefferson M. Marquez

8. Phil. Global Communications v. De Vera, 459 SCRA 260 [2005]

Atty. Jefferson M. Marquez

9. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Whether respondent is an employee of the petitioner, which in turn determines

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

2. Cosmos Bottling Corp., vs NLRC, 255 SCRA 358 [1996]

Atty. Jefferson M. Marquez

3. Purefoods v. NLRC 283 SCRA 136 [1997]

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez

Atty. Jefferson M. Marquez