1

01 CALS POULTRY SUPPLY CORPORATION and

DANILO YAP vs. ALFREDO ROCO and HELD:
CANDELARIA ROCO NO. We agree with CALS contention as upheld
by both the Labor Arbiter and the NLRC
FACTS: that Candelarias services was terminated within
CALS Poultry Supply Corporation is engaged in and not beyond the 6-month probationary
the business of selling dressed chicken period. In Cebu Royal v. Deputy Minister of
and other related products and managed by Labor, our computation of the 6-month
Danilo Yap. CALS hired Alfredo Roco as its driver probationary period is reckoned from the date
and Edna Roco, Alfredos sister, as a helper in of appointment up to the same calendar date of
the dressing room of CALS. On May 16, 1995, it the 6th month following.
hired Candelaria Roco, another sister, as helper,
also at its chicken dressing plant on a
probationary basis. On March 5, 1996, Alfredo 02 ALCIRA vs. NLRC
Roco and Candelaria Roco filed a complaint for
illegal dismissal against CALS and Danilo Yap FACTS:
alleging that Alfredo and Candelaria were The petitioner, Radin Alcira, was hired by the
illegally respondent Middle by Philippines
dismissed on January 20, 1996 and November 5, Corporation as engineering support services
1996, respectively. According to Candelaria supervisor under probationary status for 6
Roco, she was terminated without cause from months.
her job as helper after serving more than six (6) Afterwards, the service of the petitioner was
months as probationary employee. The Labor terminated by the respondent on the ground
Arbiter on April 16, 1998, issued a decision that
dismissing the complaints for illegal dismissal the latter was not satisfied on the performance
for lack of merit. In the case of Candelaria Roco, of the former. As a result, the petitioner filed a
the Labor Arbiter upheld CALS decision not to complaint foe illegal dismissal in the National
continue with her probationary employment Labor Relations Commission (NLRC) against the
having been found her unsuited for the work for respondent.
which her services were engaged. She was Petitioner contended that his termination in the
hired on May 16, 1995 and her services were service tantamount to illegal dismissal
terminated on November 15, 1995. since he attained the status of a regular
employee as of the time of dismissal. He
ISSUE: presented the
WON Candelaria has attained the status of a
regular employee.
become
appointment paper showing that he was hired a regular employment was disapproved. The
on May 20, 1996, consequently, his dismissal on respondent also insisted that the removal of the
November 20, 1996 was illegal because at that petitioner from office was within the
time, he wa s already a regular employee since probationary period.
the 6-month probationary period ended on The Labor Arbiter dismissed the complaint on
November 16, 1996. the ground that the dismissal of the
The respondent, on the other hand, asserted petitioner was done before his regularization
that during the petitioner’s probationary because the 6- month probationary period,
period, he showed poor performance on his counting from May 20, 1996 shall end on
assigned tasks, was late couple of times and November 20, 1996. The NLRC affirmed the
violated the company’s rule. Thus, the decision
petitioner was terminated and his application to
of the Labor Arbiter. The Court of Appeals termination was still probationary. His dismissal
affirmed the decision of NLRC. Hence, the on November 20, 1996 was within the 6-
present month probationary period. Article 13 of the
recourse. Civil Code provides that when the law speaks of
years, months, and days and nights, it shall be
ISSUE: understood that years are of 365 days, months
Whether the petitioner was already a regular of
employee in respondent’s company at the 30 days, days of 24 hours and nights are from
time of his dismissal from the service. sunset to sunrise. Since, one month is
composed
HELD: of 30 days, then, 6 months shall be understood
The Supreme Court ruled in the negative. The to be composed of 180 days. And
status of the petitioner at the time of his the computation of the 6- month period is
 2

reckoned from the date of appointment up to apprised of the standards upon which his
the regularization would be based. He reported for
same calendar date of the 6th month following. work on May 27, 1996. As per the company’s
Since, the number of days of a particular month policy, the probationary period was from three
is irrelevant, petitioner was still a probation ary (3) months to a maximum of six (6) months.
employee at the time of his dismissal. Applying Article 13 of the Civil Code, 31 the
Wherefore, the petition is dismissed. probationary period of six (6) months consists
of
one hundred eighty (180) days.32 This is in
03 MITSUBISHI MOTORS PHILIPPINES conformity with paragraph one, Article 13 of
CORPORATION vs CHRYSLER PHILIPPINES LABOR the
UNION Civil Code, which provides that the months
and NELSON PARAS which are not designated by their names shall
be
FACTS: understood as consisting of thirty (30) days
Nelson Paras was hired on a probationary basis each. The number of months in the proba
as a manufacturing trainee at the Plant tionary
Engineering Maintenance Department of period, six (6), should then be multiplied by the
Mitsubishi Motors Philippines Corporation number of days within a month, thirty (30);
(MMPC). hence, the period of one hundred eighty (180)
He and the new and re-hired employees were days. As clearly provided for in the last
given an orientation respecting the company’s paragraph of Article 13, in computing a period,
history, corporate philosophy, organizational the first day shall be excluded and the last day
structure, and company rules and regulations, included. Thus, the one hundred eighty (180)
including the company standards for days commenced on May 27, 1996, and ended
regularization, code of conduct and company- on
provided November 23, 1996. The termination letter
benefits. Paras started reporting for work on dated November 25, 1996 was served on
May 27, 1996. As part of the MMPC’s policy, respondent Paras only at 3:00 a.m. of
Paras November 26, 1996. He was, by then, already a
was evaluated by his immediate supervisors Lito regular
R. Lacambacal and Wilfredo J. Lopez7 after six employee of the petitioner under Article 281 of
(6) months, and received an average rating. the Labor Code.
Later, Lacambacal informed Paras that based on
his
performance rating, he would be regularized. 04 ROBINSONS GALLERIA/ROBINSONS
However, the Department and Division SUPERMARKET CORPORATION and/or JESS
Managers MANUEL, petitioners, vs. IRENE R. RANCHEZ,
reviewed the performance evaluation made on respondents.
Paras. They unanimously agreed, along with
Paras’ immediate supervisors, that the FACTS:
performance of Paras was unsatisfactory. 11 As Respondent Ranchez was a probationary
a employee for 5 months. She was hired as a
consequence, Paras was not considered for cashier by Robinsons sometime within that
regularization. On November 26, 1996, he period. Two weeks after she was hired, she
received reported the loss of cash which she had placed
a Notice of Termination dated November 25, in the company locker. She offered to pay for
1996, informing him that his services were the lost amount but the Operations Manager of
terminated effective the said date since he Robinsons had her strip-searched then reported
failed to meet the required company standards her to the police even though they found
for nothing on her person. An information for
regularization. Qualified Theft was filed with the Quezon City
Regional Trial Court. She was detained for 2
ISSUE: weeks for failure to immediately post bail.
WON Paras, who continued to be employed Weeks later, respondent Ranchez filed a
even after the 180th day, had become a complaint for illegal dismissal and damages. A
regular employee year later, Robinsons sent to respondent by
mail a notice of termination and/or notice of
HELD: expiration of probationary employment.
YES. Paras was employed as a management The Labor Arbiter dismissed the complaint for
trainee on a probationary basis. During the illegal dismissal, alleging that at the time of
orientation conducted on May 15, 1996, he was filing respondent Ranchez had not yet been
 3

terminated. She was merely investigated. In the instant case, based on the facts on
However, the NLRC reversed this ruling, stating record, petitioners failed to accord respondent
that Ranchez was illegally dismissed and that substantive and procedural due process.The
Robinson's should reinstate her. It held that haphazard manner in the investigation of the
Ranchez was deprived of due process when she missing cash, which was left to the
was strip-searched and sent to jail for two determination of the police authorities and the
weeks because such amounted to constructive Prosecutor's Office, left respondent with no
dismissal, making it impossible for the choice but to cry foul.Administrative
respondent to continue under the employment. investigation was not conducted by petitioner
Even though she was merely a probationary Supermarket.On the same day that the missing
employee, the lapse of the probationary money was reported by respondent to her
contract did not amount to a valid dismissal immediate superior, the company already pre-
because there was already an unwarranted judged her guilt without proper investigation,
constructive dismissal beforehand. and instantly reported her to the police as the
The NLRC denied Robinson's motion for suspected thief, which resulted in her
reconsideration. The CA affirmed the decision languishing in jail for two weeks.
of the NLRC. The due process requirements under the Labor
Code are mandatory and may not be replaced
ISSUE: with police investigation or court proceedings.
Whether respondent was illegally terminated An illegally or constructively dismissed
from employment by petitioners. employee, respondent is entitled to: (1) either
reinstatement, if viable, or separation pay, if
HELD: reinstatement is no longer viable; and (2)
The petition is unmeritorious. backwages. These two reliefs are separate and
LABOR LAW: Probationary employees; distinct from each other and are awarded
termination of employment conjunctively.
There is probationary employment when the In this case, since respondent was a
employee upon his engagement is made to probationary employee at the time she was
undergo a trial period during which the constructively dismissed by petitioners, she is
employer determines his fitness to qualify for entitled to separation pay and backwages.
regular employment based on reasonable Reinstatement of respondent is no longer viable
standards made known to him at the time of considering the circumstances.
engagement. DENIED
A probationary employee, like a regular
employee, enjoys security of tenure.However,
in cases of probationary employment, aside 05 ST. PAUL COLLEGE QUEZON CITY, SR. LILIA
from just or authorized causes of termination, THERESE TOLENTINO, SPC, SR. BERNADETTE
an additional ground is provided under Article RACADIO, SPC, and SR. SARAH MANAPOL,
281 of the Labor Code,i.e., the probationary Petitioners, v. REMIGIO MICHAEL A. ANCHETA II
employee may also be terminated for failure to and CYNTHIA A. ANCHETA, Respondent.
qualify as a regular employee in accordance
with reasonable standards made known by the FACTS:
employer to the employee at the time of the Remigio Michael was hired by the St. Paul
engagement.Thus, the services of an employee College (SPCQC) as a teacher in the Gen.
who has been engaged on probationary basis Education Dept. with a probationary rank in SY
may be terminated for any of the following: 1996-1997 which was renewed the following
(1) a just or year. His wife, Cynthia was was also hired as a
(2) an authorized cause; and part time teacher of the Mass Comm Dept in
(3) when he fails to qualify as a regular the 2nd Sem SY 1996-1997 and her
employee in accordance with reasonable appointment was renewed for SY 1997-1998.
standards prescribed by the employer. February 1998, the spouses both wrote a letter
Article 277(b) of the Labor Code mandates that addressed to Sr. Lilia asking for their contract to
the employer shall furnish the worker, whose be renewed which was indeed granted by the
employment is sought to be terminated, a College Council as evidenced by a letter sent by
written notice containing a statement of the petitioner.
causes of termination, and shall afford the latter April 22,1998, a letter, whose signatures
ample opportunity to be heard and to defend includes that of the respondents, was sent to Sr.
himself with the assistance of a representative Bernadette. The said letter contain teachers
if he so desires, in accordance with company sentiments regarding school policies. However,
rules and regulations pursuant to the guidelines April 21, 1998, a letter written by the latter was
set by the Department of Labor and shown, reiterating the conversation of Sr.
Employment. Bernadette and Remigio regarding the non
 4

compliance of respondent to instructional employment, implies the purpose of the term or

school policies. Accordingly, Sr. Bernadette period, not its length. It is important that the
wrote a letter endorsing the termination of the contract of probationary employment specify
spouses. Respondents submitted their the period or term of its effectivity. The failure
comments however they were still terminated to stipulate its precise duration could lead to
and their letter for reconsideration denied thus the inference that the contract is binding for the
the filling of a complaint for illegal dismissal full three-year probationary period. Therefore,
which was dismissed by both NLRC and LA but the letters sent by petitioner, which were void
was granted by the CA. Petitioners MR was of any specifics cannot be considered as
denied hence the present petition. contracts. The closest they can resemble to are
that of informal correspondence among the
said individuals. As such, petitioner school has
ISSUE: the right not to renew the contracts of the
Whether or not the spouses were illegally respondents, the old ones having been expired
dismissed. at the end of their terms.
GRANTED
HELD:.
LABOR LAW
The Court finds that there was a valid and just
cause for dismissal. The Labor Code commands 06 TAMSONS ENTERPRISES, INC., NELSON LEE,
that before an employer may legally dismiss an LILIBETH ONG and JOHNSON NG v. COURT OF
employee from the service, the requirement of APPEALS and ROSEMARIE L. SY
substantial and procedural due process must be
complied with. Under the requirement of FACTS:
substantial due process, the grounds for It appears that on September 1, 2006, Sy was
termination of employment must be based on hired by Tamsons as Assistant to the President.
just or authorized causes. Petitioner school On February 24, 2007, four days before she
charged respondent Remigio Michael of non- completed her sixth month of working in
compliance with a school policy regarding the Tamsons, Ng, Sy was informed that her services
submission of final test questions to his would be terminated due to inefficiency.
program coordinator for checking or comment Sy claimed that the remarks of her superiors
which was admitted by the respondent in his about her alleged inefficiency were ill-
letter. Respondent Remigio Michael's spouse motivated and made without any basis. She had
shared the same defenses and admissions as to been rendering services for almost six (6)
the charges against her. The plain admissions of months before she was arbitrarily and
the charges against them were the summarily dismissed.The petitioners did not
considerations taken into account by the show her any evaluation or appraisal report
petitioner school in their decision not to renew regarding her alleged inefficient performance.
the respondent spouses' employment contracts. Petitioners asserted that before Sy was hired,
This is a right of the school that is mandated by she was apprised that she was being hired as a
law and jurisprudence. It is the prerogative of probationary employee for six months, subject
the school to set high standards of efficiency for to extension as a regular employee conditioned
its teachers since quality education is a on her meeting the standards of permanent
mandate of the Constitution. Schools cannot be employment set by the company. Her work
required to adopt standards which barely satisfy performance was thereafter monitored and
criteria set for government recognition. The evaluated. On February 1, 2007, she was
same academic freedom grants the school the formally informed that her employment would
autonomy to decide for itself the terms and end because she failed to meet the company's
conditions for hiring its teacher, subject of standards.
course to the overarching limitations under the Sy filed a case for illegal dismissal.
Labor Code. The ELA rendered a decision in favor of Sy,
LABOR LAW stating that a termination, notwithstanding the
A probationary employee or probationer is one probationary status, must be for a just cause.
who is on trial for an employer, during which Dissatisfied, the petitioners appealed to the
the latter determines whether or not he is NLRC. The NLRC reversed the ELAs finding. The
qualified for permanent employment. The NLRC reasoned out that failure to qualify for
probationary employment is intended to afford regular employment is in itself a just cause for
the employer an opportunity to observe the termination of probationary employment.
fitness of a probationary employee while at The MR having been denied, Sy elevated her
work, and to ascertain whether he will become case to the CA via a petition for certiorari under
an efficient and productive employee. The word Rule 65.
probationary, as used to describe the period of
 5

On February 26, 2010, the CA reversed the petitioners failed to comply with the
NLRC. The petitioners sought reconsideration requirement of a written notice. Notably, Sy
but it was denied. was merely verbally informed that her
Hence, the present petition before this Court. employment would be terminated as admitted
by the petitioners. Considering that the
ISSUE: petitioners failed to observe due process in
Was the termination of Sy, a probationary dismissing her, the dismissal had no legal
employee, valid? sanction. It bears stressing that a workers
employment is property in the constitutional
HELD: sense.
Even if probationary employees do not enjoy
permanent status, they are accorded the
constitutional protection of security of tenure. 07 Manila Electric Co. vs. Gala, G.R. No. 191288
They may only be terminated for a just cause or & 191304, March 7, 2012
when they otherwise fail to qualify as regular
employees in accordance with reasonable Facts:
standards made known to them by the Respondent Jan Carlo Gala was hired by
employer at the time of their engagement. petitioner Meralco as a probationary lineman
*** on March 2, 2006. On July 27, 2006, barely four
One of the conditions before an employer can months on the job, Gala was dismissed for
terminate a probationary employee is alleged complicity in pilferages of Meralco’s
dissatisfaction on the part of the employer electrical supplies, particularly, for the incident
which must be real and in good faith, not which took place on May 25, 2006. On that day,
feigned so as to circumvent the contract or the Gala and other Meralco workers were
law. Here, absent any proof showing that the instructed to replace a worn-out electrical pole
work performance of petitioner was at the Pacheco Subdivision in Valenzuela City.
unsatisfactory, We cannot conclude that While the Meralco crew was at work, one
petitioner failed to meet the standards. This Noberto Llanes, a non-Meralco employee,
absence of proof leads Us to infer that their arrived. He appeared to be known to the
dissatisfaction with her work performance was Meralco foremen as they were seen conversing
contrived so as not to regularize her with him. Llanes boarded the trucks, without
employment. being stopped, and took out what were later
found as electrical supplies. Aside from Gala,
The power of the employer to terminate an the foremen and the other linemen who were
employee on probation is not without at the worksite when the pilferage happened
limitations. Here, the petitioners failed to were later charged with misconduct and
convey to Sy the standards upon which she dishonesty for their involvement in the incident.
should measure up to be considered for Unknown to them, a Meralco surveillance task
regularization and how the standards had been force was monitoring their activities and
applied in her case. Petitioners dissatisfaction recording everything with a video camera.
was at best self-serving and dubious as they Gala denied involvement in the pilferage,
could not present concrete and competent contending that even if his superiors might have
evidence establishing her alleged committed a wrongdoing, he had no
incompetence. Failure on the part of the participation in what they did. He claimed that:
petitioners to discharge the burden of proof is (1) he was at some distance away from the
indicative that the dismissal was not justified. trucks when the pilferage happened; (2) he did
*** not have an inkling that an illegal activity was
The law is clear that in all cases of probationary taking place since his supervisors were
employment, the employer shall make known conversing with Llanes, giving him the
to the employee the standards under which he impression that they knew him; (3) he did not
will qualify as a regular employee at the time of call the attention of his superiors because he
his engagement. Where no standards are made was not in a position to do so as he was a mere
known to the employee at that time, he shall be lineman; and (4) he was just following
deemed a regular employee. The standards instructions in connection with his work and
under which she would qualify as a regular had no control in the disposition of company
employee not having been communicated to supplies and materials. He maintained that his
her at the start of her probationary period, Sy mere presence at the scene of the incident was
qualified as a regular employee not sufficient to hold him liable as a conspirator.
Assuming that Sy failed to meet the standards Despite Gala’s explanation, Meralco terminated
that was made known to her, the termination his employment. Gala responded by filing an
was still flawed flawed for failure to give the illegal dismissal complaint against Meralco. The
required notice to Sy. In this case, the Labor Arbiter dismissed the complaint for lack
 6

of merit. She held that Gala’s participation in responsibilities.” He failed to qualify as a regular
the pilferage of Meralco’s property rendered employee.
him unqualified to become a regular employee.
On appeal, the NLRC reversed the labor
arbiter’s ruling. It found that Gala had been 08-09 Armando Ailing vs. Jose B. Feliciano
illegally dismissed, since there was “no concrete
showing of complicity with the alleged The Facts
misconduct/dishonesty. The CA denied Via a letter dated June 2, 2004, 6 respondent
Meralco’s petition for lack of merit and partially Wide Wide World Express Corporation
granted Gala’s petition. It concurred with the (WWWEC) offered to employ petitioner
NLRC that Gala had been illegally dismissed. It Armando Aliling (Aliling) as Account Executive
opined that nothing in the records show Gala’s (Seafreight Sales), with the following
knowledge of or complicity in the pilferage. compensation package: a monthly salary of PhP
13,000, transportation allowance of PhP 3,000,
Issue: clothing allowance of PhP 800, cost of living
Whether or not Gala was illegally dismissed. allowance of PhP 500, each payable on a per
month basis and a 14 th month pay depending
Held: on the profitability and availability of financial
We find merit in the petition. Contrary to the resources of the company. The offer came with
conclusions of the CA and the NLRC, there is a
substantial evidence supporting Meralco’s six (6)-month probation period condition with
position that Gala had become unfit to continue this express caveat: Performance during [sic]
his employment with the company. Gala was probationary period shall be made as basis for
found, after an administrative investigation, to confirmation to Regular or Permanent Status.
have failed to meet the standards expected of On June 11, 2004, Aliling and WWWEC inked an
him to become a regular employee and this Employment Contract7 under the following
failure was mainly due to his “undeniable terms, among others:
knowledge, if not participation, in the pilferage  Conversion to regular status shall be
activities done by their group, all to the determined on the basis of work performance;
prejudice of the Company’s interests.” and
As probationary employee, his overall job  Employment services may, at any time, be
performance and his behavior were being terminated for just cause or in accordance with
monitored and measured in accordance with the standards defined at the time of
the standards (i.e., the terms and conditions) engagement. 8
laid down in his probationary employment Training then started. However, instead of a
agreement. Under paragraph 8 of the Seafreight Sale assignment, WWWEC asked
agreement, he was subject to strict compliance Aliling to handle Ground Express (GX), a new
with, and non-violation of the Company Code company product launched on June 18, 2004
on Employee Discipline, Safety Code, rules and involving domestic cargo forwarding service for
regulations and existing policies. Paragraph 10 Luzon. Marketing this product and finding daily
required him to observe at all times the highest contracts for it formed the core of Alilings new
degree of transparency, selflessness and assignment.
integrity in the performance of his duties and Barely a month after, Manuel F. San Mateo III
responsibilities, free from any form of conflict (San Mateo), WWWEC Sales and Marketing
or contradicting with his own personal interest. Director, emailed Aliling9 to express
On the whole, the totality of the circumstances dissatisfaction with the latters performance,
obtaining in the case convinces us that Gala thus:
could not but have knowledge of the pilferage Armand, My expectations is [sic] that GX
of company electrical supplies on May 25, 2006; Shuttles should be 80% full by the 3 rd week
he was complicit in its commission, if not by (August 5) after launch (July 15). Pls. make that
direct participation, certainly, by his inaction happen. It has been more than a month since
while it was being perpetrated and by not you came in. I am expecting sales to be
reporting the incident to company authorities. pumping in by now. Thanks.
Thus, we find substantial evidence to support Nonong
the conclusion that Gala does not deserve to Thereafter, in a letter of September 25, 2004,
remain in Meralco’s employ as a regular 10 Joseph R. Lariosa (Lariosa), Human Resources
employee. He violated his probationary Manager of WWWEC, asked Aliling to report to
employment agreement, especially the the Human Resources Department to explain
requirement for him “to observe at all times the his absence taken without leave from
highest degree of transparency, selflessness and September 20, 2004.
integrity in the performance of their duties and Aliling responded two days later. He denied
being absent on the days in question, attaching
 7

to his reply-letter 11 a copy of his timesheet12 WWWEC also attached to its Position Paper a
which showed that he worked from September memo dated September 20, 2004 21 in which
20 to 24, 2004. Alilings explanation came with a San Mateo asked Aliling to explain why he
query regarding the withholding of his salary should not be terminated for failure to meet the
corresponding to September 11 to 25, 2004. expected job performance, considering that the
In a separate letter dated September 27, 2004, load factor for the GX Shuttles for the period
13 Aliling wrote San Mateo stating: Pursuant to July to September was only 0.18% as opposed
your instruction on September 20, 2004, I to the allegedly agreed upon load of 80%
hereby tender my resignation effective October targeted for August 5, 2004. According to
15, 2004. While WWWEC took no action on his WWWEC, Aliling, instead of explaining himself,
tender, Aliling nonetheless demanded simply submitted a resignation letter.
reinstatement and a written apology, claiming In a Reply-Affidavit dated December 13, 2004,
in a subsequent letter dated October 1, 200414 22 Aliling denied having received a copy of San
to management that San Mateo had forced him Mateos September 20, 2004 letter.
to resign. Issues having been joined, the Labor Arbiter
Lariosas response-letter of October 1, 2004, 15 issued on April 25, 2006 23 a Decision declaring
informed Aliling that his case was still in the Alilings termination as unjustified. In its
process of being evaluated. On October 6, 2004, pertinent parts, the decision reads:
16 Lariosa again wrote, this time to advise The grounds upon which complainants dismissal
Aliling of the termination of his services was based did not conform not only the
effective as of that date owing to his non- standard but also the compliance required
satisfactory performance during his under Article 281 of the Labor Code,
probationary period. Necessarily, complainants termination is not
Records show that Aliling, for the period justified for failure to comply with the mandate
indicated, was paid his outstanding salary which the law
consisted of: requires. Respondents should be ordered to pay
PhP 4,988.18 (salary for the September 25, salaries corresponding to the unexpired
2004 payroll) portion of the contract of employment and all
1,987.28 (salary for 4 days in October 2004) other benefits amounting to a total of THIRTY
PhP 6,975.46 Total FIVE THOUSAND EIGHT HUNDRED ELEVEN
Earlier, however, or on October 4, 2004, Aliling PESOS (P35,811.00) covering the period from
filed a Complaint 17 for illegal dismissal due to October 6 to December 7, 2004, computed as
forced resignation, nonpayment of salaries as follows:
well as damages with the NLRC against Unexpired Portion of the Contract:
WWWEC. Appended to the complaint was Basic Salary P13,000.00
Alilings Affidavit dated November 12, 2004, 18 Transportation 3,000.00
in which he stated: 5. At the time of my Clothing Allowance 800.00
engagement, respondents did not make known ECOLA 500.00
to me the standards under which I will qualify as P17,300.00
a regular employee. 10/06/04 12/07/04
Refuting Alilings basic posture, WWWEC stated P17,300.00 x 2.7 mos. = P35,811.00
in its Position Paper dated November 22, 2004 Complainants 13th month pay proportionately
19 that, in addition to the letter-offer and for 2004 was not shown to have been paid to
employment contract adverted to, WWWEC complainant, respondent be made liable to him
and Aliling have signed a letter of therefore computed at SIX THOUSAND FIVE
appointment20 on June 11, 2004 containing the HUNDRED THIRTY TWO PESOS AND 50/100
following terms of engagement: (P6,532.50).
Additionally, upon the effectivity of your For engaging the services of counsel to protect
probation, you and your immediate superior are his interest, complainant is likewise
required to jointly define your objectives entitled to a 10% attorneys fees of the
compared with the job requirements of the judgment amount. Such other claims for lack of
position. Based on the pre-agreed objectives, basis
your performance shall be reviewed on the 3rd sufficient to support for their grant are
month to assess your competence and work unwarranted.
attitude. The 5 th month Performance Appraisal WHEREFORE, judgment is hereby rendered
shall be the basis in elevating or confirming your ordering respondent company to pay
employment status from Probationary to complainant Armando Aliling the sum of THIRTY
Regular. FIVE THOUSAND EIGHT HUNDRED ELEVEN
Failure to meet the job requirements during the PESOS (P35,811.00) representing his salaries
probation stage means that your services may and other benefits as discussed above.
be terminated without prior notice and without Respondent company is likewise ordered to pay
recourse to separation pay. said complainant the amount of TEN
 8

THOUSAND SEVEN HUNDRED SIXTY SIX PESOS The Issues

AND 85/100 ONLY (10.766.85) representing his Aliling raises the following issues for
proportionate 13 th month pay for 2004 plus consideration:
10% of the total judgment as and by way of A. The failure of the Court of Appeals to order
attorneys fees. reinstatement (despite its finding that
Other claims are hereby denied for lack of petitioner was illegally dismissed from
merit. (Emphasis supplied.) employment) is contrary to law and applicable
The labor arbiter gave credence to Alilings jurisprudence.
allegation about not receiving and, therefore, B. The failure of the Court of Appeals to award
not bound by, backwages (even if it did not order
San Mateos purported September 20, 2004 reinstatement) is contrary to law and applicable
memo. The memo, to reiterate, supposedly jurisprudence.
apprised Aliling of the sales quota he was, but C. The failure of the Court of Appeals to award
failed, to meet. Pushing the point, the labor moral and exemplary damages (despite its
arbiter explained that Aliling cannot be validly finding that petitioner was dismissed to prevent
terminated for non-compliance with the quota the acquisition of his regular status)
threshold absent a prior advisory of the is contrary to law and applicable jurisprudence.
reasonable standards upon which his 25
performance would be evaluated. In their Comment, 26 respondents reiterated
Both parties appealed the above decision to the their position that WWWEC hired petitioner on
NLRC, which affirmed the Decision in toto in its a probationary basis and fired him before he
Resolution dated May 31, 2007. The separate became a regular employee.
motions for reconsideration were also denied
by the NLRC in its Resolution dated August 31, The Courts Ruling
2007. The petition is partly meritorious.
Therefrom, Aliling went on certiorari to the CA, Petitioner is a regular employee On a
which eventually rendered the assailed procedural matter, petitioner Aliling argues that
Decision, the dispositive portion of which reads: WWWEC, not having appealed from the
WHEREFORE, the petition is PARTLY GRANTED. judgment of CA which declared Aliling as a
The assailed Resolutions of respondent (Third regular employee from the time he signed the
Division) National Labor Relations Commission employment contract, is now precluded from
are AFFIRMED, with the following questioning the appellate courts determination
MODIFICATION/CLARIFICATION: Respondents as to the nature of his employment.
Wide Wide World Express Corp. and its officers, Petitioner errs. The Court has, when a case is on
Jose B. Feliciano, Manuel F. San Mateo III and appeal, the authority to review matters not
Joseph R. Lariosa, are jointly and severally liable specifically raised or assigned as error if their
to pay petitioner Armando Aliling: (A) the sum consideration is necessary in reaching a just
of Forty Two Thousand Three Hundred Thirty conclusion of the case. We said as much in
Three & 50/100 (P42,333.50) as the total money Sociedad Europea de Financiacion, SA v. Court of
judgment, (B) the sum of Four Thousand Two Appeals,27 It is axiomatic that an appeal, once
Hundred Thirty Three & 35/100 (P4,233.35) as accepted by this Court, throws the entire case
attorneys fees, and (C) the additional sum open to review, and that this Court has the
equivalent to one-half (1/2) month of authority to review matters not specifically
petitioners salary as separation pay. raised or assigned as error by the parties, if
SO ORDERED. 24 (Emphasis supplied.) their consideration is necessary in arriving at a
The CA anchored its assailed action on the just resolution of the case.
strength of the following premises: (a) The issue of whether or not petitioner was,
respondents failed to prove that Alilings dismal during the period material, a probationary or
performance constituted gross and habitual regular employee is of pivotal import. Its
neglect necessary to justify his dismissal; (b) not resolution is doubtless necessary at arriving at a
having been informed at the time of his fair and just disposition of the controversy.
engagement of the reasonable standards under The Labor Arbiter cryptically held in his decision
which he will qualify as a regular employee, dated April 25, 2006 that:
Aliling was deemed to have been hired from day Be that as it may, there appears no showing
one as a regular employee; and (c) the strained that indeed the said September 20, 2004
relationship existing between the parties argues Memorandum addressed to complainant was
against the propriety of reinstatement. received by him. Moreover, complainants
Alilings motion for reconsideration was rejected tasked
by the CA through the assailed Resolution dated where he was assigned was a new developed
December 15, 2008. service. In this regard, it is noted:
Hence, the instant petition. Due process dictates that an employee be
apprised beforehand of the conditions
 9

of his employment and of the terms of standard in her affidavit referring to the fact
advancement therein. Precisely, implicit in that petitioner did not perform well in his
Article assigned work and his attitude was below par
281 of the Labor Code is the requirement that compared to the companys standard required
reasonable standards be previously made of him. (Emphasis supplied.)
known by the employer to the employee at the WWWECs contention is untenable.
time of his engagement (Ibid, citing Alcira is cast under a different factual setting.
Sameer Overseas Placement Agency, Inc. vs. There, the labor arbiter, the NLRC, the CA, and
NLRC, G.R. No. 132564, October 20, even finally this Court were one in their findings
1999).28 that the employee concerned knew, having
From our review, it appears that the labor been duly informed during his engagement, of
arbiter, and later the NLRC, considered Aliling a the standards for becoming a regular employee.
probationary employee despite finding that he This is in stark contrast to the instant case
was not informed of the reasonable standards where the element of being informed of the
by which his probationary employment was to regularizing standards does not obtain. As such,
be judged. Alcira cannot be made to apply to the instant
The CA, on the other hand, citing Cielo v. case.
National Labor Relations Commission,29 ruled To note, the June 2, 2004 letter-offer itself
that petitioner was a regular employee from the states that the regularization standards or the
outset inasmuch as he was not informed of the performance norms to be used are still to be
standards by which his probationary agreed upon by Aliling and his supervisor.
employment would be measured. The CA WWWEC has failed to prove that an agreement
wrote: as regards thereto has been reached. Clearly
Petitioner was regularized from the time of the then, there were actually no performance
execution of the employment contract on June standards to speak of. And lest it be overlooked,
11, 2004, although respondent company had Aliling was assigned to GX trucking sales, an
arbitrarily shortened his tenure. As pointed out, activity entirely different to the Seafreight Sales
respondent company did not make known the he was originally hired and trained for. Thus, at
reasonable standards under the time of his engagement, the standards
which he will qualify as a regular employee at relative to his assignment with GX sales could
the time of his engagement. Hence, not have plausibly been communicated to him
he was deemed to have been hired from day as
one as a regular employee.30 (Emphasis he was under Seafreight Sales. Even for this
supplied.) reason alone, the conclusion reached in Alcira is
WWWEC, however, excepts on the argument of little relevant to the instant case.
that it put Aliling on notice that he would be Based on the facts established in this case in
evaluated on the 3rd and 5th months of his light of extant jurisprudence, the CAs holding as
probationary employment. To WWWEC, its to the kind of employment petitioner enjoyed is
efforts translate to sufficient compliance with correct. So was the NLRC ruling, affirmatory of
the requirement that a probationary worker be that of the labor arbiter. In the final analysis,
apprised of the reasonable standards for his one common thread runs through the holding
regularization. WWWEC invokes the ensuing of the labor arbiter, the NLRC and the CA, i.e.,
holding in Alcira v. National Labor Relations petitioner Aliling, albeit hired from
Commission31 to support its case: managements standpoint as a probationary
Conversely, an employer is deemed to employee, was deemed a regular employee by
substantially comply with the rule on force of the following self-explanatory
notification provisions:
of standards if he apprises the employee that he Article 281 of the Labor Code ART. 281.
will be subjected to a performance evaluation Probationary employment. - Probationary
on a particular date after his hiring. We agree employment shall not exceed six (6) months
with the labor arbiter when he ruled that: from the date the employee started working,
In the instant case, petitioner cannot unless it is covered by an apprenticeship
successfully say that he was never informed by agreement stipulating a longer period. The
private respondent of the standards that he services of an employee who has been engaged
must satisfy in order to be converted into on a probationary basis may be terminated for a
regular status. This rans (sic) counter to the just cause or when he fails to qualify as a
agreement between the parties that after five regular employee in accordance with
months of service the petitioners performance reasonable standards made known by the
would be evaluated. It is only but natural that employer to the employee at the time of his
the evaluation should be made vis--vis the engagement. An employee who is allowed to
performance standards for the job. Private work after a probationary period shall be
respondent Trifona Mamaradlo speaks of such
 10

considered a regular employee. (Emphasis supported by evidence on record or the

supplied.) impugned judgment is based on a
Section 6(d) of the Implementing Rules of Book misapprehension of facts . Its very own letter-
VI, Rule VIII-A of the Labor Code Sec. 6. offer of employment argues against its above
Probationary employment. There is posture. Excerpts of the letter-offer:
probationary employment where the employee, Additionally, upon the effectivity of your
upon his engagement, is made to undergo a probation, you and your immediate
trial period where the employee determines his superior are required to jointly define your
fitness to qualify for regular employment, based objectives compared with the job requirements
on reasonable standards made known to him at of the position. Based on the pre-agreed
the time of engagement. objectives, your performance shall be reviewed
Probationary employment shall be governed by on the 3rd month to assess your competence
the following rules: and work attitude. The 5th month Performance
xxxx Appraisal shall be the basis in elevating or
(d) In all cases of probationary employment, the confirming your employment status from
employer shall make known to the employee Probationary to Regular.
the standards under which he will qualify as a Failure to meet the job requirements during the
regular employee at the time of his probation stage means that your services may
engagement. Where no standards are made be terminated without prior notice and without
known to the employee at that time, he shall be recourse to separation pay. (Emphasis
deemed a regular employee. (Emphasis supplied.)
supplied.) Respondents further allege that San Mateos
To repeat, the labor arbiter, NLRC and the CA email dated July 16, 2004 shows that the
are agreed, on the basis of documentary standards for his regularization were made
evidence adduced, that respondent WWWEC known to petitioner Aliling at the time of his
did not inform petitioner Aliling of the engagement. To recall, in that email message,
reasonable standards by which his probation San Mateo reminded Aliling of the sales quota
would be measured against at the time of his he ought to meet as a condition for his
engagement. The Court is loathed to interfere continued employment, i.e., that the GX trucks
with this factual determination. As We have should already be 80% full by August 5, 2004.
held: Contrary to respondents contention, San
Settled is the rule that the findings of the Labor Mateos email cannot support their allegation on
Arbiter, when affirmed by the NLRC and the Aliling being informed of the standards for his
Court of Appeals, are binding on the Supreme continued employment, such as the sales quota,
Court, unless patently erroneous. It is not the at the time of his engagement. As it were, the
function of the Supreme Court to analyze or email message was sent to Aliling more than a
weigh all over again the evidence already month after he signed his employment contract
considered in the proceedings below. The with WWWEC. The aforequoted Section 6 of the
jurisdiction of this Court in a petition for review Implementing Rules of Book VI, Rule VIII-A of
on certiorari is limited to reviewing only errors the Code specifically requires the employer to
of law, not of fact, unless the factual findings inform the probationary employee of such
being assailed are not supported by evidence on reasonable standards at the time of his
record or the impugned judgment is based on a engagement, not at any time later; else, the
misapprehension of facts. 32 The more recent latter shall be considered a regular employee.
Peafrancia Tours and Travel Transport, Inc., v. Thus, pursuant to the explicit provision of
Sarmiento 33 has reaffirmed the above ruling, Article 281 of the Labor Code, Section 6(d) of
to wit: the Implementing Rules of Book VI, Rule VIII-A
Finally, the CA affirmed the ruling of the NLRC of the Labor Code and settled jurisprudence,
and adopted as its own the latter's petitioner Aliling is deemed a regular employee
factual findings. Long-established is the doctrine as of June 11, 2004, the date of his employment
that findings of fact of quasi-judicial bodies x x contract.
x are accorded respect, even finality, if Petitioner was illegally dismissed To justify fully
supported by substantial evidence. When the dismissal of an employee, the employer
passed upon must, as a rule, prove that the dismissal was for
and upheld by the CA, they are binding and a just cause and that the employee was
conclusive upon this Court and will not normally afforded due process prior to dismissal. As a
be complementary principle, the employer has the
disturbed. Though this doctrine is not without onus of proving with clear, accurate, consistent,
exceptions, the Court finds that none are and convincing evidence the
applicable to the present case. validity of the dismissal. 34 WWWEC had failed
WWWEC also cannot validly argue that the to discharge its twin burden in the instant case.
factual findings being assailed are not
 11

First off, the attendant circumstances in the Code. One is analogous to another if it is
instant case aptly show that the issue of susceptible of comparison with the latter either
petitioners alleged failure to achieve his quota, in general or in some specific detail; or has a
as a ground for terminating employment, close relationship with the latter. Gross
strikes the Court as a mere afterthought on the inefficiency is closely related to gross neglect,
part of WWWEC. Consider: Lariosas letter of for both involve specific acts of omission on the
September 25, 2004 already betrayed part of the employee resulting in damage to the
managements intention to dismiss the employer or to his business. In Buiser vs.
petitioner for alleged unauthorized absences. Leogardo, this Court ruled that failure to
Aliling was in fact made to explain and he did so observed prescribed standards to inefficiency
satisfactorily. But, lo and behold, WWWEC may constitute just cause for dismissal.
nonetheless proceeded with its plan to dismiss (Emphasis supplied.)
the petitioner It did so anew in Leonardo v. National Labor
for non-satisfactory performance, although the Relations Commission36 on the following
corresponding termination letter dated October rationale:
6, 2004 did not even specifically state Alilings An employer is entitled to impose productivity
non-satisfactory performance, or that Alilings standards for its workers, and in fact, non
termination was by reason of his failure to compliance may be visited with a penalty even
achieve his set quota. more severe than demotion. Thus, [t]he
What WWWEC considered as the evidence practice of a company in laying off workers
purportedly showing it gave Aliling the chance because they failed to make the work quota has
to explain his inability to reach his quota was a been recognized in this jurisdiction. (Philippine
purported September 20, 2004 memo of San American Embroideries vs. Embroidery and
Mateo addressed to the latter. Garment Workers, 26 SCRA 634, 639). In the
However, Aliling denies having received such case at bar, the petitioners' failure to meet the
letter and WWWEC has failed to refute his sales quota assigned to each of them constitute
contention of non receipt. In net effect, a just cause of their dismissal, regardless of the
WWWEC was at a loss to explain the exact just permanent or probationary status of their
reason for dismissing Aliling. employment. Failure to observe prescribed
At any event, assuming for argument that the standards of work, or to fulfill reasonable work
petitioner indeed failed to achieve his sales assignments due to inefficiency may constitute
quota, his termination from employment on just cause for dismissal. Such inefficiency is
that ground would still be unjustified. understood to mean failure to attain work goals
Article 282 of the Labor Code considers any of or work quotas, either by failing to complete
the following acts or omission on the part of the the same within the allotted reasonable period,
employee as just cause or ground for or by producing unsatisfactory results. This
terminating employment: management prerogative of requiring standards
(a) Serious misconduct or willful disobedience may be availed of so long as they are exercised
by the employee of the lawful orders of his in good faith for the advancement of the
employer or representative in connection with employer's interest.
his work; (Emphasis supplied.)
(b) Gross and habitual neglect by the employee In fine, an employees failure to meet sales or
of his duties; work quotas falls under the concept of gross
(c) Fraud or willful breach by the employee of inefficiency, which in turn is analogous to gross
the trust reposed in him by his employer neglect of duty that is a just cause for dismissal
or duly authorized representative; under Article 282 of the Code. However, in
(d) Commission of a crime or offense by the order for the quota imposed to be considered a
employee against the person of his employer or valid productivity standard and thereby validate
any immediate member of his family or his duly a dismissal, managements prerogative of fixing
authorized representatives; and the quota must be exercised in good faith for
(e) Other causes analogous to the foregoing. the advancement of its interest. The duty to
(Emphasis supplied) prove good faith, however, rests with WWWEC
In Lim v. National Labor Relations as part of its burden to
Commission,35 the Court considered show that the dismissal was for a just cause.
inefficiency as an analogous just cause for WWWEC must show that such quota was
termination of employment under Article 282 of imposed in good faith.
the Labor Code: This WWWEC failed to do, perceptibly because
We cannot but agree with PEPSI that gross it could not. The fact of the matter is that the
inefficiency falls within the purview of other alleged imposition of the quota was a desperate
causes analogous to the foregoing, this attempt to lend a semblance of validity to
constitutes, therefore, just cause to terminate Alilings illegal dismissal. It must be stressed that
an employee under Article 282 of the Labor even WWWECs sales manager, Eve Amador
 12

(Amador), in an internal e-mail to San Mateo, counsel if the employee so desires, is given
hedged on whether petitioner performed below opportunity to respond to the charge, present
or above expectation: his evidence or rebut the evidence presented
Could not quantify level of performance as he against him; and
as was tasked to handle a new product (GX). (c) A written notice [of] termination served on
Revenue report is not yet administered by IT on the employee indicating that upon due
a month-to-month basis. Moreover, this in a consideration of all the circumstance, grounds
way is an experimental activity. Practically you have been established to justify his termination.
have a close monitoring with Armand with In case of termination, the foregoing notices
regards to his performance. Your assessment of shall be served on the employees last known
him would be more accurate. address.
Being an experimental activity and having been MGG Marine Services, Inc. v. NLRC38 tersely
launched for the first time, the sales of GX described the mechanics of what may be
services could not be reasonably quantified. considered a two-part due process requirement
This would explain why Amador implied in her which includes the two-notice rule, x x x one, of
email that other bases besides sales figures will the intention to dismiss, indicating therein his
be used to determine Alilings performance. And acts or omissions complained against, and two,
yet, despite such a neutral observation, Aliling notice of the decision to dismiss; and an
was still dismissed for his dismal sales of GX opportunity to answer and rebut the charges
services. In any event, WWWEC failed to against him, in between such notices.
demonstrate the reasonableness and the bona King of Kings Transport, Inc. v. Mamac39
fides on the quota imposition. expounded on this procedural requirement in
Employees must be reminded that while this manner:
probationary employees do not enjoy (1) The first written notice to be served on the
permanent status, they enjoy the constitutional employees should contain the specific
protection of security of tenure. They can only causes or grounds for termination against them,
be terminated for cause or when they and a directive that the employees are given the
otherwise fail to meet the reasonable standards opportunity to submit their written explanation
made known to them by the employer at the within a reasonable period. Reasonable
time of their engagement. 37 Respondent opportunity under the Omnibus Rules means
WWWEC miserably failed to prove the every kind of assistance that management must
termination of petitioner was for a just cause accord to the employees to enable them to
nor was there substantial evidence to prepare adequately for their defense. This
demonstrate the standards were made known should be construed as a period of at least five
to the latter at the time of his engagement. calendar days from receipt of the notice xxxx
Hence, petitioners right to security of tenure Moreover, in order to enable the employees to
was breached. Alilings right to procedural due intelligently prepare their explanation and
process was violated As earlier stated, to effect defenses, the notice should contain a detailed
a legal dismissal, the employer must show not narration of the facts and circumstances that
only a valid ground therefor, but also that will serve as basis for the charge against the
procedural due process has properly been employees. A general description of the charge
observed. When the Labor Code speaks of will not suffice. Lastly, the notice should
procedural due process, the reference is usually specifically mention which company rules, if
to the two (2)-written notice rule envisaged in any, are violated and/or which among the
Section 2 (III), Rule XXIII, Book V of the Omnibus grounds under Art. 288 [of the Labor Code] is
Rules Implementing the Labor Code, which being charged against the employees
provides: (2) After serving the first notice, the employees
Section 2. Standard of due process: should schedule and conduct a hearing
requirements of notice. In all cases of or conference wherein the employees will be
termination of given the opportunity to (1) explain and clarify
employment, the following standards of due their defenses to the charge against them; (2)
process shall be substantially observed. present evidence in support of their defenses;
I. For termination of employment based on just and
causes as defined in Article 282 of the (3) rebut the evidence presented against them
Code: by the management. During the hearing or
(a) A written notice served on the employee conference, the employees are given the
specifying the ground or grounds for chance to defend themselves personally, with
termination, and giving to said employee the
reasonable opportunity within which to explain assistance of a representative or counsel of
his side; their choice x x x.
(b) A hearing or conference during which the (3) After determining that termination is
employee concerned, with the assistance of justified, the employer shall serve the
 13

employees a written notice of termination monthly salary, until the finality of this Decision.
indicating that: (1) all the circumstances This disposition hews with the Courts ensuing
involving the charge against the employees holding in Javellana v. Belen: 40 Article 279 of
have been considered; and (2) grounds have the Labor Code, as amended by Section 34 of
been Republic Act 6715 instructs:
established to justify the severance of their Art. 279. Security of Tenure. - In cases of regular
employment. (Emphasis in the original.) employment, the employer shall
Here, the first and second notice requirements not terminate the services of an employee
have not been properly observed, thus tainting except for a just cause or when authorized by
petitioners dismissal with illegality. this Title. An employee who is unjustly
The adverted memo dated September 20, 2004 dismissed from work shall be entitled to
of WWWEC supposedly informing Aliling of the reinstatement without loss of seniority rights
likelihood of his termination and directing him and other privileges and to his full backwages,
to account for his failure to meet the expected inclusive of allowances, and to his other
job performance would have had constituted benefits or their monetary equivalent computed
the charge sheet, sufficient to answer for the from the time his compensation was withheld
first notice requirement, but for the fact that from him up to the time of his actual
there is no proof such letter had been sent to reinstatement. (Emphasis
and received by him. In fact, in his December supplied)
13, 2004 Complainants Reply Affidavit, Aliling Clearly, the law intends the award of backwages
goes on to tag such letter/memorandum as and similar benefits to accumulate past
fabrication. WWWEC did not adduce proof to the date of the Labor Arbiters decision until the
show that a copy of the letter was duly served dismissed employee is actually reinstated. But
upon Aliling. Clearly enough, WWWEC did not if, as in this case, reinstatement is no longer
comply with the first notice requirement. possible, this Court has consistently ruled
Neither was there compliance with the that backwages shall be computed from the
imperatives of a hearing or conference. The time of illegal dismissal until the date
Court need not dwell at length on this particular the decision becomes final. (Emphasis supplied.)
breach of the due procedural requirement. Additionally, Aliling is entitled to separation pay
Suffice it to point out that the record is devoid in lieu of reinstatement on the ground of
of any showing of a hearing or conference strained relationship.
having been conducted. On the contrary, in its In Golden Ace Builders v. Talde,41 the Court
October 1, 2004 letter to Aliling, or barely five ruled:
(5) days after it served the notice of The basis for the payment of backwages is
termination, WWWEC acknowledged that it was different from that for the award of separation
still evaluating his case. And the written notice pay. Separation pay is granted where
of termination itself did not indicate all the reinstatement is no longer advisable because of
circumstances involving the charge to justify strained relations between the employee and
severance of employment. the employer. Backwages represent
Aliling is entitled to backwages and separation compensation that should have been earned
pay in lieu of reinstatement As may be noted, but were not collected because of the unjust
the CA found Alilings dismissal as having been dismissal. The basis for computing backwages is
illegally effected, but nonetheless usually the length of the employee's service
concluded that his employment ceased at the while that for separation pay is the actual
end of the probationary period. Thus, the period when the employee was unlawfully
appellate court merely affirmed the monetary prevented from working.
award made by the NLRC, which consisted of As to how both awards should be computed,
the payment of that amount corresponding to Macasero v. Southern Industrial Gases
the unserved portion of the contract of Philippines instructs:
employment. [T]he award of separation pay is inconsistent
The case disposition on the award is erroneous. with a finding that there was no
As earlier explained, Aliling cannot be rightfully illegal dismissal, for under Article 279 of the
considered as a mere probationary employee. Labor Code and as held in a catena of cases,
Accordingly, the probationary period set in the an employee who is dismissed without just
contract of employment dated June 11, 2004 cause and without due process is entitled to
was of no moment. In net effect, as of that date backwages and reinstatement or payment of
June 11, 2004, Aliling became part of the separation pay in lieu thereof:
WWWEC organization as a regula employee of Thus, an illegally dismissed employee is entitled
the company without a fixed term of to two reliefs: backwages and reinstatement.
employment. Thus, he is entitled to backwages The two reliefs provided are separate and
reckoned fro the time he was illegally dismissed distinct. In instances where reinstatement is no
on October 6, 2004, with a PhP 17,300.00 longer feasible because of strained relations
 14

between the employee and the employer, employee generated what may be considered
separation pay is granted. In effect, an illegally as the arbitrary dismissal of the petitioner.
dismissed employee is entitled to either Following the pronouncements of this Court
reinstatement, if viable, or separation pay if Sagales v. Rustans Commercial Corporation,43
reinstatement is no longer viable, and the computation of separation pay in lieu of
backwages. reinstatement includes the period for which
The normal consequences of respondents illegal backwages were awarded:
dismissal, then, are reinstatement without loss Thus, in lieu of reinstatement, it is but proper to
of seniority rights, and payment of backwages award petitioner separation pay
computed from the time compensation was computed at one-month salary for every year of
withheld up to the date of actual reinstatement. service, a fraction of at least six (6)
Where reinstatement is no longer viable as an months considered as one whole year. In the
option, separation pay equivalent to one (1) computation of separation pay, the
month salary for every year of service should be period where backwages are awarded must be
awarded as an alternative. The payment of included. (Emphasis supplied.)
separation pay is in addition to Thus, Aliling is entitled to both backwages and
payment of backwages. x x x separation pay (in lieu of reinstatement) in the
Velasco v. National Labor Relations Commission amount of one (1) months salary for every year
emphasizes: of service, that is, from June 11, 2004 (date of
The accepted doctrine is that separation pay employment contract) until the finality of this
may avail in lieu of reinstatement if decision with a fraction of a year of at least six
reinstatement is no longer practical or in the (6) months to be considered as one (1) whole
best interest of the parties. Separation pay year. As determined by the labor arbiter, the
in lieu of reinstatement may likewise be basis for the computation of backwages and
awarded if the employee decides not to be separation pay will be Alilings monthly salary at
reinstated. (emphasis in the original; italics PhP 17,300.
supplied) Finally, Aliling is entitled to an award of PhP
Under the doctrine of strained relations, the 30,000 as nominal damages in consonance with
payment of separation pay is considered an prevailing jurisprudence44 for violation of due
acceptable alternative to reinstatement when process.
the latter option is no longer desirable or viable. Petitioner is not entitled to moral and
On one hand, such payment liberates the exemplary damages
employee from what could be a highly In Nazareno v. City of Dumaguete,45 the Court
oppressive work environment. On the other expounded on the requisite elements for a
hand, it releases the employer from the grossly litigants entitlement to moral damages, thus:
unpalatable obligation of maintaining in its Moral damages are awarded if the following
employ a worker it could no longer trust. elements exist in the case: (1) an injury
Strained relations must be demonstrated as a clearly sustained by the claimant; (2) a culpable
fact, however, to be adequately act or omission factually established; (3) a
supported by evidence substantial evidence to wrongful act or omission by the defendant as
show that the relationship between the the proximate cause of the injury sustained by
employer and the employee is indeed strained the claimant; and (4) the award of damages
as a necessary consequence of the judicial predicated on any of the cases stated Article
controversy. 2219 of the Civil Code. In addition, the person
In the present case, the Labor Arbiter found claiming moral damages must prove the
that actual animosity existed between existence of bad faith by clear and convincing
petitioner Azul and respondent as a result of evidence for the law always presumes good
the filing of the illegal dismissal case. Such faith. It is not enough that one merely suffered
finding, especially when affirmed by the sleepless nights, mental anguish, and serious
appellate court as in the case at bar, is binding anxiety as the result of the actuations of the
upon the Court, consistent with the prevailing other party. Invariably such action must be
rules that this Court will not try facts anew and shown to have been willfully done in bad faith
that findings of facts of quasi-judicial bodies are or with ill motive. Bad faith, under the law, does
accorded great respect, even finality. (Emphasis not simply connote
supplied.) bad judgment or negligence. It imports a
As the CA correctly observed, To reinstate dishonest purpose or some moral obliquity and
petitioner [Aliling] would only create an conscious doing of a wrong, a breach of a
atmosphere of antagonism and distrust, more known duty through some motive or interest or
so that he had only a short stint with ill will that partakes of the nature of fraud.
respondent company. 42 The Court need not (Emphasis supplied.)
belabor the fact that the patent animosity that In alleging that WWWEC acted in bad faith,
had developed between employer and Aliling has the burden of proof to present
 15

evidence in support of his claim, as ruled in contention that his liability is merely joint, the
Culili v. Eastern Telecommunications Philippines, Labor Arbiter ruled:
Inc.: 46 According to jurisprudence, basic is the Such issue regarding the personal liability of the
principle that good faith is presumed and he officers of a corporation for the
who alleges bad faith has the duty to prove the payment of wages and money claims to its
same. By imputing bad faith to the actuations of employees, as in the instant case, has long been
ETPI, Culili has the burden of proof to present resolved by the Supreme Court in a long list of
substantial evidence to support the allegation cases [A.C. Ransom Labor Union-CLU vs. NLRC
of unfair labor practice. Culili failed to discharge (142 SCRA 269) and reiterated in the cases of
this burden and his bare allegations deserve no Chua vs. NLRC (182 SCRA 353), Gudez vs. NLRC
credit. (183 SCRA 644)]. In the aforementioned cases,
This was reiterated in United Claimants the Supreme Court has expressly held that the
Association of NEA (UNICAN) v. National irresponsible officer of the corporation (e.g.
Electrification Administration (NEA),47 in this President) is liable for the corporations
wise: obligations
It must be noted that the burden of proving bad to its workers. Thus, respondent Yupangco,
faith rests on the one alleging it. As the being the president of the respondent YL Land
Court ruled in Culili v. Eastern and
Telecommunications, Inc., According to Ultra Motors Corp., is properly jointly and
jurisprudence, basic is severally liable with the defendant corporations
the principle that good faith is presumed and he for
who alleges bad faith has the duty to prove the the labor claims of Complainants Alba and De
same. Moreover, in Spouses Palada v. Solidbank Guzman. x x x
Corporation, the Court stated, Allegations of xxxx
bad faith and fraud must be proved by clear and As reflected above, the Labor Arbiter held that
convincing evidence. respondents liability is solidary.
Similarly, Aliling has failed to overcome such There is solidary liability when the obligation
burden to prove bad faith on the part of expressly so states, when the law so
WWWEC. Aliling has not presented any clear provides, or when the nature of the obligation
and convincing evidence to show bad faith. The so requires. MAM Realty Development
fact that he was illegally dismissed is insufficient Corporation v. NLRC, on solidary liability of
to prove bad faith. Thus, the CA correctly ruled corporate officers in labor disputes, enlightens:
that [t]here was no sufficient showing of bad x x x A corporation being a juridical entity, may
faith or abuse of management prerogatives in act only through its directors, officers and
the personal action taken against petitioner. 48 employees. Obligations incurred by them,
In Lambert Pawnbrokers and Jewelry acting as such corporate agents are not theirs
Corporation v. Binamira,49 the Court ruled: but the direct accountabilities of the
A dismissal may be contrary to law but by itself corporation they represent. True solidary
alone, it does not establish bad faith to liabilities may at times be incurred but only
entitle the dismissed employee to moral when exceptional circumstances warrant such
damages. The award of moral and exemplary as, generally, in the following cases:
damages 1. When directors and trustees or, in
cannot be justified solely upon the premise that appropriate cases, the officers of a corporation:
the employer dismissed his employee without (a) vote for or assent to patently unlawful acts
authorized cause and due process. of the corporation;
The officers of WWWEC cannot be held jointly (b) act in bad faith or with gross negligence in
and severally liable with the company directing the corporate
The CA held the president of WWWEC, Jose B. affairs;
Feliciano, San Mateo and Lariosa jointly and xxxx
severally liable for the monetary awards of In labor cases, for instance, the Court has held
Aliling on the ground that the officers are corporate directors and officers solidarily
considered employers acting in the interest of liable with the corporation for the termination
the corporation. The CA cited NYK International of employment of employees done with malice
Knitwear Corporation Philippines (NYK) v. or in bad faith.
National Labor Relations Commission50 in A review of the facts of the case does not reveal
support of its argument. Notably, NYK in turn ample and satisfactory proof that respondent
cited A.C. Ransom Labor Union-CCLU v. NLRC.51 officers of WWEC acted in bad faith or with
Such ruling has been reversed by the Court in malice in effecting the termination of petitioner
Alba v. Yupangco,52 where the Court ruled: Aliling. Even assuming arguendo that the
By Order of September 5, 2007, the Labor actions of WWWEC are ill-conceived and
Arbiter denied respondents motion to quash erroneous, respondent officers cannot be held
the 3rd alias writ. Brushing aside respondents jointly and solidarily with it. Hence, the ruling
 16

on the joint and solidary liability of individual SO ORDERED.

respondents must be recalled.
Aliling is entitled to Attorneys Fees and Legal
Interest Petitioner Aliling is also entitled to 10 Mylene Carvajal vs. Luzon Development Bank
attorneys fees in the amount of ten percent and/or Oscar Ramirez
(10%) of his total monetary award, having been
forced to litigate in order to seek redress of his FACTS:
grievances, pursuant to Article 111 of the Labor Carvajal was employed as a trainee-teller by
Code and following our ruling in Exodus Luzon Development Bank (Bank) under a six-
International Construction Corporation v. month probationary employment
Biscocho,53 to wit: contract. Ramirez is the President and CEO of
In Rutaquio v. National Labor Relations the Bank. A month into her employment, she
Commission, this Court held that: was send a Memorandum directing her to
It is settled that in actions for recovery of wages explain in writing why she should not be
or where an employee was forced to litigate subjected to disciplinary action for her eight
and, thus, incur expenses to protect his rights tardiness on November 2003. A second
and interest, the award of attorneys fees is Memorandum was sent to her on January for
legally and morally justifiable. her again chronic tardiness on December
In Producers Bank of the Philippines v. Court of 2003. She submitted her written explanations
Appeals this Court ruled that: Attorneys fees for both events and manifested her acceptance
may be awarded when a party is compelled to of the consequences of her actions. She was
litigate or to incur expenses to protect his terminated for three days effective 21 January
interest by reason of an unjustified act of the 2004. However, on 22 January, her termination
other party. was lifted but at the same time, her services
While in Lambert Pawnbrokers and Jewelry were terminated. In the respondents’ position
Corporation,54 the Court specifically ruled: paper to the LA, they explained that the reasons
However, the award of attorneys fee is for her absence are chronic tardiness,
warranted pursuant to Article 111 of the Labor absenteeism and failure to perform
Code. Ten (10%) percent of the total award is satisfactorily as a probationary employee.
usually the reasonable amount of attorneys fees LA Decision: The petitioner was illegally
awarded. It is settled that where an employee dismissed because she was not afforded the
was forced to litigate and, thus, incur expenses notice in writing informing her of what the Bank
to protect his rights and interest, the award of would like to bring out to her for the latter to
attorneys fees is legally and morally justifiable. answer in writing.
Finally, legal interest shall be imposed on the NLRC Decision: NLRC affirmed the decision of
monetary awards herein granted at the rate of the LA.
6% per annum from October 6, 2004 (date of CA Decision: The CA found that the petitioner
termination) until fully paid. was not entitled to backwages because she was
WHEREFORE, the petition is PARTIALLY rightfully dismissed for failure to meet the
GRANTED. The July 3, 2008 Decision of the employment standards.
Court of Appeals in CA-G.R. SP No. 101309 is
hereby MODIFIED to read: ISSUE:
WHEREFORE, the petition is PARTIALLY Whether the petitioner can be considered a
GRANTED. The assailed Resolutions of regular employee at the time of her dismissal.
respondent (Third Division) National Labor
Relations Commission are AFFIRMED, with the HELD:
following MODIFICATION/CLARIFICATION: No. Carvajal’s appointment letter reads that
Respondent Wide Wide World Express Corp. is “Possible extension of this contract will depend
liable to pay Armando Aliling the following: (a) on the job requirements of the Bank and your
backwages reckoned from October 6, 2004 up overall performance. Performance review will
to the finality of this Decision based on a salary be conducted before possible renewal can take
of PhP 17,300 a month, with interest at 6% per effect.” Therefore, petitioner knew, at the time
annum on the principal amount from October 6, of her engagement, that she must comply with
2004 until fully paid; (b) the additional sum the standards set forth by respondent and
equivalent to one (1) month salary for every perform satisfactorily in order to attain regular
year of service, with a fraction of at least six (6) status. Even the NLRC upheld the petitoner’s
months considered as one whole year based on probationary status, stating that reinstatement
the period from June 11, 2004 (date of is not synonymous to regularization.
employment contract) until the finality of this Although probationary employees also enjoy
Decision, as separation pay; (c) PhP 30,000 as security of tenure, he may still be terminated
nominal damages; and (d) Attorneys Fees because of just and authorized causes of
equivalent to 10% of the total award. termination and the additional ground under
 17

Article 281 of the Labor Code, i.e. the we can only consider the first apprenticeship
probationary employee may also be terminated agreement for the purpose. With the expiration
for failure to qualify as a regular employee in of the first agreement and the retention of the
accordance to the reasonable standards set by employees,Atlanta had, to all intents and
the employer. Punctuality is a reasonable purposes, recognized the completion of their
standard imposed on every employee, whether training and their acquisition of a regular
in government or private sector. This, together employee status. To foist upon them the second
with absenteeism, underperformance and apprenticeship agreement for a second skill
mistake in clearing a check are infractions that which was not even mentioned in the
cannot be tantamount to satisfactory standards. agreement itself, is a violation of the Labor
In addition to the abovementioned, it has been Code’s implementing rules and is an act
previously held in PDI vs. Magtibay, Jr., that the manifestly unfair to the employees, to say the
second requirement under Article 281 does not least.On the supposed apprenticeship
require notice and hearing. Due process of law agreements they entered into, Costales,
for this second ground consists of making the Almoite, Sebolino and Sagun refuse to accept
reasonable standards expected of the employee the agreements’ validity, contending that the
during his probationary period known to him at company’s apprenticeship program is merely a
the time of his engagement. By the very nature ploy “to continually deprive [them] of their
of probationary employment, the employee rightful wages and benefits which are due them
knows from the very start that he will be under as regular employees.” The petition is denied.
close observation and continuous scrutiny by
his supervisors. If termination is for cause, it
may be done at anytime during the probation. 12 GREGORIO V. TONGKO v. THE
MANUFACTURERS LIFE INSURANCE CO. (PHILS.),
INC. and RENATO A. VERGEL DE DIOS
11 ATLANTA INDUSTRIES, INC. G.R. No. 187320
and/or ROBERT CHAN, VS APRILITO R. FACTS:
SEBOLINO, KHIM V. COSTALES, January 26, 2011 Taking from the November 2008 decision, the
ALVIN V. ALMOITE, and JOSEPH S. SAGUN, facts are as follows:
Manufacturers Life Insurance, Co. is a domestic
FACTS: corporation engaged in life insurance business.
The complainants filed a case against Atlanta De Dios was its President and Chief Executive
Industries Inc. for non-regularization, Officer. Petitioner Tongko started his
underpayment, nonpayment of wages and relationship with Manulife in 1977 by virtue of a
other money claims, as well as claims for moral Career Agent's Agreement.
and exemplary damages and attorney’s fees Pertinent provisions of the agreement state
against the petitioners Atlanta Industries, Inc. that:
They alleged that they had attained regular It is understood and agreed that the Agent is an
status as they were allowed to work with independent contractor and nothing contained
Atlanta for more than six (6) months from the herein shall be construed or interpreted as
start of a purported apprenticeship agreement creating an employer-employee relationship
between them and the company. They claimed between the Company and the Agent.
that they were illegally dismissed when the a) The Agent shall canvass for applications for
apprenticeship agreement expired. Atlanta Inc. Life Insurance, Annuities, Group policies and
argued that the workers were not entitled to other products offered by the Company, and
regularization and to their money claims collect, in exchange for provisional receipts
because they were engaged as apprentices issued by the Agent, money due or to become
under a government-approved apprenticeship due to the Company in respect of applications
program. The company offered to hire them as or policies obtained by or through the Agent or
regular employees in the event vacancies for from policyholders allotted by the Company to
regular positions occur in the section of the the Agent for servicing, subject to subsequent
plant where they had trained. Then the labor confirmation of receipt of payment by the
arbiter dismiss the complain but the CA Company as evidenced by an Official Receipt
reversed it. issued by the Company directly to the
policyholder.
ISSUE: b) The Company may terminate this Agreement
Whether complainants are employees of for any breach or violation of any of the
Atlanta and entitled to be payed. provisions hereof by the Agent by giving written
notice to the Agent within fifteen (15) days
HOLDING: from the time of the discovery of the breach.
Yes, Even if we recognize the company’s need No waiver, extinguishment, abandonment,
to train its employees through apprenticeship, withdrawal or cancellation of the right to
 18

terminate this Agreement by the Company shall

be construed for any previous failure to exercise ISSUE:
its right under any provision of this Agreement. Did the Supreme Court err in issuing the June
c) Either of the parties hereto may likewise 29, 2010 resolution, reversing its earlier
terminate his Agreement at any time without decision that an employer-employee
cause, by giving to the other party fifteen (15) relationship existed?
days notice in writing.
Sometime in 2001, De Dios addressed a letter to HELD:
Tongko, then one of the Metro North The Supreme Court finds no reason to reverse
Managers, regarding meetings wherein De Dios the June 29, 2010 decision. Control over the
found Tongko's views and comments to be performance of the task of one providing
unaligned with the directions the company was service both with respect to the means and
taking. De Dios also expressed his concern manner, and the results of the service is the
regarding the Metro North Managers' primary element in determining whether an
interpretation of the company's goals. He employment relationship exists. The Supreme
maintains that Tongko's allegations are Court ruled petitioners Motion against his favor
unfounded. Some allegations state that some since he failed to show that the control
Managers are unhappy with their earnings, that Manulife exercised over him was the control
they're earning less than what they deserve and required to exist in an employer-employee
that these are the reasons why Tonko's division relationship; Manulifes control fell short of this
is unable to meet agency development norm and carried only the characteristic of the
objectives. However, not a single Manager relationship between an insurance company
came forth to confirm these allegations. Finally, and its agents, as defined by the Insurance Code
De Dios related his worries about Tongko's and by the law of agency under the Civil Code.
inability to push for company development and In the Supreme Courts June 29, 2010
growth. Resolution, they noted that there are built-in
De Dios subsequently sent Tongko a letter of elements of control specific to an insurance
termination in accordance with Tongko's Agents agency, which do not amount to the elements
Contract. Tongko filed a complaint with the of control that characterize an employment
NLRC against Manulife for illegal dismissal, relationship governed by the Labor Code.The
alleging that he had an employer-employee Insurance Code provides definite parameters in
relationship with De Dios instead of a revocable the way an agent negotiates for the sale of the
agency by pointing out that the latter exercised companys insurance products, his collection
control over him through directives regarding activities and his delivery of the insurance
how to manage his area of responsibility and contract or policy. They do not reach the level
setting objectives for him relating to the of control into the means and manner of doing
business. Tongko also claimed that his dismissal an assigned task that invariably characterizes an
was without basis and he was not afforded due employment relationship as defined by labor
process. The NLRC ruled that there was an law.
employer-employee relationship as evidenced To reiterate, guidelines indicative of labor law
by De Dios's letter which contained the manner "control" do not merely relate to the mutually
and means by which Tongko should do his work. desirable result intended by the contractual
The NLRC ruled in favor of Tongko, affirming the relationship; they must have the nature of
existence of the employer-employee dictating the means and methods to be
relationship. employed in attaining the result. Tested by this
The Court of Appeals, however, set aside the norm, Manulifes instructions regarding the
NLRC's ruling. It applied the four-fold test for objectives and sales targets, in connection with
determining control and found the elements in the training and engagement of other agents,
this case to be lacking, basing its decision on the are among the directives that the principal may
same facts used by the NLRC. It found that impose on the agent to achieve the assigned
Manulife did not exert control over Tongko, tasks.They are targeted results that Manulife
there was no employer-employee relationship wishes to attain through its agents. Manulifes
and thus the NLRC did not have jurisdiction over codes of conduct, likewise, do not necessarily
the case. intrude into the insurance agents means and
The Supreme Court reversed the ruling of the manner of conducting their sales. Codes of
Court of Appeals and ruled in favor of Tongko. conduct are norms or standards of behavior
However, the Supreme Court issued another rather than employer directives into how
Resolution dated June 29, 2010, reversing its specific tasks are to be done.
decision. Tongko filed a motion for In sum, the Supreme Court found absolutely no
reconsideration, which is now the subject of the evidence of labor law control.
instant case. DENIED
 19

formally charged with the administrative

13 PHILIPPINE CHARITY SWEEPSTAKES OFFICE offenses of Discourtesy in the Course of Official
BOARD OF DIRECTORS and REYNALDO P. Duties and Grave Misconduct, for which she
MARTIN v. MARIE JEAN C. LAPID was dismissed from the service. To somehow
remedy the situation, the petitioners
FACTS: mentioned in their Memorandum before the CA
An administrative complaint was filed against that there was no reason anymore to pursue
the Respondent for allegedly confronting, the administrative charge against Lapid and to
badmouthing and shouting invectives at Mr. investigate further as this was superseded by
Guemo, in the presence of other employees and Memorandum dated September 14, 2005
seeking assistance from the PSCO. The PCSO recommending the termination of respondent
Board of Directors found her guilty of Lapid’s casual employment. They pointed out
discourtesy in the course of official duties and that this was precisely the reason why no
grave misconduct and imposed on her the Formal Charge was issued. Clearly, the action of
penalty of dismissal from service. petitioners clearly violated Lapid’s basic rights
On appeal with the CSC, the Commission as a casual employee.
dismissed the respondent’s appeal for being Therefore, the petition is denied and the
moot and academic. Moreover, they ruled that respondent is allowed to continue rendering
the respondent is a casual employee which services as teller of PCSO and is also entitled to
means that she is not entitled to security of payment of backwages.
tenure. However, the CA reversed the decision DENIED.
of the Commission by reinstating the
respondent in the service until the expiration of
her casual employment. 14 EXODUS INTERNATIONAL CONSTRUCTION
CORPORATION and ANTONIO P. JAVALERA,
ISSUE: Petitioners, v.GUILLERMO BISCOCHO,
Did the CA gravely err in granting the FERNANDO PEREDA, FERDINAND MARIANO,
respondent’s petition, in effect, reversing the GREGORIO BELLITA and MIGUEL BOBILLO,
CSC’s resolutions. Respondent.

HELD: FACTS:
A new ruling recognizes that casual employees Petitioner Exodus International Construction
are covered by the security of tenure and Corporation (Exodus) is a duly licensed labor
cannot be terminated within the period of his contractor for the painting of residential
employment except for cause. Despite this new houses, condominium units and commercial
ruling, it is not the intention of the Court to buildings.
make the status of a casual employee at par In the furtherance of its business, Exodus hired
with that of a regular employee, who enjoys respondents as painters on different dates.
permanence of employment. The rule is still Guillermo, Fernando, Ferdinand, and Miguel
that casual employment will cease filed a complaint for illegal dismissal and non-
automatically at the end of the period unless payment of holiday pay, service incentive leave
renewed as stated in the Plantilla of Casual pay, 13th month pay and night-shift differential
Employment. Casual employees may also be pay.
terminated anytime though subject to certain The Labor Arbiter rendered a Decision
conditions or qualifications. Thus, they may be exonerating petitioners from the charge of
laid-off anytime before the expiration of the illegal dismissal as respondents chose not to
employment period provided any of the report for work. However, she allowed the
following occurs:(1) when their services are no claims for holiday pay, service incentive leave
longer needed; (2) funds are no longer pay and 13th month pay. The Decision was
available; (3) the project has already been affirmed by the NLRC and the CA. They opined
completed/finished; or (4) their performance that in a situation where the employer has
are below par. complete control over the records and could
Equally important, they are entitled to due thus easily rebut any monetary claims against it
process especially if they are to be removed for but opted not to lift any finger, the burden is on
more serious causes or for causes other than the employer and not on the complainants.
the reasons mentioned in CSC Form No. 001.
The reason for this is that their termination
from the service could carry a penalty affecting
their rights and future employment in the ISSUE:
government. Whether or not the CA erred and committed
In the case at bench, the CSC itself found that grave abuse of discretion in ordering the
Lapid was denied due process as she was never reinstatement of respondents to their former
 20

positions and affirming the award granted by independent source of livelihood. He claimed
the lower tribunals. that he rendered service to DMCI continuously
for almost 31 years.
HELD: DMCI denied liability. It argued that it hired
The petition is partly meritorious. Jamin on a project-to-project basis, from the
LABOR LAW: Illegal dismissal start of his engagement in 1968 until the
In illegal dismissal cases, it is incumbent upon completion of its SM Manila project on March
the employees to first establish the fact of their 20, 1999 where Jamin last worked. With the
dismissal before the burden is shifted to the completion of the project, it terminated Jamins
employer to prove that the dismissal was legal. employment.
Here, there was no evidence that respondents The LA dismissed the complaint for lack of
were dismissed nor were they prevented from merit. On appeal, the NLRC affirmed the
returning to their work. It was only decision of the LA. On further appeal, the CA
respondents’ unsubstantiated conclusion that reversed the NLRC decision and ruled that
they were dismissed. Jamin was a regular employee. Hence, DMCI
Clearly therefore, there was no dismissal, much seeks a reversal of the CA rulings on the ground
less illegal, and there was also no abandonment that the appellate court committed a grave
of job to speak of. The Labor Arbiter is therefore error in annulling the decisions of the labor
correct in ordering that respondents be arbiter and the NLRC.
reinstated but without any backwages.
However, petitioners are of the position that ISSUE:
the reinstatement of respondents to their Whether or not Jamin is a regular employee
former positions, which were no longer existing,
is impossible, highly unfair and unjust. HELD:
Petitioners are misguided. They forgot that Yes. CA Decision Affirmed.
there are two types of employees in the Labor Law
construction industry. The first is referred to as Once a project or work pool employee has
project employees or those employed in been: (1) continuously, as opposed to
connection with a particular construction intermittently, rehired by the same employer
project or phase thereof and such employment for the same tasks or nature of tasks; and (2)
is coterminous with each project or phase of these tasks are vital, necessary and
the project to which they are assigned. The indispensable to the usual business or trade of
second is known as non-project employees or the employer, then the employee must be
those employed without reference to any deemed a regular employee.
particular construction project or phase of a While the contracts indeed show that Jamin had
project. The second category is where been engaged as a project employee, there was
respondents are classified. an almost unbroken string of Jamins rehiring
Petition is PARTLY GRANTED. from December 17, 1968 up to the termination
of his employment on March 20, 1999. While
the history of Jamins employment (schedule of
15 D.M. CONSUNJI, INC. and/or DAVID M. projects) relied upon by DMCI shows a gap of
CONSUNJI, Petitioners, v. ESTELITO L. JAMIN, almost four years in his employment for the
Respondent. period between July 28, 1980 (the supposed
completion date of the Midtown Plaza project)
FACTS: and June 13, 1984 (the start of the IRRI Dorm IV
Petitioner D.M. Consunji, Inc. (DMCI), a project), the gap was caused by the companys
construction company, hired respondent omission of the three projects above
Estelito L. Jamin as a laborer. Sometime in 1975, mentioned.
Jamin became a helper carpenter. Since his To reiterate, Jamins employment history with
initial hiring, Jamins employment contract had DMCI stands out for his continuous, repeated
been renewed a number of times. On March 20, and successive rehiring in the companys
1999, his work at DMCI was terminated due to construction projects. In all the 38 projects
the completion of the SM Manila project. This where DMCI engaged Jamins services, the tasks
termination marked the end of his employment he performed as a carpenter were indisputably
with DMCI as he was not rehired again. necessary and desirable in DMCIs construction
Jamin filed a complaintfor illegal dismissal, with business. He might not have been a member of
several money claims (including attorneys fees), a work pool as DMCI insisted that it does not
against DMCI and its President/General maintain a work pool, but his continuous
Manager, David M. Consunji. Jamin alleged that rehiring and the nature of his work
DMCI terminated his employment without a unmistakably made him a regular employee.
just and authorized cause at a time when he Further, as we stressed in Liganza, respondent
was already 55 years old and had no capitalizes on our ruling in D.M. Consunji, Inc. v.
 21

NLRC which reiterates the rule that the length Labor Arbiter pointed out that the complainants
of service of a project employee is not the were required to perform several projects that
controlling test of employment tenure but were not at all directly related to URSUMCOs
whether or not the employment has been fixed main operations, and that they were project
for a specific project or undertaking the employees, they could not be regularized since
completion or termination of which has been their respective employments end upon the
determined at the time of the engagement of completion of each project. Also, complainants
the employee." were not entitled to the benefits granted under
"Surely, length of time is not the controlling test the CBA that, as provided, covered only the
for project employment. Nevertheless, it is vital regular employees of URSUMCO.
in determining if the employee was hired fora 7, out of the 22 original complainants, appealed
specific undertaking or tasked to perform the Labor Arbiters ruling before the NLRC. NLRC
functions vital, necessary and indispensable to reversed the Labor Arbiter's ruling; it declared
the usual business or trade of the employer. the complainants are regular URSUMCO
Here, private respondent had been a project employees because they performed activities
employee several times over. His employment which were usually necessary and desirable in
ceased to be coterminous with specific projects the usual trade or business of URSUMCO, and
when he was repeatedly re-hired due to the granted their monetary claims under the CBA.
demands of petitioners business.Without NLRC denied petitioners motion for
doubt, Jamins case fits squarely into the reconsideration.
employment situation just quoted. Petitioners elevated the case to the Court of
PETITION DENIED Appeals (CA) via a petition for certiorari.
The CA granted in part the petition. It pointed
out that the primary standard for determining
16 UNIVERSAL ROBINA SUGAR MILLING regular employment is the reasonable
CORPORATION and RENE CABATI, Petitioners, v. connection between a particular activity
FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE performed by the employee vis-vis the usual
BALDOZA, RENE ABELLAR, DIOMEDES ALICOS, trade or business of the employer. As the
MIGUEL ALICOS, ROGELIO AMAHIT, LARRY complainants have been performing their
AMASCO, FELIPE BALANSAG, ROMEO respective tasks for at least one year, these
BALANSAG, MANUEL BANGOT, ANDY BANJAO, same tasks, regardless of whether the
DIONISIO BENDIJO, JR., JOVENTINO BROCE, performance was continuous or intermittent,
ENRICO LITERAL, RODGER RAMIREZ, constitutes sufficient evidence of the necessity,
BIENVENIDO RODRIGUEZ, DIOCITO PALAGTIW, if not indispensability, of the activity to
ERNIE SABLAN, RICHARD PANCHO, RODRIGO URSUMCOs business. On the claim for CBA
ESTRABELA, DANNY KADUSALE and ALLYROBYL benefits, however, the CA ruled that the
OLPUS, Respondents. complainants were not entitled to receive them.
CA pointed out that the CBA covered regular
FACTS: employees of URSUMCO performing tasks
URSUMCO is a domestic corporation engaged in needed by the latter for the entire year with no
the sugarcane milling business; Cabati is regard to the changing sugar milling season. For
URSUMCOs Business Unit General Manager. collective bargaining purposes, they constitute a
The complainants were employees of bargaining unit separate and distinct from the
URSUMCO, and were hired on various dates regular employees.
between 1988 and 1996, and on different The petitioner filed a petition for review on
capacities, i.e., drivers, crane operators, bucket certiorari after the CA denied their motion for
hookers, welders, mechanics, laboratory partial reconsideration.
attendants and aides, steel workers, carpenters,
among others. The complainants signed ISSUE:
contracts of employment for a period of 1 Whether or not the respondents are regular
month or for a given season, and were employees of URSUMCO?
repeatedly hired to perform the same duties
and, for every engagement, were required to HELD:
sign new employment contracts for the same The respondents are regular seasonal
duration of one month or given season. employees of URSUMCO
On August 23, 2002, the complainants filed LABOR LAW : regular seasonal employees
before the Labor Arbiter complaints for Article 280 of the Labor Code provides for three
regularization, entitlement to the benefits kinds of employment arrangements, namely:
under the existing Collective Bargaining regular, project/seasonal and casual.
Agreement (CBA), and attorneys fees. The Labor Regular employment refers to that arrangement
Arbiter dismissed the complaint in the decision whereby the employee has been engaged to
dated October 9, 2002, for lack of merit. The perform activities which are usually necessary
 22

or desirable in the usual business or trade of the This regular and repeated hiring of the same
employer. By way of an exception, paragraph 2, workers (two different sets) for two separate
Article 280 of the Labor Code also considers seasons has put in place, principally through
regular a casual employment arrangement jurisprudence, the system of regular seasonal
when the casual employees engagement has employment in the sugar industry and other
lasted for at least one year, regardless of the industries with a similar nature of operations.
engagements continuity. The controlling test in Therefore, the nature of the employment does
this arrangement is the length of time during not depend solely on the will or word of the
which the employee is engaged. employer or on the procedure for hiring and the
Project employment, on the other hand, manner of designating the employee. Rather,
contemplates on arrangement whereby the the nature of the employment depends on the
employment has been fixed for a specific nature of the activities to be performed by the
project or undertaking whose completion or employee, considering the nature of the
termination has been determined at the time of employers business, the duration and scope to
the engagement of the employee. The services be done, and, in some cases, even the length of
of the project employees are legally and time of the performance and its continued
automatically terminated upon the end or existence.
completion of the project as the employees The NLRC acted in grave abuse of discretion
services are coterminous with the project. when it declared the respondents regular
Seasonal employment operates much in the employees of URSUMCO without qualification
same way as project employment, albeit it and that they were entitled to the benefits
involves work or service that is seasonal in granted under the CBA, to URSUMCO's regular
nature or lasting for the duration of the season. employees. We also find that the CA grossly
To exclude the asserted seasonal employee misread the NLRC ruling and missed the
from those classified as regular employees, the implications of the respondents regularization.
employer must show that: (1) the employee To reiterate, the respondents are regular
must be performing work or services that are seasonal employees, as the CA itself opined
seasonal in nature; and (2) he had been when it declared that private respondents who
employed for the duration of the season. are regular workers with respect to their
Hence, when the seasonal workers are seasonal tasks or activities and while such
continuously and repeatedly hired to perform activities exist, cannot automatically be
the same tasks or activities for several seasons governed by the CBA between petitioner
or even after the cessation of the season, this URSUMCO and the authorized bargaining
length of time may likewise serve as badge of representative of the regular and permanent
regular employment. employees.
Casual employment refers to any other Petition for review on certiorari is partially
employment arrangement that does not fall granted.
under any of the first two categories.
In the case at bar, the respondents were made
to perform various tasks that did not at all
pertain to any specific phase of URSUMCO's
strict milling operations that would ultimately
cease upon completion of a particular phase in 17 JOSE Y. SONZA vs. ABS-CBN BROADCASTING
the milling of sugar; rather, they were tasked to CORPORATION
perform duties regularly and habitually needed
in URSUMCO's operations during the milling FACTS:
season. The respondents duties as loader ABS-CBN Broadcasting Corporation (ABS-CBN)
operators, hookers, crane operators and drivers signed an Agreement (Agreement) with
were necessary to haul and transport the the Mel and Jay Management and Development
sugarcane from the plantation to the mill; Corporation (MJMDC). ABS-CBN was
laboratory attendants, workers and laborers to represented by its corporate officers while
mill the sugar; and welders, carpenters and MJMDC was represented by SONZA, as
utility workers to ensure the smooth and President
continuous operation of the mill for the and General Manager, and Carmela Tiangco
duration of the milling season, as distinguished (TIANGCO), as EVP and Treasurer. Referred to in
from the production of the sugarcane which the Agreement as AGENT, MJMDC agreed to
involves the planting and raising of the provide SONZAs services exclusively to ABS-CBN
sugarcane until it ripens for milling. They as
perform activities that are necessary and talent for radio and television. ABS-CBN agreed
desirable in sugarcane production. Also, the to pay for SONZAs services a monthly talent fee
respondents were regularly and repeatedly of P310,000 for the first year and P317,000 for
hired to perform the same tasks year after year. the second and third year of the Agreement.
 23

ABS-CBN would pay the talent fees on the 10th consider all
and 25th days of the month. On 1 April 1996, the circumstances of the relationship, with the
SONZA wrote a letter to ABS-CBNs President control test being the most important element.
regarding the resignation of Mr. Jose Sonza,
consequently serving notice of rescission of said 17.1 FARLEY FULACHE, ET. AL. vs. ABS-CBN
Agreement. SONZA filed a complaint against BROADCASTING CORPORATION
ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon FACTS:
City. SONZA complained that ABS-CBN did not Farley Fulache, Manolo Jabonero, David Castillo,
pay his salaries, separation pay, service Jeffrey Lagunzad, Magdalena Maligon
incentive Bigno, Francisco Cabas, Jr., Harvey Ponce and
leave pay, 13th month pay, signing bonus, travel Alan C. Almendras and Cresente Atinen (Atinen)
allowance and amounts due under the filed two separate complaints for regularization,
Employees Stock Option Plan (ESOP). ABS-CBN unfair labor practice and several money claims
filed a Motion to Dismiss on the ground that no (regularization case) against ABS-CBN
employer-employee relationship existed Broadcasting Corporation-Cebu. Fulache and
between the parties. The Labor Arbiter Castillo
rendered his were drivers/cameramen; Atinen, Lagunzad and
Decision dismissing the complaint for lack of Jabonero were drivers; Ponce and Almendras
jurisdiction, and that Sonza cannot be were cameramen/editors; Bigno was a
considered PA/Teleprompter Operator-Editing, and Cabas
as an employee by reason of the peculiar was a
circumstances surrounding the engagement of VTR man/editor. They alleged that ABS-CBN and
his the ABS-CBN Rank-and-File Employees Union
services. That he was engaged by respondent by (Union) executed a collective bargaining
reason of his peculiar skills and talent as a TV agreement (CBA) where they learned that they
host and a radio broadcaster. Unlike an ordinary had
employee, he was free to perform the services been excluded from its coverage as ABS-CBN
he undertook to render in accordance with his considered them temporary and not regular
own style. Whatever benefits complainant employees, in violation of the Labor Code. They
enjoyed arose from specific agreement by the claimed they had already rendered more than a
parties and not by reason of employer- year of service in the company and, therefore,
employee should have been recognized as regular
relationship. The fact that complainant was employees entitled to security of tenure and to
made subject to respondents Rules and the privileges and benefits enjoyed by regular
Regulations, likewise, does not detract from the employees. ABS-CBN explained the nature of
absence of employer-employee relationship. the petitioners employment within the
framework
ISSUE: of its operations. It further claimed that to cope
WON employer-employee relationship existed with fluctuating business conditions, it
between Sonza and ABS-CBN. contracts on a caseto-case basis the services of
persons who possess the necessary talent, skills,
HELD: training, expertise or qualifications to meet the
NO. Independent contractors often present requirements of its programs and productions.
themselves to possess unique skills, These contracted persons are called talents and
expertise or talent to distinguish them from are considered independent contractors who
ordinary employees. The specific selection and offer their services to broadcasting companies.
hiring of SONZA, because of his unique skills, ABS-CBN alleged that the petitioners services
talent and celebrity status not possessed by were contracted on various dates by its Cebu
ordinary employees, is a circumstance station as independent contractors/off camera
indicative, but not conclusive, of an talents, and they were not entitled to
independent regularization in these capacities.
contractual relationship.If SONZA did not
possess such unique skills, talent and celebrity ISSUE:
status, WON they are ABS-CBNs regular employees
ABS-CBN would not have entered into the entitled to the benefits and privileges of
Agreement with SONZA but would have hired regular employees.
him
through its personnel department just like any HELD:
other employee. In any event, the method of They are ABS-CBNs regular employees entitled
selecting and engaging SONZA does not to the benefits and privileges of regular
conclusively determine his status. We must employees. These benefits and privileges arise
 24

from entitlements under the law (specifically,

the Labor Code and its related laws), and from ISSUE:
their employment contract as regular ABS-CBN WON resident doctors are employees of the
employees, part of which is the CBA if they fall hospital.
within the coverage of this agreement. Thus,
what only needs to be resolved as an issue for HELD:
purposes of implementation of the decision is The resident doctors are not employees of the
whether the petitioners fall within CBA hospital. It is clear that physicians
coverage. The parties 1999-2002 CBA provided undergo residency training in order to hone
in its their skills and develop or improve their
Article I (Scope of the Agreement) that: Section knowledge
1. APPROPRIATE BARGAINING UNIT. The parties in a specialized medical field or discipline.
agree that the appropriate bargaining unit shall Hence, residency is basically and simply a
be regular rank-and-file employees of ABS-CBN continuation of their medical course. However,
BROADCASTING CORPORATION but shall not they are not required or mandated under any
include: a) Personnel classified as Supervisor law to further undergo a residence training
and program. Having passed the medical board
Confidential employees; b) Personnel who are examinations, they are already licensed
on casual or probationary status as defined in physicians and could very well engage in the
Section 2 hereof; c) Personnel who are on general
contract status or who are paid for specified practice of medicine. It is for the practice of
units of highly specialized medical disciplines which
work such as writer-producers, talent-artists, necessitates further on-the-job training
and singers. The inclusion or exclusion of new thereon.
job Viewed from this perspective, residency training
classifications into the bargaining unit shall be clearly amounts to a pursuit of further
subject of discussion between the COMPANY education on a specific discipline. Thus, the
and relationship between the teaching/training
the UNION. [emphasis supplied] Under these hospital
terms, the petitioners are members of the and the resident doctor is not one of employer-
appropriate bargaining unit because they are employee. The training/teaching hospital may
regular rank-and-file employees and do not simply be likened to a medical
belong to any of the excluded categories. school/university, but in this instance, the
Specifically, nothing in the records shows that emphasis is on the
they practical application and training of its students,
are supervisory or confidential employees; the resident doctors.
neither are they casual nor probationary
employees.
Most importantly, the labor arbiters decision of
January 17, 2002 affirmed all the way up to the 19 Calamba Medical Center, Inc. vs National
CA level ruled against ABS-CBNs submission that Labor Relations Commission
they are independent contractors. Thus, as
regular rank-and-file employees, they fall within FACTS:
CBA coverage under the CBAs express terms Ronaldo Lanzanas and Merceditha Lanzanas are
and are entitled to its benefits. doctors employed by Calamba Medical
Center, Inc. They are given a retainer’s fee by
the hospital as well as shares from fees
18 UERMMMC-RDU VS. LAGUESMA obtained
from patients. One time, Ronaldo was
FACTS: overheard by Dr. Trinidad talking to another
The resident physicians formed a union called doctor
the UERMMC-Resident Doctors Union and about how low the admission rate to the
filed the petition for certification so that it will hospital is. That conversation was reported to
be recognized as the exclusive bargaining agent Dr.
of all the resident physicians in the hospital for Desipeda who was then the Medical Director of
purposes of collective bargaining. the hospital.
The petition for certification was dismissed by Eventually Ronaldo was suspended. Ronaldo
the Undersecretary, acting under the filed a case for Illegal Suspension in March
authority of the Secretary of Labor, on the 1998. In the same month, the rank and file
ground that there exist no employer-employee employees organized a strike against the
relationship between the resident doctors and hospital for
the hospital. unfair labor practices. Desipeda eventually fired
 25

Ronaldo for his alleged participation in the Rogelio Ramos, an executive of Philippine Long
strike, which is not allowed under the Labor Distance Telephone Company (PLDT), she has
Code for he is a managerial employee. Desipeda three children whose names are Rommel, Roy
also fired Merceditha on the ground that she is Roderick, and Ron Raymond. Because of the
the wife of Ronaldo who naturally sympathize s discomforts somehow interfered with her
with him. normal ways, she sough t professional advice.
The Labor Arbiter ruled that there was no Illegal She
Suspension for there was no employeremployee was told to undergo an operation for the
relationship because the hospital has no control removal of a stone in her gall bladder. She
over Ronaldo as he is a doctor who even gets underwent
shares from the hospitals earnings. series of examination which revealed that she
The National Labor Relations Commission as was fit for the said surgery.
well as the Court of Appeals reversed the Through the intercession of a mutual friend, she
LA. and her husband met Dr. Osaka for the
first time and she was advised by Dr. Osaka to
ISSUE: go under the operation called cholecystectomy
Whether or not there is an employer-employee and the same was agreed to be scheduled on
relationship? June 17,1985 at 9:00am at the Delos Santos
Medical Center. Rogelio asked Dr. Osaka to look
HELD: for a good anesthesiologist to which the latter
Yes. Under the control test, an employment agreed to. A day before the scheduled
relationship exists between a physician and operation, she was admitted at the hospital and
a hospital if the hospital controls both the on the
means and the details of the process by which day of the operation, Erlinda’s sister was with
the her insider the operating room. Dr. Osaka
physician is to accomplish his task. There is arrived
control in this case because of the fact that at the hospital late, Dr. Guttierez, the
Desipeda schedules the hours of work for anesthesiologist, started to intubate Erlina
Ronaldo and his wife. when
The doctors are also registered by the hospital Herminda heard her say that intubating Erlinda
under the SSS which is premised on an is quite difficult and there were complications.
employer-employee relationship. This prompt Dr. Osaka to order a call to another
There is Illegal Dismissal committed against anesthesiologist, Dr. Caldron who successfully
Rolando for there was no notice and hearing intubated Erlina. The patient’s nails became
held. It was never shown that Rolando joined bluish and the patient was placed in a
the strike. But even if he did, he has the right to trendelenburg position. After the operation,
do so for he is not a part of the managerial or Erlina was diagnosed to be suffering from
supervisory employees. As a doctor, their diffuse
decisions are still subject to revocation or cerebral parenchymal damage and that the
revision by Desipeda. petitioner alleged that this was due to lack of
There is Illegal Dismissal committed against oxygen supply to Erlinda’s brain which resulted
Merceditha for the ground therefor was not from the intubation.
mentioned in Article 282 of the Labor Code.
When is Control (One of the Four Tests of ISSUE:
Employer-Employee Relationship) Absent? Whether or not the doctors and the hospital are
Where a person who works for another does so liable for damages against petitioner
more or less at his own pleasure and is for the result to Erlinda of the said operation.
not subject to definite hours or conditions of
work, and is compensated according to the HELD:
result Yes. The private respondents were unable to
of his efforts and not the amount thereof, the disprove the presumption of negligence on
element of control is absent. their part in the care of Erlinda and their
negligence was the proximate case of her
20 Ramos vs Court of Appeals piteous
condition.
FACTS: Nevertheless, despite the fact that the scope of
Plaintiff Erlinda Ramos was, until the afternoon res ipsa liquitor has been measurably
of June 17, 1985 a 47-year old robust enlarged, it does not automatically follow that it
woman. Except for occasional complaints of apply to all cases of medical negligence as to
discomfort due to pains allegedly caused by mechanically shift the burden of proof to the
presence of a stone in her gall bladder, she was defendant to show that he is not guilty of the
as normal as any other woman. Married to ascribed negligence. Res ipsa liquitor is not a
 26

rigid or ordinary doctrine to be perfunctorily to

used be suffering from cancer of the sigmoid.
but a rule to be cautiously applied, dependin g April 11, 1984: Dr. Ampil performed an anterior
upon the circumstances of each case. It is resection surgery on Natividad and
generally restricted to situations in malpractice found that the malignancy in her sigmoid area
cases where a layman is able to say, as a matter had spread on her left ovary, necessitating the
of common knowledge and observation, that removal of certain portions of it Dr. Ampil
the consequences of professional care were not obtained the consent of Natividad’s husband,
as such as would ordinarily have followed if due Enrique Agana to perform hysterectomy.
care had been exercised. A distinction must be After a couple of days, Natividad consulted both
made between the failure to secure results, and Dr. Ampil and Dr. Fuentes about
the occurrence of something more unusual the excruciating pain in her anal region. Dr.
and not ordinarily found if the service or Ampil recommended that she consult an
treatment rendered followed the usual oncologist.
procedure of May 9, 1984: The Aganas went to the United
those skilled in that particular practice. It must States to seek further treatment and was
be conceded that the doctrine of res ipsa told she was FREE from cancer.
liquitor can have no application in a suit against August 31, 1984: Natividad's daughter found a
a physician or surgeon which involves the piece of gauze protruding from her
merits of a diagnosis or of a scientific vagina. Dr. Ampil proceeded to her house and
treatment. extracted by hand a piece of gauze measuring
Scientific studies point out that intubation 1.5 inches in width and assuring that the pain
problems are responsible for 1/3 of deaths will vanish.
and serious injuries associated with anesthesia. When the pain intensified, Nativided went to
Nevertheless, 98% or the vast majority of Polymedic General Hospital where Dr.
difficult intubation may be anticipated by Ramon Gutierrez found a foul-smelling gauze
performing a thorough evaluation of the measuring 1.5 inches in width which badly
patient’s infected her vaginal vault which formed a recto-
airway prior to the operation. As stated vaginal fistula forcign her stool to excrete
beforehand, respondent, Dra. Guttierez failed through the vagina.
to October 1984: Natividad underwent another
observe the proper pre-operative protocol surgery to remedy the damage
which could have prevented this unfortunate February 16, 1986: Natividad died so she was
incident. Had appropriate diligence and substituted by her children
reasonable care been used in the pre -operative RTC: PSI solidarily liable with Dr. Ampil and Dr.
evaluation, respondent physician could have Fuentes for damages for negligence and
been more prepared to meet the contingency malpractice
brought about by the perceived atomic CA: absolved Dr. Fuentes upon the same advise
variations in the patient’s neck and oral area; from the PRC Board of Medicine for
defects failure to show that he placed the guages or
which could have been easily overcome by a concealed the fact from Natividad.
prior knowledge of those va riations together
with ISSUE:
a change in technique. In other words, an W/N Dr. Fuentes may be held liable under the
experienced anesthesiologist, adequately principle of res ipso loquitor
alerted by a
thorough pre-operative evaluation, would have HELD:
had little difficulty going around the short neck NO. CA affirmed Dr. Ampil as the negligent
and potruding teeth. Having failed to observe party surgeons used gauzes as sponges to
common medical standards in pre-operative control the bleeding of the patient during the
management and intubation, respondent Dra. surgical operation immediately after the
Guttierez negligence resulted in cerebral anoxia operation, the nurses who assisted in the
and eventual coma of Erlinda. surgery noted in their report 2 sponges lacking
2
gauzes were extracted from the same spot of
21 Professional Services, Inc. vs. CA the body of Mrs. Agana element 3 "control and
management of the thing which caused the
FACTS: injury" to be wanting Dr. Fuentes performed the
April 4, 1984: Natividad Agana was rushed to surgery and thereafter reported and showed his
the Medical City General Hospital because work to Dr. Ampil who allowed Dr. Fuentes to
of difficulty of bowel movement and bloody leave the operating room Under the "Captain of
anal discharge. Dr. Miguel Ampil diagnosed her the Ship" rule, the operating surgeon is the
 27

person in complete charge of the surgery room Fuentes operated on Natividad with the
and all personnel connected with the operation assistance of the Medical City Hospital’s staff,
res ipsa loquitur not a rule of substantive law, composed of resident doctors, nurses, and
hence, does not per se create or constitute an interns
independent or separate ground of liability,
being a mere evidentiary rule mere invocation
and 22 BISIG MANGGAGAWA SA TRYCO and/or
application of the doctrine does not dispense FRANCISCO SIQUIG, as Union President,
with the requirement of proof of negligence JOSELITO
Art. 2176. Whoever by act or omission causes LARIÑO, VIVENCIO B. BARTE, SATURNINO
damage to another, there being fault or EGERA and SIMPLICIO AYA-AY vs. NATIONAL
negligence, is obliged to pay for the damage LABOR RELATIONS COMMISSION, TRYCO
done. Such fault or negligence, if there is no PHARMA CORPORATION, and/or WILFREDO C.
preexisting contractual relation between the RIVERA
parties, is called a quasi-delict and is governed
by the provisions of this Chapter. FACTS:
ART. 2180. The obligation imposed by Article Tryco Pharma Corporation (Tryco) is a
2176 is demandable not only for one’s manufacturer of veterinary medicines and its
own acts or omissions, but also for those of principal office is located in Caloocan City.
persons for whom one is responsible. Joselito Lariño, Vivencio Barte, Saturnino Egera
The owners and managers of an establishment an d
or enterprise are likewise responsible for Simplicio Aya-ay are its regular employees,
damages caused by their employees in the occupying the positions of helper, shipment
service of the branches in which the latter are helper
employed or on the occasion of their functions. and factory workers, respectively, assigned to
Employers shall be liable for the damages the Production Department. They are members
caused by their employees and household of Bisig Manggagawa sa Tryco (BMT), the
helpers acting within the scope of their assigned exclusive bargaining representative of the rank-
tasks even though the former are not engaged andfile employees. Tryco received a Letter from
in any business or industry. the Bureau of Animal Industry of the
xxxxxx Department of Agriculture reminding it that its
The responsibility treated of in this article shall production should be conducted in San Rafael,
cease when the persons herein Bulacan, not in Caloocan City, hence, Tryco
mentioned prove that they observed all the issued a Memorandum dericting petitioner Aya-
diligence of a good father of a family to prevent ay to report to the company's plant site in
damage. failed to adduce evidence showing Bulacan. When petitioner Aya -ay refused to
that it exercised the diligence of a good father obey, Tryco reiterated the order. Subsequently,
of a through a Memorandum, Tryco also directed
family in the accreditation and supervision petitioners Egera, Lariño and Barte to report to
private hospitals, hire, fire and exercise real the company's plant site in Bulacan. Petitioners
control then filed their separate complaints for illegal
over their attending and visiting ‘consultant’ dismissal, underpayment of wages,
staff control test is determining for the purpose nonpayment of overtime pay and service
of allocating responsibility in medical negligence incentive leave. The alleged that the
cases, an employer-employee relationship in management transferred petitioners Lariño,
effect exists between hospitals and their Barte, Egera and Aya-ay from Caloocan to San
attending and visiting physicians Rafael, Bulacan to paralyze the union. In their
ART. 1869. Agency may be express, or implied defense, respondents averred that the
from the acts of the principal, from his petitioners were not dismissed but they refused
silence or lack of action, or his failure to to comply with the management's directive for
repudiate the agency, knowing that another them to report to the company's plant in San
person is Rafael, Bulacan.
acting on his behalf without authority.
By accrediting Dr. Ampil and Dr. Fuentes and
publicly advertising their qualifications, the
hospital created the impression that they were ISSUE:
its agents, authorized to perform medical or WON management’s prerogative of transferring
surgical services for its patients doctrine of and reassigning employees from one
corporate negligence or corporate responsibility area of operation to another in order to meet
knowledge of any of the staff of Medical City the requirements of the business constitutes
Hospital constitutes knowledge of PSI constructive dismissal.
It is worthy to note that Dr. Ampil and Dr.
 28

Article IV, of the CBA which specified the work

HELD: schedule of respondent's employees to be from
NO. Management’s prerogative of transferring 9:00 a.m. to 5:00 p.m. Petitioner claimed that as
and reassigning employees from one a result of the memorandum, the employees
area of operation to another in order to meet are precluded from rendering their usual
the requirements of the business is, generally overtime work from 5:00 p.m. to 9:00 p.m.
not
constitutive of constructive dismissal. This
prerogative extends to the management's right ISSUE:
to WON MJCI relinquish part of its management
regulate, according to its own discretion and prerogative when it stipulated a work
judgment, all aspects of employment, including schedule in the CBA.
the freedom to transfer and reassign employees
according to the requirements of its business. HELD:
Management's prerogative of transferring and NO. MJCI did not relinquish part of its
reassigning employees from one area of management prerogative when it stipulated a
operation to another in order to meet the work schedule in the CBA. Every business
requirements of the business is, therefore, enterprise endeavors to increase profits. As it is,
generally the
not constitutive of constructive dismissal. Thus, Court will not interfere with the business
the consequent transfer of Tryco's personnel, judgment of an employer in the exercise of its
assigned to the Production Department was prerogative to devise means to improve its
well within the scope of its management operation, provided that it does not violate the
prerogative. law,
CBAs, and the general principles of justice and
fair play. We ha ve thus held that management
23 MANILA JOCKEY CLUB EMPLOYEES LABOR is
UNIONPTGWO vs MANILA JOCKEY CLUB, INC. free to regulate, according to its own discretion
and judgment, all aspects of employment,
FACTS: including hiring, work assignments, working
Manila Jockey Club Employees Labor Union- methods, time, place and manner of work,
PTGWO and respondent Manila Jockey Club, processes to be followed, supervision of
Inc., a corporation with a legislative franchise to workers, working regulations, transfer of
conduct, operate and maintain horse races, employees,
entered into a Collective Bargaining Agreement work supervision, layoff of workers and
(CBA). The CBA governed the economic rights discipline, dismissal, and recall of workers.
and obligations of respondents regular monthly
paid rank-and-file employees. In the CBA, the
parties agreed to a 7-hour work schedule from 24 CAPITOL MEDICAL CENTER, INC. and DR.
9:00 a.m. to 12:00noon and from 1:00 p.m. to THELMA NAVARETTE-CLEMENTE vs CESAR
5:00 p.m. on a work week of Monday to MERIS
Saturday. Respondent issued an inter-office
memorandum declaring that, effective April 20, FACTS:
1999, the hours of work of regular monthlypaid Capitol Medical Center, Inc. (Capitol) hired Dr.
employees shall be from 1:00 p.m. to 8:00 p.m. Cesar Meris (Dr. Meris), one of its
when horse races are held, that is, every stockholders, as in charge of its Industrial
Tuesday and Thursday. The memorandum, Service Unit (ISU) at a monthly salary of
however, maintained the 9:00 a.m. to 5:00 p.m. P10,270.00.
schedule for non-race days. Petitioner and Until the closure of the ISU, Dr. Meris
respondent entered into an Amended and performed dual functions of providing medical
Supplemental CBA retaining Section 1 of Article services to
IV and Section 2 of Article XI, supra, and Capitols more than 500 employees and health
clarified that any conflict arising therefrom shall workers as well as to employees and workers of
be referred to a voluntary arbitrator for companies having retainer contracts with it. Dr.
resolution. Subsequently, before a panel of Meris received from Capitols president and
voluntary arbitrators of the N ational chairman of the board, Dr. Thelma
Conciliation NavaretteClemente (Dr. Clemente), a notice
and Mediation Board (NCMB), petitioner advising him of
questioned the above office memorandum as the managements decision to close or abolish
violative the ISU and the consequent termination of his
of the prohibition against non-diminution of services as Chief thereof. Dr. Meris, doubting
wages and benefits guaranteed under Section 1, the reason behind the managements decision
 29

to out of the companys work place. Corollary, the

close the ISU and believing that the ISU was not private respondents were availing the benefits
in fact a bolished as it continued to operate and for overtime, holiday and night premium duty
offer services to the client companies with Dr. through time card punching. However, in the
Clemente as its head and the notice of closure early 1990s, the San Miguel Corporation
was a mere ploy for his ouster in view of his embarked on a Decentralization Program aimed
refusal to retire despite Dr. Clementes previous at enabling the separate divisions of the San
prodding for him to do so, sought his Miguel Corporation to pursue a more efficient
reinstatement but it was unheeded. Dr. Meris and effective management of their respective
thus filed a operations. As a result of the Decentralization
complaint against Capitol and Dr. Clemente for Program, the Beer Division of the San Miguel
illegal dismissal and reinstatement with claims Corporation implemented a no time card policy
for backwages, moral and exemplary damages, whereby the Supervisory I and II composing of
plus attorneys fees. the supervising security guards of the Beer
Division were no longer required to punch their
ISSUE: time
WON the abolition of the industrial service unit cards. Consequently, without prior consultation
(ISU) constitutes a valid exercise of with the private respondents, the time cards
management prerogative were ordered confiscated and the latter were
no longer allowed to render overtime work.
HELD: However, in lieu of the overtime pay and the
No. Capitol failed to sufficiently prove its good premium pay, the personn el of the Beer
faith in closing the ISU. Employers are Division
also accorded rights and privileges to assure affected by the No Time Card Policy were given
their self-determination and independence and a 10% across-the-board increase on their basic
reasonable return of capital. This mass of pay while the supervisors who were assigned in
privileges comprises the so-called management the night shift (6:00 p.m. to 6:00 a.m.) were
prerogatives. Although they may be broad and given night shift allowance ranging from
unlimited in scope, the State has the right to P2,000.00 to P2,500.00 a month. Respondents
determine whether an employers privilege is filed a
exercised in a manner that complies with the complaint for unfair labor practice, violation of
legal Article 100 of the Labor Code of the Philippines,
requirements and does not offend the and violation of the equal protection clause and
protected rights of labor. One of the rights due process of law in relation to paragraphs 6
accorded an and 8 of Article 32 of the New Civil Code of the
employer is the right to close an establishment Philippines SMC maintained that respondents
or undertaking. The right to close the operation were supervisory security guards who were
of an establishment or undertaking is explicitly exempt from the provisions of the Labor Code
recognized under the Labor Code as one of the on
authorized causes in terminating employment hours of work, weekly rest periods, and rest
of workers, the only limitation being that the days. The no time card policy did not ju st
closure must not be for the purpose of prevent
circumventing the provisions on termination of respondents from punching their time cards,
employment embodied in the Labor Code. but it also granted respondents an across-the
board increase of 10% of basic salary and either
a P2,000 or P2,500 night shift allowance on top
25 SAN MIGUEL CORPORATION, et.al, vs. of their yearly merit increase. They further
NUMERIANO LAYOC, JR., et.al. asserted that the no time card policy was a valid
exercise of management prerogative and that
FACTS: all supervisors in the Beer Division were
Respondents were among the Supervisory covered
Security Guards of the Beer Division of the by the no time card policy, which classification
San Miguel Corporation with offices at No. 40 was distinct and separate from the other
San Miguel venue, Mandaluyong City. They divisions within SMC.
started working as guards assigned to the Beer
Division on different dates until such time that ISSUE:
they were promoted as supervising security Whether the implementation of the no time
guards. From the commencement of their card policy was a valid exercise of
employment, the private respondents were management prerogative.
required to punch their time cards for purposes
of HELD:
determining the time they would come in and
 30

Yes. Given the discretion granted to the various collective bargaining agreement (CBA) or any
divisions of SMC in the management provision of the Labor Code
and operation of their respective businesses
and in the formulation and implementation of ISSUE:
policies affecting their operations and their Whether the management may be compelled to
personnel, the no time card policy affecting all share with the union or its employees
of its prerogative of formulating a code of
the supervisory employees of the Beer Division discipline.
is a valid exercise of management prerogative.
The no time card policy undoubtedly caused HELD:
pecuniary loss to respondents. However, YES. PAL asserts that when it revised its Code on
petitioners granted to respondents and other March 15, 1985, there was no law
supervisory employees a 10% across-the-board which mandated the sharing of responsibility
increase in pay and night shift allowance, in therefor between employer and employee.
addition to their yearly merit increase in basic Indeed, it was only on March 2, 1989, with the
salary, to cushion the impact of the loss. So long approval of Republic Act No. 6715, amend ing
as a companys management prerogatives are Article 211 of the Labor Code, that the law
exercised in good faith for the advancement of explicitly considered it a State policy "(t)o
the employers interest and not for the ensure the
purpose of defeating or circumventing the participation of workers in decision and policy-
rights of the employees under special laws or making processes affecting the rights, duties
under valid agreements, this Court will uphold and
them. welfare." However, even in the absence of said
clear provision of law, the exercise of
management prerogatives was never
26 PHILIPPINE AIRLINES, INC. (PAL) vs. NLRC considered boundless. Thus, in Cruz vs. Medina
(177 SCRA
FACTS: 565 [1989]) it was held that management's
Philippine Airlines, Inc. (PAL) completely revised prerogatives must be without abuse of
its 1966 Code of Discipline. The Code discretion.
was circulated among the employees and was In San Miguel Brewery Sales Force Union
immediately implemented, and some (PTGWO) vs. Ople (170 SCRA 25 [1989]), we
employees upheld
were forthwith subjected to the disciplinary the company's right to implement a new system
measures embodied therein. Thus, the of distributing its products, but gave the
Philippine following caveat: So long as a company's
Airlines Employees Association (PALEA) filed a management prerogatives are exercised in good
complaint before the National Labor Relations faith
Commission (NLRC) for unfair labor practice for the advancement of the employer's interest
with the following remarks: "ULP with arbitrary and not for the purpose of defeating or
implementation of PAL's Code of Discipline circumventing the rights of the employees under
without notice and prior discussion with Union special laws or under valid agreements, this
by Court will uphold the.
Management". In its position paper, PALEA All this points to the conclusion that the
contended that PAL, by its unilateral exercise of managerial prerogatives is not
implementation of the Code, was guilty of unlimited. It is circumscribed by limitations
unfair l abor practice. PALEA alleged that copies found in law, a collective bargaining agreement,
of or the general principles of fair play and justice
the Code had been circulated in limited (University of Sto. Tomas vs. NLRC, 190 SCRA
numbers; that being penal in nature the Code 758 [1990]). Moreover, as enunciated in Abbott
must Laboratories (Phil.), vs. NLRC (154 713 [1987]),
conform with the requirements of sufficient it must be duly established that the prerogative
publication, and that the Code was arbitrary, being invoked is clearly a managerial one.
oppressive, and prejudicial to the rights of the
employees. PAL filed a motion to dismiss the
complaint, asserting its prerogative as an 27 WILTSHIRE FILE CO., INC., vs. NLRC and
employer to prescibe rules and regulations VICENTE T. ONG
regarding
employees' conduct in carrying out their duties FACTS:
and functions, and alleging that by Vicente T. Ong was the Sales Manager of
implementing the Code, it had not violated the Wiltshire File Co., Inc. ("Wiltshire"). As such, he
received a monthly salary excluding
 31

commissions from sales. He also enjoyed as violation of law or merely arbitrary and
vacation leave malicious action is not shown.
with pay, as well as hospitalization privileges The determination of the continuing necessity
per year. Upon private respondent's return of a particular officer or position in a
from a business corporation is management's
business and pleasure trip abroad, he was prerogative, and the courts will not interfere
informed by the President of Wiltshire that his with the
services were being terminated. Ong maintains exercise of such so long as no abuse of
that he tried to get an explanation from discretion or merely arbitrary or malicious
management of his dismissal but to no avail. action on the
When private respondent again tried to speak part of management is shown.
with the President of Wiltshire, the company's
security guard handed him a letter which REDUNDANCY ISSUE:
formally informed him that his services were Redundancy in an employer's personnel force
being terminated upon the ground of does not necessarily or even ordinarily
redundancy. refers to duplication of work. That no other
Ong filed a complaint before the Labor Arbiter person was holding the same position that
for illegal dismissal alleging that his position private
could not possibly be redundant because respondent held prior to the termination of his
nobody (save himself) in the company was then services, does not show that his position had
performing the same duties. He further not become redundant. Indeed, in any well-
contended that retrenching him could not organized business enterprise, it would be
prevent surprising to find duplication of work and two
further losses because it was in fact through his (2) or more people doing the work of one
remarkable performance as Sales Manager that person.
the Company had an unprecedented increase in Redundancy exists where the services of an
domestic market share the preceding year. For employee are in excess of what is reasonably
that accomplishment, he continued, he was demanded by the actual requirements of the
promoted to Marketing Manager and was enterprise. Succinctly put, a position is
authorized by the President to hire four (4) redundant
Sales Executives five (5) months prior to his where it is superfluous, and superfluity of a
termination. Wiltshire alleged that the position or positions may be the outcome of a
termination of Ong's services was a cost-cutting number of factors, such as overhiring of
measure: that the company had experienced an workers, decreased volume of business, or
unusually low volume of orders: and that it was dropping of
in fact forced to rotate its employees in order to a particular product line or service activity
save the company. Despite the rotation of previously manufactured or undertaken by the
employees, it continued to experience financial enterprise. The employer has no legal obligation
losses and Ong's position, Sales Manager of the to keep in its payroll more employees than are
company, became redundant. During the necessarily for the operation of its business.
proceedings before the Labor Arbiter, Wiltshire
notified the DOLE that it would close its doors
permanently due to substantial business losses.

HIRING ISSUE: 28 FARLE P. ALMODIEL vs. NLRC & RAYTHEON

It is of no legal moment that the financial PHILS., INC.
troubles of the company were not of Ong's
making. Ong cannot insist on the retention of FACTS:
his position upon the ground that he had not Farle P. Almodiel is a certified public accountant
contributed to the financial problems of who was as Cost Accounting Manager
Wiltshire. The characterization of private of Raytheon Philippines, Inc. through a
respondent's reputable placement firm, John Clements
services as no longer necessary or sustainable, Consultants,
and therefore properly terminable, was an Inc. He started as a probationary or temporary
exercise of business judgment on the part of employee. After a few months, he was given a
petitioner company. The wi sdom or soundness regularization increase. Not long thereafter, his
of salary was also increased. Almodiel
such characterization or decision was not recommended and submitted a Cost
subject to discretionary review on the part of Accounting/Finance Reorganization, affecting
the the whole
Labor Arbiter nor of the NLRC so long, of course, finance group but the same was disapproved by
the Controller. However, he was assured by the
 32

Controller that should his position or It is a well-settled rule that labor laws do not
department which was apparently a one-man authorize interference with the employer's
department judgment in the conduct of his business. The
with no staff becomes untenable or unable to determination of the qualification and fitness of
deliver the needed service due to manpower workers for hiring and firing, promotion or
constraint, he would be given a three (3) year reassignment are exclusive prerogatives of
advance notice. In the meantime, the standard management. The Labor Code and its
cost accounting system was installed and used implementing Rules do not vest in the Labor
at the Raytheon plants and subsidiaries Arbiters nor
worldwide. Almodiel was summoned by his in the different Divisions of the NLRC (nor in the
immediate boss and in the presence of IRD courts) managerial authority. The employer is
Manager, Mr. Rolando Estrada, was told of the free to determine, using his own discretion and
abolition of his position on the ground of business judgment, all elements of employment,
redundancy. He pleaded with management to "from hiring to firing" except in cases of
defer its action or transfer him to another unlawful discrimination or those which may be
department, but he was told that the decision provided
of management was final and that the same has by law. There is none in the instant case.
been conveyed to the Department of Labor and
Employment. Thus, he was constrained to file
the complaint for illegal dismissal. Petitioner 29 PRIMO E. CAONG, JR., ALEXANDER
claims that the functions of his position were J. TRESQUIO, and LORIANOD. DALUYON,
absorbed by the Payroll/Mis/Finance Petitioners,- versus - AVELINO
Department under the management of Danny REGUALOS, Respondent
Ang Tan
Chai, a resident alien without any working Facts:
permit from the Department of Labor and Petitioners Primo E. Caong, Jr. (Caong),
Employment as required by law. And granting Alexander J. Tresquio(Tresquio), and Loriano D.
that his department has to be declared Daluyon (Daluyon) were employed by
redundant, he claims that he should have been respondent Avelino Regualos under a
the Manager of the Payroll/Mis/Finance boundary agreement, as drivers of his brand
Department which handled general accounting, new jeepneys. On November 4, 2001 a meeting
payroll and encoding. As a B. S. Accounting was conducted by respondent.During the said
graduate, a CPA with M.B.A. units, 21 years of meeting, respondent informed his employees,
work experience, and a natural born Filipino, he includingpetitioners, to strictly comply with the
claims that he is better qualified than Ang Tan policy regarding remittances and warnedthem
Chai, a B.S. Industrial Engineer, hired merely as that they would not be allowed to take out
a the jeepneys if they did notremit the full
Systems Analyst Programmer or its equivalent amount of the boundary. Despite the said
in early 1987, promoted as MIS Manager only reminder given by therespondent, Daluyon,
during the middle part of 1988 and a resident Tresquio and Caong failed to remit the entire
alien. Petitioner also assails Raytheon's choice amount ofboundary on November 7, 8, 9, 2001,
of respectively, and when they returnedfor work
Ang Tan Chai to head the Payroll/Mis/Finance after their rest day, respondent barred them
Department, claiming that he is better qualified from driving because ofthe deficiency in the
for the position. boundary payment. They pleaded with the
respondent toallow them to drive but to no
HELD: avail. Thus, they filed an illegal dismissal
It has been consistently held that an objection caseagainst the respondent. During the
founded on the ground that one has mandatory conference, respondentmanifested
better credentials over the appointee is that petitioners were not dismissed and that
frowned upon so long as the latter possesses they could drivehis jeepneys once they paid
the their arrears. Petitioners, however, refused to
minimum qualifications for the position. In the doso. On March 31, 2003, the Labor Arbiter
case at bar, since petitioner does not allege that decided the case in favor ofrespondent.
Ang Tan Chai does not qualify for the position, Petitioners appealed the decision to the
the Court cannot substitute its discretion and National Labor RelationsCommission (NLRC). In
judgment for that which is clearly and its resolution] dated March 31, 2004, the
exclusively management prerogative. To do so NLRCagreed with the Labor Arbiter and
would dismissed the appeal. It also denied petitioners’
take away from the employer what rightly motion for reconsideration.
belongs to him as aptly explained in National Forthwith, petitioners filed a petition for
Federation of Labor Unions v. NLRC: certiorari with the CA.In its Decision dated
 33

December 14, 2006, the CA found no discipline onhis employees and to impose
graveabuse of discretion on the part of the penalties, including dismissal, ifwarranted, upon
NLRC. According to the CA, theemployer- erring employees.
employee relationship of the parties has not This is a management prerogative. Indeed, the
been severed, butmerely suspended when manner in which management conducts its own
respondent refused to allow petitioners to affairs to achieve its purpose is within the
drivethe jeepneys while there were unpaid management’s discretion.
boundary obligations. The CA pointedout that The only limitation on theexercise
the fact that it was within the power of of management prerogative is that the
petitioners to return to work isproof that policies, rules, andregulations on work-related
there was no termination of employment. The activities of the employees must always be
condition thatpetitioners should first pay their fairand reasonable, and the corresponding
arrears only for the period of November 5- penalties, when prescribed,commensurate to
9,2001 before they can be readmitted to work is the offense involved and to the degree of
neither impossible norunreasonable if their the infraction.
total unpaid boundary obligations and the need Petitioners’ concern relates to the
to sustain the financial viability of the implementation of the policy, which is another
employer’s enterprise—which wouldultimately matter. A company policy must be implemented
redound to the benefit of the employees—are in such manner aswill accord social justice and
taken intoconsideration.The CA went on to rule compassion to the employee. In case
that petitioners were not denied their right ofnoncompliance with the company policy, the
todue process. It pointed out that the case does employer must consider thesurrounding
not involve a termination ofemployment; circumstances and the reasons why the
hence, the strict application of the twin-notice employee failed tocomply. When the
rule is notwarranted. According to the CA, what circumstances merit the relaxation of the
is important is that petitioners weregiven the application of thepolicy, then its noncompliance
opportunity to be heard. The meeting must be excused.In the case at bench, private
conducted by respondent onNovember 4, 2001 respondent, upon finding thatpetitioners had
served as sufficient notice to petitioners. During consistently failed to remit the full amount of
the saidmeeting, respondent informed his theboundary, conducted a meeting on
employees, including petitioners, to November 4, 2001 informingthem to strictly
strictlycomply with the policy regarding comply with the policy regarding their
remittances and warned them that theywould remittancesand warned them to discontinue
not be allowed to take out the jeepneys if they driving if they still failed to remitthe full amount
did not remit the fullamount of the boundary. of the boundary.
WHEREFORE, premises considered, the petition
Issue: is DENIED. TheCourt of Appeals Decision dated
Whether or not the petitioners were illegally December 14, 2006 and Resolution datedJuly
dismissed by the respondent andthat such 16, 2007 are AFFIRMED
dismissal was made in violation of the due
process requirements ofthe law.
30 PHILIPPINE TELEGRAPH AND TELEPHONE
Held: CORPORATION vs. ALICIA LAPLANA, ET.AL
The petition is without merit.The Labor Arbiter,
the NLRC, and the CA uniformly declared that FACTS:
petitionerswere not dismissed from Alicia Laplana was the cashier of the Baguio City
employment but merely suspended Branch Office of the Philippine
pendingpayment of their arrears. We have no Telegraph and Telephone Corporation. PT & T's
reason to deviate from suchfindings. treasurer, Mrs. Alicia A. Arogo, directed Laplana
Indeed, petitioners’ suspension cannot be to transfer to the company's branch office at
categorized as dismissal, considering that there Laoag City. Laplana refused the reassignment
was no intent on the part of respondent to and
sever theemployer-employee relationship proposed instead that qualified clerks in the
between him and petitioners. In fact, it Baguio Branch be trained for the purpose. She
wasmade clear that petitioners could put an set
end to the suspension if they only paytheir out her reasons therefor in her letter to Mrs.
recent arrears. As it was, the suspension Arogo. Mrs. Arogo reiterated her directive for
dragged on for years because of petitioners’ Laplana's transfer to the Laoag Branch, this time
stubborn refusal to pay. It is acknowledged that in the form of a written Memorandum,
an employerhas free rein and enjoys wide informing Laplana that she will be reassigned to
latitude of discretion to regulate allaspects of Laoag branch assuming the same position of
employment, including the prerogative to instil branch cashier and ordering her "to turn over
 34

her accountabilities and files to Rose Ca ysido that the employer was transferring Laplana to
who will be in charge of cashiering in Baguio." another work place, not because she would be
Apparently Laplana was not allowed to resume more useful there, but merely "as a subterfuge
her work as Cashier of the Baguio Branch when to rid . . . (itself) of an undesirable worker," or
the time came. She thereupon wrote again to "to penalize an employee for . . . union
Mrs. Arogo advising that the directed transfer activities.
was unacceptable, reiterating the reasons . . ." The employer was moreover not unmindful
already given by her in her first letter. Laplana of Laplana's initial plea for reconsideration of
later received a telegram from Mrs. Arogo the directive for her transfer to Laoag; in fact, in
requiring her to report to Manila for a new job response to that plea not to be moved to the
assignment, that failure to report shall Laoag Office, the employer opted instead to
constitute abandonment of her job, which transfer her to Manila, the main office, offering
might constrain them to impose disciplinary at
actions against her. Laplana in turn sent a telex the same time the normal benefits attendant
message to Mrs. Arogo refusing the job offer in upon transfers from an office to another. The
Manila and requested that she be retrenched situation here presented is of an employer
instead. Termination of Laplana's employment transferring an employee to another office in
on account of retrenchment thereupon the
followed. Laplana then filed a complaint against exercise of what it took to be sound business
PT & T its "Baguio Northwestern Luzon Branch, judgment and in accordance with pre-
Baguio City," and Paraluman Bautista, Area determined
Manager. In her complaint, she set forth and established office policy and practice, and
substantially the facts just narrated, and of the latter having what was believed to be
alleged, as right of action, that "when she legitimate reasons for declining that transfer,
insisted on her right of refusing to be rooted in considerations of personal
transferred, the Defendants made good its convenience
warning by terminating her services on May 16, and difficulties for the family. Under these
1984 on alleged ground of "retrenchment," circumstances, the solution proposed by the
although the truth is, she was forced to be employee herself, of her voluntary termination
terminated and that there was n o ground at all of her employment and the delivery to her of
for corresponding separation pay, would appear to
the retrenchment;" that the company's "act of be the most equitable. Certainly, the Court
transferring is not only without any valid ground cannot accept the proposition that when an
but also arbitrary and without any purpose but employee opposes his employer's decision to
to harass and force . . . (her) to eventually transfer him to another work place, there being
resign." In answer, the defendants alleged that no bad faith or underhanded motives on the
Laplana "was being transferred to Laoag City part of either party, it is the employee's wishes
because of ncrease in sales due to the that should be made to prevail. In adopting that
additional installations of vodex line and the proposition by way of resolving the controversy,
company the respondent NLRC gravely abused its
"was exercising management prerogatives in discretion.
transferring complainant . . . and there is no
showing that this exercise was arbitrarily and
whimsically done;" 31 BLUE DAIRY CORPORATION vs. NLRC and
ELVIRA R. RECALDE
ISSUE:
WON Laplana was illegally dismissed. FACTS:
BLUE DAIRY CORPORATION, engaged in the
processing of dairy and chocolate products,
juices and vegetables, hired Elvira R. Recalde as
HELD: a food technologist in its laboratory. Recalde
NO. In this case, the employee (Laplana) had to accompanied Production Manager Editha N.
all intents and purposes resigned from Nicolas in conductin g a sensory evaluation of
her position. She had unequivocally asked that vanilla syrup in one of the outlets of a client.
she be considered dismissed, herself suggesting While on their way back to the office a post fell
the reason therefor –– retrenchment. When so on
dismissed, she accepted separation pay. On the the company vehicle they were riding due to a
other hand, the employer has not been shown raging typhoon damaging the vehicle's
to be acting otherwise than in good faith, and in windshield and side mirror. Later, Recalde was
the legitimate pursuit of what it considered its transferred from the laboratory to the
best interests, in deciding to transfer her to vegetable
another office. There is no showing whatever processing section where she cored lettuce,
 35

minced and repacked garlic and performed limits thereto. The managerial prerogative to
similar transfer personnel must be exercised without
work, and was restricted from entering the grave abuse of discretion, bearing in mind the
laboratory. She was unhappy. She considered basic elements of justice and fair play. Having
her the
new job humiliating and menial. She later right should not be confused with the manner in
stopped reporting for work. The following day which that right is exercised. Thus, it cannot be
she used as a subterfuge by the employer to rid
sent a letter to Blue Dairy Corporation that she himself of an undesirable worker. In particula r,
will no longer report for work because of their the
drastic and oppressive action. Recalde then filed employer must be able to show that the
a complaint against Blue Dairy Corporation for transfer is not unreasonable, inconvenient or
constructive dismissal and non-payment of prejudicial to the employee; nor does it involve
premium pay. Petitioners contended that a demotion in rank or a diminution of his
Recalde salaries, privileges and other benefits. Should
was given a less sensitive assignment outside of the employer fail to overcome this burden of
the laboratory on account of her dishonesty proof, the employees transfer shall be
which resulted in loss of trust and confidence. tantamount to constructive dismissal, which has
They seriously took into account the result of been
the defined as a quitting because continued
investigation that Recalde was actually scouting employment is rendered impossible,
for a new residence using company vehicle unreasonable or
without prior permission from the General unlikely; as an offer involving a demotion in
Manager and during office hours, in violation of rank and diminution in pay. Likewise,
par. constructive
IV, subpars. B and G, of the company's General dismissal exists when an act of clear
Rules and Regulation, to that effect such act of discrimination, insensibility or disdain by an
dishonesty could even have merited dismissal employer has
from employment had they adhered simply to become so unbearable to the employee leaving
jurisprudential rule but took into account him with no option but to forego with his
instead the spirit of the approaching Christmas continued employment In the present case,
season. The Labor Arbiter rule that petitioners petitioners failed to justify Recaldes transfer
were guilty of constructive dismissal as he from
found the position of food technologist in the
the justification for Recaldes transfer laboratory to a worker in the vegetable
unreasonable. Petitioners insist that the processing
transfer of section. In petitioners view, she was dishonest
Recalde from the laboratory to the vegetable such that they lost their trust and confidence i n
processing section was effected i n the exercise her. Yet, it does not appear that Recalde was
of provided an opportunity to refute the reason
management prerogative. for
the transfer. Nor was Recalde notified in
ISSUE: advance of her impending transfer which was,
WON Recaldes transfer was unreasonable. as we
shall elucidate later, a demotion in rank. In Gaco
HELD: v. NLRC we noted - While due process required
YES. It is the prerogative of management to by law is applied in dismissals, the same is also
transfer an employee from one office to applicable to demotions as demotions likewise
another within the business establishment affect the employment of a worker whose right
based on its assessment and perception of the to continued employment, under the same
employees qualifications, aptitudes and terms and conditions, is also protected by law.
competence, and in order to ascertain where he Moreover, considering that demotion is, like
can dismissal, also a punitive action, the employee
function with maximum benefit to the being demoted should, as in cases of dismissals,
company. This is a privilege inherent in the be given a chance to contest the same.
employers
right to control and manage his enterprise
effectively. Th e freedom of management to 32 PHARMACIA and UPJOHN, INC. vs. RICARDO
conduct P. ALBAYDA, JR
its business operations to achieve its purpose
cannot be denied. But, like other rights, there FACTS:
are
 36

Ricardo P. Albayda, Jr. was an employee of memorandum was then sent notifying Abayda
Upjohn, Inc. in 1978 and continued working of the
there until 1996 when a merger between company’s decision to terminate his services
Pharmacia and Upjohn was created. After the after he repeatedly refused to report for work
merger, despite due notice, Abayda filed a Complaint for
Abayda was designated by Pharmacia and constructive di smissal but was later dismissed.
Upjohn (Pharmacia) as District Sales Manager
assigned to District XI in the Western Visayas
area, where respondent settled in Bacolod City.
A ISSUE:
district meeting was held in Makati City wherein WON Abayda’s reassignment was a valid
one of the topics discussed was the district exercise of petitioners management
territorial configuration for the new marketing prerogative.
and sales direction. Later, Abayda received a
Memorandum announcing the sales force HELD:
structure and that he was reassigned as District YES. Jurisprudence recognizes the exercise of
Sales management prerogative to transfer or
Manager to District XII in the Northern assign employees from one office or area of
Mindanao area. Abayda questioned his transfer operation to another, provided there is no
from demotion in rank or diminution of salary,
District XI to District XII, that he has always been benefits, and other privileges, and the action is
assigned to the Western Visayas area and that not
he felt that he could not improve the sales of motivated by discrimination, made in bad faith,
products if he was assigned to an unfamiliar or effected as a form of punishment or
territory. He then concluded that his transfer demotion without sufficient cause. To
might be a way for his managers to dismiss him determine the validity of the transfer of
from employment. He added that he could not employees, the
possibly accept his new assignment in Cagayan employer must show that the transfer is not
de Oro City because he will be dislocated from unreasonable, inconvenient, or prejudicial to
his family; his wife runs an established business the
in Bacolod City; his eleven- year-old daughter is employee; nor does it involve a demotion in
studying in Bacolod City; and his two-year-old rank or a diminution of his salaries, privile ges
son is under his and his wifes direct care. and
Petitioner then deny the request of Abayda to other benefits. Should the employer fail to
be overcome this burden of proof, the employee's
reassigned to the Western Visayas area. It transfer shall be tantamount to constructive
explained that the factors used in determining dismissal. Petitioners posture that the transfer
assignments of managers are to maximize of
business opportunities and growth and respondent was a valid exercise of a legitimate
development management prerogative to maximize business
of personnel. Abayda likened his transfer to opportunities, growth and development of
Mindanao as a form of punishment. He argued personnel and that the expertise of respondent
that was
Chu failed to face and address the issues he needed to build the companys business in
raised regarding the loss of his family income, Cagayan de Oro City which dismally performed
the in
additional cost of housing and other additional 1999, that the reassignment of respondent was
expenses he will incur in Mindanao. Abayda was not a demotion as he will also be assigned as a
then given an option to be assigned in Metro District Sales Manager in Mindanao or in Metro
Manila and is entitled to Relocation Benefits Manila and that the notice of his transfer did
and not indicate that his emoluments will be
Allowance pursuant to the companys Benefits reduced. He was even entitled to Relocation
Manual and was then directed to report for Benefits
work and Allowance in accordance with petitioners
in Manila . However, Abayda did not replied to Benefits Manual. The allegation of complainant
their last memorandum and was warned that that his income will be affected because his wife
the same would be a final notice for him to who is doing business in Bacolod City and
report for work in Manila within 5 working days earns P50,000.00, should not be taken in
from receipt of the memo; otherwise, his consideration of his transfer. What is
services will be terminated on the basi s of contemplated
being here is the diminution of the salary of the
absent without official leave (AWOL). A complainant but not his wife. Besides, even if
 37

complainant may accept his new assignment in

Cagayan de Oro or in Metro Manila, his wife ISSUE:
may still continue to do her business in Bacolod WON Petitioners transfer was a valid exercise of
City. Anyway, Bacolod Ci ty and Manila is just management prerogative.
one (1) hour travel by plane. Lastly, in
respondents contract of employment, he HELD:
agreed to be NO. The fact that petitioners, in their
assigned to any work or workplace as may be application for employment agreed to be
determined by the company whenever the transferred or assigned to any branch should
operations require such assignment. not be taken in isolation, but rather in
conjunction
with the established company practice in PLDT.
33 ZEL T. ZAFRA, vs. CA, PLDT The standard operating procedure in PLDT is to
inform personnel regarding the nature and
FACTS: location of their future assignments after
Zel T. Zafra was hired by PLDT as Operations training
Analyst II while Edwin B. Ecarma was hired abroad. This prevailing company practice is
as Junior Operations Analyst I. Both were evidenced by the inter-office memorandum.
regular rank-and-file employees assigned at the Under
Regional Operations and Maintenance Control these circumstances, the need for the
Center (ROMCC) of PLDTs Cebu Provincial dissemination of notice of transfer to
Division. Petitioners were chosen for the OMC employees before
Specialist and System Software Acceptance sending them abroad for training should be
Training Program in Germany. They left for deemed necessary and later to have ripened
Germany and while they were in Germany, a into a
certain company practice or policy that could no longer
Mr. R. Relucio, SwitchNet Division Manager, be peremptorily withdrawn, discontinued, or
requested advice, through an inter-office eliminated by the employer. Fairness at the
memorandum, from the Cebu and Davao workplace and settled expectations among
Provincial Managers if any of the training employees require that we honor this practice
participants and commend this policy. Needless to say, had
were interested to transfer to the Sampaloc they known about their pre-planned
ROMCC to address the operational reassignments, petitioners could have declined
requirements the foreign
therein. Upon petitioners return from Germany, training intended for personnel assigned to the
they were informed about the memorandum. Manila office. The lure of a foreign trip is
They balked at the idea, but PLDT, through an fleeting while a reassignment from Cebu to
inter-office memorandum proceeded to Manila entails major and permanent
transfer readjustments
petitioners to the Sampaloc ROMCC. Petitioners for petitioners and their families. The transfer of
left Cebu for Manila to air their grievance to an employee ordinarily lies within the ambit of
PLDT and to seek assistance from their union management prerogatives. However, a transfer
head office in Mandaluyong. PLDT ordered amounts to constructive dismissal when the
petitioners to report for work but they asked for transfer is unreasonable, inconvenient, or
a deferment to February 1, 1996. Petitioners prejudicial to the employee, and involves a
reported for work at the Sampaloc office on demotion in rank or diminution of salaries,
January 29, 1996. Meanwhile PLDT moved the benefits, and other privileges. In the present
effectivity date of their transfer to March 1, case,
1996. On March 13, 1996, petitioners again petitioners were unceremoniously transferred,
appealed to PLDT to no avail. And, because all necessitating their families relocation from
their appeals fell on deaf ears, petitioners, while Cebu to Manila. This act of management
in Manila, tendered their resignation letters. appears to be arbitrary without the usual notice
Petitioners then filed a com plaint for alleged that
constructive dismissal and non-payment of should have been done even prior to their
benefits under the Collective Bargaining training abroad. From the employees viewpoint,
Agreement such action affecting their families are
PLDT averred that petitioners agreed to accept burdensome, economically and emotionally. It
any assignment within PLDT in their application is no
for employment and also in the undertaking exaggeration to say that their forced transfer is
they executed prior to their training in not only unreasonable, inconvenient, and
Germany. prejudicial, but to our mind, also in defiance of
 38

basic due process and fair play in employment alleged that the transfers were made in the
relations. lawful exercise of its management prerogative
and
were done in good faith. The transfers were
34 PHILIPPINE TELEGRAPH & TELEPHONE aimed at decongesting surplus employees and
CORPORATION vs. CA, NLRC, et.al detailing them to a more demanding branch.

FACTS: ISSUE:
The petitioner is a domestic corporation WON private respondents transfers were made
engaged in the business of providing telegraph in the lawful exercise of its management
and communication services thru its branches prerogative. WON it was transfer or promotion.
all over the country. After conducting a series of
studies regarding the profitability of its retail
operations, it came up with a Relocation and
Restructuring Program designed to (a) sustain HELD:
its (PT&Ts) retail operations; (b) decongest NO. The increase in the respondents
surplus workforce in some branches, to responsibility can be ascertained from the scalar
promote efficiency and productivity; (c) lower ascent of their job grades. With or without a
expenses corresponding increase in salary, the respective
incidental to hiring and training new personnel; transfer of the private respondents were in fact
and (d) avoid retrenchment of employees promotions, following the ruling enunciated in
occupying redundant positions. Cristina Rodiel, Homeowners Savings and Loan Association, Inc.
Jesus Paracale, Romeo Tee, Benjamin v. NLRC: [P]romotion, as we defined in Millares
Lakandula, Avelino Acha, Ignacio Dela Cerna and v, Subido, is the advancement from one position
Guillermo Demigillo received separate letters to another with an increase in du ties and
from the petitioner, giving them the option to responsibilities as authorized by law, and
choose the branch to which they could be usually accompanied by an increase in salary.
transferred. Thereafter they were directed to Apparently, the indispensable element for there
relocate to their new PT&T Branches. They were to be a promotion is that there must be an
directed to report to their respective relocation advancement from one position to another or
assignments. Meanwhile, the petitioner offered an upward vertical movement of the employees
benefits/allowances to those employees who rank or position. Any increase in salary should
would agree to be transferred under its new only be considered incidental but never
program. Moreover, the employees who would determinative of whether or not a promotion is
agree to the transfers would be considered bestowed upon an employee. This can be
promoted. However, private respondents likened to the upgrading of salaries of
rejected the petitioners offer. Petitioner sent government employees without conferring
letters upon the, the
to the private respondents requiring them to concomitant elevation to the higher positions. ]
explain in writing why no disciplinary action An employee cannot be promoted, even if
should be taken against them for their refusal merely as a result of a transfer, without his
to be transferred/relocated. Private consent. A transfer that results in promotion or
respondents demotion, advancement or reduction or a
explained that: the transfers imposed by the transfer that aims to lure the employee away
management would cause enormous difficulties from
on the individual complainants. For one, their his permanent position cannot be done without
new assignment involve distant places which the employees consent. There is no law that
would require their separation from their compels an employee to accept a promotion for
respective families. Dissatisfied with this the reason that a promotion is in the nature of
explanation, a gift or reward, which a person has a right to
the petitioner considered the private refuse. Hence, the exercise by the private
respondents refusal as insubordination and respondents of their right cannot be considered
willful in law as insubordination, or willful
disobedience to a lawful order; hence, the disobedience of a lawful order of the employer.
private respondents were dismissed from work. As such, there was no valid cause for the
Respondents then filed their respective private respondents dismissal.
complaints against the petitioner declaring that
their
refusal to transfer could not possibly give rise to 35 PHILIPPINE INDUSTRIAL SECURITY AGENCY
a valid dismissal on the ground of willful CORPORATION vs. VIRGILIO DAPITON & NLRC
disobedience, as their transfer was prejudicial
and inconvenient; thus unreasonable. Petitioner FACTS:
 39

Petitioner hired Dapiton as a security guard. His WON petitioner was constructively dismissed.
initial assignment was at PCIBank in
Caloocan City. During his tour of duty at HELD:
PCIBank, Dapiton had a heated argument with YES. Constructive dismissal is defined as a
his quitting because continued employment is
fellow security guard. The incident almost led to rendered impossible, unreasonable or unlikely;
a shootout. Respondent was suspended from as an offer involving a demotion in rank and
work for seven (7) days. Petitioner alleged that diminution in pay. On the other hand,
respondent did not serve his suspension and abandonment of work means a clear, deliberate
instead went on a leave of absence. and
Nonetheless, he was assigned at the BPI Family unjustified refusal of an employee to resume his
Bank in employment and a clear intention to sever the
Navotas when he reported back for duty. employer-employee relationship. Abandonment
Allegedly, respondent refused to accept his is incompatible with constructive dismissal.
assignment. Respondent was assigned at Sevilla In the case at bar, we hold that there was no d
Candle Factory in Malabon. Three (3) weeks eliberate intent on the part of the respondent
later, he abandoned his post and went on to
absence without leave (AWOL). Respondent abandon his employment with petitioner. The
was clear evidence that respondent did not wish to
given another assignment at Security Bank and be separated from work is that, after his last
Trust Company. He was required to report for assignment he reported to petitioners office
an interview and to undergo a neurological regularly for a new posting but to no avail. He
examination. Respondent refused and allegedly then lost no time in filing the illegal dismissal
again went on AWOL. Petitioner sent a telegram case. An employee who forthwith takes steps to
to respondent to report to its office for a protest his layoff cannot by any logic be said to
conference. Respondent did not show up. have abandoned his work. Moreover,
Instead, on April 22, 1994, respondent filed the respondent's failure to assume his posts in Sevi
present illegal dismissal case. Respondent lla Candle
denied petitioners allegations. He claimed that Factory and the Security Bank and Trust
after Company is not without reason. He explained
he served his suspension, he was assigned at that he
BPI Family Bank in Navotas. He accepted the requested for a transfer of assignment from
new Sevilla Candle Factory because he feared for his
post. However, after a short period, he was life
relieved and was transferred to the Mercury after he witnessed shabu dealers doing their
Drugstore in Grand Central, Kalookan City. business in his workstation. As regards the
Again, after a brief tour of duty, he was Security Bank assignment, he failed to take the
relieved. He neurological test for lack of money to pay for
was posted at Sevilla Candle Factory. While on the examination fee. Petitioner cannot
duty, he witnessed some shabu dealers doing overinflate the significance of the fact that
their illegal trade. Fearful for his life, he left his respondent
post and requested petitioner to transfer him to often absented himself from work without an
another post. He admitted that his assignment approved leave. It is a settled rule that mere
at Security Bank did not materialize for he failed absence or failure to report for work is not
to take the neurological test. He explained he tantamount to abandonment of work. Even the
could not pay the examination fee in the failure to report for work after a notice to
amount return to work has been served does not
of P250.00. He asked petitioner to pay the said necessarily
amount but it refused. Respondent alleged that constitute abandonment nor does it bar
thereafter, he was reduced to a mere reliever of reinstatement. The burden of proving that
absent security guards and was frequently respondent
transferred from one post to another. His last has abandoned his job rests with petitioner.
assignment was at the Philippine Savings Bank However, petitioner failed miserably to
(PSB) in Makati. It lasted for only one (1) day. discharge
Since April 13, 1994, he was not given any the burden. The records show no memoranda
assignment. He reported to petitioners office concerning respondents alleged unauth orized
regularly for his posting but to no avail. absences and refusal to work. Even the
Consequently, on April 22, 1994, he sued telegram petitioner sent to respondent after he
petitioner for illegal dismissal and asked for allegedly went on AWOL merely required
separation pay. respondent to report to its office for a
conference but
ISSUE: did not mention anything about his absences.
 40

We find it incredible that petitioner did not Meanwhile, his normal sales route was
even temporarily suspended until further notice but
write respondent on his alleged refusal to he was
accept the posts assigned to him and the instructed to report daily to the head office in
abandonment of his posts considering that such Pasig City. Baron submitted his answer. Private
acts constitute willful disobedience and gross respondent was required to submit his written
neglect of duty which are valid grounds for explanation on the poi nts indicated within a
dismissal. period of seven (7) days from receipt of the
memorandum and was also requested to
explain
36 CONSOLIDATED FOOD why no additional action should be taken
CORPORATION/PRESIDENT JOHN GOKONGWEI, against him for his continued absence.
et.al. vs. NLRC AND Petitioners
WILFREDO M. BARON sent notice to private respondent requiring him
to explain within ten (10) days why he should
FACTS: not be dismissed from the service for having
Consolidated Food Corporation (CFC) is a been absent without leave (AWOL). Baron sent
domestic corporation engaged in the sale of a
food products. Wilfredo M. Baron was a Bonded letter to petitioners stating that he was advised
Merchandiser at CFC, was thereafter assigned by his doctor not to report for work because he
as Acting Section Manager for Northern Luzon was sick and would have to take his medication.
(NL) — 2 Area covering Baguio City, La Trinidad Baron then filed a complaint with the Labor
and Benguet. He was tasked, among others, to Arbiter for constructive dismissal, non-payment
deliver for sale CFC Presto Ice Cream Products of salaries, commissions, service incentive
to leave pay and allowances.
stores and outlets in Baguio City, make
inventories thereof, replace or retrieve bad HELD:
orders or A valid exercise of management prerogative is
damaged ice cream stocks, and to handle funds one which covers hiring, work
in relation to his functions. A killer earthquake assignment, working methods, time, place and
hit Baguio City causing severe damage in the manner of work, tools to be used, processes to
area. Power lines were cut off and the roads to be followed, supervision of workers, working
and from the city became impassable. Hence, regulations, transfer of employees, work
the Presto ice cream products in the possession supervision, lay-off of workers and the
of customers and sales outlets in Baguio were discipline, dismissal and recall of workers.
damaged and became bad orders. Unit Mgr. Except as
Abalos issued an Action Plan which provided provided for or limited by special laws,
among others the cut-off audit of Wilfredo M. employers are free to regulate, according to
Baron to determine accountabilities that should their own
be liquidated on account of non -sales discretion and judgment, all aspects of
operations. The Field Audit Group of CFC employment. Re-assignments made by
conducted an audit on the accountabilities of management
Baron pending investigation of irregularities allegedly
that reflected a shortage of P1,985.12 in the committed by an employee fall within the ambit
cash purchase fund and expense allowance of management prerogative. The purpose of
fund. reassignments is no different from that of
Unit Mgr. Abalos requested a field audit of the preventive suspension which management could
area to further evaluate private respondent's validly impose as a disciplinary measure for the
exposure, particularly on sales account, freezer protection of the company's property pending
and bad orders stocks. Baron was then directed investigation of any alleged malfeasance or
to temporarily stop routing in his assigned areas misfeasance committed by the employee. The
until such time that the complete audit of the audit result also showed that Baron failed to
customers' bad orders stocks within the area account for his expense allowance fund.
had been finished and was ordered to turnover Although Baron had given his written
his accountabilities Calura, who is to take over explanation,
the route operation of Baguio City as Baron’s petitioners found it unsatisfactory and his
presence would be required in the audit being defense inexcusable. While there may be no
conducted on bad orders stocks caused by the direct
earthquake. A memorandum was sent to Baron evidence to prove that Baron actually and
informing him of the discrepancies appearing in deliberately committed fraud or
the audit of accountabilities and giving him misappropriation of
opportunity to explain his side in writing. Company funds, there was substantial proof of
 41

the existence of irregularities committed by him Yes. An employer has the inherent right to
in the use of the funds. We have ruled that transfer or assign an employee in pursuance of
substantial proof, and not clear and convincing its legitimate business interest, subject only to
evidence or proof beyond reasonable doubt, is the condition that the move be not motivated
sufficient as basis for the imposition of any by bad faith. Having lost his trust and
disciplinary action upon the employee. The confidence in petitioner, respondent Delfin had
standard of substantial evidence is satisfied the right to transfer her to ensure that she
where would no longer have access to the companies’
the employer has reasonable ground to believe confidential files. Although it is true that
that the employee is responsible for the petitioner has yet to be proven guilty,
misconduct and his participation therein respondents had the authority to reassign her,
renders him unworthy of the trust and pending investigation.
confidence
demanded by his position.
We find that petitioners' acts of conducting 38 WENIFREDO FARROL vs. CA and RCPI
audits and investigation on the alleged
irregularities committed by private respondent FACTS:
and in reassigning him to another place of work Wenifredo Farrol was employed as station
pending the results of the investigation were cashier at RCPIs Cotabato City station. RCPIs
based on valid and legitimate grounds. As such, district manager in Cotabato City informed their
these acts of management cannot amount to main office that "Peragram funds"[ from said
constructive dismissal. It is worthy to note that branch were used for the payment of
petitioners gave Baron every opportunity to retirement benefits of five employees. Farrol
raise his defense and fully explain the verified as
discrepancies in the funds in his possession. In correct RCPIs Field Auditors report that there
fact private respondent i nformed petitioners was a shortage of P50,985.37 in their branchs
that he would be returning for work on 5 March Peragram, Petty and General Cash Funds.
1991 after his sick leave. But instead of doing Consequently, petitioner was required by the
so, he filed a complaint for constructive Field
dismissal before the Labor Arbiter. Auditor to explain the cash shortage within 24
hours from notice. The next day, petitioner paid
to RCPI P25,000.00 of the cash shortage. RCPI
37 Josephine Ruiz vs Wendel Osaka Realty required petitioner to explain why he should
not
Facts: be dismissed from employment. Two days
Petitioner was hired as secretary to respondent thereafter, petitioner wrote a letter to the Field
(Delfin), the president of DMWAI there after Auditor stating that the missing funds were
appointed as executive assistant to the used for the payment of the retirement benefits
president of respondent WORC. Sometime in earlier referred to by the branch manager and
2002, the BIR informed Delfin of the tax that he had already paid P25,000.00 to RCPI.
deficiency allegations against his companies. On After making two more payments of the cash
November 2002, he discovered that “various shortage to RCPI, petitioner was informed by
very important files”11 of DMWAI were missing. the
He required the employees to answer a district manager that he is being placed under
questionnaire but the petitioner failed to preventive suspension. Thereafter, he again
comply. ThusDelfin sent a letter17 to petitioner paid
informing her that she would be placed under a two more sums on different dates to RCPI
30-day preventive suspension and another 15 leaving a balance of P6,995.37 of the shortage.
days with pay. After 45 day period, she reported RCPI
back to work and was transferred to the Cavite claims that it sent a letter to petitioner
city branch. Thereafter, petitioner amended her informing him of the termination of his services
Complaint for illegal suspension to include on the
constructive illegal dismissal. ground that the position of Station Cashier is
CA ruled, that the transfer of petitioner was one which requires utmost trust and
justified, considering the gravity of the offense confidence.
she was being charged with.41 Unaware of the termination letter, Farrol
requested that he be reinstated considering
Issue: that the
w/n the transfer is valid. period of his preventive suspension had
expired. He likewise manifested to RCPI his
Held: willingness
to settle his case provided he is given his
 42

retirement benefits. However, RCPI informed appears that this is the first infraction
petitioner that his employment had already committed by petitioner. Although the
been terminated earlier employer has the
prerogative to discipline or dismiss its employee,
HELD: such prerogative cannot be exercised
In cases involving the illegal termination of wantonly, but must be controlled by substantive
employmen t, it is fundamental that the due process and tempered by the fundamental
employer must observe the mandate of the policy of protection to labor enshrined in the
Labor Code, i.e., the employer has the burden Constitution. Infractions committed by an
of employee should merit only the corresponding
proving that the dismissal is for a cause sanction demanded by the circumstances. The
provided by the law[ and that it afforded the penalty must be commensurate with the act,
employee conduct or omission imputed to the employee
an opportunity to be heard and to defen d and
himself The employer must comply with the imposed in connection with the employers
twin disciplinary authority. RCPI alleged that under
requirements of two notices and hearing. The its
first notice is that which apprises the employee rules, petitioners infraction is punishable by
of the particular acts or omissions for which his dismissal. Petitioner has no previous record in
dismissal is sought, and after affording the his
employee an opportunity to be heard, a twenty-four long years of service - this would
subsequent notice informing the latter of the have been his first offense. The Court thus holds
employers decision to dismiss him from work. that the dismissal imposed on petitioner is
As regards the first notice, RCPI simply required unduly harsh and grossly disproporti onate to
petitioner to "explain in writing why he failed to the
account" for the shortage and demanded that infraction which led to the termination of his
he restitute the same. On the assumption that services. A lighter penalty would have been
the foregoing statement satisfies the first more
notice, just, if not humane. In any case, petitioner paid
the second notice sent by RCPI to petitioner back the cash shortage in his accounts.
does not "clearly" cite the reasons for the Considering, however, that the latter is about to
dismissal, retire or may have retired from work, it would
contrary to the requirements set by the above- no longer be practical to order his
quoted Section 6 of Book V, Rule XIV of the reinstatement.
Omnibus Rules. RCPIs dismissal notice reveals
that it merely stated a conclusion to the effect
that the withholding was deliberately done to 39 MANILA WATER COMPANY, Petitioner,vs.
hide alleged malversation or misappropriation CARLITO DEL ROSARIO, Respondent.
without, however, stating the facts and
circumstances in support thereof. It further PRINCIPLE:
mentioned The grant of separation pay to a dismissed
that the position of cashier requires utmost employee is determined by the cause of the
trust and confidence but failed to allege the dismissal. The years of service may determine
breach how much separation pay may be awarded. It
of trust on the part of petitioner and how the is, however, not the reason why such pay
alleged breach was committed. On the should be granted at all.
assumption that there was indeed a breach,
there is no evidence that petitioner was a FACTS:
managerial employee of respondent RCPI. It  Del Rosario was employed as Instrument
should be noted that the term "trust and Technician by Metropolitan Waterworks and
confidence" is restricted to managerial Sewerage System (MWSS). MWSS was
employees. It may not even be presumed that reorganized pursuant to Republic Act No. 8041
when or the National Water Crisis Act of 1995, and its
there is a shortage, there is also a implementing guidelines − Executive Order No.
corresponding breach of trust. Cash shortages 286.
in a cashiers  Because of the reorganization, Manila Water
work may happen, and when there is no proof absorbed some employees of MWSS including
that the same was deliberately done for a Del Rosario.
fraudulent or wrongful purpose, it cannot  Manila Water discovered that 24 water
constitute breach of trust so as to render the meters were missing in its stockroom. Upon
dismissal from work invalid. Assuming further initial investigation, it appeared that Del Rosario
that there was breach of trust and confidence, it and his co-employee, Danilo Manguera, were
 43

involved in the pilferage and the sale of water has been granted to a legally dismissed
meters to the company’s contractor. employee as an act of “social justice” or on
 When Del Rosario was directed to explain, he “equitable grounds.” In either case, “it is
confessed his involvement in the act charged required that the dismissal (1) was not for
and pleaded for forgiveness, promising not to serious misconduct; and (2) did not reflct on the
commit similar acts in the future. moral character of the employee.”
 During the formal investigation Del Rosario Citing the leading case of PLDT v. NLRC (247
was found responsible for the loss of the water Phil. 641, 1988), the Supreme Court laid down
meters and therefore liable for violating Section the rule “that separation pay shall be allowed as
11.1 of the Company’s Code of Conduct. Hence, a measure of social justice only in the instances
the dismissal of Del Rosario from employment. where the employee is validly dismissed for
 This prompted Del Rosario to fie an action for causes other than serious misconduct reflcting
illegal dismissal claiming that his severance his moral character…”
from employment is without just cause. Del In subsequent cases, the high tribunal
Rosario averred in his position paper that his “expanded the exclusions and elucidated that
admission to the misconduct charged was not separation pay shall be allowed as a measure of
voluntary but was coerced by the company. social justice only in instances where the
Such admission therefore, made without the employee is validly dismissed for causes other
assistance of a counsel, could not be made basis than serious misconduct, willful disobedience,
in terminating his employment. gross and habituals neglect of duty, fraud or
 Manila Water answered and pointed out that willful breach of trust, commission of a crime
he was involved in the taking of the water against the employer or his family, or those
meters from the company’s stock room and of reflcting on his moral character…”
selling these to a private contractor for personal Although long years of service might generally
gain. Invoking Section 11.1 of the Company’s be considered for the award of separation
Code of Conduct, Manila Water averred that benefis or some form of fiancial assistance to
such act of stealing the company’s property is mitigate the effcts of termination, this case is
punishable by dismissal. They further averred not the appropriate instance for generosity
that Del Rosario himself confessed his under the Labor Code nor under our prior
involvement to the loss of the water meters not decisions. The fact that private respondent
only in his letter-explanation, but also during served petitioner for more than twenty years
the formal investigation, and in both instances, with no negative record prior to his dismissal, in
pleaded for his employer’s forgiveness. our view of this case, does not call for such
**Labor Arbiter - dismissing for lack of merit the award of
complaint fied by Del Rosario benefis, since his violation reflcts a regrettable
who was, however, awarded separation pay. lack of loyalty and worse, betrayal of the
According to the Labor Arbiter, Del company. If an employee's length of service is
Rosario’s length of service for 21 years, without to be regarded as a justifiation for moderating
previous derogatory record, the penalty of dismissal, such gesture will
warrants the award of separation pay. actually become a prize for disloyalty, distorting
----------- **Separation pay equivalent to one- the meaning of social justice and undermining
half (1/2) month’s salary for every year of the effrts of labor to cleanse its ranks of
service based on his basic salary Php 11,244.00 undesirables.
at the time of his dismissal. This shall be The grant of separation pay to a dismissed
computed from [1 August 1997] up to June employee is determined by the cause of the
2000, the total amount of which is Php dismissal. The years of service may determine
118,062.00. how much separation pay may be awarded. It
**Manila Waters fied a MR to NLRC however, it is, however, not the reason why such pay
is denied. should be granted at all.
**CA – affied the granting of Separation Pay by In sum, we hold that the award of separation
the Labor Arbiter pay or any other kind of fiancial assistance to
Del Rosario, under the nomenclature of
ISSUE: compassionate justice, is not warranted in the
WON Respondent Del Rosario is entitled for instant case. A contrary rule would have the
Separation Pay effct of rewarding rather than punishing an
erring employee, disturbing the noble concept
RULING: of social justice.
No. “As a general rule, an employee who has 40 Salvador O. Mojar vs Agro Commercial
been dismissed for any of the just causes Security Service Agency
enumerated under Article 282 of the Labor
Code is not entitled to a separation pay.” Facts:
However, in exceptional cases, separation pay
 44

Petitioners were employed as security guards applicable here. In Agro, the service contracts of
by respondent and assigned to the various the security agency therein with various
branches of the Bank of Commerce in corporations and government agencies – to
Pangasinan, La Union and Ilocos Sur. Petitioners which the security guards were previously
were relieved from their respective posts and assigned – were terminated, generally due to
directed to report to their new assignments in the sequestration of the said offices.
Metro Manila. They, however, failed to report Accordingly, many of the security guards were
for duty in their new assignments. On 15 placed on floating status. “Floating status”
February 2005, petitioners filed a Complaint for means an indefinite period of time when one
illegal dismissal against respondent and the does not receive any salary or financial benefit
Bank of Commerce, Dagupan Branch. provided by law. In this case, petitioners were
Petitioners claimed, among others, that their actually reassigned to new posts, albeit in a
reassignment was a scheme to sever the different location from where they resided.
employer-employee relationship and was done Thus, there can be no floating status or
in retaliation for pressing their claim for salary indefinite period to speak of. Instead,
differential, which they had earlier filed against petitioners were the ones who refused to
respondent and the Bank of Commerce before report for work in their new assignment. In
the NLRC. They also contended that the transfer cases involving security guards, a relief and
to Manila was inconvenient and prejudicial, transfer order in itself does not sever the
since they would incur additional expenses for employment relationship between the security
board and lodging. The Labor Arbiter rendered guards and their agency. Employees have the
a Decision finding that petitioners were illegally right to security of tenure, but this does not give
dismissed and ordered respondents to reinstate them such a vested right to their positions as
all the complainants to their former assignment would deprive the company of its prerogative to
in Pangasinan with full backwages and if change their assignment or transfer them
reinstatement is no longer possible, to pay where their services, as security guards, will be
separation pay of one month for every year of most beneficial to the client. An employer has
service each of the seven complainant security the right to transfer or assign its employees
guards. On appeal, the NLRC affirmed the LA’s from one office or area of operation to another
ruling, with the modification that the Complaint in pursuit of its legitimate business interest,
against the Bank of Commerce was dismissed. provided there is no demotion in rank or
The CA found the Orders transferring diminution of salary, benefits, and other
petitioners to Manila to be a valid exercise of privileges; and the transfer is not motivated by
management prerogative. The CA further ruled discrimination or bad faith, or effected as a
that the records were bereft of any showing form of punishment or demotion without
that the subject transfer involved a diminution sufficient cause. While petitioners may claim
of rank or salaries. Further, there was no that their transfer to Manila will cause added
showing of bad faith or ill motive on the part of expenses and inconvenience, the court agree
the employer. Thus, petitioners’ refusal to with the CA that, absent any showing of bad
comply with the transfer orders constituted faith or ill motive on the part of the employer,
willful disobedience of a lawful order of an the transfer remains valid.
employer and abandonment, which were just
causes for termination under the Labor Code.
However, respondent failed to observe the due 41 PHILBAG INDUSTRIAL MANUFACTURING
process requirements in terminating them. CORPORATION, Petitioner, v. PHILBAG
WORKERS UNION-LAKAS AT GABAY NG
Issue: MANGGAGAWANG NAGKAKAISA, Respondent.
Whether or not an employee may be
considered to have been constructively FACTS:
dismissed if his floating status lasts for more Edwin Mauricio and Zharralyn Camacho were
than six months. employees of the petitioner, Philbag Industrial
Manufacturing Corporation (company), until
Ruling: their dismissal in the second half of 2004.
The Petition is DENIED and the court AFFIRMED Mauricio and Camacho protested their
the Court of Appeals decision. Petitioners argue dismissal, prompting the union and the
that they were illegally dismissed, based on the company to convene the CBAs grievance
1989 case Agro Commercial Security Services machinery in an effort to resolve the matter at
Agency, Inc. v. NLRC., which holds that when plant level. Unable to reach a settlement, they
the floating status of employees lasts for more agreed to have the dispute resolved through
than six (6) months, they may be considered to voluntary arbitration.
have been illegally dismissed from the service. To avoid liability, the company maintained that
Unfortunately, the above-mentioned case is not both Mauricio and Camacho violated company
 45

rules on employee discipline, thereby incurring Jean Aurelio started as clinical instructor of the
demerit points that justified their separation College of Nursing of Northwestern
from the service. It pointed out that Mauricio College (NWC). Later, she was appointed as
was observed idling and wasting company time Dean of the College of Nursing. Again,
for two hours on May 24, 2004 as reported by petitioner
Reinoso who witnessed the incident. With was promoted to College Administrator or Vice-
respect to Camacho, the company stressed that President for Administration, retaining
she failed (1) to follow the procedure in taking a concurrently her position of Dean of the College
leave of absence (filing the required form) or of Nursing, with an increased salary. She was
getting permission from or notifying later promoted to Executive Vice-President. This
management that she could not report for work new management unleashed a series of
from March 15 to 21, 2004 and (2) to have her reorganization affecting the petitioner . Without
medical certificate countersigned by the prior notice, petitioner's office was stripped of
company doctor. its facilities, her salary was reduced from
VA Ancheta declared Mauricio and Camachos P7,500.00 to P5,000.00 then to P2,500.00 a
dismissal valid. With the ruling, VA Ancheta month,
upheld the companys prerogative to impose and while petitioner was absent because of
disciplinary action on its employees who violate influenza, respondents assigned her office room
company rules and regulations. The union to
sought relief from the CA through a petition for the Chairman on Management and Planning;
review under Rule 43 of the Rules of Court. the Nursing conference room was assigned as
CA granted the petition and reversed VA the
Anchetas ruling. It found "no plausible reason lounge room of the members of the Board of
for [the company] to [impose] demerit points Directors. Because of the indignities and
on Mauricio and Camacho as a result of the humiliation suffered by the petitioner, she
subject incidents. wrote a letter informing the President of
The CA thus ruled that Mauricio and Camacho Northwestern College that she was going on an
were illegally dismissed. The company moved indefinite leave. Petitioner sent a copy of the
for reconsideration, which was denied by the letter to the Secretary of DECS for assistance.
CA. The matter of petitioner's resumption of her
position as Dean of the College of Nursing was
ISSUE: addressed by the DECS to the attention of
Whether or not Mauricio and Camacho were respondents but it did not answer. They refused
illegally dismissed? to accept petitioner. Hence, petitioner filed
her complaint for illegal dismissal against
HELD: private respondents. NWC, on its part, was
Court of Appeals decision is sustained. compelled
LABOR LAW to abolish the administrative positions held by
Under the law, the burden of proving that the petitioner, which she did not contest, because
termination of employment was for a valid or they realized after a study of the realignment of
authorized cause rests on the employer. Failure the positions that the fu nctions and duties of
to discharge this burden would result in an Administrator/Vice President for Administration
unjust or illegal dismissal, as aptly pointed out were being performed by the President.
by the CA. We find such a failure on the part of Consequently, the former positions had become
the employer in this case. redundant.
It is obvious that the company overstepped the
bounds of its management prerogative in the ISSUE:
dismissal of Mauricio and Camacho. It lost sight WON the Management is at liberty to abolish
of the principle that management prerogative positions no longer necessary.
must be exercised in good faith and with due
regard to the rights of the workers in the spirit HELD:
of fairness and with justice in mind. YES. The Board of Directors, composed of the
In sum, we find Mauricio and Camachos individual private respondents herein, has
dismissal without a valid cause and, therefore, the power granted by the Corporation Code to
illegal. implement a reorganization of respondent
DENIED. college's offices, including the abolition of
various positions, since it is imp lied or
incidental to
42 JEAN C. AURELIO vs. NATIONAL LABOR its power to conduct the regular business affairs
RELATIONS COMMISSION of the corporation. The prerogative of
management to conduct its own business affairs
FACTS: to achieve its purposes cannot be denied.
 46

Management is at liberty, absent any malice on (SA MGA NAG SLASH NG TOWELS) We find that
its part, to abolish positions which it deems no petitioners were unable to substantiate
longer necessary. Thus, when petitioner was the charge of serious misconduct against the
stripped by the Board of her positions as ones who slashed the towels. They were
Executive likewise denied procedural due process. As
Vice President and Vice President for correctly observed by respondent NLRC,
Administration, with a corresponding reduction petitioners
in salary, failed to afford Macaspac and Albasin the
the Board did not act in a capricious, whimsical, benefit of hearing and investigation before
and arbitrary manner, thus negating malice and termination. It is also our observation that
bad faith. neither did petitioners comply with the
requirement
on notices. An established rule of long standing
43 GOLDEN THREAD KNITTING INDUSTRIES, is that to effect a completely valid and
INC., GEORGE NG and WILFREDO BICO vs. unassailable dismissal, an employer must show
NATIONAL LABOR RELATIONS COMMISSION, not only sufficient ground therefor but must
GEORGE MACASPAC, MARY ANN MACASPAC, also prove that procedural due process has
ROMULO ALBASIN, MELCHOR CACHUCHA, been observed by giving the employee two (2)
GILBERT RIVERA and FLORA BALBINO, notices: one, of the intention to dismiss,
respondents. indicating therein his acts or omissions
complained
FACTS: against, and two, notice of the decision to
The complainants alleged that in the first week dismiss.
of May 1992 they organized a labor (SA MGA NATANGGAL FOR REDUNDANCY) The
union. On 22 May 1992 Cristina Balingit, wife of characterization of an employee’s
the union Chairman, was dismissed from services as no longer necessary or sustainable,
emyloyment as sewer. In the last week of May and therefore properly terminable, is an
union Chairman Deogracias Balingit himself exercise
was, of business judgment on the part of the
suspended from work as knitting operator. On 1 employer. (Management Prerogative)
June 1992 petitioners shortened the number HOWEVER, SC
of working days of the union officers and questioned petitioners’ exercise of
members from six (6) to three (3) days a week. management prerogative because it was not
Petitioners contended that they resorted to shown that
rotation of work, which affected practically Rivera and Macaspac’s positions were indeed
all employees, because of the low demand for unnecessary, much less was petitioners’ claim
their towels and shirts. Petitioners also avowed supported by any evidence. It is not enough for
that they validly dismissed five (5) of the a company to merely declare that it has
complainants. According to petitioners, some become overmanned. It must produce
slashed adequate proof that such is the actual situation
several bundles of towels on 3 July 1992, while in
the positions of some became redundant. One order to justify the dismissal of the affected
of them threatened the Personnel Manager and employees for redundancy.
violated company rules by removing her time Furthermore, we have laid down the principle
card from the rack, while another one was not that in selecting the employees to be
dismissed but abandoned his employment on 7 dismissed, a fair and reasonable criteria must be
July 1992. used, such as but not limited to:
LABOR ARBITER ruled that they were validly (a) less preferred status (e.g., temporary
dismissed, while the reduction of working employee),
days and suspension or dismissal of union (b) efficiency, and
officers or members were not shown to have (c) seniority.
been However, no criteria whatsoever was used by
done in retaliation to the complainants’ act of the employer in this case.
organizing a union. Another procedural lapse committed by
NLRC reversed the ruling for a number of the petitioners is the lack of written notice to the
complainants, holding that they were DOLE required under Art. 283 of the Labor
illegally dismissed. Code. The purpose of such notice is to ascertain
the
ISSUE: verity of the cause of termination of
WON they were validly dismissed employment.
(DUN SA NANG THREATEN NG MANAGER) The
HELD: utterances by an employee of obscene,
 47

insulting or offensive words against a superior Resolution

justify his dismissal for gross misconduct. The affirming the labor arbiter's decision in toto.
scornful attitude is also destructive of his co-
employees’ morale. However, the dismissal will ISSUE:
not be upheld where it appears, as in this case, Whether or not the CBA stipulation on
that the employee’s act of disrespect compulsory retirement after twenty-five years
was provoked by the employer. Balbino hurled of
invectives at petitioner Bico because she was service is legal and enforceable.
provoked by the baseless suspension imposed
on her. Under the circumstances, we believe RULING:
that The Court rules that the CBA stipulation is legal
dismissal was a harsh penalty; one (1) week and enforceable.
suspension would have sufficed. The bone of contention in this case is the
(DUN SA NAG ABANDON NG WORK) It is provision on compulsory retirement after 25
essential that: years of service.
(1) the employee must have failed to report for Article XI, Section 1 (e) (5) of the May 2, 1989
work or must have been absent without Collective Bargaining Agreement 8 between
valid or justifiable reason; and, petitioner company and the union states:
(2) there must have been a clear intention to Section 1. The COMPANY shall formulate a
sever the employer-employee relationship retirement plan with the following main
manifested by some overt acts. features:
The circumstance that Cachucha lost no time in (e) The COMPANY agrees to grant the
filing a complaint for illegal dismissal retirement benefits herein provided to regular
against petitioners on 16 July 1992 is employees who may be separated from the
incompatible with the charge of abandonment COMPANY for any of the following reasons:
and (5) Upon reaching the age of sixty (60) years or
confirms in fact that he was refused entry into upon completing twenty-five (25) years of
the company premises on 6 July 1992. service to the COMPANY, whichever comes first,
and the employee shall be compulsory retired
and paid the retirement benefits herein
44 Pantranco North Express, Inc., vs. NLRC & provided."
Urbano Suñiga The said Code provides: Art. 287. Retirement. —
Any employee may be retired upon
FACTS: reaching the retirement age established in the
Private respondent was hired by petitioner in Collective Bargaining Agreement or other
1964 as a bus conductor. He eventually applicable employment contract. In case of
joined the Pantranco Employees Association- retirement, the employee shall be entitled to
PTGWO. He continued in petitioner's employ receive such retirement benefits as he may
until have earned under existing laws and any
August 12, 1989, when he was retired at the collective
age of fifty-two (52) after having rendered bargaining or other agreement."
twenty The Court agrees with petitioner and the
five years' service. The basis of his retirement Solicitor General. Art. 287 of the Labor Code as
was the compulsory retirement provision of the worded permits employers and employees to fix
collective bargaining agreement between the the applicable retirement age at below 60
petitioner and the aforenamed union. On years. Moreover, providing for early retirement
February 1990, private respondent filed a does not constitute diminution of benefits. In
complaint for illegal dismissal against petitioner almost all countries today, early retirement, i.e.,
with before age 60, is considered a reward for
NLRC. The complaint was consolidated with two services rendered since it enables an employee
other cases of illegal dismissal having similar to reap the fruits of his labor — particularly
facts and issues, filed by other employees, non - retirement benefits, whether lump-sum or
union members. otherwise — at an earlier age, when said
Labor Arbiter rendered his decision finding that employee,
the three complainants were illegally in presumably better physical and mental
and unjustly dismissed and order the condition, can enjoy them better and longer.
respondent to reinstate them to their former or As a matter of fact, one of the advantages of
substantially equivalent positions without loss early retirement is that the corresponding
of seniority rights with full back wages and retirement benefits, usually consisting of a
other substantial cash windfall, can early on be put to
benefits. Petitioner appealed to public productive and profitable uses by way of
respondent, which issued the questioned income-generating investments, thereby
 48

affording a
more significant measure of financial security FACTS:
and independence for the retiree who, up till Respondent employed petitioner as a utility
then, had to contend with life's vicissitudes man on March 15, 1987. Petitioner was
within the parameters of his fortnightly or eventually assigned at respondent's Paper Mill
weekly No. 4, the section which manufactures the
wages. Thus we are now seeing many CBAs with company's industrial paper products, as a back
such early retirement provisions. And the same tender in charge of the proper operation of the
cannot be considered a diminution of sections machineries. In a Notice of Transfer
employment benefits. dated March 27, 1999, respondent informed
Being a product of negotiation, the CBA petitioner of its reorganization plan and offered
between the petitioner and the union intended him a position at Paper Mill No. 5 under the
the provision on compulsory retirement to be same terms and conditions of employment in
beneficial to the employees-union members, anticipation of the eventual closure and
including herein private respondent. When permanent shutdown of Paper Mill No. 4
private respondent ratified the CBA with the effective May 5, 1999.The closure and
union, concomitant
he not only agreed to the CBA but also agreed reorganization is in line with respondents
to conform to and abide by its provisions. Thus, decision to streamline and phase out the
it cannot be said that he was illegally dismissed company's
when the CBA provision on compulsory industrial paper manufacturing operations due
retirement was applied to his case. to financial difficulties brought about by the low
Incidentally, we call attention to Republic Act volume of sales and orders for industrial paper
No. 7641, known as "The Retirement Pay products. However, petitioner rejected
Law", which went into effect on January 7, respondents offer for his transfer. Thus, a notice
1993. Although passed many years after the of termination of employment effective May
compulsory retirement of herein private 5, 1999 was sent to petitioner as his position
respondent, nevertheless, the said statute was declared redundant by the closure of Paper
sheds light Mill No. 4.He then received his separation pay
on the present discussion when it amended and thereafter executed a release and quitclaim
Art. 287 of the Labor Code, to make it read as in favor of respondent. On April 5, 1999,
follows: Retirement. — Any employee respondent informed the Dep artment of Labor
may be retired upon reaching the retirement and
age establish in the collective bargaining Employment (DOLE) of its reorganization and
agreement or other applicable employment partial closure by submitting with the said office
contract. an Establishment Termination Report together
In the absence of a retirement plan or with the list of 31 terminated employees.
agreement providing for retirement benefits of Petitioner filed a complaint for illegal dismissal
employees in the establishment, an employee against respondent assailing his termination as
upon reaching the age of sixty (60) years or without any valid cause.He averred that the
more, but not beyond sixty-five (65) years alleged redundancy never occurred as there
which is hereby declared the compulsory was
retirement no permanent shutdown of Paper Mill No. 4
age, who has served at least five (5) years in the due to its continuous operation since his
said establishment may retire . . ." termination.A co-employee, Nestor Agtang,
The aforequoted provision makes clear the confirmed this fact and further attested that
intention and spirit of the law to give several contractual workers were employed to
employers and employees a free hand to operate Paper Mill No. 4. Petitioner also
determine and agree upon the terms and presented in evidence documents pertaining to
conditions the actual and continuous operation of Paper
of retirement. Providing in a CBA for Mill No. 4 such as the Paper Mill Personnel
compulsory retirement of employees after Schedule for July 2-8, 2000 and 23-29, 2000 and
twenty-five (25) Paper Machine No. 4 Production Report and
years of service is legal and enforceable so long Operating Data dated April 28, 2000 and May
as the parties agree to be governed by such 18,
CBA. The law presumes that employees know 2000. In its defense, respondent refuted
what they want and what is good for them petitioners claim of illegal dismissal.It argued
absent any showing that fraud or intimidation that
was employed to secure their consent thereto. petitioner has voluntarily separated himself
from service by opting to avail of the separation
benefits of the company instead of accepting
45 Pantoja v. SCA Hygiene reassignment/transfer to another position of
 49

equal rank and pay. According to respondent, costs by retrenching must be exercised
petitioners discussion on the alleged essentially as a measure of last resort, after less
resumption drastic
of operation of Paper Mill No. 4 is rendered means have been tried and found
moot by the fact of petitioner's voluntary wanting.Giving the workers an option to be
separation. transferred
The Labor Arbiter rendered a Decision without any diminution in rank and pay
dismissing petitioners complaint for lack of specifically belie petitioners allegation that the
merit.Upon appeal by petitioner, the NLRC alleged
reversed the Labor Arbiters Decision by finding streamlining scheme was implemented as a
petitioners separation from employment ploy to ease out employees, thus, the absence
illegal.Aggrieved, respondent filed a petition for of
certiorari with the CA. The CA reversed the bad faith. Apparently, respondent implemented
NLRC's Decision and reinstated the Labor its streamlinin g or reorganization plan with
Arbiters good faith, not in an arbitrary manner and
Decision dismissing the complaint. without prejudicing the tenurial rights of its
employees.
ISSUE: DENIED
Whether or not respondent is guilty of illegal
dismissal. 46 JONATHAN V. MORALES, Petitioner, v.
HARBOUR CENTRE PORT TERMINAL, INC.
HELD: Respondent.
LABOR LAW
Respondent presented evidence of the low FACTS:
volume of sales and orders for the Regularized on 17 November 2000, Morales was
production of industrial paper in 1999 which promoted to Division Manager of the
inevitably resulted to the company's decision to Accounting Department, for which he was
streamline its operations. This fact was compensated a monthly salary of P33,700.00,
corroborated by respondents VP-Tissue plus allowances starting 1 July 2002.
Manufacturing Subsequent to HCPTIs transfer to its new offices
Director and was not disputed by petitioner. at Vitas, Tondo, Manila on 2 January 2003,
Exercising its management prerogative and Morales received an inter-office memorandum
sound dated 27 March 2003, reassigning him to
business judgment, respondent decided to cut Operations Cost Accounting, tasked with the
down on operational costs by shutting down duty of "monitoring and evaluating all
one consumables requests, gears and equipment"
of its paper mill. The determination of the need related to the corporations operations and of
to phase out a particular department and interacting with its sub-contractor, Bulk Fleet
consequent reduction of personnel and Marine Corporation.
reorganization as a labor and cost saving device Morales wrote Singson, protesting that his
is a reassignment was a clear demotion since the
recognized management prerogative which the position to which he was transferred was not
courts will not generally interfere with. In this even included in HCPTIs plantilla. Singson, the
case, the abolishment of Paper Mill No. 4 was Administration Manager, answered by stating
undoubtedly a business judgment arrived at in that the transfer was a management
the face of the low demand for the production prerogative.
of industrial paper at the time.Despite an For the whole of the ensuing month Morales
apparent reason to implement a retrenchment was absent from work and/or tardy. Singson
program as a cost-cutting measure, respondent, issued to Morales a 29 April 2003 inter-office
however, did not outrightly dismiss the workers memorandum denominated as a First Warning.
affected by the closure of Paper Mill No. 4 but In view of the absences Morales continued to
gave them an option to be transferred to posts incur, HCPTI issued a Second Warning.
of equal rank and pay.As can be seen, In the meantime, Morales filed a complaint
retrenchment was utilized by respondent only dated 25 April 2003 against HCPTI, Filart and
as an available option in case the affected Singson, for constructive dismissal, moral and
employee would not want to be exemplary damages as well as attorneys fees.
transferred.Respondent did not proceed LA dismissed the complaint for lack of merit. It
directly to ruled that Morales reassignment was a valid
retrench.This is an indication of good faith on exercise of HCPTIs management prerogative
respondents part as it exhausted other possible which cannot be construed as constructive
measures other than retrenchment.Besides, the dismissal absent showing that the same was
employers prerogative to bring down labor done in bad faith and resulted in the diminution
 50

of his salary and benefits. The NLRC however, work assignments, working methods, processes
reversed the decision. Its subsequent denial of to be followed, regulation regarding transfer of
HCPTIs motion for reconsideration prompted employees, supervision of their work, lay-off
the latter to file a petition for certiorari before and discipline, and dismissal and recall of
the CA. The CA reversed the findings of the workers.
NLRC. Hence, this petition. Although jurisprudence recognizes said
management prerogative, it has been ruled that
ISSUE: the exercise thereof, while ordinarily not
Whether or not petitioner was constructively interfered with, is not absolute and is subject to
dismissed limitations imposed by law, collective
bargaining agreement, and general principles of
HELD: fair play and justice. Thus, an employer may
Yes. CA Decision reversed and set aside transfer or assign employees from one office or
Constructive dismissal exists where there is area of operation to another, provided there is
cessation of work because "continued no demotion in rank or diminution of salary,
employment is rendered impossible, benefits, and other privileges, and the action is
unreasonable or unlikely, as an offer involving a not motivated by discrimination, made in bad
demotion in rank or a diminution in pay and faith, or effected as a form of punishment or
other benefits. demotion without sufficient cause. Indeed,
In cases of a transfer of an employee, the rule is having the right should not be confused with
settled that the employer is charged with the the manner in which that right is exercised.
burden of proving that its conduct and action GRANTED
are for valid and legitimate grounds such as
genuine business necessity and that the transfer
is not unreasonable, inconvenient or prejudicial 47 STAR PAPER CORPORATION vs. RONALDO D.
to the employee. If the employer cannot SIMBOL, ET.AL.
overcome this burden of proof, the employees
transfer shall be tantamount to unlawful FACTS:
constructive dismissal. Josephine Ongsitco is the Manager of the
Record shows that HCPTI miserably failed to Personnel and Administration Department
discharge the foregoing onus. While there was a while Sebastian Chua is its Managing Director of
lack of showing that the transfer or Star Paper Corporation. Meanwhile, Ronaldo
reassignment entailed a diminution of salary D. Simbol (Simbol), Wilfreda N. Comia (Comia)
and benefits, one fact that must not be lost and Lorna E. Estrella (Estrella) were all regular
sight of was that Morales was already occupying employees of the company. Simbol was
the position of Division Manager at HCPTIs employed by the company where he met Alma
Accounting Department as a consequence of his Dayrit,
promotion to said position on 22 October 2002. also an employee of the company, whom he
Concurrently appointed as member of HCPTIs also married. Prior to the marriage, Ongsitco
Management Committee (MANCOM) on 2 advised the couple that should they decide to
December 2002, Morales was subsequently get married, one of them should resign
reassigned by HCPTI "from managerial pursuant
accounting to Operations Cost Accounting" on to a company policy. Simbol then resigned
27 March 2003, without any mention of the pursuant to the company policy. Comia was
position to which he was actually being hired by
transferred. That the reassignment was a the company where she met Howard Comia, a
demotion is, however, evident from Morales co-employee, and whom she later married.
new duties which, far from being managerial in Ongsitco likewise reminded them that pursuant
nature, were very simply and vaguely described to company policy, one must resign should
as inclusive of "monitoring and evaluating all they decide to get married. Comia then
consumables requests, gears and equipments resigned later on. Estrella was hired by the
related to HCPTIs operations" as well as "close company,
interaction with its sub-contractor Bulk Fleet and there she met Luisito Zuiga (Zuiga), also a
Marine Corporation." co-worker. Petitioners stated that Zuiga, a
Admittedly, the right of employees to security married man, got Estrella pregnant. The
of tenure does not give them vested rights to company allegedly could have terminated her
their positions to the extent of depriving servi ces
management of its prerogative to change their due to immorality but she opted to resign.
assignments or to transfer them. By However, Simbol and Comia allege that they did
management prerogative is meant the right of not
an employer to regulate all aspects of resign voluntarily; they were compelled to
employment, such as the freedom to prescribe resign in view of an illegal company policy. As to
 51

respondent Estrella, she alleges that she had a courts

relationship with co-worker Zuiga who also find the no-spouse employment policy
misrepresented himself as a married but invalid for failure of the employer to present
separated man. After he got her pregnant, she any
discovered that he was not separated. Thus, she evidence of business necessity other than the
severed her relationship with him to avoid general perception that spouses in the same
dismissal due to the company policy. Estrella workplace might adversely affect the business.
met an accident and when she returned to work They hold that the absence of such a bona fide
she found out that she was being dismissed for occupational qualification invalidates a rule
immoral conduct. She refused to sign the denying employment to one spouse due to the
memorandum because she was on leave for current employment of the other spouse in the
twenty-one (21) days and has not been given a same office. Thus, they rule that unless the
chance to explain. The management asked her employer can prove that the reasonable
to write an explanation. But she was demands of the business require a distinction
nonetheless dismissed by the company. Due to based on
her urgent need for money, she later submitted marital status and there is no better available or
a letter of resignation in exchange for her acceptable policy which would better
thirteenth month pay. accomplish the business purpose, an employer
may not discriminate against an employee
ISSUE: based
WON Respondents company policy is illegal and on the identity of the employees spouse. This is
contraven es Article 136 of the Labor known as the bona fide occupational
Code/ Whether the policy of the employer qualification exception. We note that since the
banning spouses from working in the same finding of a bona fide occupational qualification
company justifies an employers no-spouse rule, the
violates the rights of the employee under the exception is interpreted strictly and narrowly by
Constitution and the Labor Code or is a valid these state courts. There must be a compelling
exercise of management prerogative. business necessity for which no alternative
exists other than the discriminatory practice. To
HELD: justify a bona fide occupational qualification,
YES. It is true that the policy of petitioners the employer must prove two factors: (1) that
prohibiting close relatives from working in the employment qualification is reasonably
the same company takes the nature of an anti- related to the essential operation of the job
nepotism employment policy. Companies adopt involved; and, (2) that there is a factual basis for
these policies to prevent the hiring of believing that all or substantially all persons
unqualified persons based on their sta tus as a meeting the qualification would be unable to
relative, properly perform the duties of the job. We do
rather than upon their ability. With more not find a reasonable business necessity in the
women entering the workforce, employers are case at bar. Petitioners sole contention that the
also company did not just want to have two (2) or
enacting employment policies specifically more of its employees related between the
prohibiting spouses from working for the same third degree by affinity and/or consanguinity is
company. Two types of employment policies lame. That the second paragraph was meant to
involve spouses: policies banning only spouses give teeth to the first paragraph of the
from working in the same company (no-spouse questioned rule is evidently not the valid
employment policies), and those banning all reasonable business necessity required by the
immediate family members, including spouses, law. It
from working in the same company is significant to note that in the case at bar,
(antinepotism employment policies). The courts respondents were hired after they were found
that have broadly construed the term marital fit
status rule that it encompassed the identity, for the job, but were asked to resign when they
occupation and employment of one's spouse. married a co-employee. Petitioners failed to
They show how the marriage of Simbol, then a
strike down the no-spouse employment policies Sheeting Machine Operator, to Alma Dayrit,
based on the broad legislative intent of the then an
state statute. They reason that the no-spouse employee of the Repacking Section, could be
employment policy violate the marital status detrimental to its business operations. Neither
provision because it arbitrarily discriminates did
against all spouses of present employees petitioners explain how this detriment will
without happen in the case of Wilfreda Comia, then a
regard to the actual effect on the individual's Production Helper in the Selecting Department,
qualifications or work performance. These who married Howard Comia, then a helper in
 52

the cutter-machine. The policy is premised on received several reminders from his District
the mere fear that employees married to each Manager regarding the conflict of interest
other will be less efficient. If we uphold the which his
questioned rule without valid justification, the relationship with Bettsy might engender. Still,
employer can create policies based on an Tecson married Bettsy. Tecsons superiors
unproven presumption of a perceived danger at informed him that his marriage to Bettsy gave
the rise to a conflict of interest. Tecson requested
expense of an employees right to security of for
tenure. Petitioners contend that their policy will time to comply with the company policy against
apply only when one employee marries a co- entering into a relationship with an employee
employee, but they are free to marry persons of a competitor company. Later Tecson applied
other than co-employees. The questioned policy for a transfer in Glaxos milk division, thinking
may not facially violate Article 136 of the that since Astra did not have a milk division, the
Labor Code but it creates a disproportionate potential conflict of interest would be
effect and under the disparate impact theory, eliminated. However, his application was
the denied. Thus, Glaxo transferred Tecson to the
only way it could pass judicial scrutiny is a Butuan
showing that it is reasonable despite the City Surigao City-Agusan del Sur sales area.
discriminatory, albeit disproportionate, effect. Tecson asked Glaxo to reconsider its decision,
The failure of petitioners to prove a legitimate but
business concern in imposing the questioned his request was denied. Tecson defied the
policy cannot prejudice the employees right to transfer order and continu ed acting as medical
be representative in the Camarines Sur-Camarines
free from arbitrary discrimination based upon Norte sales area.
stereotypes of married persons working
together ISSUE:
in one company. Thus, for failure of petitioners WON Glaxos policy prohibiting its employees
to present undisputed proof of a reasonable from having personal relationships with
business necessity, we rule that the questioned employees of competitor companies is a valid
policy is an invalid exercise of management exercise of its management prerogatives.
prerogative.
HELD:
YES. Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing
48 DUNCAN ASSOCIATION OF DETAILMAN- strategies and other confidential programs and
PTGWO and PEDRO A. TECSON vs. GLAXO information from competitors, especially so
WELLCOME PHILIPPINES, INC. that it and Astra are rival companies in the
highly competitive pharmaceutical industry. The
FACTS: prohibition against personal or marital
Pedro A. Tecson (Tecson) was hired by relationships with employees of competitor
respondent Glaxo Wellcome Philippines, Inc. companies
(Glaxo) as medical representative. Tecson upon Glaxos employees is reasonable under the
signed a contract of employment which circumstances because relationships of that
stipulates, nature might compromise the interests of the
among others, that he agrees to study and company. In laying down the assailed company
abide by existing company rules; to disclose to policy, Glaxo only aims to protect its interests
management any existing or future relationship against the possibility that a competitor
by consanguinity or affinity with co-employees company
or employees of competing drug companies and will gain access to its secrets and procedures.
should management find that such That Glaxo possesses the right to protect its
relationship poses a possible conflict of interest, economic interests cannot be denied. No less
to resign from the company. Tecson was than the Constitution recognizes the right of
initially assigned to market Glaxos products in enterprises to adopt and enforce such a policy
the Camarines Sur-Camarines Norte sales area. to protect its right to reasonable returns on
Subsequently, Tecson entered into a romantic investments and to expansion and growth.
relationship with Bettsy, an employee of Astra Indeed, while our laws endeavor to give life to
Pharmaceuticals (Astra), a competitor of Glaxo. the
Bettsy was Astras Bra nch Coordinator in Albay. constitutional policy on social justice and the
She supervised the district managers and protection of labor, it does not mean that every
medical representatives of her company and labor dispute will be decided in favor of the
prepared marketing strategies for Astra in that workers. The law also recognizes that
area. Even before they got married, Tecson management
 53

has rights which are also entitled to respect and hamper the performance of his duties.
enforcemen t in the interest of fair play. NLRC affirmed.
CA: the weight standards of PAL are reasonable.
Thus, petitioner was legally dismissed
49 ARMANDO G. YRASUEGUI, petitioners vs. because he repeatedly failed to meet the
PHILIPPINE AIRLINES, INC., respondents. prescribed weight standards. It is obvious that
the
FACTS: issue of discrimination was only invoked by
THIS case portrays the peculiar story of an petitioner for purposes of escaping the result of
international flight steward who was his
dismissed because of his failure to adhere to dismissal for being overweight.
the weight standards of the airline company. ISSUE:
The proper weight for a man of his height and WON he was validly dismissed.
body structure is from 147 to 166 pounds,
the ideal weight being 166 pounds, as HELD:
mandated by the Cabin and Crew YES. A reading of the weight standards of PAL
Administration Manual would lead to no other conclusion than
of PAL. that they constitute a continuing qualification of
In 1984, the weight problem started, which an employee in order to keep the job. The
prompted PAL to send him to an extended dismissal of the employee would thus fall under
vacation until November 1985. He was allowed Article 282(e) of the Labor Code.
to return to work once he lost all the excess In the case at bar, the evidence on record
weight. But the problem recurred. He again militates against petitioner’s claims that
went on leave without pay from October 17, obesity is a disease. That he was able to reduce
1988 his weight from 1984 to 1992 clearly shows that
to February 1989. it is possible for him to lose weight given the
Despite the lapse of a ninety-day period given proper attitude, determination, and self-
him to reach his ideal weight, petitioner discipline.
remained overweight. On January 3, 1990, he Indeed, during the clarificatory hearing on
was informed of the PAL decision for him to December 8, 1992, petitioner himself claimed
remain grounded until such time that he that
satisfactorily complies with the weight “*t+he issue is could I bring my weight down to
standards. ideal weight which is 172, then the answer is
Again, he was directed to report every two yes. I can do it now.”
weeks for weight checks, which he failed to Petitioner has only himself to blame. He could
comply ha ve easily availed the assistance of the
with. company physician, per the advice of PAL.
On April 17, 1990, petitioner was formally In fine, We hold that the obesity of petitioner,
warned that a repeated refusal to report for when placed in the context of his work as
weight check would be dealt with accordingly. flight attendant, becomes an analogous cause
He was given another set of weight check dates, under Article 282(e) of the Labor Code that
which he did not report to. justifies his dismissal from the service. His
On November 13, 1992, PAL finally served obesity may not be unintended, but is
petitioner a Notice of Administrative Charge nonetheless
for violation of company standards on weight voluntary. As the CA correctly puts it,
requirements. Petitioner insists that he is being “*v+oluntariness basically means that the just
discriminated as those similarly situated were cause is
not treated the same. solely attributable to the employee without any
On June 15, 1993, petitioner was formally external force influencing or controlling his
informed by PAL that due to his inability to actions. This element runs through all just
attain his ideal weight, “and considering the causes under Article 282, whether they be in
utmost leniency” extended to him “which the
spanned nature of a wrongful action or omission. Gross
a period covering a total of almost five (5) and habitual neglect, a recognized just cause, is
years,” his services were considered terminated considered voluntary although it lacks the
“effective immediately.” element of intent found in Article 282(a), (c),
LABOR ARBITER: held that the weight standards and
of PAL are reasonable in view of the (d).”
nature of the job of petitioner. However, the
weight standards need not be complied with NOTES:
under pain of dismissal since his weight did not The dismissal of petitioner can be predicated on
the bona fide occupational qualification
 54

defense. Employment in particular jobs may not over the management and operations of
be limited to persons of a particular se x, Beautifont, Inc. Nonetheless, respondent Luna
religion, or national origin unless the employer continued working for said successor company.
can show that sex, religion, or national origin is Aside from her work as a supervisor,
an actual qualification for performing the job. respondent Luna also acted as a make-up artist
The qualification is called a bona fide of
occupational qualification (BFOQ). In short, the petitioner Avon's Theatrical Promotion's Group,
test of reasonableness of the company policy is for which she received a per diem for each
used because it is parallel to BFOQ. BFOQ is theatrical performance.
valid “provided it reflects an inherent quality On 5 November 1985, petitioner Avon and
reasonably necessary for satisfactory job respondent Luna entered into an agreement,
performance.” entitled Supervisor's Agreement, whereby said
The business of PAL is air transportation. As parties contracted in the manner quoted below:
such, it has committed itself to safely The Company agrees:
transport its passengers. In order to achieve xxxx
this, it must necessarily rely on its employees, 1) To allow the Supervisor to purchase at
most wholesale the products of the Company.
particularly the cabin flight deck crew who are xxxx
on board the aircraft. The weight standards of The Supervisor agrees:
PAL should be viewed as imposing strict norms 1) To purchase products from the Company
of discipline upon its employees. exclusively for resale and to be responsible
The primary objective of PAL in the imposition for obtaining all permits and licenses required
of the weight standards for cabin crew is to sell the products on retail.
flight safety. xxxx
Separation pay, however, should be awarded in The Company and the Supervisor mutually
favor of the employee as an act of social agree:
justice or based on equity. This is so because his xxxx
dismissal is not for serious misconduct. Neither 2) That this agreement in no way makes the
is it reflective of his moral character. Supervisor an employee or agent of the
Company, therefore, the Supervisor has no
authority to bind the Company in any contracts
50 AVON vs. LUNA with other parties.
3) That the Supervisor is an independent
THE CASE: retailer/dealer insofar as the Company is
Before us is a Petition for Review on Certiorari concerned, and shall have the sole discretion to
under Rule 45 of the Rules of Court, seeking to determine where and how products purchased
reverse and set aside the Decision dated 20 from the Company will be sold. However, the
May 2002 of the Court of Appeals in CAG.R. CV Supervisor shall not sell such products to stores,
No. 52550, which affirmed in toto the Decision supermarkets or to any entity or person who
dated 26 January 1996 of the Regional Trial sells things at a fixed place of business.
Court (RTC) of Makati City, Branch 138, in Civil 4) That this agreement supersedes any
Case No. 88-2595, in favor of herein respondent agreement/s between the Company and the
Leticia H. Luna (Luna), rendered by the Supervisor.
Honorable Ed Vicente S. Albano, designated as 5) That the Supervisor shall sell or offer to sell,
the "assisting judge" pursuant to Supreme Court display or promote only and exclusively
Administrative Order No. 70-94, dated 16 June products sold by the Company.
1994. 6) Either party may terminate this agreement at
will, with or without cause, at any time
FACTS: upon notice to the other.
The facts of the case are not in dispute. As xxxx
culled from the records, they are as follows: By virtue of the execution of the aforequoted
The present petition stemmed from a complaint Supervisor's Agreement, respondent Luna
dated 1 December 1988, filed by herein became part of the independent sales force of
respondent Luna alleging, inter alia, that she petitioner Avon.
began working for Beautifont, Inc. in 1972, first Sometime in the latter part of 1988, respondent
as Luna was invited by a former Avon employee
a franchise dealer and then a year later, as a who was then currently a Sales Manager of
Supervisor. Sandré Philippines, Inc., a domestic corporation
Sometime in 1978, Avon Cosmetics, Inc. (Avon), engaged in direct selling of vitamins and other
herein petitioner, acquired and took food supplements, to sell said
products. Respondent Luna apparently
accepted the invitation as she then became a
 55

Group Franchise Director of Sandré Philippines, our legal rights and be ready to protect
Inc. concurrently with being a Group Supervisor ourselves if they are trampled upon.
of petitioner Avon. As Group Franchise Director, I hope we will all stay together selling Avon
respondent Luna began selling and/or products for a long time and at the same
promoting Sandré products to other Avon time increase our earning opportunity by
employees and friends. On 23 September 1988, engaging in other businesses without being
she requested a law firm to render a legal afraid to
opinion as to the legal consequence of the do so.
Supervisor's Agreement she executed with In a letter dated 11 October 1988, petitioner
petitioner Avon. In response to her query, a Avon, through its President and General
lawyer of the firm op ined that the Supervisor's Manager, Jose Mari Franco, notified respondent
Agreement was "contrary to law and public Luna of the termination or cancellation of her
policy." Supervisor's Agreement with petitioner Avon.
Wanting to share the legal opinion she obtained Said letter reads in part:
from her legal counsel, respondent Luna wrote In September, (sic) 1988, you brought to our
a letter to her colleagues and attached attention that you signed up as Group
mimeographed copies of the opinion and then Franchise Director of another company, Sandré
circulated them. The full text of her letter reads: Philippines, Inc. (SPI).
We all love our work as independent dealers Not only that. You have also sold and promoted
and we all love to continue in this livelihood. products of SPI (please refer for
Because my livelihood is important to me, I example to SPI Invoice No. 1695 dated Sept. 30,
have asked the legal opinion of a leading Makati 1988). Worse, you promoted/sold SPI products
law office regarding my status as an even to several employees of our company
independent dealer, I am sharing this opinion including Mary Arlene Nolasco, Regina Porter,
with you. Emelisa Aguilar, Hermie Esteller and Emma
I have asked their advice on three specific Ticsay.
things: To compound your violation of the above-
1) May the company legally change the quoted provision, you have written letters to
conditions of the existing "Supervisor's other members of the Avon salesforce inducing
Agreement" without the Supervisor's consent? them to violate their own contracts with our
If I should refuse to sign the new Agreement, company.
may the company terminate my dealership? x x x.
On the first issue, my lawyers said that the For violating paragraph 5
company cannot change the existing x x x,
"Agreement" without my consent, and that it The Company, pursuant to paragraph 6 of the
would be illegal if the company will compel me same Agreement, is terminating and
to sign the new agreement. canceling its Supervisor's Agreement with you
2) Is Section 5 of the "Supervisor's Agreement" effective upon your receipt of this notice. We
which says that a dealer may only sell regret having to do this, but your repeated
products sold by the company, legal? disregard of the Agreement, despite warnings,
My lawyers said that Section 5 of the leaves (sic) the Company no other choice.
Supervisors Agreement is NOT valid because it xxxx
is Aggrieved, respondent Luna filed a complaint
contrary to public policy, being an unreasonable for damages before the RTC of Makati
restraint of trade. City, Branch 138. The complaint was docketed
3) Is Section 6 of the "Supervisor's Agreement" as Civil Case No. 88-2595. On 26 January 1996,
which authorizes the company to after trial on the merits, the RTC rendered
terminate the contract at any time, with or judgment in favor of respondent Luna stating
without cause, legal? that:
My lawyer said Section 6 is NOT valid because it WHEREFORE, in view of the foregoing premises,
is contrary to law and public policy. The judgment is hereby rendered in favor of
company cannot terminate the "Supervisor's the plaintiff, and against defendant, Avon,
Agreement" without a valid cause. ordering the latter:
Therefore, I can conclude that I don't violate 1) to pay moral damages to the plaintiff in the
Section 5 if I sell any product which is not amount of P100,000.00 with interest
in direct competition with the company's from the date of this judgment up to the time of
products, and there is no valid reason for the complete payment;
company to terminate my dealership contract if 2) to pay attorney's fees in the amount of
I sell a non -competitive product. P20,000.00;
Dear co-supervisor[s], let us all support the 3) to pay the costs.
reasonable and legal policies of the On 8 February 1996, petitioner Avon filed a
company. However, we must all be conscious of Notice of Appeal dated the same day. In
 56

an Order dated 15 February 1996, the RTC gave violative of law and publ ic policy; and b)
due course to the appeal and directed its whether or
Branch Clerk of Court to transmit the entire not paragraph 6 of the Supervisor's Agreement
records of the case to the Court of Appeals, which authorizes petitioner Avon to terminate
which or cancel the agreement at will is void for being
docketed the appeal as CA G.R. CV No. 52550. contrary to law and public policy. Certainly, it is
On 20 May 2002, the Court of Appeals quite obvious that the foregoing issues are
promulgated the assailed Decision, the questions of law.
dispositive part of which states thus: In affirming the decision of the RTC declaring
WHEREFORE, the foregoing premises the subject contract null and void for being
considered, the decision appealed from is against public policy, the Court of Appeals ruled
hereby that the exclusivity clause, which states that:
AFFIRMED in toto. The Company and the Supervisor mutually
agree:
ISSUES: xxxx
In predictable displeasure with the conclusions 5) That the Supervisor shall sell or offer to sell,
reached by the appellate court, display or promote only and
petitioner Avon now implores this Court to exclusively products sold by the Company.
review, viaa petition for review on certiorari [Emphasis supplied.]
under should be interpreted to apply solely to those
Rule 45 of the Revised Rules of Court, the products directly in competition with
former's decision and to resolve the following those of petitioner Avon's, i.e., cosmetics
assigned errors: and/or beauty supplies and lingerie products. Its
I. THE COURT OF APPEALS COMMITTED declaration is anchored on the fact that Avon
SERIOUS ERROR IN DECLARING THAT THE products, at that time, were not in any way
SUPERVISOR'S AGREEMENT EXECUTED similar to the products sold by Sandré
BETWEEN AVON AND RESPONDENT LUNA AS Philippines, Inc. At that time, the latter was
NULL AND merely
VOID FOR BEING AGAINST PUBLIC POLICY; selling vitamin products. Put simply, the
II. THE COURT OF APPEALS COMMITTED products of the two companies do not compete
SERIOUS ERROR IN HOLDING THAT AVON HAD with
NO RIGHT TO TERMINATE OR CANCEL THE each other. The appellate court ratiocinated
SUPERVIOSR'S AGREEMENT; that:
III. THE COURT OF APPEALS COMMITTED xxx
SERIOUS ERROR IN UPHOLDING THE AWARD OF If the agreement were interpreted otherwise,
MORAL DAMAGES AND ATTORNEY'S FEES IN so as to include products that do not
FAVOR OF RESPONDENT LUNA; and directly compete with the products of
IV. THE COURT OF APPEALS COMMITTED defendant-appellant Avon, such would result in
SERIOUS ERROR IN NOT AWARDING absurdity. x x x [A]greements which prohibit a
ATTORNEY'S FEES AND LITIGATION EXPENSES IN person from engaging in any enterprise
FAVOR OF PETITIONER. whether
similar or not to the enterprise of the employer
HELD: constitute an unreasonable restraint of trade,
A priori, respondent Luna objects to the thus, it is void as against public policy.
presentation, and eventual resolution, of the Petitioner Avon disputes the abovestated
issues raised herein as they allegedly involve conclusion reached by the Court of Appeals. It
questions of facts. argues that the latter went beyond the literal
To be sure, questions of law are those that and obvious intent of the parties to the subject
involve doubts or controversies on what the contract when it interpreted the abovequoted
law is on certain state of facts; and questions of clause to apply only to those products that do
fact, on the other hand, are those in which not compete with that of petitioner Avon's; and
there is doubt or difference as to the truth or that the words "only and exclusively" need no
falsehood of the alleged facts. One test, it has other interpretation other than the literal
been held, is whether the appellate court can meaning that "THE SUPERVISORS CANNOT SELL
determine the issue raised without reviewing or THE
evaluating the evidence, in which case it is a PRODUCTS OF OTHER COMPANIES WHETHER
question of law, otherwise it will be a question OR NOT THEY ARE COMPETING PRODUCTS."
of Moreover, petitioner Avon reasons that:
fact. The exclusivity clause was directed against the
In the present case, the threshold issues are a) supervisors selling other
whether or not paragraph 5 of the products utilizing their training and experience,
Supervisor's Agreement is void for being and capitalizing on Avon's existing network for
 57

the promotion and sale of the said products. xxxx

The exclusivity clause was meant to protect 5) That the Supervisor shall sell or offer to sell,
Avon display or promote only and
from other companies, whether competitors or exclusively products sold by the Company.
not, who would exploit the sales and [Emphasis supplied.]
promotions network already established by In business parlance, this is commonly termed
Avon at great expense and effort. as the "exclusivity clause." This is defined
xxxx as agreements which prohibit the obligor from
Obviously, Sandre Phils., Inc. did not have the engaging in "business" in competition with the
(sic) its own trained personnel and obligee.
network to sell and promote its products. It was This exclusivity clause is more often the subject
precisely why Sandre simply invited, and then of critical scrutiny when it is perceived
and there hired Luna and other Avon to collide with the Constitutional proscription
supervisors and dealers to sell and promote its against "reasonable restraint of trade or
products. occupation." The pertinent provision of the
They had the training and experience, they also Constitution is quoted hereunder. Section 19 of
had a ready market for the other products the Article XII of the 1987 Constitution on the
customers to whom they had been selling the National Economy and Patrimony states that:
Avon products. It was easy to entice the SEC. 19. The State shall regulate or prohibit
supervisors to sign up. The supervisors could monopolies when the public interest so
continue to sell Avon products, and at the same requires. No combinations in restraint of trade
time earn additional income by selling other or unfair competition shall be allowed.
products. First off, restraint of trade or occupation
This is most unfair to Avon. The other embraces acts, contracts, agreements or
companies cannot ride on and exploit the combinations which restrict competition or
training obstruct due course of trade.
and experience of the Avon sales force to sell Now to the basics. From the wordings of the
and promote their own products. [Emphasis Constitution, truly then, what is brought
supplied.] On the other hand, in her about to lay the test on whether a given
Memorandum, respondent Luna counters that agreement constitutes an unlawful machination
"there is no or
allegation nor any finding by the trial court or combination in restraint of trade is whether
the Court of Appeals of an 'existing nationwide under the particular circumstances of the case
sales and promotions network established by and
Avon' or 'Avon's existing sales promotions the nature of the particular contract involved,
network' or 'Avon's tried and tested sales and such contract is, or is not, against public
promotions network' nor the alleged damage interest.
caused to such system caused by other Thus, restrictions upon trade may be upheld
companies." Further, well worth noting is the when not contrary to public welfare and
opinion of not greater than is necessary to afford a fair and
respondent Luna's counsel which started the set reasonable protection to the party in whose
off the series of events which culminated to favor it is imposed. Even contracts which
the termination or cancellation of the prohibit an employee from engaging in business
Supervisor's Agreement. In response to the in
queryletter of respondent Luna, the latter's competition with the employer are not
legal counsel opined that, as allegedly hel d in necessarily void for being in restraint of trade.
the case In sum, contracts requiring exclusivity are not
of Ferrazzini v. Gsell, paragraph 5 of the subject per se void. Each contract must be
Supervisor's Agreement "not only prohibits the viewed vis-á-vis all the circumstances
supervisor from selling products which compete surrounding such agreement in deciding
with the company's product but restricts whether a
likewise the supervisor from engaging in any restrictive practice should be prohibited as
industry wh ich involves sales in general." Said imposing an unreasonable restraint on
counsel thereafter concluded that the subject competition.
provision in the Supervisor's Agreement The question that now crops up is this, when is
constitutes an unreasonable restraint of trade a restraint in trade unreasonable?
and, therefore, void for being contrary to public Authorities are one in declaring that a restraint
policy. in trade is unreasonable when it is contrary to
At the crux of the first issue is the validity of public policy or public welfare. As far back as
paragraph 5 of the Supervisor's Agreement, viz: 1916, in the case of Ferrazzini v. Gsell, this Court
The Company and the Supervisor mutually has had the occasion to declare that:
agree:
 58

[T]here is no difference in principle between the public good, or contravenes some established
public policy (orden público) in the in interests of society, or is inconsistent with
the two jurisdictions (United States and the sound
Philippine Islands) as determined by the policy and good morals, or tends clearly to
Constitution, laws, and judicial decisions. undermine the security of individual rights,
In the United States it is well settled that whether
contracts in undue or unreasonable restraint of personal liability or of private property.
of trade are unenforcible because they are From another perspective, the main objection
repugnant to the established public policy in to exclusive dealing is its tendency to
that foreclose existing competitors or new entrants
country. Such contracts are illegal in the sense from competition in the covered portion of the
that the law will not enforce them. The relevant market during the term of the
Supreme agreement. Only those arrangements whose
Court in the United States, in Oregon Steam probable
Navigation Co. vs. Winsor )20 Will., 64), quoted effect is to foreclose competition in a
with approval in Gibbs v. Consolidated gas Co. substantial share of th e line of commerce
of Baltimore (130 U.S., 396), said: affected can be
"Cases must be judged according to their considered as void for being against public
circumstances, and can only be rightly judged policy. The foreclosure effect, if any, depends
when reason and grounds of the rule are on the
carefully considered. There are two principle market share involved. The relevant market for
groun ds this purpose includes the full range of selling
on which the doctrine is founded that a contract opportunities reasonably open to rivals, namely,
in restraint of trade is void as against public all the product and geographic sales they may
policy. One is, the injury to the public by being readily compete for, using easily convertible
deprived of the restricted party's industry; and plants and marketing organizations.
the other is, the injury to the party himself by Applying the preceding principles to the case at
being precluded from pursuing his occupation, bar, there is nothing invalid or contrary
and thus being prevented from supporting to public policy either in the objectives sought
himself and his family." to be attained by paragraph 5, i.e.,
And what is public policy? In the words of the the exclusivity clause, in prohibiting respondent
eminent Spanish jurist, Don Jose Maria Luna, and all other Avon supervisors, from
Manresa, in his commentaries of the Codigo selling products other than those manufactured
Civil, public policy (orden público): by petitioner Avon. We quote with approval
[R]epresents in the law of persons the public, the determination of the U.S. Supreme Court in
social and legal interest, that which is the case of Board of Trade of Chicago v.
permanent and essential of the institutions, U.S. that "the question to be determined is
that which, even if favoring an individual in whether the restraint imposed is such as merely
whom regulates and perhaps thereby promotes
the right lies, cannot be left to his own will. It is competition, or whether it is such as m ay
an idea which, in cases of the waiver of any suppress or
right, is manifested with clearness and force. even destroy competition."
As applied to agreements, Quintus Mucius Such prohibition is neither directed to eliminate
Scaevola, another distinguished civilist gives the competition like Sandré Phils., Inc.
the term "public policy" a more defined nor foreclose new entrants to the market. In its
meaning: Memorandum, it admits that the reason for
Agreements in violation of orden público must such exclusion is to safeguard the network that
be considered as those which conflict it has cultivated through the years. Admittedly,
with law, whether properly, strictly and wholly a both companies employ the direct selling
public law (derecho) or whether a law of the method in order to peddle their products. By
person, but law which in certain respects affects direct
the interest of society. selling, petitioner Avon and Sandre, the
Plainly put, public policy is that principle of the manufacturer, forego the use of a middleman in
law which holds that no subject or citizen selling
can lawfully do that which has a tendency to be their products, thus, controlling the price by
injurious to the public or against the public which they are to be sold. The limitation does
good. As applied to contracts, in the absence of not
express legislation or constitutional prohibition, affect the public at all. It is only a means by
a court, in order to declare a contract void as which petitioner Avon is able to protect its
against public policy, must find that the contract investment.
as to the consideration or thing to be done, has It was not by chance that Sandré Philippines,
a tendency to injure the public, is against the Inc. made respondent Luna one of its
 59

Group Franchise Directors. It doesn't take a subject agreement. Being of age, financially
genius to realize that by making her an stable and with vast business experience, she is
important presumed to have acted with due care and to
part of its distribution arm, Sandré Philippines, have signed the assailed contract with full
Inc., a newly formed direct-selling business, knowledge of its import. Under the premises, it
would be saving time, effort and money as it would be difficult to assume that she was
will no longer have to recruit, train and morally abused. She was free to reject the
motivate agreement if she wanted to.
supervisors and dealers. Respondent Luna, who Accordingly, a contract duly executed is the law
learned the tricks of the trade from petitioner between the parties, and they are
Avon, will do it for them. This is tantamount to obliged to comply fully and not selectively with
unjust enrichment. Worse, the goodwill its terms. A contract of adhesion is no
established by petitioner Avon among its loyal exception. The foregoing premises noted, the
customers will be taken advantaged of by Court of Appeals, therefore, committed
Sandre reversible error in interpreting the subject
Philippines, Inc. It is not so hard to imagine the exclusivity clause to apply merely to those
scenario wherein the sale of Sandré products by products in direct competition to those
Avon dealers will engender a belief in the minds manufactured and sold by petitioner Avon.
of loyal Avon customers that the product that When the terms of the agreement are clear and
they are buying had been manufactured by explicit, that they do not justify an attempt to
Avon. In other words, they will be misled into read into any alleged intention of the parties,
thinking that the Sandré products are in fact the terms are to be understood literally just as
Avon products. From the foregoing, it cannot be they appear on the face of the contract. Thus, in
said that the purpose of the subject exclusivity order to judge the intention of the contracting
clause is to foreclose the competition, that is, parties, "the
the entrance of Sandré products in to the circumstances under which it was made,
market. Therefore, it cannot be considered void including the situation of the subject thereof
for and of
being against public policy. How can the the parties to it, may be shown, so that the
protection of one's property be violative of judge may be placed in the position of those
public whose
policy? Sandré Philippines, Inc. is still very much language he is to interpret." It has been held
free to distribute its products in the market but that once this intention of the parties has been
it must do so at its own expense. The exclusivity ascertained, it becomes an integral part of the
clause does not in any way limit its selling contract as though it has been originally
opportunities, just the undue use of the expressed therein in unequivocal terms.
resources of petitioner Avon. Having held that the "exclusivity clause" as
It has been argued that the Supervisor's embodied in paragraph 5 of the Supervisor's
Agreement is in the nature of a contract of Agreement is valid and not against public policy,
adhesion; but just because it is does not we now pass to a consideration of respondent
necessarily mean that it is void. A contract of Luna's objections to the validity of her
adhesion termination as provided for under paragraph 6
is so-called because its terms are prepared by of the
only one party while the other party merely Supervisor's Agreement giving petitioner Avon
affixes his signature signifying his adhesion the right to terminate or cancel such contract.
thereto. [27] Such contract is just as binding as The paragraph 6 or the "termination clause"
ordinary contracts. "It is true that we have, on therein expressly provides that:
occasion, struck down such contracts as void The Company and the Supervisor mutually
when the weaker party is imposed upon in agree:
dealing with the dominant bargaining party and xxxx
is 6) Either party may terminate this agreement at
reduced to the alternative of taking it or leaving will, with or without cause, at any time
it, completely deprived of the opportunity to upon notice to the other. [Emphasis supplied.]
bargain on equal footing. Nevertheless, In the case of Petrophil Corporation v. Court of
contracts of adhesion are not invalid per se and Appeals, this Court already had the
they opportunity to opine that termination or
are not entirely prohibited. The one who cancellation clauses such as that subject of the
adheres to the contract is in reality free to case at
reject it bar are legitimate if exercised in good faith. The
entirely, if he adheres, he gives his consent." facts of said case likewise involved a
[28] In the case at bar, there was no indication termination or cancellation clause that clearly
that respondent Luna was forced to sign the provided for two ways of terminating the
 60

contract, i.e., with or without cause. The Republic Act

utilization of one mode will not preclude the No. 7431 known as the Radiologic
use of
the other. Therein, we stated that the finding Technology Act of 1992. Said law requires
that the termination of the contract was "for that no person
cause," is immaterial. When petitioner shall practice or offer to practice as a
terminated the contract "without cause," it was radiology and/or x-ray technologist in the
required
only to give x x x a 30-day prior written notice, Philippines
which it did. without having obtained the proper
In the case at bar, the termination clause of the certificate of registration from the Board of
Supervisor's Agreement clearly provides Radiologic
for two ways of terminating and/or canceling
the contract. One mode does not exclude the Technology. SLMC issued a final notice to all
other. The contract provided that it can be practitioners of Radiologic Technology to
terminated or cancelled for cause, it also stated comply
that with the requirement of Republic Act No.
it can be terminated without cause, both at any
time and after written notice. Thus, whether or 7431 otherwise, the unlicensed employee
not the termination or cancellation of the will be
Supervisor's Agreement was "for cause," is transferred to an area which does not
immaterial. The only requirement is that of
require a license to practice if a slot is
notice to the other party. When petitioner Avon
chose to terminate the contract, for cause, available. Later, a
respondent Luna was duly notified thereof. final notice was issued to Maribel S. Santos
Worth stressing is that the right to unilaterally requiring the latter to comply by taking and
terminate or cancel the Supervisor's
passing
Agreement with or without cause is equally
available to respondent Luna, subject to the the forthcoming examination otherwise,
same SLMC may be compelled to retire her from
notice requirement. Obviously, no advantage is employment should there be no other
taken against each other by the contracting
position available where she may be
parties.
WHEREFORE, in view of the foregoing, the absorbed. She was
instant petition is GRANTED. The Decision dated likewise advised that only a license can
20 May 2002 rendered by the Court of Appeals assure her of her continued employment at
in CA-G.R. CV No. 52550,
the Institute
affirming the judgment of the RTC of Makati
City, Branch 138, in Civil Case No. 88-2595, are of Radiology of the SLMC. otherwise, private
hereby REVERSED and SET ASIDE. Accordingly, respondent SLMC shall be constrained to
let a new one be entered dismissing the take
complaint for damages. Costs against
action which may include her separation
respondent Leticia Luna.
SO ORDERED. from employment. Later, a notice was issued
to
Maribel S. Santos informing the latter that
51 ST. LUKE’S MEDICAL CENTER the management of private respondent
EMPLOYEE’S ASSOCIATION-AFW (SLMCEA- SLMC has
AFW) AND approved her retirement in lieu of
MARIBEL S. SANTOS vs. NATIONAL LABOR separation pay, but Santos refused to accept
RELATIONS COMMISSION SLMCs offer for
early retirement. SLMC again issued a Notice
FACTS: of Separation from the Company to
Maribel S. Santos was hired as X-Ray petitioner
Technician in the Radiology department of Maribel S. Santos after the latter failed to
private present/ submit her appeal for rechecking to
respondent St. Lukes Medical Center, Inc. the
(SLMC). Congress passed and enacted Professional Regulation Commission (PRC) of
 61

the recent board examination which she undertaken by it

took and conformably to an existing statute. It is
failed. Maribel S. Santos filed a complaint undeniable that her continued employment
against private respondent SLMC for illegal without the
dismissal. required Board certification exposed the
hospital to possible sanctions and even to a
ISSUE: revocation
Whether petitioner Santos was of its license to operate. Certainly, private
illegally dismissed by private respondent respondent could not be expected to retain
SLMC on the petitioner Santos despite the inimical threat
basis of her inability to secure a certificate of posed by the latter to its business. This
registration from the Board of Radiologic notwithstanding, the records bear out the
Technology. fact that petitioner Santos was given ample
opportunity to qualify for the position and
HELD: was sufficiently warned that her failure to do
NO. While the right of workers to so
security of tenure is guaranteed by the would result in her separation from work in
Constitution, the event there were no other vacant
its exercise may be reasonably regulated positions to
pursuant to the police power of the State to which she could be transferred. Despite
safeguard these warnings, petitioner Santos was still
health, morals, peace, education, order, unable to
safety, and the general welfare of the comply and pass the required exam. To
people. reiterate, the requirement for Board
Consequently, persons who desire to engage certification was
in the learned professions requiring scientific set by statute. Justice, fairness and due
or process demand that an employer should
technical knowledge may be required to take not be
an examination as a prerequisite to engaging penalized for situations where it had no
in participation or control. It would be
their chosen careers. The most concrete unreasonable to
example of this would be in the field of compel private respondent to wait until its
medicine, the license is cancelled and it is materially
practice of which in all its branches has been injured
closely regulated by the State. It has long before removing the cause of the impending
been evil. Neither can the courts step in to force
recognized that the regulation of this field is private
a reasonable method of protecting the respondent to reassign or transfer petitioner
health and Santos under these circumstances.
safety of the public to protect the public Petitioner
from the potentially deadly effects of Santos is not in the position to demand that
incompetence she be given a different work assignment
and ignorance among those who would when
practice medicine. The same rationale what necessitated her transfer in the first
applies in the place was her own fault or failing. The
regulation of the practice of radiologic and x- prerogative to
ray technology. No malice or ill-will can be determine the place or station where an
imputed upon private respondent as the employee is best qualified to serve the
separation of petitioner Santos was interests of the
 62

company on the basis of the his or her who

qualifications, training and performance takes his place. When the employee
belongs solely concerned succeeds in meeting the quota
to the employer.[14] The Labor Code and its again, he is reappointed supervisor and his
implementing Rules do not vest in the Labor allowance is restored.
Arbiters nor in the different Divisions of the
NLRC (nor in the courts) managerial ISSUE:
authority. WON the right to demote an
employee falls within the category of
management
52 DANILO LEONARDO, petitioner, vs. prerogatives.
NATIONAL LABOR RELATIONS
COMMISSION, ET.AL. HELD:
YES. This arrangement appears to us
FACTS: to be an allowable exercise of company
AURELIO FUERTE was originally rights. An
employed by REYNALDOS MARKETING employer is entitled to impose productivity
CORPORATION as standards for its workers, and in fact, non
a muffler specialist. He alleges that he was compliance may be visited with a penalty
instructed to report at private respondents even more severe than demotion. Thus,
main [t]he practice
office where he was informed by the of a company in laying off workers because
companys personnel manager that he would they failed to make the work quota has been
be recognized in this jurisdiction. In the case at
transferred to its Sucat plant due to his bar, the petitioners failure to meet the sales
failure to meet his sales quota, and for that quota
reason, his assigned to each of them constitute a just
supervisors allowance would be withdrawn. cause of their dismissal, regardless of the
For a short time, FUERTE reported for work permanent
at the or probationary status of their employment.
Sucat plant; however, he protested his Failure to observe prescribed standards of
transfer, subsequently filing a complaint for work, or
illegal to fulfill reasonable work assignments due to
termination. Private respondent contends inefficiency may constitute just cause for
that it never terminated petitioners services. dismissal. Such inefficiency is understood to
In mean failure to attain work goals or work q
FUERTEs case, they claimed that the latter uotas,
was demoted pursuant to a company policy either by failing to complete the same within
intended to foster competition among its the allotted reasonable period, or by
employees. Under this scheme, private producing
respondents unsatisfactory results. This management
employees are required to comply with a prerogative of requiring standards may be
monthly sales quota. Should a supervisor availed of
such as so long as they are exercised in good faith for
FUERTE fail to meet his quota for a certain the advancemen t of the employers interest.
number of consecutive months, he will be 53 RODOLFO LUNA, Petitioner, v.
demoted, ALLADO CONSTRUCTION CO., INC., and/or
whereupon his supervisors allowance will be RAMON ALLADO, Respondents.
withdrawn and be given to the individual
 63

(2) Whether the CA exercised grave

FACTS: abuse of discretion in disregarding the
Sometime in the afternoon of findings of fact by the NLRC, the principle of
November 24, 2001, petitioner alleges that social justice, and jurisprudence with respect
he was given a travel order dated to proceed to the award of financial assistance, and
to respondents main office in Davao City for (3) Whether the CA exhibited bias and
reassignment. Upon arrival at the office, he partiality when it rendered the decision and
was asked to sign several sets of "Contract of resolution considering the hasty and
Project Employment". He refused. Thus, he improvident issuance of a writ of preliminary
was not given a reassignment or any other injunction to frustrate petitioner in
work. These incidents prompted him to file implementing the final and executor
the complaint. judgment of the NLRC favouring petitioner.
Respondents, on the other hand,
alleged that petitioner applied for a leave of HELD:
absence which was granted. Upon expiration The petition is PARTLY
of his leave, he was advised to report to the GRANTED.The award of financial assistance
companys project in Sarangani Province. is REINSTATED.
However, he refused and claimed instead I. The 2002 Rules of Procedure of the
that he had been dismissed illegally. NLRC, which was in effect at the time
Finding that petitioner is deemed respondents appealed the Labor Arbiters
resigned, the Labor Arbiter (LA) dismissed decision, provided that the NLRC shall limit
petitioners complaint for illegal dismissal, itself only to the specific issues that were
but ordered respondent to pay the former elevated for review. Here, the NLRC passed
the amount ofP18,000.00 by way of financial upon the issue of illegal dismissal although
assistance. this was not brought up in the appeal.
Respondents appealed with the Therefore, by considering the arguments
National Labor Relations Commission (NLRC) and issues in the reply/opposition to appeal
which reversed the decision of the LA, which were not properly raised by timely
declared respondents guilty of illegal appeal nor comprehended within the scope
dismissal, and ordered them to pay of the issue raised in petitioners appeal,
petitioner one-month salary for every year public respondent committed grave abuse of
of service as separation pay. Respondents discretion amounting to excess of
moved for reconsideration but their motion jurisdiction.
was denied. II. As shown by the records,
Respondents elevated their cause to inconsistent with his claim that he was
the CAviaa petition forcertiorariunder Rule actually dismissed petitioner applied for and
65. The CA granted respondents petition was granted a week long leave. Petitioner
forcertiorariand deleted the award of did not deny this. He merely claimed that he
financial assistance. Further, the CA held went on leave since he was not given any
that it was grave abuse of discretion for the work assignment by the Company.However,
NLRC to rule on the issue of illegal dismissal the leave application form which bore his
when such issue was not raised on appeal. signature clearly stated that his reason for
Petitioner filed an MR but this was going on leave was "to settle [his] personal
denied by the CA. problem." Indeed, the NLRC gravely abused
its discretion in reversing the Labor Arbiters
ISSUE: decision on mere conjectures and
(1) Whether the NLRC could still insubstantial grounds.
review issues not brought during the appeal, III. We are not unmindful of the rule
that financial assistance is allowed only in
 64

instances where the employee is validly Corporation (ABS-CBN) in 1993 at its regional
dismissed for causes other than serious station in Cebu as a television talent, co-
misconduct or those reflecting on his moral anchoring Hoy Gising and TV Patrol Cebu. His
character. But we must stress that this Court stint in ABS-CBN later extended to radio
did allow the grant of financial assistance as when ABS-CBN Cebu launched its AM station
a measure of social justice and exceptional DYAB in 1995 where he worked as drama
circumstances, and as an equitable and voice talent, spinner, scriptwriter and
concession.There appears to be no reason public affairs program anchor. Like Ymbong,
why petitioner, who has served respondent Leandro Patalinghug also worked for ABS-
corporation for more than eight years CBN Cebu. Starting 1995, he worked as
without committing any infraction, cannot talent, director and scriptwriter for various
be extended the reasonable financial radio programs aired over DYAB. On January
assistance of P18,000.00 as awarded by the 1, 1996, the ABS-CBN Head Office in Manila
Labor Arbiter on equity considerations. issued Policy No. HR-ER-016 or the “Policy on
IV. Granting of a TRO by a justice of Employees Seeking Public Office.”
the CA even without the concurrence of the The pertinent portions read:
other associate justices in the division, is 1. Any employee who intends to run
allowed in cases of extreme urgency. Here, for any public office position, must file
the records of this case would attest to the his/her letter of resignation, at least thirty
urgency of the situation. When the TRO was (30) days prior to the official filing of the
issued, the NLRC Regional Arbitration Branch certificate of candidacy either for national or
No. XI was already in the process of local election.
enforcing the assailed Resolution of the xxxx 3. Further, any employee who
NLRC dated May 9, 2003 as evidenced by its intends to join a political group/party or
issuance of a Notice of Hearingfor a pre- even with no political affiliation but who
execution conference which was impelled by intends to openly and aggressively campaign
a motion made by petitioner. The pre- for a candidate or group of candidates (e.g.
execution conference was conducted as publicly speaking/endorsing candidate,
scheduled, thus, respondents filed with the recruiting campaign workers, etc.) must file
Court of Appeals an Urgent Motion for the a request for leave of absence subject to
Issuance of a Temporary Restraining Order management’s approval.
and/or Writ of Preliminary Injunction. For this particular reason, the
employee should file the leave request at
least thirty (30) days prior to the start of the
54 ERNESTO G. YMBONG VS. ABS-CBN planned leave period. x x x x3[3] [Emphasis
BROADCASTING CORPORATION, and underscoring supplied.]
VENERANDA SY AND DANTE LUZON, Because of the impending May 1998
VILLARAMA, JR., J.: elections and based on his immediate
recollection of the policy at that time, Dante
Before us is a Rule 45 Petition seeking Luzon, Assistant Station Manager of DYAB
to set aside the August 22, 2007 Decision issued the following memorandum:
1[1] and September 18, 2008 Resolution2[2] TO : ALL CONCERNED FROM : DANTE
of the Court of Appeals (CA) in CA-G.R. SP No. LUZON DATE : MARCH 25, 1998 SUBJECT : AS
86206 declaring petitioner to have resigned STATED Please be informed that per
from work and not illegally dismissed. company policy, any employee/talent who
wants to run for any position in the coming
The antecedent facts follow: election will have to file a leave of absence
Petitioner Ernesto G. Ymbong started the moment he/she files his/her certificate
working for ABS-CBN Broadcasting of candidacy. The services rendered by the
 65

concerned employee/talent to this company feel that I’m still an asset to your drama
will then be temporarily suspended for the production department.
entire campaign/election period. For strict I’m looking forward to that day and
compliance.4[4] [Emphasis and I’m very happy and proud that I have served
underscoring supplied.] for two and a half years the most stable and
Luzon, however, admitted that upon the most prestigious Radio and TV Network
double-checking of the exact text of the in the Philippines. As a friend[,] wish me luck
policy and subsequent confirmation with the and Pray for me. Thank you. 1 2 3 4 5
ABS-CBN Head Office, he saw that the policy Very Truly Yours, (Sgd.) Leandro
actually required suspension for those who “Boy” Patalinghug6[6]
intend to campaign for a political party or Unfortunately, both Ymbong and
candidate and resignation for those who will Patalinghug lost in the May 1998 elections.
actually run in the elections.5[5] Later, Ymbong and Patalinghug both tried to
After the issuance of the March 25, come back to ABS-CBN Cebu.
1998 Memorandum, Ymbong got in touch According to Luzon, he informed
with Luzon. Luzon claims that Ymbong them that they cannot work there anymore
approached him and told him that he would because of company policy. This was
leave radio for a couple of months because stressed even in subsequent meetings and
he will campaign for the administration they were told that the company was not
ticket. It was only after the elections that allowing any exceptions. ABS-CBN, however,
they found out that Ymbong actually ran for agreed out of pure liberality to give them a
public office himself at the eleventh hour. chance to wind up their participation in the
Ymbong, on the other hand, claims radio drama, Nagbabagang Langit, since it
that in accordance with the March 25, 1998 was rating well and to avoid an abrupt
Memorandum, he informed Luzon through a ending. The agreed winding-up, however,
letter that he would take a few months leave dragged on for so long prompting Luzon to
of absence from March 8, 1998 to May 18, issue to Ymbong the following memorandum
1998 since he was running for councilor of dated September 14, 1998:
Lapu-Lapu City. As regards Patalinghug, TO : NESTOR YMBONG FROM :
Patalinghug approached Luzon and advised DANTE LUZON SUBJECT : AS STATED DATE :
him that he will run as councilor for Naga, 14 SEPT. 1998 Please be reminded that your
Cebu. services as drama talent had already been
According to Luzon, he clarified to automatically terminated when you ran for a
Patalinghug that he will be considered local government position last election. The
resigned and not just on leave once he files a Management however gave you more than
certificate of candidacy. Thus, Patalinghug enough time to end your drama
wrote Luzon the following letter on April 13, participation and other involvement with
1998: Dear Mr. Luzon, I’m submitting to you the drama department. It has been decided
my letter of resignation as your Drama therefore that all your drama participation
Production Chief and Talent due to your shall be terminated effective immediately.
company’s policy that every person However, your involvement as drama
connected to ABS-CBN that should seek an spinner/narrator of the drama
elected position in the government will be “NAGBA[BA]GANG LANGIT” continues until
forced to resigned (sic) from his position. So its writer/director Mr. Leandro Patalinghug
herewith I’m submitting my resignation with wraps it up one week upon receipt of a
a hard heart. But I’m still hoping to be separate memo issued to him.7[7]
connected again with your prestigious Ymbong in contrast contended that
company after the election[s] should you after the expiration of his leave of absence,
he reported back to work as a regular talent
 66

and in fact continued to receive his salary. explain why he did not tender his resignation
On September 14, 1998, he received a before he ran for public office as mandated
memorandum stating that his services are by [the subject company policy].”12[37]
being terminated immediately, much to his Ymbong’s overt act of running for councilor
surprise. Thus, he filed an illegal dismissal of Lapu-Lapu City is tantamount to
complaint 8[8] against ABS-CBN, Luzon and resignation on his part. He was separated
DYAB Station Manager Veneranda Sy. He from ABS-CBN not because he was dismissed
argued that the ground cited by ABS-CBN for but because he resigned. Since there was no
his dismissal was not among those termination to speak of, the requirement of
enumerated in the Labor Code, as amended. due process in dismissal cases cannot be
And even granting without admitting the applied to Ymbong. Thus, ABS-CBN is not
existence of the company policy supposed to duty-bound to ask him to explain why he did
have been violated, Ymbong averred that it not tender his resignation before he ran for
was necessary that the company policy meet public office as mandated by the subject
certain requirements before willful company policy. In addition, we do not
disobedience of the policy may constitute a subscribe to Ymbong’s claim that he was not
just cause for termination. in a position to know which of the two
Ymbong further argued that the issuances was correct. Ymbong most likely
company policy violates his constitutional than not, is fully aware that the subsisting
right to suffrage.9[9] Patalinghug likewise policy is Policy No. HR-ER-016 and not the
filed an illegal dismissal complaint10[10] March 25, 1998 Memorandum and it was for
against ABS-CBN. ABS-CBN prayed for the this reason that, as stated by Luzon in his
dismissal of the complaints arguing that Sworn Statement, he only told the latter that
there is no employer-employee relationship he will only campaign for the administration
between the company and Ymbong and ticket and not actually run for an elective
Patalinghug. ABS-CBN contended that they post. Ymbong claims he had fully apprised
are not employees but talents as evidenced Luzon by letter of his plan to run and even
by their talent contracts. However, filed a leave of absence but records are
notwithstanding their status, ABS-CBN has a bereft of any proof of said claim. Y
standing policy on persons connected with Ymbong claims that the letter stating
the company whenever they will run for his intention to go on leave to run in the
public office.11[11] election is attached to his Position Paper as
Annex “A,” a perusal of said pleading
Issues: attached to his petition before this Court,
(1) whether Ymbong, by seeking an however, show that Annex “A” was not his
elective post, is deemed to have resigned letter to Luzon but the September 14, 1998
and not dismissed by ABS-CBN. Memorandum informing Ymbong that his
services had been automatically terminated
Held: when he ran for a local government position.
Ymbong is deemed resigned when he Moreover, as pointed out by ABS-
ran for councilor. As Policy No. HR-ER-016 is CBN, had Ymbong been truthful to his
the subsisting company policy and not superiors, they would have been able to
Luzon’s March 25, 1998 Memorandum, clarify to him the prevailing company policy
Ymbong is deemed resigned when he ran for and inform him of the consequences of his
councilor. decision in case he decides to run, as Luzon
We find no merit in Ymbong’s did in Patalinghug’s case. WHEREFORE, the
argument that “[his] automatic termination petition for review on certiorari is DENIED
x x x was a blatant [disregard] of [his] right to for lack of merit. With costs against
due process” as he was “never asked to petitioner. SO ORDERED
 67

discretion of the BANK to grant, modify or

withdraw.
55 PRODUCERS BANK OF THE PHILIPPINES
vs. NATIONAL LABOR RELATIONS HELD:
COMMISSION A bonus is an amount granted and
and PRODUCERS BANK EMPLOYEES paid to an employee for his industry and
ASSOCIATION loyalty
which contributed to the success of the
FACTS: employers business and made possible the
Private respondent argues that the realization
mid-year and Christmas bonuses, by reason of profits. It is an act of generosity granted
of their by an enlightened employer to spur the
having been given for thirteen consecutive employee to
years, have ripened into a vested right and, greater efforts for the success of the
as such, business and realization of bigger profits.
can no longer be unilaterally withdrawn by The granting of a
petitioner without violating Article 100 of bonus is a management prerogative,
Presidential Decree No. 442 which prohibits something given in addition to what is
the diminution or elimination of benefits ordinarily received
already by or strictly due the recipient. Thus, a bonus
being enjoyed by the employees. Although is not a demandable and enforceable
private respondent concedes that the grant obligation,
of a except when it is made part of the wage,
bonus is discretionary on the part of the salary or compensation of the employee.
employer, it argues that, by reason of its long However, an
and employer cannot be forced to distribute
regular concession, it may become part of bonuses which it can no longer afford to pay.
the employees regular compensation. On To hold
the other otherwise would be to penalize the
hand, Petitioner asserts that it cannot be employer for his past generosity.
compelled to pay the alleged bonus
differentials due
to its depressed financial condition, as 56 LEPANTO CERAMICS, INC. vs. LEPANTO
evidenced by the fact that in 1984 it was CERAMICS EMPLOYEES ASSOCIATION
placed under
conservatorship by the Monetary Board. FACTS:
Moreover, the collective bargaining Lepanto Ceramics Employees
agreement of the Association is a legitimate labor organization
parties does not provide for the payment of duly
any mid -year or Christmas bonus. On the registered with the Department of Labor and
contrary, Employment. It is the sole and exclusive
in the CBA it states that any other benefits or bargaining agent of Lepanto Ceramics,
privileges which are not expressly provided, Incorporated. In December 1998, Petitioner
even gave a
if now accorded or hereafter accorded to the P3,000.00 bonus to its employees.
employees, shall be deemed purely acts of Subsequently, in September 1999, petitioner
grace and
dependent upon the sole judgment and respondent Association entered into a CBA
which provides for, among others, the grant
 68

of a the same partakes the nature of a

Christmas gift package/bonus to the demandable obligation. Verily, by virtue of
members of the respondent Association. The its incorporation
Christmas in the CBA, the Christmas bonus due to
bonus was one of the enumerated existing respondent Association has become more
benefit, practice of traditional rights which than just an
shall act of generosity on the part of the
remain in full force and effect. In the petitioner but a contractual obligation it has
succeeding years, the bonus was not in cash. undertaken.
Instead,
petitioner gave each of the members of
respondent Association Tile Redemption 57 INTERPHIL LABORATORIES EMPLOYEES
Certificates UNION-FFW, ENRICO GONZALES and MA.
equivalent to P3,000.00. On 2002, Petitioner THERESA
gave a yearend cash benefit of Six Hundred MONTEJO vs. INTERPHIL LABORATORIES,
Pesos INC.,
(P600.00) and offered a cash advance to
interested employees equivalent to one (1) FACTS:
month Interphil Laboratories Employees
salary payable in one year. The respondent Union-FFW is the sole and exclusive
Association objected to the P600.00 cash bargaining agent
benefit of the rank-and-file employees of Interphil
and argued that this was in violation of the Laboratories, Inc., a company engaged in the
CBA it executed with the petitioner. business of manufacturing and packaging
pharmaceutical products. They had a
HELD: Collective
By definition, a bonus is a gratuity or Bargaining Agreement (CBA). On 16 April
act of liberality of the giver. It is something 1993, all the rank-and-file employees of the
given in company
addition to what is ordinarily received by or refused to follow their regular two-shift
strictly due the recipient. A bonus is granted work schedule of from 6:00 a.m. to 6:00
and p.m., and from
paid to an employee for his industry and 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00
loyalty which contributed to the success of a.m., respectively, the employees stopped
the working
employers business and made possible the and left their workplace without sealing the
realization of profits. A bonus is also granted containers and securing the raw materials
by an they
enlightened employer to spur the employee were working on. When Salazar inquired
to greater efforts for the success of the about the reason for their refusal to follow
business their
and realization of bigger profits. Generally, a normal work schedule, the employees told
bonus is not a demandable and enforceable him to "ask the union officers." To minimize
obligation. For a bonus to be enforceable, it the
must have been promised by the employer damage the overtime boycott was causing
and the company, Salazar immediately asked for
expressly agreed upon by the parties. Given a
that the bonus in this case is integrated in meeting with the union officers. In the
the CBA, meeting, Enrico Gonzales, a union director,
 69

told Salazar 58 MALAYAN EMPLOYEES ASSOCIATION-

that the employees would only return to FFW and RODOLFO MANGALINO vs.
their normal work schedule if the company MALAYAN
would INSURANCE COMPANY, INC.
agree to their demands as to the effectivity
and duration of the new CBA. Salazar again FACTS:
told the The union is the exclusive bargaining
union officers that the matter could be agent of the rank-and-file employees of the
better discussed during the formal company. A provision in the unions collective
renegotiations of the bargaining agreement (CBA) with the
CBA. company
allows union officials to avail of union leaves
HELD: with pay for a total of ninety-man days per
It is evident from the foregoing year
provision that the working hours may be for the purpose of attending grievance
changed, at the meetings, Labor-Management Committee
discretion of the company, should such meetings,
change be necessary for its operations, and annual National Labor Management
that the Conferences, labor education programs and
employees shall observe such rules as have seminars, and
been laid down by the company. In the case other union activities. The company issued a
before rule in November 2002 requiring not only
us, Labor Arbiter Caday found that the prior
respondent company had to adopt a notice that the CBA expressly requires, but
continuous 24-hour prior approval by the department head
work daily schedule by reason of the nature before the
of its business and the demands of its clients. union and its members can avail of union
It leaves. The rule was placed into effect in
was established that the employees adhered November
to the said work schedule since 1988. The 2002 without any objection from the union
employees are deemed to have waived the until a union officer, Mangalino, filed union
eight-hour schedule since they followed, leave
without applications in January and February, 2004.
any question or complaint, the twoshift His department head disapproved the
schedu le while their CBA was still in force applications
and even because the department was undermanned
prior thereto. The two-shift schedule at that time. Despite the disapproval,
effectively changed the working hours Mangalino
stipulated in the proceeded to take the union leave. He said
CBA. As the employees assented by practice he believed in good faith that he had
to this arrangement, they cannot now be complied with
heard to the existing company practice and with the
claim that the overtime boycott is justified procedure set forth in the CBA. The company
because they were not obliged to work responded by suspending him for one week
beyond eight and, thereafter, for a month, for his second
hours. offense
in February 2004.

ISSUE:
 70

WON regulation of the use of union charge, of

leaves is within the companys management course, can no longer prosper even if laid
prerogative today, given the lapse of time that has since
transpired.

HELD:
YES. While it is true that the union
and its members have been granted union
leave
privileges under the CBA, the grant cannot
be considered separately from the other
provisions
of the CBA, particularly the provision on
management prerogatives where the CBA
reserved for
the company the full and complete authority
in managing and running its business. We
see
nothing in the wordings of the union leave
provision that removes from the company
the right
to prescribe reasonable rules and
regulations to govern the manner of availing
of union leaves,
particularly the prerogative to require prior
approval. Precisely, prior notice is expressly
required under the CBA so that the company
can appropriately respond to the request for
leave. In this sense, the rule requiring prior
approval only made express what is implied
in the
terms of the CBA. The prior approval policy
fully supported the validity of the
suspensions the
company imposed on Mangalino. We point
out additiona lly that as an employee,
Mangalino
had the clear obligation to comply with the
management disapproval of his requested
leave
while at the same time registering his
objection to the company regulation and
action. That he
still went on leave, in open disregard of his
superiors orders, rendered Mangalino open
to the
charge of insubordination, separately from
his absence without official leave. This
 71

59 Negros Slashers, Inc., et al. v. Alvin L. Teng penalty of dismissal. There was no warning
or admonition for respondent’s violation of
Facts: team rules, only outright termination of his
Respondent Alvin Teng is a services for an act which could have been
professional basketball player who started punished appropriately with a severe
his career as such in the Philippine Basketball reprimand or suspension.
Association and then later on played in the
Metropolitan Basketball Association (MBA). 60 VILLARUEL VS. YEO HAN GUAN
Some time in one of his games,
particularly Game Number 4 of the MBA FACTS:
Championship Round for the year 2000 Villaruel filed with the NLRC NCR-
season, Teng had a below-par playing Quezon City a Complaint for payment of
performance. Because of this, the coaching separation pay against Yuhans Enterprises.
staff decided to pull him out of the Petitioner alleged that in June 1963,
game. Teng then sat on the bench, untied he was employed as a machine operator by
his shoelaces and donned his practice Ribonette Manufacturing Company, an
jersey. On the following game, Game enterprise engaged in the business of
Number 5 of the Championship Round, Teng manufacturing and selling PVC pipes and is
called-in sick and did not play. owned and managed by herein respondent
On March 16, 2001, because of what Yeo Han Guan.Petitioner further alleged that
happened, the management of Negros in October 1998, he got sick and was
Slashers came up with a decision, and confined in a hospital; In December 1998, he
through its General Manager, petitioner reported for work but was no longer
Rodolfo Alvarez, wrote Teng informing him permitted to go back because of his illness;
of his termination from the team. he asked that respondent allow him to
continue working but be assigned a lighter
Issue: kind of work but his request was denied;
Whether or not Teng’s dismissal from instead, he was offered a sum of P15,000.00
the Negros Slashers Team was unjustified as his separation pay; however, the said
and too harsh considering his misconduct. amount corresponds only to the period
between 1993 and 1999; petitioner prayed
Ruling: that he be granted separation pay computed
YES. from his first day of employment in June
As ruled in Sagales v. Rustan’s Commercial 1963, but respondent refused.
Corporation, while the employer has the On the other hand, respondent
inherent right to discipline, including that of averred that petitioner was hired as machine
dismissing its employees, this prerogative is operator from March 1993 until he stopped
subject to the regulation by the State in the working sometime in February 1999 on the
exercise of its police power. ground that he was suffering from illness;
In this regard, it is a hornbook after his recovery, petitioner was directed to
doctrine that infractions committed by an report for work, but he never showed
employee should merit only the up. Respondent was later caught by surprise
corresponding penalty demanded by the when petitioner filed the instant case for
circumstance. The penalty must recovery of separation pay. Respondent
be commensurate with the act, conduct or claimed that he never terminated the
omission imputed to the employee and must services of petitioner and that during their
be imposed in connection with the mandatory conference, he even told the
disciplinary authority of the employer. latter that he could go back to work anytime
In the case at bar, the penalty handed but petitioner clearly manifested that he was
out by the petitioners was the ultimate
 72

no longer interested in returning to work and has no other choice but to disassociate
instead asked for separation pay. himself from his employment
However, there is no provision in the
ISSUE: Labor Code which grants separation pay to
is Villaruel entitled to separation voluntarily resigning employees. In fact, the
pay? rule is that an employee who voluntarily
resigns from employment is not entitled to
HELD: separation pay, except when it is stipulated
YES, but only financial assistance as a in the employment contract or CBA, or it is
measure of social justice Article 284 of the sanctioned by established employer practice
Labor Code reads: or policy.
An employer may terminate the Since petitioner was not terminated
services of an employee who has been found from his employment and, instead, is
to be suffering from any disease and whose deemed to have resigned therefrom, he
continued employment is prohibited by law is not entitled to separation pay under the
or is prejudicial to his health as well as to the provisions of the Labor Code.
health of his co-employees: Provided, That **
he is paid separation pay equivalent to at It may not be amiss to point out at
least 1 month salary or to ½ month salary for this juncture that aside from Article 284 of
every year of service whichever is greater, a the Labor Code, the award of separation pay
fraction of at least six months being is also authorized in the situations dealt with
considered as 1 whole year. in Article 283 of the same Code and under
A plain reading of the abovequoted provision Section 4 (b), Rule I, Book VI of the IRR of the
clearly presupposes that it is the employer said Code where there is illegal dismissal and
who terminates the services of the employee reinstatement is no longer feasible. By way
found to be suffering from any disease and of exception, this Court has allowed grants of
whose continued employment is prohibited separation pay to stand as “a measure of
by law or is prejudicial to his health as well social justice” where the employee is validly
as to the health of his co-employees. It does dismissed for causes other than serious
not contemplate a situation where it is the misconduct or those reflecting on his moral
employee who severs his or her employment character.
ties. This Court, in a number of cases, has
The Court agrees with the CA in its granted financial assistance to separated
observation of the following circumstances employees as a measure of social and
as proof that respondent did not terminate compassionate justice and as an equitable
Villaruel’s employment: first, the only cause concession. Taking into consideration the
of action in petitioner’s original complaint is factual circumstances obtaining in the
that he was “offered a very low separation present case, the Court finds that petitioner
pay”; second, there was no allegation of is entitled to this kind of assistance. The
illegal dismissal, both in petitioner’s original Court notes that there is no evidence on
and amended complaints and position record to show that petitioner has any
paper; and, third, there was no prayer for derogatory record during his long years of
reinstatement. This is tantamount to service with respondent and that his
resignation. employment was severed not by reason of
Resignation is defined as the any infraction on his part but because of his
voluntary act of an employee who finds failing physical condition. Based on the
himself in a situation where he believes that foregoing, the Court finds that the award of
personal reasons cannot be sacrificed in financial assistance is deemed equitable
favor of the exigency of the service and he under the circumstances.
 73

61 The University of Immaculate Labor Arbiter. Article 262 of the same Code
Conception vs National Labor and provides the exception. For the exception to
Relations Commission apply, there must be an agreement between
the parties clearly conferring jurisdiction to
FACTS: the voluntary arbitrator. Such agreement
Teodora Axalan is a regular faculty may be stipulated in a collective
member in the University of the Immaculate bargaining agreement. However, in the
Conception holding the position of Associate absence of a collective
Professor II. Aside from being a regular bargaining agreement, it is enough that
faculty member, Axalan is the elected there is evidence on record showing that the
President of the Employees' Union from 18 parties have agreed to resort to
November to 22 November 2002. Axalan voluntary arbitration. As can be gleaned
attended a seminar in Quezon City on from the transcript of stenographic notes of
website development. Axalan then received the administrative hearing held on 20
a memorandum from Dean Maria Rosa February 2003, the parties in this case clearly
Celestial asking her to explain in writing why agreed to resort to voluntary arbitration.
she should not be dismissed for having been
absent without official leave. Axalan claimed
that she held online classes while attending 62 NATIONWIDE SECURITY AND ALLIED
the seminar. She explained that she was SERVICES, INC., Petitioner, v. RONALD P.
under the impression that faculty members VALDERAMA, Respondent.
would not be marked absent even if they
were not physically present in the classroom FACTS:
as long as they conducted online classes. Respondent was hired by petitioner
From 28 January to 3 February 2003, Axalan as security guard. Almost 4 years after, he
attended a second seminar in Baguio City on was relieved from service and was not given
advanced paralegal training on which dates any assignment thereafter. He filed a
Axalan was absent. An Ad Hoc Grievance complaint for constructive dismissal and
Committee was created, and upon its nonpayment of 13th month pay. Petitioner
recommendation Axalan was suspended for presented a different version. It alleged that
a year for her AWOLcharges. On 1 December respondent was not constructively or
2003, Axalan filed a complaint against the illegally dismissed, but had voluntarily
University for illegal suspension and resigned.
constructive dismissal in the Labor Arbiter. The LA declared respondent to have
The University moved to dismiss on the been constructively dismissed. On appeal,
ground that the Labor Arbiter had no the NLRC modified the LA decision. It
jurisdiction over the subject matter of the declared that respondent was neither
complaint. The university maintained that constructively terminated nor did he
jurisdiction lay in the voluntary arbitrator. voluntarily resign. As such, respondent
remained an employee of petitioner. The
ISSUE: NLRC thus ordered respondent to
Whether or not the labor arbiter has immediately report to petitioner and
jurisdiction in the case at bar assume his duty. The CA set aside the
resolutions of the NLRC and reinstated that
RULING: of the LA. The CA sustained respondent’s
No. Although Article 217 of the Labor claim of constructive dismissal and pointed
Code states that unfair labor practices and out that respondent remained on floating
termination disputes fall within the original status for more than six (6) months, and
and exclusive jurisdiction of the petitioner offered no credible explanation
 74

why it failed to provide a new assignment to changed or forfeited if he will be re-assigned

respondent somewhere. In 1994, he was recalled to Laoag.
Later, Barroga was also assigned as the
ISSUE: temporary Head of Education; he was also given
a scholarship grant to support his post-graduate
Whether or not the CA erred in
studies. In 2003, Barroga was advised that he will
sustaining respondent’s claim of constructive
be transferred to Bangued, Abra. Barroga
dismissal. refused because his father was sick and second,
he found out that there will be no additional
HELD: allowance this time and that he will be working
The petition lacks merit. there as an instructor and not as a Head of
LABOR LAW: Floating status Education. In the same year, he filed a labor case
In cases involving security guards, a against Data College for constructive dismissal.
relief and transfer order in itself does not Barroga alleged that the real purpose of his
sever employment relationship between a transfer is to demote him to the rank of an
security guard and his agency. An employee instructor from being the Head for Education
performing administrative functions and that his
has the right to security of tenure, but this
re-assignment will entail an indirect reduction of
does not give him a vested right to his
his salary or diminution of pay considering that
position as would deprive the company of its no additional allowance will be given to cover for
prerogative to change his assignment or board and lodging expenses. He claims that such
transfer him where his service, as security additional allowance was given in the past and
guard, will be most beneficial to the client. therefore cannot be discontinued and
Jurisprudence is trite with withdrawn without violating the prohibition
pronouncements that the temporary against non-diminution of benefits.
inactivity or “floating status” of security
guards should continue only for six months. ISSUE:
Otherwise, the security agency concerned Whether or not the absence of
could be liable for constructive dismissal. In additional allowance in Barroga’s supposed
this case, respondent remained on “floating re-assignment constitutes a diminution of
status” for more than six months. He was benefits.
relieved on January 30, 2006, and was not
given a new assignment at the time he filed HELD:
the complaint on August 2, 2006. No. It is true that as a general rule,
Petition is DENIED. benefits and perks enjoyed by employees
cannot be reduced and discontinued or
diminished. But this rule is only applicable to
62.1 William Barroga vs Data Center grants or benefits which are founded on an
College et al express policy or has ripened into a practice
over a long period which is consistent and
FACTS: deliberate. In the case at bar, Barroga’s
In November 1991, William Barroga was additional allowance while in Vigan is not
hired as an instructor by Data Center College in permanent. In fact, Data College made clear
its Laoag City, Ilocos Norte campus. In June 1992, that such allowance is only applicable while
Barroga was re-assigned to Vigan, Ilocos Sur. Part Barroga is in Vigan and such allowance is no
of the deal for his re-assignment was that longer applicable if he is going to be assigned
Barroga will receive a monthly allowance of
somewhere. Further, Data College showed
P1,200.00 for board and lodging while
that it is experiencing financial difficulties
performing his job in Vigan. However, Data
hence the need to withdraw the scholarship
Center made it clear in writing that Barroga is
only entitled to the additional allowance while previously granted to Barroga. On the issue
assigned in Vigan and such allowance may be of his removal as Head for Education, the
 75

same is valid. Barroga was merely assigned same day, expressing her intention to return
in a temporary capacity, such designation is to work on 15 February 2002 and to call off
terminable at the pleasure of Data College her planned resignation upon the advice of
which made such appointment. her lawyer. On 22 February 2002, Leynes was
further served with a letter and
memorandum relieving her from her
63 NIPPON HOUSING PHIL. INC., and/or position and directing her to report to NHPI
TADASHI OTA, HOROSHI TAKADA, main office while she was on floating status.
YUSUHIRO KAWATA, MR. NOBOYUSHI and Aggrieved, Leynes lost no time in
JOEL REYES,Petitioners, v. MAIAH ANGELA filing against NHPI and its above-named
LEYNES, Respondent. officers a complaint for illegal dismissal,
unpaid salaries, benefits, damages and
FACTS: attorney fees before the NLRC. NHPI and its
Nippon Housing Philippines, Inc. officers asserted that the management
(NPHI) hired respondent Maiah Angela exercise of the prerogative to put an
Leyneson 26 March 2001 for the position of employee on floating status for a period not
Property Manager. exceeding six months was justified in view of
On 6 February 2002, Leynes had a her threatened resignation from her position
misunderstanding with Engr. Honesto and BGCC request for her
Cantuba, the Building Engineer assigned at replacement.During the pendency of the
Bay Gardens Condominium Project (the case, however, Reyes eventually served the
Project), regarding the extension of the DOLE and Leynes with a notice terminating
latter working hours. Aside from instructing her services effective 22 August 2002, on the
the security guards to bar Engr. Cantuba ground of redundancy or lack of a posting
from entry into the Project and to tell him to commensurate to her position at the
report to the NHPI main office in Makati, Project.Leynes was offered by NHPI the sum
Leynes also sent a letter dated 8 February ofP28,188.16 representing her unpaid
2002 by telefax to Joel Reyes, NHPI HR Head, wages, proportionate 13th month pay, tax
apprising the latter of Cantuba supposed refund and service incentive leave pay (SILP).
insubordination and disrespectful conduct. The LA found that NHPI act of putting
With Engr. Cantuba submission of a reply in Leynes on floating status was equivalent to
turn accusing Leynes of pride, conceit and termination from employment without just
poor managerial skills, Hiroshi Takada, NHPI cause and compliance with the twin
VP, went on to issue the 12 February 2002 requirements of notice and hearing.
memorandum, attributing the incident to On appeal, the NLRC reversed the LA
"simple personal differences" and directing decision. Leynes elevated the case to the CA
Leynes to allow Engr. Cantuba to report back on a Rule 65 petition for certiorari and the
for work. CA reversed the NLRC decision.
Disappointed with the foregoing ISSUE:
management decision, Leynes submitted to Whether or not the CA erred in
a letter asking for an emergency leave of finding that Leynes was constructively
absence for the supposed purpose of dismissed when she was placed on floating
coordinating with her lawyer regarding her status prior to her termination from
resignation letter. While NHPI offered the employment on the ground of redundancy?
Property Manager position to Engr. Carlos
Jose on 13 February 2002 as a consequence HELD:
Leynessignification of her intention to Although the CA correctly found that
resign, it also appears that Leynes sent the record is bereft of any showing that
another letter to Reyes by telefax on the Leynes was unacceptable to BGCC, the
 76

evidence the parties adduced a quo clearly Code has been applied to other industries
indicates that petitioners were not in bad when, as a consequence of the bona fide
faith when they placed the former under suspension of the operation of a business or
floating status. Disgruntled by NHPI undertaking, an employer is constrained to
countermanding of her decision to bar Engr. put employees on floating status for a period
Cantuba from the Project, Leynes twice not exceeding six months.
signified her intention to resign from her Considering that even labor laws
position. In her application letter for an discourage intrusion in the employer's
immediate emergency leave, Leynes also judgment concerning the conduct of their
distinctly expressed her dissatisfaction over business, courts often decline to interfere in
NHPI resolution of her dispute with Engr. their legitimate business decisions,absent
Cantuba and announced her plan of showing of illegality, bad faith or
coordinating with her lawyer regarding her arbitrariness. Indeed, the right of employees
resignation letter. to security of tenure does not give them
In view of the sensitive nature of vested rights to their positions to the extent
Leynes position and the critical stage of the of depriving management of its prerogative
Project business development, NHPI was to change their assignments or to transfer
constrained to relay the situation to BGCC them.The record shows that Leynes filed the
which, in turn, requested the immediate complaint for actual illegal dismissal from
adoption of remedial measures from Takada, which the case originated on 22 February
including the appointment of a new Property 2002 or immediately upon being placed on
Manager for the Project. Upon BGCC floating status as a consequence of NHPI
recommendation, NHPI consequently hired hiring of a new Property Manager for the
Engr. Jose on 13 February 2002 as Leynes Project. The rule is settled, however, that
replacement. Far from being the indication "off-detailing" is not equivalent to dismissal,
of bad faith the CA construed the same to be, so long as such status does not continue
these factual antecedents suggest that NHPI beyond a reasonable time and that it is only
immediate hiring of Engr. Jose as the new when such a "floating status" lasts for more
Property Manager for the Project was than six months that the employee may be
brought about by Leynesown rash considered to have been constructively
announcement of her intention to resign dismissed. A complaint for illegal dismissal
from her position. Although she filed prior to the lapse of said six-month
subsequently changed her mind and sent and/or the actual dismissal of the employee
Reyes a letter by telefax on 13 February 2002 is generally considered as prematurely filed.
announcing the reconsideration of her Viewed in the light of the foregoing
planned resignation and her intention to factual antecedents, the Court finds that the
return to work on 15 February 2002, Leynes CA reversibly erred in holding petitioners
evidently had only herself to blame for liable for constructively dismissing Leynes
precipitately setting in motion the events from her employment. There is said to be
which led to NHPI hiring of her own constructive dismissal when an act of clear
replacement. discrimination, insensitivity or disdain on the
The record, moreover, shows that part of the employer has become so
NHPI simply placed her on floating status unbearable as to leave an employee with no
"until such time that another project could choice but to forego continued employment.
be secured" for her. Traditionally invoked by Constructive dismissal exists where there is
security agencies when guards are cessation of work because continued
temporarily sidelined from duty while employment is rendered impossible,
waiting to be transferred or assigned to a unreasonable or unlikely, as an offer
new post or client, Article 286 of the Labor involving a demotion in rank and a
 77

diminution in pay. Stated otherwise, it is a safety-related operations in the Bonifacio

dismissal in disguise or an act amounting to Global City (BGC). In August 2001, Bello was
dismissal but made to appear as if it were posted at the Negros Navigation Company in
not. Pier 2, North Harbor, to supervise sectoral
With no other client aside from BGCC operations. In November 2001, he was
for the building management side of its assigned at BGC as assistant detachment
business, the Court finds that NHPI was commander. After a week, he was
acting well within its prerogatives when it transferred to Pacific Plaza Towers as
eventually terminated Leynesservices on the assistant detachment commander and later
ground of redundancy. One of the as detachment commander. In June 2002, he
recognized authorized causes for the was assigned at Pier 2, North Harbor as
termination of employment, redundancy assistant detachment commander, but later
exists when the service capability of the reassigned to BGC. In August 2002, the BSSI
workforce is in excess of what is reasonably hired a new operations manager, resulting in
needed to meet the demands of the business the reorganization of posts. In October 2002,
enterprise. A redundant position is one Bello was assigned as roving traffic marshal
rendered superfluous by any number of at the BGC. On October 25, 2002, he filed an
factors, such as overhiring of workers, indefinite leave of absence when his new
decreased volume of business, dropping of a assignment took effect.
particular product line previously On November 5, 2002, Bello filed a
manufactured by the company or phasing complaint against the BSSI and its General
out of service activity priorly undertaken by Manager, respondent Samuel Tomas, with
the business.It has been held that the the National Labor Relations Commission
exercise of business judgment to (NLRC),[5] claiming that he had been
characterize an employee service as no constructively dismissed when he was
longer necessary or sustainable is not demoted from a detachment commander to
subject to discretionary review where, as a mere traffic marshal. He alleged that he
here, it is exercised there is no showing of received a series of promotions from 2001 to
violation of the law or arbitrariness or malice 2002, from traffic marshal to supervisor, to
on the part of the employer. assistant detachment commander, and to
Having been validly terminated on detachment commander.[6]
the ground of redundancy, Leynes is entitled The BSSI denied Bello’s claim of
to separation pay equivalent to one-month constructive dismissal, arguing that no
salary for every year of service but not to the promotion took place; Bello’s designation as
backwages adjudicated in her favor by the assistant detachment commander or
Labor Arbiter. detachment commander was not an
GRANTED employment position but a duty-related
assignment; Bello abandoned his job when
he went on an indefinite leave of absence
64 Francis Bello vs Bonifacio Security and did not report for work.[7]
Services
The Labor Arbiter’s Ruling
The Factual Background In his December 29, 2005 decision,[8]
Respondent Bonifacio Security Labor Arbiter Cresencio G. Ramos, Jr. found
Services, Inc. (BSSI) is a domestic private that Bello was illegally dismissed, noting that
corporation engaged in the business of the BSSI failed to adduce evidence that Bello
providing security services. In July 2001, the abandoned his employment. Thus, he
BSSI hired Bello as a roving traffic marshal to ordered Bello’s reinstatement and awarded
manage traffic and to conduct security and him backwages amounting to P391,474.25.
 78

After the NLRC dismissed the BSSI’s not to the present petition; and that Bello-
belated appeal and subsequent motion for Ona has no personal knowledge of the
reconsideration,[9] the latter filed a petition allegations in the petition. On the merits of
for certiorari with the CA. The CA granted the the case, the BSSI contends that the CA
petition,[10] thus reinstating BSSI’s appeal correctly ruled that there was no evidence to
with the NLRC. substantiate the NLRC’s finding of
In its March 26, 2008 resolution, the constructive dismissal.
NLRC affirmed the labor arbiter’s decision,
finding that Bello had been constructively The Issues
dismissed when he was demoted to the The core issues boil down to:
rank-and-file position of traffic marshal after whether the petition should be dismissed
occupying the supervisory position of outright for defective verification; and
assistant detachment commander and whether the CA erred in annulling the NLRC’s
detachment commander.[11] The denial of resolutions.
BSSI’s subsequent motion for
reconsideration led it back to the CA on a The Court’s Ruling
petition for certiorari under Rule 65 of the The petition lacks merit.
Rules of Court.[12] Verification of a pleading is a formal,
not jurisdictional, requirement intended to
The CA Ruling secure the assurance that the matters
The CA nullified the NLRC alleged in a pleading are true and
resolutions, finding the records bereft of correct.[15] Thus, the court may simply
evidence substantiating the labor arbiter’s order the correction of unverified pleadings
and the NLRC’s conclusions that Bello had or act on them and waive strict compliance
been constructively dismissed.[13] It noted with the rules.[16] It is deemed substantially
that Bello offered no evidence to prove that complied with when one who has ample
there was a series of promotions that would knowledge to swear to the truth of the
justify his claim of subsequent allegations in the complaint or petition signs
demotion. The CA denied the BSSI’s motion the verification, and when matters alleged in
for reconsideration,[14] paving the way for the petition have been made in good faith or
the present petition. are true and correct.[17]
In this case, we find that the
petition’s verification substantially complied
with the requirements of the rules. The SPA
The Petition authorized Bello-Ona to represent Bello in
Bello insists that he was the case entitled “Francis Bello v. Bonifacio
constructively dismissed when he was Security Services, Inc. and/or Samuel Tomas,
demoted to a mere traffic marshal after (CA) Case No. 047829-06; NLRC-N[CR] Case
having been promoted to the positions of No. 00-11-09529-2002”[18] – the case from
supervisor, assistant detachment which the present petition originated. As the
commander, and detachment commander. daughter of Bello, Bello-Ona is deemed to
have sufficient knowledge to swear to the
The Case for the BSSI truth of the allegations in the petition, which
The BSSI prays for the petition’s are matters of record in the tribunals and the
outright dismissal due to a defective appellate court below.
verification, arguing that the special power On the merits of the case, we find no
of attorney (SPA) of Bello’s attorney-in-fact, reason to disturb the CA conclusion that
Geraldine Bello-Ona, was limited to there was no constructive dismissal. Case
representing him in the NLRC case only and law defines constructive dismissal as a
 79

cessation of work because continued processing and shipping) into one

employment has been rendered impossible, distribution center located in Metro Manila.
unreasonable, or unlikely, as when there is a As a result, Unilab closed down its sixteen
demotion in rank or diminution in pay, or (16) provincial depots. The job functions of
both, or when a clear discrimination, the employees working thereat were
insensibility, or disdain by an employer declared redundant and their positions were
becomes unbearable to the employee.[19] abolished. Unilab gave the redundant
We note that, other than his bare and employees a separation package of two and
self-serving allegations, Bello has not offered a half (2 1/2) months' pay for every year of
any evidence that he was promoted in a span service.IaHDA
of four months since his employment as In the succeeding year, on 7 January
traffic marshal in July 2001 to a detachment 2002, respondents wrote Unilab requesting
commander in November 2001. During his for their separation or retirement from
six-month probationary period of service under a separation package similar or
employment,[20] it is highly improbable that equivalent to that of the redundant
Bello would be promoted after just a month employees in the provincial depots.
of employment, from a traffic marshal in July Respondents referred to this separation
2001 to supervisor in August 2001, and three package as theagong Sibolrogram./span>
months later to assistant detachment On 9 April 2002, respondents'
commander and to detachment commander counsel, on their behalf, wrote Unilab
in November 2001. At most, the BSSI merely reiterating respondents' previous request to
changed his assignment or transferred him be separated from service under Unilab's
to the post where his service would be most purportedagong SibolProgram. Particularly,
beneficial to its clients. The management's respondents were keen on retiring and
prerogative of transferring and reassigning receiving 2 1/2 months' pay for every year of
employees from one area of operation to service, and all the other benefits which
another in order to meet the requirements Unilab had extended to the redundant
of the business is generally not constitutive employees in the provincial depots. The
of constructive dismissal.[21] We see this to message and sentiment were that "they
be the case in the present dispute so that the should likewise be retired under the same
consequent reassignment of Bello to a traffic redundancy plan or retirement scheme
marshal post was well within the scope of [because] their positions are similarly
the BSSI’s management prerogative. situated [to] the 'retired employees' of
WHEREFORE, we hereby DENY the [Unilab's] distribution centers under the
petition and AFFIRM the assailed CA decision principle that 'things that are alike should be
and resolution in CA-G.R. SP. No. 105402. treated alike' since they also hold the
Costs against the petitioner. position of 'distribution personnel.'"
SO ORDERED.

ISSUE:
65 United Laboratories, Inc., Petitioner, v. Is constructive dismissal applicable
Jaime Domingo Substituted by his spouse to the respondents?
Carmencita Punzalan Domingo, et al.
HELD:
FACTS: Constructive dismissal is a derivative
Sometime in 2001, under a Physical of dismissal without cause; an involuntary
Distribution Master Plan (PDMP), Unilab resignation, nay, a dismissal in disguise.It
consolidated its finished goods inventories occurs when there isessation of workecause
and logistics activities (warehousing, order continued employment is rendered
 80

impossible, unreasonable, or unlikely as dismissed from work shall be entitled to

when there is a demotion in rank or reinstatement without loss of seniority
diminution in pay or when a clear rights and other privileges and to his full
discrimination, insensibility, or disdain by an backwages, inclusive of allowances, and to
employer becomes unbearable to the his other benefits or their monetary
employee leaving the latter withother equivalent computed from the time his
option but to quit. In turn, dismissal without compensation was withheld from him up to
cause is prohibited because of the the time of his actual reinstatement.
Constitutional security of tenure of workers. Simply put, security of tenure from
Thus, it is stated in Article XIII, which springs the concept of constructive
Section 3 of the Constitution that: [Workers] dismissal is not an absolute right. It cannot
shall be entitled to security of tenure, be pleaded to avoid the transfer or
humane conditions of work, and a living assignment of employees according to the
wage. requirements of the employer's business.
From the start, respondents insisted Such transfer or assignment becomes
that Unilab has unjustifiably refused to grant objectionable only when it is not for
them the same separation package granted "reasonable returns on investments," and
to the redundant employees in the provincial for "expansion and growth" which are
depots. Respondents demanded that this constitutionally recognized employer's
higher separation package be applied for rights, but is sought merely as a convenient
their retirement as they are "similarly cover for oppression.
situated" with the redundant employees. GRANTED
Respondents wished for the cessation of 66 JONATHAN V. MORALES, Petitioner, v.
their employment, specifying, however, HARBOUR CENTRE PORT TERMINAL, INC.
their availment of retirement benefits Respondent.
equivalent to the separation package of the
redundant employees. Effectively, FACTS:
respondents were exercising their right to Regularized on 17 November 2000,
terminate their employment, invoking a Morales was promoted to Division Manager
hodgepodge of provisions from the Unilab of the Accounting Department, for which he
Retirement Plan, Unilab's purported Bagong was compensated a monthly salary of
Sibol Program, and the Labor Code. P33,700.00, plus allowances starting 1 July
*** 2002. Subsequent to HCPTIs transfer to its
The Labor Code describes as basic new offices at Vitas, Tondo, Manila on 2
policy the worker's security of tenure. Thus: January 2003, Morales received an inter-
ART. 3. Declaration of basic policy. office memorandum dated 27 March 2003,
The State shall afford protection to labor, reassigning him to Operations Cost
promote full employment, ensure equal Accounting, tasked with the duty of
work opportunities regardless of sex, race or "monitoring and evaluating all consumables
creed, and regulate the relations between requests, gears and equipment" related to
worker and employers.he State shall assure the corporations operations and of
the rights of workerso self-organization, interacting with its sub-contractor, Bulk
collective bargaining,ecurity of tenure, and Fleet Marine Corporation.
humane conditions of work. Morales wrote Singson, protesting
ART. 279. Security of Tenure. In cases that his reassignment was a clear demotion
of regular employment, the employer shall since the position to which he was
not terminate the services of an employee transferred was not even included in HCPTIs
except for a just cause or when authorized plantilla. Singson, the Administration
by this Title. An employee who is unjustly
 81

Manager, answered by stating that the overcome this burden of proof, the
transfer was a management prerogative. employees transfer shall be tantamount to
For the whole of the ensuing month unlawful constructive dismissal.
Morales was absent from work and/or tardy. Record shows that HCPTI miserably
Singson issued to Morales a 29 April 2003 failed to discharge the foregoing onus. While
inter-office memorandum denominated as a there was a lack of showing that the transfer
First Warning. In view of the absences or reassignment entailed a diminution of
Morales continued to incur, HCPTI issued a salary and benefits, one fact that must not
Second Warning. be lost sight of was that Morales was already
In the meantime, Morales filed a occupying the position of Division Manager
complaint dated 25 April 2003 against HCPTI, at HCPTIs Accounting Department as a
Filart and Singson, for constructive dismissal, consequence of his promotion to said
moral and exemplary damages as well as position on 22 October 2002.
attorneys fees. Concurrently appointed as member
LA dismissed the complaint for lack of of HCPTIs Management Committee
merit. It ruled that Morales reassignment (MANCOM) on 2 December 2002, Morales
was a valid exercise of HCPTIs management was subsequently reassigned by HCPTI "from
prerogative which cannot be construed as managerial accounting to Operations Cost
constructive dismissal absent showing that Accounting" on 27 March 2003, without any
the same was done in bad faith and resulted mention of the position to which he was
in the diminution of his salary and benefits. actually being transferred. That the
The NLRC however, reversed the decision. Its reassignment was a demotion is, however,
subsequent denial of HCPTIs motion for evident from Morales new duties which, far
reconsideration prompted the latter to file a from being managerial in nature, were very
petition for certiorari before the CA. The CA simply and vaguely described as inclusive of
reversed the findings of the NLRC. Hence, "monitoring and evaluating all consumables
this petition. requests, gears and equipments related to
HCPTIs operations" as well as "close
ISSUE: interaction with its sub-contractor Bulk Fleet
Whether or not petitioner was Marine Corporation."
constructively dismissed Admittedly, the right of employees to
security of tenure does not give them vested
HELD: rights to their positions to the extent of
Yes. CA Decision reversed and set depriving management of its prerogative to
aside change their assignments or to transfer
Constructive dismissal exists where them. By management prerogative is meant
there is cessation of work because the right of an employer to regulate all
"continued employment is rendered aspects of employment, such as the freedom
impossible, unreasonable or unlikely, as an to prescribe work assignments, working
offer involving a demotion in rank or a methods, processes to be followed,
diminution in pay and other benefits. regulation regarding transfer of employees,
In cases of a transfer of an employee, supervision of their work, lay-off and
the rule is settled that the employer is discipline, and dismissal and recall of
charged with the burden of proving that its workers.
conduct and action are for valid and Although jurisprudence recognizes
legitimate grounds such as genuine business said management prerogative, it has been
necessity and that the transfer is not ruled that the exercise thereof, while
unreasonable, inconvenient or prejudicial to ordinarily not interfered with, is not absolute
the employee. If the employer cannot and is subject to limitations imposed by law,
 82

collective bargaining agreement, and reinstate her. It held that Ranchez was
general principles of fair play and justice. deprived of due process when she was strip-
Thus, an employer may transfer or assign searched and sent to jail for two weeks
employees from one office or area of because such amounted to constructive
operation to another, provided there is no dismissal, making it impossible for the
demotion in rank or diminution of salary, respondent to continue under the
benefits, and other privileges, and the action employment. Even though she was merely a
is not motivated by discrimination, made in probationary employee, the lapse of the
bad faith, or effected as a form of probationary contract did not amount to a
punishment or demotion without sufficient valid dismissal because there was already an
cause. Indeed, having the right should not be unwarranted constructive dismissal
confused with the manner in which that right beforehand.
is exercised. The NLRC denied Robinson's motion
GRANTED for reconsideration. The CA affirmed the
decision of the NLRC.

66.1 ROBINSONS GALLERIA/ROBINSONS ISSUE:

SUPERMARKET CORPORATION and/or JESS Whether respondent was illegally
MANUEL, petitioners, vs. IRENE R. terminated from employment by petitioners.
RANCHEZ, respondents
HELD:
FACTS: The petition is unmeritorious.
Respondent Ranchez was a LABOR LAW: Probationary
probationary employee for 5 months. She employees; termination of employment
was hired as a cashier by Robinsons There is probationary employment
sometime within that period. Two weeks when the employee upon his engagement is
after she was hired, she reported the loss of made to undergo a trial period during which
cash which she had placed in the company the employer determines his fitness to
locker. She offered to pay for the lost qualify for regular employment based on
amount but the Operations Manager of reasonable standards made known to him at
Robinsons had her strip-searched then the time of engagement.
reported her to the police even though they A probationary employee, like a
found nothing on her person. An information regular employee, enjoys security of
for Qualified Theft was filed with the Quezon tenure.However, in cases of probationary
City Regional Trial Court. She was detained employment, aside from just or authorized
for 2 weeks for failure to immediately post causes of termination, an additional ground
bail. Weeks later, respondent Ranchez filed is provided under Article 281 of the Labor
a complaint for illegal dismissal and Code,i.e., the probationary employee may
damages. A year later, Robinsons sent to also be terminated for failure to qualify as a
respondent by mail a notice of termination regular employee in accordance with
and/or notice of expiration of probationary reasonable standards made known by the
employment. employer to the employee at the time of the
The Labor Arbiter dismissed the engagement.Thus, the services of an
complaint for illegal dismissal, alleging that employee who has been engaged on
at the time of filing respondent Ranchez had probationary basis may be terminated for
not yet been terminated. She was merely any of the following:
investigated. However, the NLRC reversed (1) a just or
this ruling, stating that Ranchez was illegally (2) an authorized cause; and
dismissed and that Robinson's should
 83

(3) when he fails to qualify as a Reinstatement of respondent is no longer

regular employee in accordance with viable considering the circumstances.
reasonable standards prescribed by the DENIED
employer.
Article 277(b) of the Labor Code
mandates that the employer shall furnish the 67 PASTOR DIONISIO V. AUSTRIA vs. HON.
worker, whose employment is sought to be NATIONAL LABOR RELATIONS
terminated, a written notice containing a COMMISSION
statement of the causes of termination, and
shall afford the latter ample opportunity to FACTS:
be heard and to defend himself with the Petitioner had worked with the
assistance of a representative if he so private respondent Seventh Day Adventists
desires, in accordance with company rules (SDA) for 28
and regulations pursuant to the guidelines years before he was terminated. Prior to said
set by the Department of Labor and termination, petitioner was asked to ad mit
Employment. accountability for the church offerings
In the instant case, based on the facts collected by his wife in the amount of
on record, petitioners failed to accord P15,078.10.
respondent substantive and procedural due Petitioner refused since it was private
process.The haphazard manner in the respondents Pastor Buhat and Eufronio
investigation of the missing cash, which was Ibesate who
left to the determination of the police authorized his wife to collect. Thereafter
authorities and the Prosecutor's Office, left petitioner requested Pastor Buhat to
respondent with no choice but to cry convene the
foul.Administrative investigation was not Executive Committee to settle the dispute
conducted by petitioner Supermarket.On between him and Pastor Rodrigo, but the
the same day that the missing money was latter
reported by respondent to her immediate denied the same, and heated arguments
superior, the company already pre-judged between the two ensued until petitioner
her guilt without proper investigation, and banged the
instantly reported her to the police as the attaché case of Pastor Buhat on the table,
suspected thief, which resulted in her scattered the books and threw the phone.
languishing in jail for two weeks. Later, an
The due process requirements under Executive Committee meeting was held
the Labor Code are mandatory and may not where the non-remittance of church
be replaced with police investigation or collections and the
court proceedings. An illegally or events that transpired were discussed.
constructively dismissed employee, Subsequently, petitioner received a letter of
respondent is entitled to: (1) either dismissal
reinstatement, if viable, or separation pay, if citing therein grounds for the termination of
reinstatement is no longer viable; and (2) his services. Petitioner then filed a complaint
backwages. These two reliefs are separate for
and distinct from each other and are illegal dismissal and a decision was rendered
awarded conjunctively. in his favor.
In this case, since respondent was a
probationary employee at the time she was ISSUE:
constructively dismissed by petitioners, she Whether or not Austria’s termination
is entitled to separation pay and backwages. was valid.
 84

from employment. For the foregoing

HELD: reasons, we believe that the minor infraction
NO. Misconduct has been defined as committed
improper or wrong conduct. It is the by petitioner does not merit the ultimate
transgression penalty of dismissal.
of some established and definite rule of
action, a forbidden act, a dereliction of duty,
willful in 68 PHILIPPINE LONG DISTANCE TELEPHONE
character, and implies wrongful intent and COMPANY vs. NLRC and MARILYN ABUCAY
not mere error in judgment. For misconduct
to be FACTS:
considered serious it must be of such grave Marilyn Abucay, a traffic operator of
and aggravated character and not merely the Philippine Long Distance Tel ephone
trivial or Company,
unimportant. Based on this standard, we was accused by two complainants of having
believe that the act of petitioner in banging demanded and received from them the total
the amount of P3,800.00 in consideration of her
attache case on the table, throwing the promise to facilitate approval of their
telephone and scattering the books in the applications
office of for telephone installation. Investigated and
Pastor Buhat, although improper, cannot be heard, she was found guilty as charged and
considered as grave enough to be accordingly separated from the service. She
considered as went to the Ministry of Labor and
serious misconduct. After all, though Employment
petitioner committed damage to property, claiming she had been illegally removed. The
records show case was dismissed but she was granted with
that he did not physically assault Pastor a
Buhat or any other pastor present during the separation pay.
incident.Hence, there is no basis for the
allegation that petitioners act constituted ISSUE:
serious WON Abuca is entitled to separation
misconduct or that the same was an offense pay.
against the person of the employers duly
authorized representative.As such, the cited HELD:
actuation of petitioner does not justify the NO. The rule embodied in the Labor
ultimate penalty of dismissal from Code is that a person dismissed for cause as
employment. While the Constitution does defined
not condone therein is not entitled to separation pay.
wrongdoing by the employee, it Separation pay shall be allowed as a measure
nevertheless urges a moderation of the of social
sanctions that may be justice only in those instances where the
applied to him in light of the many employee is validly dismissed for causes
disadvantages that weigh heavily on hi m like other than
an albatross on his neck. Where a penalty serious misconduct or those reflecting on his
less punitive would suffice, whatever moral character. Where the reason for the
missteps may have been valid
committed by the worker ought not be dismissal is, for example, habitual
visited with a consequence so severe such as intoxication or an offense involving moral
dismissal turpitude, like theft
 85

or illicit sexual relations with a fellow worker, ucation

the employer may not be required to give malpractice or grave misconduct and grossly
the prejudicial to the good name of the
dismissed employee separation pay, or petitioner
financial assistance, or whatever other name school. On these bases, the members of the
it is called, investigating committee ruled to terminate
on the ground of social justice. In the case at respondents services. Respondent filed a
bar, the grant of separation pay in the case Complaint for illegal dismissa l.
at bar
is unjustified. Abuca has been dismissed for ISSUE:
dishonesty and as she herself has impliedly WON respondents act of giving
admitted. The fact that she has worked with failing students higher grades than what
the PLDT for more than a decade, if it is to be they actually
considered at all, should be taken against her earned is tantamount to serious misconduct
as it reflects a regrettable lack of loyalty that which justified her dismissal.
she
should have strengthened instead of HELD:
betraying during all of her 10 years of service NO. Respondent had committed a
with the misconduct. However, such misconduct is
company. If regarded as a justification for not serious
moderating the penalty of dismissal, it will enough to warrant her dismissal from
actually employment under paragraph (a) of Article
become a prize for disloyalty, perverting the 282 of the
meaning of social justice and undermining Labor Code. Misconduct is defined as
the improper or wrong conduct. It is the
efforts of labor to cleanse its ranks of all transgression of
undesirables. some established and definite rule of action,
a forbidden act, a dereliction of duty, willful
in
69 NLRC, ST. JUDE CATHOLIC SCHOOL, character and implies wrongful intent and
et.al., vs MA. BERNADETTE S. SALGARINO not mere error of judgment. The
misconduct to be
FACTS: serious within the meaning of the act must
Maria Bernadette A. Salgarino was be of such a grave and aggravated character
employed by St. Jude Catholic School as and not
Mathematics merely trivial or unimportant. Such
teacher. She was directed to submit herself misconduct, however serious, must
to a panel of investigators and explain why nevertheless be in
she had connection with the work of the employee to
allegedly tampered school records, violated constitute just cause from his separation. In
school policies and committed misconduct. order
Respondent was investigated for her act of to constitute serious misconduct which will
increasing the grades of her students while warrant the dismissal of an employee under
she was paragraph (a) of Article 282 of the Labor
on maternity leave. The investigating panel Code, it is not sufficient that the act or
reached the conclusion that respondent conduct
altered her complained of has violated some established
students grades while she was on leave, rules or policies. It is equally important and
which is, according to them, a case of ed required that the act or conduct must have
 86

been performed with wrongful intent. allegedly suffering from hypertension,

There is no hence, she
evidence to show that there was ulterior was again unable to remit the contributions.
motive on the part of the respondent when On February 26, 2002 Mary Anne sent a
she memorandum to petitioner charging her
decided to pass her students. Also, it was not with gross and habitual neglect of duty
shown that respondent received immoral and/or
consideration when she did the same. misconduct or willful disobedience and
Respondent has maintained her stand that insubordination, detailing therein the bases
her decisio n of the
to pass the concerned students was done charges, and requiring her to submit a
out of humanitarian consideration. It is written explanation why she should not be
settled that a penalized or
misconduct, which is not serious or grave, dismissed from employment. Complying
cannot be a valid basis for dismissing an with the show cause order, petitioner
employee. claimed that the
delay was due to the fact that she was
overloaded with work and undermanned.
70 EDEN LLAMAS vs OCEAN GATEWAY On account of
MARITIME AND MANAGEMENT, INC. the delay in the remittance of those
contributions, respondent was penalized in
FACTS: the amount of
Ocean Gateway Maritime and P18,580.41 which it charged to petitioner via
Management, Inc. hired Eden Llamas as an salary deductions. Later, the company sent
accounting Llamas
manager. Mary Anne T. Macaraig, notice of termination from employment
respondents Chief Executive Officer, called anchored on gross and habitual neglect of
Llamas’s duty and/or
attention to her failure, despite repeated serious misconduct or willful
demands, to accomplish the long overdue disobedience/insubordination
monthly
and annual company financial reports and to HELD:
remit the companys contributions to the On petitioners declaration that I
Social believe that I did something good for our
Security System (SSS) and PhilHealth for office when
November and December 2001. our declaration of gross income submitted to
Subsequently or on City Hall for the renewal of our municipal
February 20, 2002, Mary Anne again license
instructed petitioner to remit on that day or was lower than our actual gross income for
until the which the office had paid a lowe r amount,
following day the companys contributions to the
the SSS and PhilHealth for January 2002. By Court finds the same as betraying a streak of
petitioners claim, she failed to comply with dishonesty in her. It partakes of serious
the instruction as money for the purpose misconduct.
was not, xxx
as of February 20, 2002, credited to the Misconduct has been defined as
companys account at the bank. The improper or wrong conduct. It is the
following day, transgression of
petitioner did not report for work as she was some established and definite rule of
 87

action, a forbidden act, a dereliction of Petitioners worked as merchandisers

duty, willful in of P&G. They all individually signed
character, and implies wrongful intent and employment contracts with either Promm-
not mere error of judgment. The Gem or SAPS. They were assigned at
misconduct to be different outlets, supermarkets and stores
serious must be of such grave and where they handled all the products of P&G.
aggravated character and not merely trivial They received their wages from Promm-Gem
and or SAPS.
unimportant. Such misconduct, however SAPS and Promm-Gem imposed
serious, must nevertheless be in connection disciplinary measures on erring
with the merchandisers for reasons such as habitual
employees work to constitute just cause for absenteeism, dishonesty or changing day-off
his separation. Thus, for misconduct or without prior notice.
improper To enhance consumer awareness
behavior to be a just cause for dismissal, (a) and acceptance of the products, P&G
it must be serious; (b) must relate to the entered into contracts with Promm-Gem
performance of the employees duties; and and SAPS for the promotion and
(c) must show that the employee has merchandising of its products.
become unfit In December 1991, petitioners filed a
to continue working for the employer. complaint against P&G for regularization,
Indeed, an employer may not be compelled service incentive leave pay and other
to continue benefits with damages.
to employ such person whose continuance
in the service would be patently inimical to Issue:
his WON P&G is the employer of
employers interest. (Emphasis supplied) For petitioners.
her act of understating the companys profits
or Held:
financial position was willful and not a mere In order to resolve the issue of
error of judgment, committed as it was in whether P&G is the employer of petitioners,
order to it is necessary to first determine whether
save costs, which to her warped mind, was Promm-Gem and SAPS are labor-only
supposed to benefit responden t. It was not contractors or legitimate job contractors.
merely a violation of company policy, but of Clearly, the law and its implementing
the law itself, and put respondent at risk of rules allow contracting arrangements for the
being made performance of specific jobs, works or
legally liable. Verily, it warrants her dismissal services. However, in order for such
from employment as respondents outsourcing to be valid, it must be made to
Accounting an independent contractorbecause the
Manager, for as correctly ruled by the current labor rules expressly prohibit labor-
appellate court, an employer cannot be only contracting.
compelled to To emphasize, there is labor-only
retain in its employ someone whose services contracting when the contractor or sub-
is inimical to its interests. contractor merely recruits, supplies or places
workers to perform a job, work or service for
a principal and any of the following
71 Aliviado vs. Procter and Gamble elements are present:
1. i) The contractor or subcontractor does
Facts: not have substantial capital or
 88

investment which relates to the job, herein petitioner Norman Yabut (Yabut)
work or service to be performed andthe against respondents Manila Electric
employees recruited, supplied or placed Company (Meralco) and Meralco officer
by such contractor or subcontractor are Manuel M. Lopez (Lopez).
performing activities which are directly The petitioner had worked with
related to the main business of the Meralco from February 1989 until his
principal; or dismissal from employment on February 5,
1. ii) The contractor does not exercise the 2004. Meralco's Inspection Office issued a
right to control over the performance of memorandum informing it of an illegal
the work of the contractual service connection at the petitioner's
Under the circumstances, Promm-Gem residence. Given this report, Meralco's Head
cannot be considered as a labor-only of Investigation-Litigation Office issued to
contractor. We find that it is a legitimate the petitioner a notice of investigation.
independent contractor. Meralcos Litigation Investigation
Considering that SAPS has no substantial Office summarized the results of Meralco's
capital or investment and the workers it findings in a memorandum which indicated
recruited are performing activities which are that Yabuts electric service was
directly related to the principal business of disconnected for account delinquency.
P&G, we find that the former is engaged in Notwithstanding the disconnection and the
“labor-only contracting”. fact that Meralcos service had not been
Where labor-only contracting exists, the reconnected, Yabut's meter registered
Labor Code itself establishes an employer- electric consumption. In view of these
employee relationship between the findings, respondent Meralco, issued a
employer and the employees of the labor- notice of dismissaladdressed to the
only contractor. The statute establishes this petitioner. The notice cites violation of
relationship for a comprehensive purpose: Section 7, paragraph 3 of Meralco's
to prevent a circumvention of labor laws. Company Code on Employee Discipline and
The contractor is considered merely an Article 282 (a), (c), (d) and (e) of the Labor
agent of the principal employer and the Code of the Philippines as bases for the
latter is responsible to the employees of the dismissal.
labor-only contractor as if such employees Aggrieved by the decision of the
had been directly employed by the principal management, Yabut filed with the National
employer. Labor Relations Commission (NLRC) a
Petition Granted complaintfor illegal dismissal and money
NOTE: claims against Meralco and Lopez.
1. Respondent filed MR, which was denied. Labor Arbiter Antonio R. Macam
2. In its resolution, the Court upheld its rendered his Decision,declaring the
decision declaring SAPS has no petitioner illegally dismissed from the
substantial capital, therefore, labor-only service and hence, entitled to reinstatement
contractor. plus backwages and attorney's fees.
NLRC rendered its
Resolutiondismissing the herein
72 NORMAN YABUT, Petitioner, v. MANILA respondents' appeal for lack of merit.
ELECTRIC COMPANY AND MANUEL M. CA rendered the now assailed
LOPEZ, Respondents. Decisionreversing the rulings of the NLRC. In
finding the petitioner's dismissal lawful, the
FACTS: appellate court attributed unto Yabut
This case stems from a complaint for authorship of the meter tampering and
illegal dismissal and monetary claims filed by
 89

illegal use of electricity acts which it grave wrong directed against their
regarded as serious misconduct. employer.
Article 282 (a) provides that an
ISSUE: employer may terminate an employment
Whether or not petitioners dismissal because of an employee's serious
is illegal? misconduct, a cause that was present in this
case in view of the petitioner's violation of
HELD: his employer's code of conduct. Misconduct
Court of Appeals decision is is defined as the transgression of some
sustained. established and definite rule of action, a
LABOR LAW forbidden act, a dereliction of duty, willful in
Article 279 of the Labor Code of the character, and implies wrongful intent and
Philippines provides that (i)n cases of regular not mere error in judgment. For serious
employment, the employer shall not misconduct to justify dismissal, the following
terminate the services of an employee requisites must be present:
except for a just cause or when authorized (a) it must be serious;
by this Title. x x x The just causes are (b) it must relate to the performance
enumerated in Article 282, which provides: of the employee's duties; and
Article 282.Termination by employer. (c) it must show that the employee
- An employer may terminate an has become unfit to continue working for
employment for any of the following causes: the employer.
(a) Serious misconduct or willful The dismissal is also justified as the
disobedience by the employee of the lawful act imputed upon the petitioner qualifies as
orders of his employer or representative in fraud or willful breach by the employee of
connection with his work; the trust reposed in him by his employer or
(b) Gross and habitual neglect by the duly authorized representative under Article
employee of his duties; 282 (c) of the Labor Code. While the
(c) Fraud or willful breach by the petitioner contests this ground by denying
employee of the trust reposed in him by his that his position is one of trust and
employer or duly authorized representative; confidence, it is undisputed that at the time
(d) Commission of a crime or offense of his dismissal, he was holding a supervisory
by the employee against the person of his position after he rose from the ranks since
employer or any immediate member of his commencement of his employment with
family or his duly authorized representative; Meralco. As a supervisor with duty and
and power that included testing of service
(e) Other causes analogous to the meters and investigation of violations of
foregoing. contract of customers, his position can be
Significantly, tampering with electric treated as one of trust and confidence,
meters or metering installations of the requiring a high degree of honesty as
Company or the installation of any device, compared with ordinary rank-and-file
with the purpose of defrauding the Company employees.
is classified as an act of dishonesty from We emphasize that dismissal of a
Meralco employees, expressly prohibited dishonest employee is to the best interest
under company rules. It is reasonable that its not only of the management but also of
commission is classified as a severe act of labor. As a measure of self-protection
dishonesty, punishable by dismissal even on against acts inimical to its interest, a
its first commission, given the nature and company has the right to dismiss its erring
gravity of the offense and the fact that it is a employees. An employer cannot be
compelled to continue employing an
 90

employee guilty of acts inimical to the Mabalacad constituted

employer's interest, justifying loss of insubordination or disrespect towards a
confidence in him. superior officer punishable by dismissal
DENIED under the
Schedule of disciplinary sanctions and norms
of conduct, incorporated in the existing
73 GOLD CITY INTEGRATED PORT Collective
SERVICES, INC. (INPORT) vs. NLRC Bargaining Agreement ("CBA") with the
union.
FACTS:
Jose Bacalso was employed as an ISSUE:
admeasurer by the Gold City Integrated Port Whether private respondent was
Services, dismissed for a just cause.
Inc.. He was suspected by management of
under measuring cargo. One time, the cargo HELD:
control NO. Wilful disobedience of the
officer ordered two (2) other admeasurers to employer's lawful orders, as a just cause for
re-measure three (3) pallets of bananas the
which dismissal of an employee, envisages the
had already been measured by private concurrence of at least two (2) requisites:
respondent. The re-measurement revealed the
that employee's assailed conduct must have
respondent had under-measured the been wilful or intentional, the wilfulness
bananas. Bacalso felt insulted by the re- being
measurement and characterized by a "wrongful and perverse
so the next day he confronted Nigel attitude"; and the order violated must have
Mabalacad, one who had re-checked his been
work. Bacalso reasonable, lawful, made known to the
quarreled with Mabalacad in the presence of employee and must pertain to the duties
their immediate superior Gunacao. Guanaco which he had
directed Bacalso to stop provoking been engaged to discharge. Both requisites
Mabalacad and told both that being in his are present in the instant case. By private
office, they should respondent Bacalso's own admission, he felt
behave properly but a fistfight erupted then insulted by the re-measurement of the cargo
and there between him and Mabalacad. he
Bacalso had already measured. He was apparently
was then charged with assaulting a much offended by the implication he
coemployee and falsifying reports and perceived that
records of the management was uncertain either about his
company relative to the performance of his honesty or his competence or possibly both.
duties, and was preventively suspended He
pending determined to lose his temper, became very
investigation of his case by the union- angry and picked a fight with one of the
management grievance committee. Bacalso coworkers who had been instructed by their
later received common superior to carry out the re-
a notice of termination of services upon the measurement
grounds of assaulting a co-employee and of of private respondent's pallets of bananas. In
insubordination for failure to heed the process, Bacalso completely disregard ed
Guangco's order to stop provoking the
 91

courtesy and respect due from a subordinate occurred inside the offices of the Surveyors'
to his superior. Indeed, he may have been, Division, more particularly, Mr. Guangco's
consciously or otherwise, precisely sending a office,
signal to his superior officer in whose away from the view of petitioner's
presence he customers or of the general public.
provoked and then engaged in physical Considering that private
violence with his co-worker. Prior to the respondent Bacalso's unruly temper did not
fistfight, become an effective threat to his co-workers
Guangco had warned Bacalso to desist from or the
further provoking his co-worker with safety of the customers dealing with his
insulting employer, or to the goodwill of his employer,
language. This warning constituted an order and
from private respondent's immediate considering further that he had been quite
superior not candid in admitting that he had been at fault
to breach the peace and order of the as
Surveyors'(Admeasurers') Division; Guangco soon as the investigation began in the
was company level, we agree with the NLRC that
obviously attempting to maintain basic termination
employee discipline in the workplace. It does of his services was a disproportionately
not follow, heavy penalty. We believe that suspension
however, that private respondent Bacalso's without p ay
services were lawfully terminated either for three (3) months would be an adequate
under penalty for the assault on a co-worker and
Article 282 (a) of the Labor Code or under the act of
CBA Schedule of penalties. We believe that insubordination that private respondent
not Bacalso actually committed.
every case of insubordination or wilful
disobedience by an employee of a lawful
workconnected order of the employer or its 74 PERMEX INC. vs NLRC
representative is reasonably penalized with
dismissal. FACTS:
For one thing, Article 282 (a) refers to Permex initially hired Emmanuel
"serious misconduct or wilful disobedience". Filoteo on October 1, 1990, as a mechanic.
There must Eventually,
be reasonable proportionality between, on Filoteo was promoted to water treatment
the one hand, the wilful disobedience by the operator, a position he held until his
employee and, on the other hand, the termination on
penalty imposed therefor. Examination of August 29, 1994. As water treatment
the operator, Filoteo did not have a fixed
circumstances surrounding private working schedule.
respondent's assault upon his co-employee His hours of work were dependent upon the
shows that no company's shifting production schedules. N
serious or substantial danger had been One
posed by that fistfight to the well -being of evening he inquire if "butchering" of fish
his other coemployees or of the general would be done so they could start operating
public doing business with petitioner the
employer; and neither did boiler. They were advised to wait from 9:30
such behavior threaten substantial prejudice p.m. to 10:00 p.m. for confirmation. At or
for the business of his employer. The fistfight about
 92

10:00 p.m., Filoteo they were informed that must be supported by clear and convincing
there would be no "butchering" of tuna that evidence. It also means that, procedurally,
night. the
Filoteo then sought permission to go home, employee must be given notice, with
which was granted. Filoteo then hurriedly adequate opportunity to be heard, before he
got his is notified
things and dashed off to the exit gate to of his actual dismissal for cause. In the
catch the service jeep provided by Permex. present case, the NLRC found that the two-
The next fold
day, Filoteo reported for work as usual. He requirements for a valid dismissal were not
then remembered that he had to make a re- satisfied by the petitioners. First, petitioner's
entry in charge
his daily time record for the previous day. He of serious misconduct of falsification or
proceeded to the Office of the Personnel deliberate misrepresentation was not
Manager supported by the
to retime his DTR entry. Later, he received a evidence on the record. Such dismissal was
memorandum from th e Assistant Personnel too harsh a penalty for an unintentional
Officer asking him to explain, in writing, the infraction,
entry he made in his DTR. Filoteo complied not to mention that it was his first offense
and submitted his written explanation that committed without malice, and committed
same evening. Filoteo was suspended also by
indefinitely. His explanation was found others who were not equally penalized. It is
unsatisfactory. Thereafter, he was dismissed clear that the alleged false entry in private
from employment for allegedly violating respondent's DTR was actually the result of
Article 2 of the company rules and having logged his scheduled time-out in
regulations. The offense charged was advance on
entering in his DTR that he had worked from July 31, 1994. But it appears that when he
8:45 p.m. of July 31, 1994 to 7:00 a.m. of timed in, he had no idea that his work
August 1,1994, when in fact he had worked schedule
only up to 10:00 p.m. (night shift) would be cancelled. When it was
confirmed at 10:00 p.m. that there was no
ISSUE: "butchering" of tuna to be done, those who
Whether or not private respondent reported for work were allowed to go home,
was illegally terminated from his including private respondent. In fact, Filoteo
employment. even obtained permission to leave from the
Assistant Production Manager. Considering
HELD: the factory practice which management
YES. To constitute a valid dismissal tolerated,
from employment, two requisites must we are persuaded that Filoteo, in his rush to
concur: (a) catch the service vehicle, merely forgot to
the dismissal must be for any of the causes correct
provided for in Article 282 of the Labor Code; his initial time-out entry. Nothing is shown to
and prove he deliberately falsified his daily time
(b) the employee must be afforded an record to deceive the company. The NLRC
opportunity to be heard and defend himself. found that even management's own evi
This means dence
that an employer can terminate the services reflected that a certain Felix Pelayo, a co-
of an employee for just and valid causes, worker of private respondent, was also
which allowed to go
 93

home that night and like private respondent control procedures resulting in company
logged in advance 7:00 a.m. as his time-out. damages.
This
supports Filoteo's claim that it was common
practice among night-shift workers to log in ISSUE:
their Whether or not the infraction
usual time-out in advance in the daily time committed by petitioner warrants the
record. penalty of dismissal
despite the fact that it was his first offense
during his eighteen (18) long years of
75 ROLANDO APARENTE, SR. vs. NLRC and satisfactory
COCA-COLA BOTTLERS PHILIPPINES, INC. and unblemished service.

FACTS: HELD:
Rolando Aparante, Sr. was first YES. Article 282 (a) of the Labor Code
employed by private respondent Coca -Cola of the Philippines sanctions termination by
Bottlers the
Phils., Inc. (CCBPI), General Santos City Plant employer of the employees services for
as assistant mechanic in April 1970. He rose serious misconduct or willful disobedience
through the ranks to eventually hold the by the
position of advertising foreman until his employee of the lawful orders of his
termination employer or representative in connection
on May 12, 1988 for alleged violation of with his work. In
company rules and regulations. One day, he the instant case, petitioner Aparente was
met an terminated from service after having been
accident wherein he sideswiped a kid. He found
reported the incident to private respondent guilty of driving without a valid drivers
then license, which is a clear violation of the
submitted himself to the police authorities companys rules
at Polomolok, South Cotabato for and regulations. In order that an employer
investigation may dismiss an employee on the ground of
where it was discovered that petitioner had willful
no drivers license at the time of the accident. disobedience, there must be concurrence of
In at least two requisites: The employees
view thereof, an insurer of private assailed
respondents vehicles, did not reimburse the conduct must have been willful or
latter for the intentional, the willfulness being
expenses it incurred in connection with the characterized by a wrongful
kid hospitalization. Private respondent and perverse attitude; and the order
conducted violated must have been reasonable, lawful,
an investigation of the incident where made known
petitioner was given the opportunity to to the employee and must pertain to the
explain his side duties which he had been engaged to
and to defend himself but eventually private discharge. We
respondent dismissed petitioner from have found these requisites to be present in
employment for having violated the the case at bar. The extant evidence on
company rules and regulations particularly record
Sec. 12 of Rule clearly reveals the willful act of petitioner
005-85 for blatant disregard of established Aparente in driving without a valid drivers
 94

license, a magmaneho." Nuez was then required to

fact that he even tried to conceal during the explain
investigation conducted by private why he should not be administratively dealt
respondent. with for disobeying an order of their most
Such misconduct should not be rewarded senior
with re-employment and backwages, for to officer. In his written reply Nuez mentioned
do a personal appointment in justification for
so would wreak havoc on the disciplinary his
rules that employees are required to refusal to render "overtime" service and that
observe. The law "ferrying employees . . . was not a kind of
warrants the dismissal of an employee emergency that . . . warrants (the) charge of
without making any distinction between a disobedience." Later, the company
first offen der terminated
and a habitual delinquent where the totality Nuez for insubordination.
of the evidence was sufficient to warrant his
dismissal. In protecting the rights of the ISSUE:
laborer, the law authorizes neither WON Nuez was illegally terminated.
oppression nor selfdestruction of the
employer. HELD:
NO. It is the discretion of the
employer to regulate all aspects of
76 FEDERICO NUEZ vs. NLRC, PHILIPPINE employment as well as
OVERSEAS TELECOMMUNICATIONS the corresponding obligation of the workers
CORPORATION to obey company rules and regulations.
(PHILCOMSAT), ET.AL. Deliberate
disregard or disobedience of the rules
FACTS: cannot be countenanced and any
Nuez was a driver of PHILCOMSAT justification for th e
assigned to its station in Baras, Antipolo, violation is deemed inconsequential. In fact,
Rizal, from this is one ground the Labor Code provides
seven-thirty in the morning to three-thirty in for
the afternoon. At one-thirty that afternoon, termination of employment since an
Engr. employer cannot be compelled to continue
Jeremias Sevilla, the officer in charge and the retaining a
highest ranking official of the station, asked worker found guilty of maliciously
Nuez committing acts detrimental to its interests.
to drive the employees to the Makati head A contrary rule
office to collect their profit shares. Nuez would render a mockery of the regulations
declined the employees are required to observe. The
saying that he had an important personal existence of an emergency situation is
appointment right after office hours. At two- irrelevant to the charge of willful
thirty disobedience; an
that same afternoon, he also declined a opposite principle would allow a worker to
similar order given on the phone by his shield himself under his self-designed
vehicle concept of
supervisor, Pedro Sibal, reasoning that "nonemergency situation" to deliberately
"Ayaw kong magmaneho dahil may bibilhin defy the directive of the employer. Neither is
ako sa the
Lagundi. Kung gusto mo yong 'loyalist' ang resulting damage vital. The heart of the
 95

charge is the crooked and anarchic attitude cause.On appeal, the NLRC reversed the LA's
of the Decision. The CA affirmed the decision of the
employee towards his employer. Damage NLRC. It held that LREI and Sumulong failed
aggravates the charge but its absence does to establish with substantial evidence that
not the dismissal of Pacia was for a just cause.It
mitigate nor negate the employee's liability. found that Pacias initial reluctance to obey
The fact that a replacement driver was able the orders of her superiors was for a good
to reason.
perform the task could neither alter the
gravity of the charge, this responsibility ISSUE:
being personal Whether or not Pacia was illegally
to the perpetrator. The length of service dismissed.
rendered by the employee is also
inconsequential for it HELD:
does not lessen a bit the rebellious temper Court of Appeals decision is
of the employee object of the charge. We affirmed.
thus find LABOR LAW
no grave abuse of discretion in the finding of The offense of willful disobedience
the NLRC that there is a just ground for the requires the concurrence of two (2)
termination of petitioner from the services. requisites:
(1) the employee's assailed conduct
must have been willful, that is characterized
77 LORES REALTY ENTERPRISES, INC., by a wrongful and perverse attitude; and
LORENZO Y. SUMULONG III, Petitioners, v. (2) the order violated must have
VIRGINIA E. PACIA,Respondent. been reasonable, lawful, made known to the
employee and must pertain to the duties
FACTS: which he had been engaged to discharge.
Respondent Virginia E. There is nothing unlawful in the
Pacia(Pacia)was hired by Lores Realty directive of Sumulong to prepare checks in
Enterprises, Inc.(LREI). LREI's acting general payment of LREI's obligations. The
manager, petitioner Sumulong, on two availability or unavailability of sufficient
occasions, directed Pacia to prepare checks funds to cover the check is immaterial in the
as partial payment for LREI's outstanding physical preparation of the checks. Pacias
obligation to the Bank of the Philippine initial reluctance to prepare the checks,
Islands. Pacia was slow in obeying the however, which was seemingly an act of
order.When asked to explain for her refusal disrespect and defiance, was for honest and
to immediately follow the directive, Pacia well intentioned reasons. Protecting LREI
reasoned out that the funds in LREI's account and Sumulong from liability under the
were not sufficient to cover the amounts to Bouncing Checks Lawwas foremost in her
be indicated in the checks and that she only mind.It was not wrongful or willful. Neither
wanted to protect LREI from liability under can it be considered an obstinate defiance of
the Bouncing Checks Law. Pacia received a company authority.The Court takes into
notice of termination stating that she was consideration that Pacia, despite her initial
being dismissed because of her willful reluctance, eventually did prepare the
disobedience and their loss of trust and checks on the same day she was tasked to do
confidence in her.Pacia then filed a it.
Complaint for illegal dismissal. The Labor DENIED
Arbiter (LA) rendered a decision finding that
the dismissal of Pacia was for a just and valid
 96

78 Realda vs New Age Graphics Inc overtime

work constitutes willful disobedience.
Facts: Security of tenure is guaranteed by
Petitioner Billy Realda was the the Constitution but it is not an absolute rule
former machine operator of respondent and
New Age cannot be used as a legal shield by an
Graphics Inc. employee who has exhibited habitual
The company dismissed him on the tardiness
ground of repeated violations of company’s and absenteeism, and willful disobedience.
rules In Merin v. National Labor Relations
and regulations, namely: insubordination, Commission, this Court expounded on the
deliberate slowdown of work, habitual principle
tardiness, absence without official leave and of totality of infractions as follows:
inefficiency. The totality of infractions or the
Furthermore, private respondent’s number of violations committed during the
refusal to render overtime work when period
required upon of employment shall be considered in
him, contributed to losses incurred by the determining the penalty to be imposed upon
petitioner. an erring employee. The offenses committed
Nonetheless, while the CA by petitioner should not be taken singly and
recognized the existence of just causes for separately. Fitness for continued
petitioner’s employment cannot be compartmentalized
dismissal, it found that the petitioner is into tight little cubicles of aspects of
entitled to nominal damages due to character, conduct and ability separate and
Graphics, independent of each other. While it may be
Inc.’s failure to observe the procedural true that petitioner was penalized for his
requirements of due process. previous infractions, this does not and should
not
Issue: mean that his employment record would be
Whether or not the petitioner wiped clean of his infractions. After all, the
exhibited willful disobedience to a record of an employee is a relevant
reasonable order from his employer thus consideration in determining the penalty
making his dismissal valid that should be meted out since an
employee's past misconduct and present
Held: behavior must be taken together in
Yes, the dismissal is valid but there is determining the proper imposable penalty.
a lack of due process. But, the employer, is not exempt
from observing due process for every
Ratio: infraction. The
In the present case, the company’s Supreme Court found the memorandum
business is a printing press whose asking for a written explanation within 24
production schedule is sometimes flexible hours
and varying. It is only reasonable that to be unreasonable.
workers are sometimes asked to render Also, there is no indication that
overtime work in order to meet production Graphics, Inc. issued a second notice,
deadlines. informing the
The petitioner’s arbitrary defiance to petitioner of his dismissal. The respondents
Graphics, Inc.’s order for him to render admit that Graphics, Inc. decided to
terminate the petitioner’s employment after
 97

he ceased reporting for work from the time on January 20, 2006, informing them of their
he received the memorandum requiring him dismissal for the abovementioned charges
to explain and subsequent to his failure to based on the following acts: fabrication of
submit a written explanation. However, baseless money claims against the company,
there is nothing on record showing that misleading fellow co-workers to sign the
Graphics, Inc. placed its decision to dismiss malicious complaint for money claims
in writing and that a copy thereof was sent against the company, refusal to undergo the
to the petitioner. Dispositive: The petition is company's general drug test, and extorting
DENIED. The Decision of the Court of Appeals money from co-workers to fund activities
in CA-G.R. SP No. 106928 is AFFIRMED with that they were never fully informed of. Also,
MODIFICATION in that respondent New Age petitioner Dacara was dismissed for
Graphics, Inc. is hereby ordered to pay consummating his sexual relations with Co’s
petitioner Billy M. Realda nominal damages helper inside her residence and thus
in the amount of Thirty Thousand Pesos impregnating the help.
(P30,000.00) because such dismissal was for A complaint for illegal dismissal was
a just cause but there is a lack of due process. subsequently filed, alleging that the charges
against them were fabricated and that their
dismissal was prompted by Kingspoint
79 Kakampi and Its Members Panuelos vs. Express' aversion to their union activities.
Kingspoint Express & Logistics The Labor Arbiter ruled in favor of the
petitioners as the charges are purportedly
Facts: mere unsubstantiated allegations. This was
Petitioners were former drivers of affirmed by the NLRC on appeal but the
the respondent Kingspoint Express, a sole latter reversed itself on a subsequent MR
proprietorship under the name of Co which filed by Kingspoint. The CA initially reversed
is engaged in the business of transporting the NLRC’s ruling but on an MR, they too
goods. T They were dismissed from reversed their earlier ruling and favored
service on January 20, 2006 on the grounds Kingspoint. Thus, this petition for certiorari
of serious misconduct, dishonesty, loss of before the SC.
trust and confidence and commission of acts
inimical to the interest of Kingspoint Express.
Kingspoint Express issued separate
notices to explain to the individual Issue:
petitioners on January 16, 2006 the charges WON the dismissal was valid.
of dishonesty, serious misconduct and loss of
confidence by filing with the NLRC false, Ruling:
malicious and fabricated cases against the Yes, the dismissal was valid. It is
company, and their allegedly unwarranted fundamental that in order to validly dismiss
refusal to undergo drug testing. They were an employee, the employer is required to
required to submit their answer to the observe both substantive and procedural
charges within forty-eight (48) hours from due process — the termination of
receipt of the notices with a warning that employment must be based on a just or
failure to do so would mean waiver of their authorized cause and the dismissal must be
answer. They were also placed under effected after due notice and hearing.
preventive suspension in the meantime. As to the substantive requirements
Petitioners failed to submit their of due process, the employees' refusal to
written explanation within the stated period. submit themselves to drug test is a just cause
Subsequently, Kingspoint Express issued to for their dismissal.
them separate yet uniformly worded notices
 98

An employer may terminate an opportunity", which the Court construed in

employment on the ground of serious King of Kings Transport, Inc. v. Mamacas a
misconduct or willful disobedience by the period of at least five (5) calendar days from
employee of the lawful orders of his receipt of the notice.
employer or representative in connection Thus, even if Kingspoint Express'
with his work. Willful disobedience requires defective attempt to comply with procedural
the concurrence of two elements: due process does not negate the existence of
(1) the employee's assailed conduct a just cause for their dismissal, Kingspoint
must have been willful, that is, characterized Express is still liable to indemnify the
by a wrongful and perverse attitude; and, (2) dismissed employees, with the exception of
the order violated must have been Panuelos, Dizon and Dimabayao, who did
reasonable, lawful, made known to the not appeal the dismissal of their complaints,
employee, and must pertain to the duties with nominal damages in the amount of
which he had been engaged to discharge. P30,000.00.
Both elements are present in this case.
As to the first element, the dismissed 80 EVELYN J. GARCIA vs. NLRC, HOLY
employees did not deny their refusal to TRINITY ACADEMY
undergo drug testing nor did they explain
their refusal. The utter lack of reason or FACTS:
justification for their insubordination Petitioner served as school cashier
indicates that it was prompted by mere for private respondent Holy Trinity Academy
obstinacy, hence, willful and warranting of (the
dismissal. As to the second element, the school) from June 1974 until her dismissal on
subject order is relevant in the performance October 5, 1993 for alleged loss of
of their functions as drivers of Kingspoint confidence,
Express. As the NLRC correctly pointed out, gross negligence of duty, gross inefficiency
drivers are indispensable to Kingspoint and dishonesty. As school cashier, she was
Express' primary business of rendering door- the
to-door delivery services. It is common custodian of all school funds, including
knowledge that the use of dangerous drugs tuition fees, the petty cash and canteen cash
has adverse effects on driving abilities that receipts. In
may render the dismissed employees her position paper, she alleged that her
incapable of performing their duties to termination was brought about by an
Kingspoint Express and acting against its incident which
interests, in addition to the threat they pose occurred on June 15, 1993. There appeared
to the public. to be a discrepancy in one of the deposits
The existence of a single just cause is she made
enough to order their dismissal and it is now where the amount indicated in the deposit
inconsequential if the other charges against slip and the money actually received by the
them do not merit their dismissal from ba nk did not tally. A sum of P50, 000.00 was
service. Nonetheless, while Kingspoint missing and such loss was blamed exclusively
Express had reason to sever their on her by the private respondents, after
employment relations, this Court finds its considering the separate reports of the
supposed observance of the requirements of National Bureau of
procedural due process pretentious. While Investigation and the Diaz Murillo Dalupan
Kingspoint Express required the dismissed Auditing Firm. Prior to her dismissal,
employees to explain their refusal to submit petitioner was
to a drug test, the two (2) days afforded to suspended for a total of 90 days. Two
them to do so cannot qualify as "reasonable months after, she then filed a complaint for
 99

illegal On
dismissal. March 1, 1999, she again failed to properly
count the bundle of socks assigned to her.
ISSUE: Thus, on
WON petitioner was validly March 2, 1999, petitioner terminated her
dismissed for gross negligence and for loss of services on grounds of habitual absenteeism
trust and without
confidence prior leave, tardiness and neglect of work.
ISSUE:
HELD: WON Buguat was validly terminated.
YES. Bearing in mind that the position
of cashier is a highly sensitive position, HELD:
requiring YES. One of the just causes for
as it does the attributes of absolute trust and terminating an employment under Article
honesty because of the temptations 282 of the
attendant to Labor Code is gross and habitual neglect by
the daily handling of money, petitioner's acts the employee of her duties. This cause
could not help but sow mistrust an d loss of includes
confidence on the part of respondent gross inefficiency, negligence and
employer. The Court agrees with the carelessness. Such just causes is derived
Commission that from the right of the
the resulting breach of trust constitutes a employer to select and engage his
valid cause for the dismissal of petitioner. employees. In the instant case, there is no
doubt that Buguat
was habitually absent, tardy and neglectful
81 CHALLENGE SOCKS CORPORATION vs. of her duties. Habitual neglect implies
COURT OF APPEALS repeated
failure to perform ones duties for a period of
FACTS: time. Buguats repeated acts of absences
Elvie Buguat was hired by petitioner without
Challenge Socks Corporation as knitting leave and her frequent tardiness reflect her
operator. In indifferen t attitude to and lack of motivation
the course of her employment, she incurred in her
absences and tardiness without prior work. Her repeated and habitual infractions,
approval and committed despite several warnings,
had been neglectful of her duties. On May constitute
25, 1998, she failed to check the socks she gross misconduct. Habitual absenteeism
was without leave constitute gross negligence
working on causing excess use of yarn and and is
damage to the socks design. She was sufficient to justify termination of an
suspended for employee. We find the penalty of dismissal
five days and warned that a repetition of the from the
same act would mean dismissal from the service reasonable and appropriate to
service. Buguats infraction. Her repeated negligence
On February 2, 1999, she committed the is not
same infraction and was given a warning. tolerable; neither should it merit the penalty
Despite the of suspension only. The record of an
previous warnings, Buguat continued to be employee is a
habitually absent and inattentive to her task. relevant consideration in determining the
 100

penalty that should be meted out. Buguat (3) deliberately instructing the staff to follow
committed her version of the incident in order to cover
several infractions in the past and despite up the lapse; and (4) negligence and
the warnings and suspension, she continued carelessness in carrying out her duty as staff
to nurse-on-duty when the incident happened.
display a neglectful attitude towards her Respondent De Castro, with the
work. An employees past misconduct and p assistance of Medical Center Manila
resent Employees Association-AFW, filed a
behavior must be taken together in Complaint for illegal dismissal against
determining the proper imposable penalty. petitioners with prayer for reinstatement
The totality of and payment of full backwages without loss
infractions or the number of violations of seniority rights, P20,000.00 moral
committed during the period of employment damages, P10,000.00 exemplary damages,
shall be and 10% of the total monetary award as
considered in determining the penalty to be attorney's fees.
imposed upon an errin g employee. The The Labor Arbiter ruled in favor of
offenses respondent De Castro, stating that although
committed by him should not be taken singly De Castro committed the act complained of,
and separately but in their totality. Fitness being her first offense, the penalty to be
for meted should not be dismissal from service,
continued employment cannot be but merely 7 to 14 days suspension as the
compartmentalized into tight little cubicles same was classified as a less serious offense
of aspects of under the Employee's Handbook.
character, conduct, and ability separate and The NLRC reversed the decision of
in dependent of each other. It is the totality, the Labor Arbiter, stating that respondent
not De Castro lacked diligence and prudence in
the compartmentalization, of such company carrying out her duty when, instead of
infractions that Buguat had consistently personally checking on the condition of
committed which justified her dismissal. patient Causaren after she fell from the bed,
she merely sent ward-clerk orientee
Guillergan to do the same in her behalf and
82 HOSPITAL MANAGEMENT SERVICES, for influencing her staff to conceal the
INC.MEDICAL CENTER MANILA, petitioner, incident.
vs. HOSPITAL MANAGEMENT SERVICES, The CA reversed the NLRC's ruling
INC.MEDICAL CENTER MANILA EMPLOYEES and reinstated the Labor Arbiter's ruling.
ASSOCIATION-AFW and EDNA R. DE
CASTRO, respondents. ISSUE:
Whether the CA erred in affirming the
FACTS: illegal dismissal of respondent De Castro.
Respondent De Castro was a staff
nurse at Medical Center Manila. Calixijan, HELD:
HRD Officer of Medical Center Manila issued The petition is unmeritorious.
a notice of termination upon respondent De LABOR LAW - Illegal dismissals;
Castro for alleged (1) negligence to follow negligence
company policy on what to do with patient Article 282 (b) of the Labor Code
RufinaCausaren who fell from a hospital bed; provides that an employer may terminate an
(2) failure to record and refer the incident to employment for gross and habitual neglect
the physician-on-duty allowing a significant by the employee of his duties. The CA ruled
lapse of time before reporting the incident; that per the Employees Handbook of
 101

petitioner hospital, respondent De Castros offense of respondent De Castro in her nine

infraction is classified as a less serious (9) years of employment with petitioner
offense for "commission of negligent acts hospital as a staff nurse without any previous
during working time" as set forth in derogatory record and, further, as her lapse
subparagraph 11, paragraph 3 (B) of Chapter was not characterized by any wrongful
XI[10] thereof. Petitioners anchor motive or deceitful conduct, the Court
respondent De Castros termination of deems it appropriate that, instead of the
employment on the ground of serious harsh penalty of dismissal, she would be
misconduct for failure to personally attend suspended for a period of six (6) months
to patient Causaren who fell from the bed as without pay, inclusive of the suspension for
she was trying to reach for the bedpan. a period of 14 days which she had earlier
Based on her evaluation of the situation, served. Thereafter, petitioner hospital
respondent De Castro saw no necessity to should reinstate respondent Edna R. De
record in the chart of patient Causarenthe Castro to her former position without loss of
fact that she fell from the bed as the patient seniority rights, full backwages, inclusive of
did not suffer any injury and her vital signs allowances and other benefits, or their
were normal. She surmised that the incident monetary equivalent, computed from the
was not of a magnitude that would require expiration of her suspension of six (6)
medical intervention as even the patient and months up to the time of actual
her niece did not press charges against her reinstatement.
by reason of the subject incident. Petition is DENIED.
Neglect of duty, to be a ground for
dismissal, must be both gross and habitual.
Gross negligence connotes want of care in 83
the performance of one's duties. Habitual NISSAN MOTORS PHILS., INC. vs. VICTORIN
neglect implies repeated failure to perform O ANGELO
one's duties for a period of time, depending G.R. No. 164181, 14 September 2011
upon the circumstances. A single or isolated
act of negligence does not constitute a just FACTS:
cause for the dismissal of the employee. Angelo was employed by Nissan as o
Negligence is defined as the failure to ne of its payroll staff. His sick leave and vac
exercise the standard of care that a ation leave resulted in the non-
reasonably prudent person would have preparation of the payroll for that particular
exercised in a similar situation. The Court period.
emphasizes that the nature of the business He then received a Memorandum inf
of a hospital requires a higher degree of orming him that the company is considering
caution and exacting standard of diligence in his dismissal from employment on the grou
patient management and health care as nds of serious misconduct, willful disobedie
what is involved are lives of patients who nce and gross neglect of duties. He was the
seek urgent medical assistance. An act or n placed on preventive suspension effective
omission that falls short of the required immediately. Unsatisfied with his answer, t
degree of care and diligence amounts to hey then issued a Notice of Termination.
serious misconduct which constitutes a
sufficient ground for dismissal. ISSUE:
However, in some cases, the Court Whether or not an employee dismiss
had ruled that sanctioning an erring ed on just cause may be entitled to separati
employee with suspension would suffice as on pay.
the extreme penalty of dismissal would be
too harsh. Considering that this was the first RULING:
 102

Yes. Although the dismissal was legal by the bank, and she was reinstated.
, respondent is still entitled to a separation
pay as a measure of financial assistance, co ISSUES
nsidering his length of service and his poor I. Whether the position of a credit
physical condition which was one of the rea investigator is one imbued with the trust and
sons he filed a leave of absence. As a genera confidence of the employer
l rule, an employee who has been dismissed II. Whether the act of falsifying the
for any of the just causes enumerated unde credit and appraisal reports and that of
r Article 282 of the Labor Code is not entitle affixing ones signature in a false report by
d to separation pay. Although by way of exc another is one and the same degree of
eption, the grant of separation pay or some misconduct which warrants the same
other financial assistance may be allowed to penalty
an employee dismissed for just causes on t
he basis of equity, inspired by compassionat HELD:
e and social justice. While it is an employers basic right
to freely select or discharge its employees,
84 PHILIPPINE NATIONAL BANK, Petitioner, if only as a measure of self-protection
v. DAN PADAO, Respondent. against acts inimical to its interest, the law
sets the valid grounds for termination as
FACTS: well as the proper procedure to be followed
On August 21, 1981, Padao was hired when terminating the services of an
by PNB as a clerk at its Dipolog City Branch. employee.
He was later designated as a credit Thus, in cases of regular
investigator in an acting capacity on employment, the employer is prohibited
November 9, 1993. He was ultimately from terminating the services of an
promoted to the position of Loan and Credit employee except for a just or authorized
Officer IV. cause. Such just causes for which an
In 1994, PNB became embroiled in a employer may terminate an employee are
scandal involving "behest loans" as enumerated in Article 282 of the Labor Code:
anomalous loans were being granted by its (a) serious misconduct or willful
officers. In line with this, Padao was disobedience by the employee of the lawful
administratively charged with Dishonesty, orders of his employer or representative in
Grave Misconduct, Gross Neglect of Duty, connection with his work; (b) Gross and
Conduct Prejudicial to the Best Interest of habitual neglect by the employee of his
the Service, and violation of R.A. No. 3019 duties; (c) Fraud or willful breach by the
(Anti-Graft and Corrupt Practices Act). The employee of the trust reposed in him by his
case against Padao was grounded on his employer or duly authorized representative;
having allegedly presented a deceptively (d) Commission of a crime or offense by the
positive status of the business, credit employee against the person of his employer
standing/rating and financial capability of 13 or any immediate family member of his
loan applicants. After due investigation, PNB family or his duly authorized representative;
found Padao guilty of gross and habitual and (e) Other causes analogous to the
neglect of duty and ordered him dismissed foregoing. Further, due process requires that
from the bank. Padao appealed to the banks employers follow the procedure set by the
Board of Directors. Velasco, Padaos Labor Code. Under Art. 277, workers may be
colleague, was also held guilty of the dismissed only for a just cause and enjoy the
offenses charged, and was similarly meted right of due process which includes notice
the penalty of dismissal. Her motion for and the ample opportunity to be heard and
reconsideration, however, was later granted to defend his or her side.
 103

In this case, Padao was dismissed by doing so, he repeatedly failed to perform his
PNB for gross and habitual neglect of duties duties as a credit investigator.
under Article 282 (b) of the Labor Code.
Gross negligence connotes want of care in
the performance of ones duties, while 85 MANSION PRINTING CENTER and
habitual neglect implies repeated failure to CLEMENT CHENG, Petitioners, v.
perform ones duties for a period of time, DIOSDADO BITARA, JR., Respondent.
depending on the circumstances. Padao was
accused of having presented a fraudulently FACTS:
positive evaluation of the business, credit Petitioners engaged the services of
standing/rating and financial capability 13 respondent as a helper (kargador).
loan applicants. Respondent was later promoted as the
The role that a credit investigator companys sole driver tasked to pick-up raw
plays in the conduct of a banks business materials for the printing business, collect
cannot be overestimated. The amount of account receivables and deliver the products
loans to be extended by a bank depends to the clients within the delivery schedules.
upon the report of the credit investigator on Petitioners aver that the timely
the collateral being offered. If a loan is not delivery of the products to the clients is one
fairly secured, the bank is at the mercy of the of the foremost considerations material to
borrower who may just opt to have the the operation of the business.It being so,
collateral foreclosed. If the scheme is they closely monitored the attendance of
repeated a hundredfold, it may lead to the respondent. They noted his habitual
collapse of the bank. tardiness and absenteeism.
Padao's repeated failure to discharge Thus, petitioners issued a
his duties as a credit investigator of the bank Memorandumrequiring respondent to
amounted to gross and habitual neglect of submit a written explanation why no
duties under Article 282 (b) of the Labor administrative sanction should be imposed
Code. He not only failed to perform what he on him for his habitual tardiness.
was employed to do, but also did so Despite respondents undertaking to
repetitively and habitually, causing millions report on time, however, he continued to
of pesos in damage to PNB. Thus, PNB acted disregard attendance policies.
within the bounds of the law by meting out Consequently, Davis Cheng, General
the penalty of dismissal, which it deemed Manager of the company and son of
appropriate given the circumstances. petitioner Cheng, issued another
The CA was correct in stating that Memorandum(Notice to Explain) requiring
when the violation of company policy or respondent to explain why his services
breach of company rules and regulations is should not be terminated. He personally
tolerated by management, it cannot serve as handed the Notice to Explain to respondent
a basis for termination. Such ruling, but the latter, after reading the directive,
however, does not apply here. The principle refused to acknowledge receipt thereof.He
only applies when the breach or violation is did not submit any explanation and,
one which neither amounts to nor involves thereafter, never reported for work.
fraud or illegal activities. In such a case, one Davis Cheng personally served
cannot evade liability or culpability based on another Memorandum(Notice of
obedience to the corporate chain of Termination) upon him informing him that
command. the company found him grossly negligent of
Padao, in affixing his signature on the his duties, for which reason, his services
fraudulent reports, attested to the were terminated.
falsehoods contained therein. Moreover, by
 104

On even date, respondent met with The imputed absence and tardiness
the management requesting for of the complainant are documented. He
reconsideration of his termination from the faltered on his attendance 38 times of the 66
service. However, after hearing his position, working days. His last absences on 11, 13, 14,
the management decided to implement the 15 and 16 March 2000 were undertaken
Memorandum. Nevertheless, the without even notice/permission from
management, out of generosity, offered management. These attendance
respondent financial assistance in the delinquencies may be characterized as
amount ofP6,110.00 equivalent to his one habitual and are sufficient justifications to
month salary. Respondent demanded that terminate the complainants employment.
he be given the amount equivalent to two (2) On this score,Valiao v. Court of
months salary but the management declined Appealsis instructive:
as it believed it would, in effect, reward xxx It bears stressing that petitioners
respondent for being negligent of his duties. absences and tardiness were not isolated
Respondent filed a complaintfor incidents but manifested a pattern of
illegal dismissal against the petitioners habituality. xxx The totality of infractions or
before the Labor Arbiter. the number of violations committed during
Labor Arbiter dismissed the the period of employment shall be
complaint for lack of merit. considered in determining the penalty to be
On appeal to the National Labor imposed upon an erring employee. The
Relations Commission, the findings of the offenses committed by him should not be
Labor Arbiter was AFFIRMEDen toto. taken singly and separately but in their
Before the Court of Appeals, totality. Fitness for continued employment
respondent sought the annulment of the cannot be compartmentalized into tight little
Commissions Resolution on the ground that cubicles of aspects of character, conduct,
they were rendered with grave abuse of and ability separate and independent of
discretion and/or without or in excess of each other.
jurisdiction. InValiao,we definedgross
The Court of Appeals found for the negligenceas want of care in the
respondent and reversed the findings of the performance of ones dutiesandhabitual
Commission. neglectas repeated failure to perform ones
duties for a period of time, depending upon
ISSUE: the circumstances.51 These are not overly
Whether or not respondent is illegally technical terms, which, in the first place, are
dismissed? expressly sanctioned by the Labor Code of
the Philippines, to wit:
HELD: ART. 282.Termination by employer.-
NLRC's decision is reinstated. An employer may terminate an employment
LABOR LAW for any of the following causes:
In order to validly dismiss an (a) xxx
employee, the employer is required to (b)Gross and habitual neglect by the
observe both substantive and procedural employee of his duties;
aspects the termination of employment Xxx
must be based on a just or authorized cause Clearly, even in the absence of a
of dismissal and the dismissal must be written company rule defining gross and
effected after due notice and hearing. habitual neglect of duties, respondents
We, therefore, agree with the Labor Arbiters omissions qualify as such warranting his
findings, to wit: dismissal from the service.
 105

We cannot simply tolerate injustice falsification of the entries for February 19

to employers if only to protect the welfare of and 20, 1983 in their time cards,
undeserving employees. As aptly put by then complainant Mi solas was caught redhanded
Associate Justice Leonardo A. Quisumbing: by Security Guard Romeo Martin at 7:45
Needless to say, so irresponsible an A.M. on March 2, 1983
employee like petitioner does not deserve a punching in not only his own time card but
place in the workplace, and it is within the also the time cards of Delen and Querubin (p.
managements prerogative xxx to terminate 51,
his employment. Even as the law is solicitous Rollo). Seeing Misolas in a tight fix, Querubin
of the welfare of employees, it must also rushed to the bundy clock a nd punched in a
protect the rights of an employer to exercise time
what are clearly management prerogatives. card (which turned out to be the card of one
As long as the companys exercise of those Rodrigo de Castro) to save Misolas and to
rights and prerogative is in good faith to make it
advance its interest and not for the purpose appear to Martin that he (Querubin),
of defeating or circumventing the rights of punched in his own time card. Hence, he was
employees under the laws or valid dismissed.
agreements, such exercise will be upheld.
Procedural due process entails ISSUE:
compliance with the two-notice rule in WON complainants were validly
dismissing an employee, to wit: (1) the terminated.
employer must inform the employee of the
specific acts or omissions for which his HELD:
dismissal is sought; and (2) after the YES. The falsification and fraud which
employee has been given the opportunity to the private respondents committed against
be heard, the employer must inform him of their
the decision to terminate his employment. employer were inexcusable. Major
REMANDED Asaytuno's initials on the false entries in
their time cards did
not purge the documents of their falsity.
86 SAN MIGUEL CORPORATION vs. Their acts constituted dishonesty and
NLRC serious
misconduct, lawful grounds for their
FACTS: dismissal under Art. 282, sub-pars. (a) and
The complainants were former (c), of the Labor
security guards of the petitioner which Code, which provides: ART. 282. Termination
dismissed them by employer. An employer may terminate an
for falsification of their lame cards. They employment for any of the following just
made false entries in their time cards causes: (a) Serious misconduct or willful
showing that disobedience
they reported for work on February 19 and by the employee of the lawful orders of his
20, 1983 when the truth was that they went employer or representative in connection
on a with his
hunting tap to San Juan, Batangas, with their work. xxx xxx xxx (c) Fraud or willful breach
chief Major Martin Asaytuno, then head of by the employee of the trust reposed in him
the by his
Administrative Services Department of the employer or duly authorized representative.
Security Directorate of the petitioner.
Besides the
 106

87 NATIONAL SUGAR REFINERIES trust and confidence. It is only through the

CORPORATION (NASUREFCO) vs. NLRC and issuance by Pabiona of a Refined Sugar
SUSAN PABIONA Delivery Order that the planters could avail
of the
FACTS: refined sugar of NASUREFCO. The rule is
Pabiona was appointed as Sugar settled that if the employee is guilty of
Accountant-Bookkeeper. She was tasked to breach of trust
maintain or that his employer has justifiable reason to
records of all transactions pertaining to the distrust him, the labor tribunal cannot justly
Raw and Refined Sugar Exchange Program, deny
validate the freedom and authority to dismiss his
Raw Sugar Quedans submitted by Exchange employee. The basic premise for dismissal
participants prior to issuance of the Refined on the
Sugar ground of loss of confidence is that the
Delivery Orders and prepare and issue employee concerned holds a position of
Refined Sugar Delivery Orders only after trust and
validation confidence. It is the breach of this trust that
procedures have been properly complied results in the employers loss of confidence in
with. When the books of NASUREFCO were the
audited in employee. Under Art. 282 of the Labor Code,
1990 anomalous and irregular transactions as amended, loss of confidence would be the
were uncovered in the Raw Sugar Movement result of fraud or willful breach by the
Report. NASUREFCO found Pabionas written employee of the trust reposed in him by his
explanation flawed, unsatisfactory. Hence, employer or
NASUREFCO charged Pabiona with several duly authorized representative, a just cause
violations of accounting policies. A formal for termination. It cannot be gainsaid that
investigation was conducted thereafter, the
NASUREFCO terminated the services of breach of trust must be related to the
Pabiona for performance of the employee's functions.
willful violation of company policies, gross The infractions
and habitual neglect of duties, and willful committed by Pabiona were directly within
breach of the purview of her job description. It was
trust. Complainant herself admits that she only
may be negligent yet it was not gross and through her active participation and
habitual; involvement in the illicit infringement of the
that her acts in violating company policies as companys
basis for her dismissal may be viewed by accounting procedures that some clients of
respondent as breach of trust, yet the same NASUREFCO were able to withdraw refined
is not wilful. sugar in
larger quantities to the prejudice of the
ISSUE: latter.
WON the dismissal of Pabiona was
for a just and valid cause
88 ALEX A. FALGUERA vs. NLRC, PHILIPPINE
HELD: REFINING CO. (PRC) or UNILEVER-PRC, and
YES. The preparation and validation JESUS
of documents for purposes of withdrawing JAVELONA
refined
sugar from NASUREFCO's warehouse involve FACTS:
 107

Falguera was an employee of YES. It is not disputed that the

Philippine Refining Co., Inc., now known as petitioner is a rank-and-file employee.
Unilever Ordinarily, a
Philippines (PRC), Inc. One day, the assistant rankand-file employee is not reposed with a
soapery engineer of the Company observed high degree of trust and confidence
an expected of a
unusual increase in the reported requisitions supervisory or managerial employee. It
by the soapery department of Parker packing must, however, be noted that the petitioner
materials for the month of June. Upon his served as a
examination of the green copies of the MRs warehouseman and was in charge of the
of the custody, safekeeping, and release of the
soapery department, he discovered that Company's
P27,025.00 worth of Parker packing materials. The nature of his work and the
materials scope and special character of his duties,
chargeable to his department could not be therefore,
accounted for and were not reflected in the involved utmost trust and confidence.
said Among the just causes or valid grounds for
copies. He therefore sought the original termina tion
white copies of the MRs from the accounting of employment by the employer is "fraud or
department. A meticulous scrutiny disclosed willful breach by the employee of the trust
that while the original MRs contained entries reposed
of in him by his employer or duly authorized
the packing items worth P27,050.00, they, representative." Ordinary breach will not
however, showed alterations, suffice; it
superimpositions, and must be willful and without justifiable
erasures. Pending investigation, the excuse; there must be basis therefor, and it
petitioner was placed under preventive must be
suspension supported by substantial evidence and not
pending the investigation of the anomaly. merely by the whims or caprice of the
Upon investigation, it found that eight employer. In
original MRs the instant case, we find no difficulty in
were tampered by two engineering agreeing with the public respondents that
storemen, in particular, Falguera and Felipe the
Viado. The petitioner committed willful breach of the
latter admitted having tampered one MR trust and confidence reposed in him by the
and offered to testify against the petitioner. Company.
Thereafter, Falguera received a letter signed
by Javelona informing him that the Company
was 89 JAMES BEN L. JERUSALEM, Petitioner, v.
terminating his employment for loss of KEPPEL MONTE BANK, HOE ENG HOCK,
confidence and breach of trust, effective as SUNNY YAP and JOSEFINA PICART,
of the time Respondents.
he was placed under preventive suspension.
FACTS:
ISSUE: James Ben L. Jerusalem (James) was
WON Falguera’s termination was employed by Keppel Monte Bank (Keppel) as
valid. Assistant Vice-President and was later was
assigned as Head of the newly created VISA
HELD: Credit Card Department. The bank
 108

subsequently re-organized the said

Department and reduced it to a mere unit. ISSUE:
Afterwards, James, carrying the same rank, Whether Keppel legally terminated
was reassigned as Head of the Marketing James’s employment on the ground of willful
and Operations of the Jewelry Department. breach of trust and confidence.
James received from Jorge Javier
(Jorge) a sealed envelope said to be HELD:
containing VISA Card application forms. The Petition is granted.
Jorge is a Keppel Visa Card Holder since LABOR LAW : Termination of
December 1998. James immediately handed Employment
over the envelope with accomplished Article 282(c) of the Labor Code
application forms to the VISA Credit Card prescribes two separate and distinct grounds
Unit. All in all, the VISA credit card for termination of employment, namely: (1)
applications referred by Jorge which James fraud; or (2) willful breach by the employee
forwarded to the VISA Credit Card Unit of the trust reposed in him by his employer
numbered 67, all of which were or duly authorized representative. In order
subsequently approved. As it turned out, all to constitute a just cause for dismissal, the
the accounts under these approved act complained of must be ‘work-related’
applications became past due. such as would show the employee
James received a Notice to Explain concerned to be unfit to continue working
why no disciplinary action should be taken for the employer.
against him for referring/endorsing fictitious There are 2 requisites for dismissal
VISA card applicants. He explained that he on the ground of loss of trust and
had no participation in the processing of the confidence, these are: 1) employee
VISA card applications since he was no concerned must be holding a position of
longer connected with the VISA Credit Card trust and confidence; and 2) there must be
Unit at the time of such transactions. He an act that would justify the loss of trust and
explained that he can only endorse the confidence. In the case at hand, the first
applications referred by Jorge to the VISA requisite is present for James held a a
Credit Card Unit because he was already position of trust and confidence as Assistant
transferred to Jewelry Department, as Head. Vice-President of the Jewelry Department.
However, he was issued a a Notice of As for the second requisite, the court ruled
Termination informing him that he was that Keppel’s evidence against James fails to
found guilty of breach of trust and clearly and convincingly establish a willful
confidence for knowingly and maliciously breach of trust.
referring, endorsing and vouching for VISA From the findings of both the Labor
card applicants who later turned out to be Arbiter and the NLRC it is clear that James did
impostors resulting in financial loss to nothing wrong when he handed over to
Keppel. Thus, the filing o a complaint foe Marciana, the unit head, the envelope
illegal dismissal. containing the applications of persons under
The LA found Keppel guilty of illegal the referred accounts of Jorge who were
dismissal and ordered the payment of later found to be fictitious. As the records
backwages from the time of his illegal now stand, James was no longer connected
termination and in lieu of reinstatement, a with the VISA Credit Card Unit when the 67
separation pay should be given. The NLRC applications for VISA card were approved. At
affirmed the LA’s decision. However, the CA such time, he was already the Head of the
reversed and set aside the said decision and Marketing and Operations of the Jewelry
dismissed the complaint. Department. His act therefore of forwarding
the already accomplished applications to the
 109

VISA Credit Card Unit is proper as he is not in terminated Lopez's employment effective
any position to act on them. The processing immediately.[6]
and verification of the identities of the Lopez asked the bank for
applicants would have been done by the reconsideration.[7] In response, the bank,
proper department, which is the VISA Credit through the respondent officers, met with
Card Unit. Therefore, it is incumbent upon Lopez at its headquarters in Cubao, Quezon
Marciana as Unit Head to have performed City on September 25, 2003. Lopez came
her duties. As correctly observed by the with his lawyer (Atty. Edmundo V.
Labor Arbiter, Keppel had gone too far in Buensuceso) and a military man (one Col.
blaming James for the shortcomings and Flordeliza). After the meeting, the bank
imprudence of Marciana. The invocation of found no reason to reconsider and
Keppel of the loss of trust and confidence as reiterated its decision to dismiss Lopez.[8]
ground for James’s termination has Lopez filed a complaint for illegal
therefore no basis at all. Thus, the Court dismissal and money claims against the
declared that such dismissal based on the bank, Bosano and Tong.
ground of loss of trust and confidence was
illegal. The Compulsory Arbitration Proceedings
Therefore, the petition is denied. Lopez alleged before the labor
arbiter that he issued the POs as part of his
strategy to enhance the bank's business, in
90 Elmer Lopez vs Keppel Bank Philippines, line with his duty as branch manager to
Inc. promote the growth of the bank. He claimed
that the bank honored the first PO for P1.8M
The Antecedents from which the bank derived an income of
The facts, as set out in the assailed CA P142,000.00. He added that the second PO
decision, are summarized below. did not materialize because Mr. James Puyat
Petitioner Elmer Lopez was the Concepcion, a Hertz incorporator and
Branch Manager of the respondent Keppel director who opened the Hertz account,
Bank Philippines, Inc. (bank) in Iloilo City. stopped depositing with the bank because of
Allegedly, through his efforts, Hertz the negative credit rating he received from
Exclusive Cars, Inc. (Hertz) became a client of the bank's credit committee. Allegedly, the
the bank. committee discovered that James Puyat
By notice dated August 12, Concepcion had several pending court cases.
[4]
2003, the bank asked Lopez to explain in For its part, the bank denied
writing why he should not be disciplined for approving the first PO, arguing that Lopez
issuing, without authority, two purchase did not have the authority to issue the POs
orders (POs) for the Hertz account for the Hertz account as there was a standing
amounting to a total of P6,493,000.00, advice that no Hertz loan application was to
representing the purchase price of 13 Suzuki be approved. It stressed that Lopez
Bravo and two Nissan Exalta vehicles. committed a serious violation of company
Lopez submitted his written rules when he issued the POs.
explanation on the same day,[5] but the bank In a decision dated April 28,
refused to give it credit. Through [9]
2004, Labor Arbiter Cesar D. Sideño ruled
respondents Manuel Bosano III (Vice- that Lopez was illegally dismissed.
President and Head of Retail Banking Accordingly, the labor arbiter ordered
Division/Consumer Banking Division) and Lopez's immediate reinstatement, and
Stefan Tong Wai Mun (Vice- awarded him backwages of P392,000.00,
President/Comptroller), the bank moral and exemplary damages of P8M, and
P550,000.00 -- the purchase price of a
 110

Toyota Revo which Lopez allegedly brought been dismissed on the ground of non-
over from his stint with Global Bank (now perfection; and (2) affirming the decision of
Metrobank). The labor arbiter found that the NLRC that he was dismissed for a just
contrary to the bank's claim, the evidence cause (loss of trust and confidence) and that
showed that Lopez had been issuing POs he was afforded due process.
which the bank had paid, including the first Lopez argues, with respect to the first
of the two POs that led to his dismissal.[10] assignment of error, that the bank failed to
On appeal by the bank, the National comply with Sections 4 and 6, Rule VI, of the
Labor Relations Commission (NLRC) 2002 Rules of Procedure of the NLRC.[18] He
rendered a decision on October 11, points out that the bank did not file a notice
2005[11] reversing the labor arbiter's ruling. It of appeal together with its memorandum of
dismissed the complaint for lack of merit. appeal, which in turn was not supported by
The NLRC found merit in the bank's a certificate of non-forum shopping; and
submission that by issuing the questioned neither did the bank furnish him, as appellee,
POs without authority and against the bank's a certified copy of the appeal bond.
express orders, Lopez thereby committed a On the substantive aspect of the
willful disobedience against his superiors -- a case, Lopez posits that the bank failed to
sufficient basis for the bank to lose its trust justify his dismissal on the ground of loss of
and confidence in him as branch manager. It trust and confidence. He insists that, as
thus found that Lopez had been dismissed branch manager, he had the authority to
for cause after the observance of due issue POs as in fact he issued several of them
process. Lopez moved for reconsideration, in the past, which POs were honored and
but the NLRC denied the motion in its paid by the bank. The labor arbiter properly
resolution of January 25, 2006.[12] Lopez relied on the past transactions in his
sought relief from the CA through a petition decision. These included, he reiterates, the
for certiorari, charging the NLRC with grave first PO for the Hertz account which was paid
abuse of discretion for setting aside the labor by the bank on July 18, 2003, a transaction
arbiter's decision. where the bank even earned a substantial
income (P142,000.00). He maintains that the
The CA Decision bank failed to substantiate its position that
On December 19, 2006, the CA he was not authorized to issue the POs. He
rendered its now assailed adds that the bank's claim that his issuance
decision,[13]denying the petition and of the POs exposed the bank to financial loss
affirming the October 11, 2005 decision of is a lame excuse to justify the termination of
the NLRC. It fully agreed with the NLRC his employment.
finding that Lopez had not been illegally Lopez argues that his dismissal was a
dismissed. mere afterthought on the part of the bank
Lopez moved for, but failed to obtain, management, particularly Bosano, to cover
a reconsideration of the CA decision. The CA up its embarrassment when he (Lopez) made
denied the motion on February 7, 2007.[14] inquiries and discovered that Hertz's James
Puyat Concepcion had no pending court
The Case for Lopez cases and was therefore credit worthy. He
Through the present petition,[15] the adds that assuming that he did not have the
reply to the bank's comment dated February authority to issue POs, still, he cannot be
11, 2008,[16] and the memorandum dated held guilty of willful disobedience; even if he
September 22, 2008,[17] Lopez entreats the had been guilty, dismissal was a very harsh
Court to nullify the CA decision, contending penalty.
that the CA erred in: (1) not ruling that the Finally, Lopez submits that the bank
bank's appeal with the NLRC should have failed to accord him due process because the
 111

bank did not give him the opportunity to with his personal decision. It argues that in
prepare for his defense. He points out that this situation, the law (Labor Code) provides
his written explanation (dated August 12, protection to the employer through its
2003)[19] preceded the bank's letter (of the management prerogative rights and the
same date)[20] that required him to explain right to dismiss employees on just and valid
why he issued the POs in question. Lopez grounds.
contends in this regard that on August 12, The bank refutes Lopez's contention
2003, he went to Bosano's office in Quezon that there was no willful disobedience that
City all the way from Iloilo City and there, he warranted his dismissal. It points out that
was cornered by Bosano who verbally there was an order for him not to proceed
instructed him to immediately write down with the Hertz loan application. The order
his explanation even before he was served was very reasonable as it is the standard
with the bank's August 12, 2003 letter. He policy of every bank to conduct an
maintains that Bosano's preemptive move investigation on the credit worthiness of any
deprived him of the opportunity to secure loan applicant. Since it appeared from the
the services of a counsel. investigation of its credit committee that
While Lopez believes his dismissal to James Puyat Concepcion of Hertz had
be illegal, he does not seek reinstatement various court cases, it was only proper for
due to the antagonism that has developed the bank to put on hold the loan application
between him, and the bank and its officers, of Hertz until the adverse finding could be
due to the present case. He only asks for cleared. It insists that Lopez willfully and
separation pay of one month pay for every knowingly disobeyed this order.
year of service, full backwages, allowances Further, the bank questions Lopez's
and other benefits. Additionally, he prays for submission, through a supplemental
moral and exemplary damages, as well as addendum to his position paper, of evidence
attorney's fees, to compensate him for a that it honored and paid POs issued by Lopez
dismissal that was attended by bad faith and in the past. It maintains that it was not
effected in a wanton, oppressive and furnished a copy of this submission; hence, it
malevolent manner. was unable to controvert this evidence.
On the procedural due process issue,
The Case for the Bank and its Officers, the bank denies Lopez's allegation that he
Through its comment to the was not given the opportunity to defend
petition[21] and memorandum,[22] the bank himself. It points out that both the NLRC and
submits that the CA committed no reversible the CA confirmed that Lopez was not
error in denying Lopez's petition deprived the opportunity to be heard; the
for certiorari, and in affirming the ruling of opportunity commenced with: (1) the notice
the NLRC that Lopez was dismissed for a just for him to explain his side regarding his
cause and after due process. unauthorized issuance of POs; (2) the notice
The bank is puzzled why Lopez is of his termination from employment; and (3)
standing firm on his position that he did the hearing called in response to his motion
nothing wrong when he issued the for reconsideration where he was assisted by
questioned POs despite the express directive his lawyer and his soldier friend.
not to proceed with the Hertz loan
application unless its adverse credit The Court's Ruling
investigation report is explained to the
bank's credit committee. It posits that no The procedural issue
bank would gamble to maintain as branch Lopez faults the CA for not ruling that
manager a person who dares to supplant a the bank's appeal to the NLRC should have
major decision of the bank's top leadership been dismissed for non-perfection. He
 112

argues that no notice of appeal accompanied recommend such managerial actions. To the
the memorandum of appeal; neither was second class belong cashiers, auditors,
there a certificate of non-forum shopping property custodians, or those who, in the
nor any copy furnished to him of the certified normal and routine exercise of their
true copy of the appeal bond. functions, regularly handle significant
The procedural question is a non- amounts of money or property.[26]
issue. Lopez did not raise it before the CA; in As branch manager, Lopez clearly
fact, he challenged the NLRC decision of occupies a "position of trust." His hold on his
October 11, 2005[23] on its merits and not on position and his stay in the service depend
its form. We, therefore, see no need to on the employer's trust and confidence in
further discuss this argument. him and on his managerial
services. [27] According to the bank, Lopez
The merits of the case betrayed this trust and confidence when he
On the substantive aspect of the issued the subject POs without authority and
case, we note that Lopez was dismissed from despite the express directive to put the
the service by reason of loss of trust and client's application on hold. In response,
confidence, a just cause for an employee's Lopez insists that he had sufficient authority
dismissal under the law.[24] Lopez insists to act as he did, as this authority is inherent
though that the act which triggered the in his position as bank manager. He points
dismissal action does not justify his to his record in the past when he issued POs
separation from the service. which were honored and paid by the bank
and which constituted the arbiter's
Is Lopez liable for loss of trust and "overwhelming evidence"[28] in support of
confidence for issuing the two disputed the finding that "complainant's dismissal
POs? from work was without just cause, hence,
The right of an employer to freely illegal."[29]
select or discharge his employee is a We disagree with Lopez's
recognized prerogative of management; an contention. Despite evidence of his past
employer cannot be compelled to continue exercise of authority (as found by the labor
employing one who has been guilty of acts arbiter), we cannot disregard evidence
inimical to its interests. When this happens, showing that in August 2003, the bank
the employer can dismiss the employee for specifically instructed Lopez not to proceed
loss of confidence.[25] with the Hertz loan application because of
At the same time, loss of confidence the negative credit rating issued by the
as a just cause of dismissal was never bank's credit committee. We find it
intended to provide employers with a blank undisputed that Lopez processed the loan
check for terminating employment. Loss of despite the adverse credit rating. In fact, he
confidence should ideally apply only (1) to admitted that he overlooked the "control
cases involving employees occupying aspects" of the transaction as far as the bank
positions of trust and confidence, or (2) to was concerned because of his eagerness to
situations where the employee is routinely get a bigger share of the market.[30]
charged with the care and custody of the Lopez's good intentions, assuming
employer's money or property. To the first them to be true, are beside the point for,
class belong managerial ultimately, what comes out is his defiance of
employees, i.e., those vested with the a direct order of the bank on a matter of
powers and prerogatives to lay down business judgment. He went over the heads
management polices and/or to hire, of the bank officers, including the credit
transfer, suspend, lay-off, recall, discharge, committee, when, based on inquiries he
assign or discipline employees, or effectively made on his own regarding the credit
 113

worthiness of James Puyat Concepcion, he in terminating Lopez's employment by

simply proceeded to act on the basis of his reason of loss of trust and confidence. He
own judgment. Evident in his written admitted issuing the two POs, claiming
explanation[31] was his failure to inform the merely that he had the requisite authority.
credit committee of his own efforts to check He could not present any proof in this
on the committee's adverse findings against regard, however, except to say that it was
Hertz and his independent action based part of his inherent duty as bank manager.
solely on his own authority. He also claimed that the bank acquiesced to
As a bank official, the petitioner must the issuance of the POs as it paid the first PO
have been aware that it is basic in every and the POs he issued in the past. This
sound management that people under one's submission flies in the face of the bank's
supervision and direction are bound to directive for him not to proceed unless
follow instructions or to inform their matters are cleared with the bank's credit
superior of what is going on in their committee. The bank had a genuine concern
respective areas of concern, especially over the issue as it found through its credit
regarding matters of vital interest to the committee that Hertz was a credit risk.
enterprise. Under these facts, we find it Whether the credit committee was correct
undisputed that Lopez disobeyed the bank's or not is immaterial as the bank's direct
directive to put the Hertz loan application on order left Lopez without any authority to
hold, and did not wait until its negative credit clear the loan application on his own. After
rating was cleared before proceeding to act. this defiance, we cannot blame the bank for
That he might have been proven right is losing its confidence in Lopez and in
immaterial. Neither does the submission separating him from the service.
that the bank honored and paid the first PO
and even realized a profit from the The due process issue
transaction, mitigate the gravity of Lopez's As the NLRC and the CA did, we find
defiance of the directive of higher authority Lopez to have been afforded due process
on a business judgment. What appears clear when he was dismissed. He was given the
is that the bank cannot in the future trust the required notices. More importantly, he was
petitioner as a manager who would follow actually given the opportunity to be heard;
directives from higher authorities on when he moved for reconsideration of the
business policy and directions. The bank can bank's decision to terminate his
be placed at risk if this kind of managerial employment, it scheduled a hearing where
attitude will be repeated, especially if it he appeared together with his lawyer and a
becomes an accepted rule among lower military man. This was an opportunity to be
managers. heard that the law recognizes.
In Nokom v. NLRC,[32] we reiterated In fine, we find no merit in the
the guidelines for the application of loss of petition.
confidence as follows: (1) loss of confidence, WHEREFORE, premises considered,
should not be simulated; (2) it should not be we hereby DENY the petition for lack of
used as a subterfuge for causes which are merit. The assailed decision and resolution
improper, illegal or unjustified; (3) it may not of the Court of Appeals are AFFIRMED. Costs
be arbitrarily asserted in the face of against petitioner Elmer Lopez.
overwhelming evidence to the contrary; and SO ORDERED.
(4) it must be genuine, not a mere
afterthought to justify an earlier action taken
in bad faith.
Under the circumstances of this case,
we are convinced that the bank was justified
 114

91 Jumuad vs. Hi-Flyer Food, G.R. No.

187887, September 7, 2011 HELD:
The Court is convinced that Jumuad
Facts: cannot be dismissed on the ground of gross
Petitioner Pamela Florentina P. and habitual neglect of duty. The Court notes
Jumuad began her employment with the apparent neglect of Jumuad of her duty
respondent Hi-Flyer Food, Inc. as in ensuring that her subordinates were
management trainee. Based on her properly monitored and that she had
performance through the years, Jumuad dutifully done all that was expected of her to
received several promotions until she ensure the safety of the consuming public.
became the area manager for the entire The nature of the anomalies uncovered were
Visayas-Mindanao 1 region. Sometime on each of a different nature, the Court finds
October 2004, Hi-Flyer conducted a food that her acts or lack of action in the
safety, service and sanitation audit and performance of her duties is not born of
revealed several sanitation violations, such habit.
as the presence of rodents and the use of a Despite saying this, it cannot be
defective chiller for the storage of food. denied that Jumuad willfully breached her
When asked to explain, Jumuad first pointed duties as to be unworthy of the trust and
out that she had already taken steps to confidence of Hi-Flyer.
prevent the further infestation of the Based on established facts, the mere
branch. As to why the branch became existence of the grounds for the loss of trust
infested with rodents, Jumuad faulted and confidence justifies petitioner's
management's decision to terminate the dismissal. In the present case, the reports of
services of the branch's pest control Hi-Flyer show that there were anomalies
program and to rely solely on the pest committed in the branches managed by
control program of the mall. Jumuad. On the principle of respondeat
Hi-Flyer audited the account of one superior or command responsibility alone,
of its branches and found out irregularities of Jumuad may be held liable for negligence in
cash shortages. Another sanitation audit was the performance of her managerial duties.
made and signs of rodent She may not have been directly involved in
gnawing/infestation were found. This time, causing the cash shortages but her
Jumuad explained to management that she involvement in not performing her duty
had been busy conducting management monitoring and supporting the day to day
team meetings and that, at the date the operations of the branches and ensure that
audit was conducted, she had no scheduled all the facilities and equipment at the
visit. Hi-Flyer sent Jumuad an Irregularities restaurant were properly maintained and
Report and Notice of Charges. Jumuad serviced, could
submitted her written explanation. Hi-Flyer have truly prevented the whole debacle
held an administrative hearing where from ever occurring. Moreover, it is
Jumuad appeared with counsel. Apparently observed that rather than taking proactive
not satisfied with her explanations, Hi-Flyer steps to prevent the anomalies at her
served her a Notice of Dismissal. This branches, Jumuad merely effected remedial
prompted Jumuad to file a complaint against measures. In the restaurant business where
Hi-Flyer for illegal the health and well-being of the
dismissal. consuming public is at stake, this does not
suffice. Thus, there is reasonable basis for Hi-
Issue: Flyer to withdraw its trust in her and
Whether Jumuad was illegally dismissing her from its service.
dismissed
 115

Promm-Gem and SAPS were legitimate

92 JOEB M. ALIVIADO, et al., Petitioners, v. independent job contractors. On appeal, the
PROCTER & GAMBLE PHILS., INC., and NLRC dismissed the same. Petitioners filed a
PROMM-GEM INC., Respondents. motion for reconsideration but the motion
was denied in theNovember 19,
FACTS: 1998Resolution.
Petitioners worked as merchandisers Petitioners likewise failed to have a
of P&G from various dates, allegedly starting favrable decision in the CA hence, this
as early as 1982 or as late as June 1991, to petition.
either May 5, 1992orMarch 11, 1993.
They all individually signed ISSUE:
employment contracts with either Promm- Whether or not Promm-Gem and
Gem or SAPS for periods of more or less five SAPS are labor-only contractors or legitimate
months at a time.They were assigned at job contractors?
different outlets, supermarkets and stores HELD:
where they handled all the products of The petition is granted.
P&G.They received their wages from LABOR LAW
Promm-Gem or SAPS. Article 106 of the Labor Code and its
SAPS and Promm-Gem imposed implementing rules allow contracting
disciplinary measures on erring arrangements for the performance of
merchandisers for reasons such as habitual specific jobs, works or services.Indeed, it is
absenteeism, dishonesty or changing day-off management prerogative to farm out any of
without prior notice. its activities, regardless of whether such
P&G is principally engaged in the activity is peripheral or core in
manufacture and production of different nature.However, in order for such
consumer and health products, which it sells outsourcing to be valid, it must be made to
on a wholesale basis to various anindependent contractorbecause the
supermarkets and distributors. To enhance current labor rules expressly prohibit labor-
consumer awareness and acceptance of the only contracting.
products, P&G entered into contracts with To emphasize, there is labor-only
Promm-Gem and SAPS for the promotion contracting when the contractor or sub-
and merchandising of its products. contractor merely recruits, supplies or places
In December 1991, petitioners filed a workers to perform a job, work or service for
complaint against P&G for regularization, a principalandanyof the following elements
service incentive leave pay and other are present: (i) The contractor or
benefits with damages.The complaint was subcontractor does not have substantial
later amendedto include the matter of their capital or investment which relates to the
subsequent dismissal. job, work or service to be performedandthe
OnNovember 29, 1996, the Labor employees recruited, supplied or placed by
Arbiter dismissed the complaint for lack of such contractor or subcontractor are
merit and ruled that there was no employer- performing activities which are directly
employee relationship between petitioners related to the main business of the
and P&G.He found that the selection and principal;or (ii) The contractor does not
engagement of the petitioners, the payment exercise the right to control over the
of their wages, the power of dismissal and performance of the work of
control with respect to the means and thecontractualemployee.
methods by which their work was In the instant
accomplished, were all done and exercised case,thefinancialstatementsof Promm-Gem
by Promm-Gem/SAPS.He further found that show that it has authorized capital stock
 116

ofP1 million and a paid-in capital, or capital It is clear that SAPS having a paid-in
available for operations, ofP500,000.00 as of capital of onlyP31,250 - has no substantial
1990. It also has long term assets capital.SAPS lack of substantial capital is
worthP432,895.28 and current assets underlined by the records which show that
ofP719,042.32.Promm-Gem has also proven its payroll for its merchandisers alone for
that it maintained its own warehouse and one month would already totalP44,561.00.It
office space with a floor area of 870 square had 6-month contracts withP&G.Yet SAPS
meters. It also had under its name three failed to show that it could complete the 6-
registered vehicles which were used for its month contracts using its own capital and
promotional/merchandising investment.Its capital is not even sufficient
business.Promm-Gem also has other for one months payroll. SAPS failed to show
clientsaside from P&G. Under the that its paid-in capital ofP31,250.00 is
circumstances, Promm-Gem has substantial sufficient for the period required for it to
investment which relates to the work to be generate its needed revenue to sustain its
performed.These factors negate the operations independently.Substantial
existence of the element specified in Section capital refers to capitalization used in
5(i) of DOLE Department Order No. 18-02. theperformance or completionof the job,
The records also show that Promm- work or service contracted out.In the
Gem supplied its complainant-workers with present case, SAPS has failed to show
the relevant materials, such as markers, substantial capital.
tapes, liners and cutters, necessary for them Furthermore, the petitioners have
to perform their work.Promm-Gem also been charged with the merchandising and
issued uniforms to them. It is also relevant to promotion of the products of P&G, an
mention that Promm-Gem already activity that has already been considered by
considered the complainants working under the Court as doubtlessly directly related to
it as its regular, not merely contractual or the manufacturing business, which is the
project, employees.This circumstance principal business of P&G.Considering that
negates the existence of element (ii) as SAPS has no substantial capital or
stated in Section 5 of DOLE Department investment and the workers it recruited are
Order No. 18-02, which speaks of contractual performing activities which are directly
employees. This, furthermore, negates on related to the principal business of P&G, we
the part of Promm-Gem bad faith and intent find that the former is engaged in labor-only
to circumvent labor laws which factors have contracting.
often been tipping points that lead the Court Where labor-only contracting exists,
to strike down the employment practice or the Labor Code itself establishes an
agreement concerned as contrary to public employer-employee relationship between
policy, morals, good customs or public order. the employer and the employees of the
Under the circumstances, Promm- labor-only contractor. The statute
Gem cannot be considered as a labor-only establishes this relationship for a
contractor. Thus, it is a legitimate comprehensive purpose: to prevent a
independent contractor. circumvention of labor laws. The contractor
On the other hand, the Articles of is considered merely an agent of the
Incorporation of SAPS shows that it has a principal employer and the latter is
paid-in capital of onlyP31,250.00.There is no responsible to the employees of the labor-
other evidence presented to show how only contractor as if such employees had
much its working capital and assets been directly employed by the principal
are.Furthermore, there is no showing of employer.
substantial investment in tools, equipment LABOR LAW
or other assets.
 117

In cases of regular employment, the premised on the fact that the employee
employer shall not terminate the services of concerned holds a position of responsibility
an employee except for a justor authorized or of trust and confidence.As such, he must
cause. be invested with confidence on delicate
In the instant case, the termination matters, such as custody, handling or care
letters given by Promm-Gem to its and protection of the property and assets of
employees uniformly specified the cause of the employer.And, in order to constitute a
dismissal as grave misconduct and breach of just cause for dismissal, the act complained
trust. of must be work-related and must show that
Misconduct has been defined as the employee is unfit to continue to work for
improper or wrong conduct; the the employer. In the instant case, the
transgression of some established and petitioners-employees of Promm-Gem have
definite rule of action, a forbidden act, a not been shown to be occupying positions of
dereliction of duty, unlawful in character responsibility or of trust and confidence.
implying wrongful intent and not mere error Neither is there any evidence to show that
of judgment.The misconduct to be serious they are unfit to continue to work as
must be of such grave and aggravated merchandisers for Promm-Gem. Thus, there
character and not merely trivial and was no valid cause for the dismissal of
unimportant.To be a just cause for dismissal, petitioners-employees of Promm-Gem.
such misconduct (a) must be serious; (b) While Promm-Gem had complied
must relate to the performance of the with the procedural aspect of due process in
employees duties; and (c) must show that terminating the employment of petitioners-
the employee has become unfit to continue employees,i.e., giving two notices and in
working for the employer. between such notices, an opportunity for
In the instant case, petitioners- the employees to answer and rebut the
employees of Promm-Gem may have charges against them, it failed to comply
committed an error of judgment in claiming with the substantive aspect of due process
to be employees of P&G, but it cannot be as the acts complained of neither constitute
said that they were motivated by any serious misconduct nor breach of
wrongful intent in doing so.As such, they are trust.Hence, the dismissal is illegal.
only found them guilty of only simple With regard to the petitioners placed
misconduct for assailing the integrity of with P&G by SAPS, they were given no
Promm-Gem as a legitimate and written notice of dismissal.The records show
independent promotion firm.A misconduct that upon receipt by SAPS of P&Gs letter
which is not serious or grave, as that existing terminating their Merchandising Services
in the instant case, cannot be a valid basis for Contact effective March 11, 1993, they in
dismissing an employee. turn verbally informed the concerned
Meanwhile, loss of trust and petitioners not to report for work anymore.
confidence, as a ground for dismissal, must Neither SAPS nor P&G dispute the
be based on the willful breach of the trust existence of these
reposed in the employee by his circumstances.Parenthetically, unlike
employer.Ordinary breach will not suffice.A Promm-Gem which dismissed its employees
breach of trust is willful if it is done for grave misconduct and breach of trust due
intentionally, knowingly and purposely, to disloyalty, SAPS dismissed its employees
without justifiable excuse, as distinguished upon the initiation of P&G.It is evident that
from an act done carelessly, thoughtlessly, SAPS does not carry on its own business
heedlessly or inadvertently. because the termination of its contract with
Loss of trust and confidence, as a P&G automatically meant for it also the
cause for termination of employment, is termination of its employees services.It is
 118

obvious from its act that SAPS had no other Lastly, under Article 279 of the Labor
clients and had no intention of seeking other Code, an employee who is unjustly dismissed
clients in order to further its merchandising from work shall be entitled to reinstatement
business.From all indications SAPS, existed without loss of seniority rights and other
to cater solely to the need of P&G for the privileges, inclusive of allowances, and other
supply of employees in the latters benefits or their monetary equivalent from
merchandising concerns only.Under the the time the compensation was withheld up
circumstances prevailing in the instant case, to the time of actual reinstatement. Hence,
we cannot consider SAPS as anindependent all the petitioners, having been illegally
contractor. dismissed are entitled to reinstatement
In termination cases, the burden of without loss of seniority rights and with full
proof rests upon the employer to show that back wages and other benefits from the time
the dismissal is for just and valid cause. In the of their illegal dismissal up to the time of
instant case, P&G failed to discharge the their actual reinstatement.
burden of proving the legality and validity of The decision and resolution of the
the dismissals of those petitioners who are Court of Appeals are reversed and set aside.
considered its employees. Hence, the The case is remanded to the NLRC.
dismissals necessarily were not justified and
are therefore illegal.
CIVIL LAW 93 Grand Asian Shipping Lines v. Galvez
Moral and exemplary damages are
recoverable where the dismissal of an Facts:
employee was attended by bad faith or fraud  Petitioner Grand Asian Shipping
or constituted an act oppressive to labor or Lines, Inc (GASLI) is a domestic corporation
were done in a manner contrary to morals, engaged in transporting liquified petroleum
good customs or public policy. gas (LPG) from Petron’s refinery in Bataan to
With regard to the employees of Pasig and Cavite.
Promm-Gem, there being no evidence of bad  Respondents are crewmembers of
faith, fraud or any oppressive act on the part one of GASLI’s vessels, M/T Dorothy Uno.
of the latter, we find no support for the  On January 2000, Richard Abis
award of damages. (vessel’s oiler) reported to GASLI an alleged
As for P&G, the records show that it illegal activity being committed by
dismissed its employees through SAPS in a respondent who would misdeclare the
manner oppressive to labor. The sudden and consume fuel in the Engineer’s Voyage
peremptory barring of the concerned Reports and the save fuel oil were sold to
petitioners from work, and from admission other vessel out at sea (at nighttime). Profits
to the work place, after just a one-day verbal would be divided amongst themselves.
notice,andfor no valid cause bellows  After investigation, from the period
oppression and utter disregard of the right to of June 30, 1999 to Feb 15, 2000 the fuel it
due process of the concerned consumption was overrate by 6,954.3 liters
petitioners.Hence, an award of moral amounting to 74,737.86.
damages is called for.  Acting upon the anomaly, GASLI
Attorneys fees may likewise be placed respondents under preventive
awarded to the concerned petitioners who suspension and after conducting
wereillegallydismissedinbadfaithandwereco administrative hearings decided to
mpelledtolitigateorincur expenses to protect terminate them for breach of trust,
their rights by reason of the oppressive act commission of crime against employer.
of P&G.  Respondents filed with the NLRC
LABOR LAW separate complaint for illegal suspension
 119

and dismissal, underpayment/nonpayment commission of a crime against their

of salaries/wages, overtime pay, premium employer.
pay for holiday and rest day, service After examination of the evidence,
incentive pay, tax refunds and indemnities the court finds that petitioners failed to
for damages and attorney’s fees against substantiate the charges of pilferage against
petitioner. respondents. The quantum of proof that
 On August 30, 2001, the Labor should be presented is substantial evidence.
Arbiter rendered decision finding the Mere filing of formal charge does not
dismissal of 21 complainants to be illegal. automatically make dismissal valid. The
 Petitioner then filed a Notice of affidavit executed simply contained
Appeal with Motion to Reduce Bond before accusations while allegations remained
the NLRC citing economic depression, uncorroborated. Also there is no sufficient
legality of termination, and compliance with evidence to show respondents participation
labor standards. NLRC denied petitioner’s in the commission of the crime.
motion to reduce bond and directed an Respondent’s termination due to loss
additional bond. of trust and confidence should have a
 Despite petitioner’s failure the pay distinction between managerial and rank
the bond, NLRC found the appeal and file employees. Rank-and-file employees
meritorious and ruled for petitioners. Stating require proof of involvement while
that the dismissal was valid with the managerial employees mere existence of a
exception of Sales. basis for belief is sufficient. Given that Galvez
 NLRC struck down the monetary and Gruta have managerial positions there is
awards given by the Labor Arbiter as they some basis for the loss of employer’s
were based on computations made by confidence—regarding the overstatement of
respondents. fuel consumption without any evidence to
 On appeal to the CA, the court the contrary. While the others, who are
ruled in favor of respondent stating that the ordinary rank and file employees, were not
NLRC’s decision had jurisdictional error since proven to have any involvement in the loss
petitioner did not comply with the additional of the vessel’s fuel. Rendering their
bond. dismissals illegal. The employer bears the
burden of proof in illegal dismissal cases thus
LABOR LAW the employer must first establish by
Issue: substantial evidence the fact of dismissal.
I. WON the CA erred in holding that With regard to the contention of the
respondents were illegally dismissed Labor Arbiter’s Authority to impose the
II. WON the CA erred when it penalty of double indemnity for violations of
concluded petitioner were not able to the Minimum Wage Law. Petitioner’s
perfect the appeal of the Labor Arbitrer’s contention is untenable since there is no
decision provision in RA 6727 or RA 8188 that
precludes that labor from imposing the
Held/Ratio: penalty of double indemnity against
I. No, the CA did not commit any employers. Article 217 of the Labor Code
error in finding that respondent’s were gives the labor arbiter jurisdiction over cases
illegally dismissed. According to the of termination disputes and those cases
termination notice, respondents were accompanied with a claim of reinstatement.
dismissed based on the grounds of (a) The Labor arbiter erred in awarding
serious misconduct (b) engaging in pilferage damages by lumping, moral, actual, and
wile navigating at sea (c) willful breach of the exemplary damages. These should rest on
trust reposed by the company (d)
 120

different jural foundations and must PHP. We find this to be in substantial

independently identified and justified. compliance with the Labor Code.
Glaze and Gruta, as managerial
employees, are not entitled to claims for
holiday 94 Concepcion vs. Minex Import Corp., G.R.
pay, service incentive leave pay and No. 153569, January 24, 2012
premium pay for holiday and restday—
according to Facts:
Art. 82 of the Labor Code. The same way the Respondent is engaged in the retail
other rank-and-file employees cannot be of semi-precious stones, selling them in
classified as field personnel under Article 82 kiosks or stalls installed in various shopping
of the Labor Code. According to Article 82, centers. It employed the petitioner initially
“non-agricultural employees who regularly as a salesgirl then later on as supervisor.
perform their duties away from the principal Working under her supervision were
place of business or branch office of the salesgirls Cristina Calung and Lida Baquilar.
employer and whose actual hours of work in One day the petitioner and her
the field cannot be determined with salesgirls had sales of crystal items totaling
reasonable certainty.” Here, respondents P39,194.50. At the close of business that
remain day, they conducted a cashcount of their
inside a vessel and were constantly sales proceeds, including those from the
supervised under effective control of a ship previous two days and determined their
captain. total for the three days to be P50,912.00.
Also they cannot claim to be entitled of these The petitioner wrapped the amount in a
because they have already been paid all plastic bag and deposited it in the drawer of
the days of the month, which include the locked wooden cabinet of the kiosk.
benefits. As for the overtime pay and The following day petitioner phoned
premium pay respondent Vina Mariano to report that the
for holiday and rest day, no evidence was P50,912.00 was missing, explaining how she
presented to prove that they worked in and her salesgirls had placed the wrapped
excess of the regular working hours. For their amount at the bottom of the cabinet the
claim of service incentive leave pay, night before, and how she had found upon
respondents did not specify what year they reporting to work that morning that the
were not paid—in accordance with Art. 95. contents of the cabinet were in disarray and
II. Yes, the CA erred in holding that there was the money.
no compliance on the part of petitioner Later, while the petitioner was giving
regarding the appeal bonds. According to a detailed statement on the theft to the
Art. 223 of the Labor Code, the posting of a security investigator of Harrison Plaza, Vina
bond, either in cash or surety, must be in the and Sylvia Mariano, her superiors, arrived
amount equivalent to them entry award. with a policeman who immediately placed
Nonetheless, the court held that rules should the petitioner under arrest and brought her
not be applied in a very rigid and strict to a police station where she was
sense—the same in labor cases were investigated her and detained for a day.
substantial merits serve the interest of Subsequently petitioner filed a case
justice. In for illegal dismissal against respondent and
this case, the petitioner appeals from the two days later respondent filed a criminal
awarding of 7,104,483.84 to respondents case for qualified theft against petitioner.
and The petitioner insisted on her innocence,
only complied with the posting of 500,000 reiterating that on the time the alleged crime
took place she, together with her two
 121

salesgirls, had first counted the cash before evidence sufficient to warrant a finding by
placing it in a plastic bag that she deposited the Labor Tribunal of the existence of a just
inside the drawer of the cabinet with the cause for their termination based on loss of
knowledge of the other salesgirls. One of the trust and confidence.
salesgirls however averred that she had left The Labor Tribunal need not have
the petitioner alone because the latter had gone further as to require private
still to change her clothes; and that that was respondent’s conviction of the crime
the first time that the petitioner had ever charged, or inferred innocence on their part
asked to be left behind, for they had from their release from detention, which
previously left the kiosk together. was mainly due to their posting of bail.
Respondent Vina declared that the While there is a valid ground to
petitioner did not call the office of Minex for terminate petitioner, respondent however
the pick-up of the P39,194.50 cash sales on failed to comply with the requirements of
that faithful day in violation of the standard due process prior to the termination under
operating procedure (SOP) requiring cash the implementing rules and regulations of
proceeds exceeding P10,000.00 to be the Labor Code.
reported for pick-up if the amount could not In all cases of termination of
be deposited in the bank. After the employment, the following standards of due
preliminary investigation, the fiscal rendered process shall be substantially observed. For
a resolution finding probable cause for termination of employment based on just
qualified theft and recommending the filing causes as defined in Article 282 of the Labor
of an information against the petitioner. Code:
Thus, she was charged with qualified theft (i) A written notice served on the
before the Regional Trial Court. The employee specifying the ground or grounds
petitioner argued that there was no for termination, and giving said employee
evidence at all upon which Minex could reasonable opportunity within which to
validly dismiss her considering that she had explain his side.
not yet been found guilty beyond reasonable (ii) A hearing or conference during
doubt of the crime of qualified theft. which the employee concerned, with the
assistance of counsel if he so desires is given
Issues: opportunity to respond to the charge,
Whether or not there was valid present his evidence, or rebut the evidence
ground to terminate the petitioner. presented against him.
(iii) A written notice of termination
Ruling: served on the employee, indicating that
The petitioner’s argument is not upon due consideration of all the
novel. It has been raised and rejected many circumstances, grounds have been
times before on the basis that neither established to justify his termination
conviction beyond reasonable doubt for a In this case the respondents immediately
crime against the employer nor acquittal had her arrested and investigated by the
after criminal prosecution was police authorities for qualified theft which
indispensable. Nor was a formal charge in constitutes a denial of her right to due
court for the acts prejudicial to the interest process of law, consisting in the opportunity
of the employer a pre-requisite for a valid to be heard and to defend herself. In fact,
dismissal. The criminal charges initiated by their decision to dismiss her was already final
the company against private respondents even before the police authority
and the finding after preliminary commenced an investigation of the theft,
investigation of their prima facieguilt of the the finality being confirmed by no less than
offense charged constitute substantial Sylvia Mariano herself telling the petitioner
 122

during their phone conversation following National Labor Relations Commission (NLRC)
the latter’s release from police custody that a complaint for illegal dismissal and
she (Sylvia) “no longer wanted to see” her. suspension, underpayment of overtime pay,
The fact that the petitioner was the and non-payment of emergency cost of
only person suspected of being responsible living allowance (ECOLA), with prayers for
for the theft aggravated the denial of due reinstatement and payment of full
process. backwages.
Meanwhile, an entrapment
operation was conducted by the police
95 Blue Sky Trading Co. vs. Blas, G.R. No. during which Jayde and Helario were caught
190559, March 7, 2012 allegedly attempting to sell to an operative
an ultrasound probe worth around
Facts: P400,000.00 belonging to Blue Sky. Though
Petitioner Blue Sky Trading eventually, Jayde and Helario executed
Company, Inc. (Blue Sky) is a duly registered affidavits of desistance stating that their
domestic corporation engaged in the dismissal was for cause.
importation and sale of medical supplies and The Labor Arbiter denied the claims
equipment. The respondents Arlene P. Blas of the respondents of illegal suspension and
(Arlene) and Joseph D. Silvano (Joseph) were dismissal since they failed in their duties to
regular employees of Blue Sky and they exercise utmost protection, care, or custody
respectively held the positions of stock clerk of respondent's property. Hence, their
and warehouse helper before they were dismissal from the service is warranted.
dismissed from service on February 5, 2005. The first decision of the NLRC ruled
An incident occurred where six pairs that respondents were not holding positions
of intensifying screens were missing. On of trust and must therefore be reinstated
February 3, 2005, Jean B. De La Paz (Jean), and be paid their backwages. Their second
Human Resource Department Head issued decision on the other hand reversed the
notices to explain/preventive suspension to previous one which in turn reinstated the
Arlene, Joseph, delivery personnel Jayde Labor Arbiter’s dismissal of the complaint
Tano-an (Jayde) and saying that respondents were holding
maintenance personnel/driver Wilfredo positions of trust and that the loss of the
Fasonilao (Wilfredo). The notices informed company’s property are substantially
them that they were being accused of gross proven. The CA on the other hand found
dishonesty in connection with their alleged merit on their claims, though found
participation in and conspiracy with other respondents to have positions of trust and
employees in committing theft against confidence, petitioner in this case failed to
company property, specifically relative to sufficiently establish the charge against
the loss of the six intensifying screens. respondents which was the basis for its loss
On February 5, 2005, Jean issued to of trust and confidence that warranted their
Arlene, Joseph, Jayde and Wilfredo notices dismissal.
of dismissal for cause stating therein that
evidence that they had conspired with each Issue:
other to commit theft against company Whether or not respondents Blas and
property was too glaring to ignore. Blue Sky Silvano committed a breach of trust
had lost its trust and confidence on them and
as an act of self-preservation, their Ruling:
termination from service was in order. The rule is long and well settled that,
On February 8, 2005, Arlene, Joseph, in illegal dismissal cases like the one at
Helario, Jayde and Wilfredo filed with the bench, the burden of proof is upon the
 123

employer to show that the employee's that ground lest due process be violated.
termination from service is for a just and Other Matters: (For Discussion Purposes)
valid cause. The employer's case succeeds or Impropriety of the Preventive
fails on the strength of its evidence and not Suspension
on the weakness of that adduced by the The purpose of the suspension is to
employee, in keeping with the principle that prevent an employee from causing harm or
the scales of justice should be tilted in favor injury to his colleagues and to the employer.
of the latter in case of doubt in the evidence The maximum period of suspension is 30
presented by them. Often described as more days, beyond which the employee should
than a mere scintilla, the quantum of proof either be reinstated or be paid wages and
is substantial evidence which is understood benefits due to him.
as such relevant evidence as a reasonable While we do not agree with Blue Sky's
mind might accept as adequate to support a subsequent decision to terminate them from
conclusion, even if other equally reasonable service, we find no impropriety in its act of
minds might conceivably opine otherwise. imposing preventive suspension upon the
Failure of the employer to discharge the respondents since the period did not exceed
foregoing onus would mean that the the maximum imposed by law and there was
dismissal is not justified and therefore illegal. a valid purpose for
We find no error in the CA's findings the same.
that the petitioners had not adequately In lieu of reinstatement, separation
proven by substantial evidence that Arlene pay If reinstatement proves impracticable,
and Joseph indeed participated or and hardly in the best interest of the parties,
cooperated in the commission of theft perhaps due to the lapse of time since the
relative to the six missing intensifying employee's
screens so as to justify the latter's dismissal, or if the employee decides not to
termination from employment on the be reinstated, the latter should be awarded
ground of loss of trust and confidence. separation pay in lieu of reinstatement.
We note that the parties disagree as In the case at bar, Arlene and Joseph
to what tasks were actually and regularly were dismissed from service on February 5,
performed by Arlene and Joseph. They are at 2005. We find that the lapse of more than
odds as to the issue of whether or not Arlene seven years already renders their
and Joseph had custody of the missing reinstatement impracticable. Further, from
screens. We observe though that neither of the stubborn stances of the parties, to wit,
the parties presented any documentary the petitioners' insistence that dismissal was
evidence, such as employment contracts, to valid on one hand, and the respondents'
establish their claims relative to the actual express prayer for the payment of
nature of Arlene and Joseph's daily tasks. separation pay on the other, we find that
The petitioners also argue that if reinstatement would no longer be in the
Arlene and Joseph had not been grossly best interest of the contending parties.
negligent in the performance of their duties, Liability of Corporate Officers
Blue Sky would not have incurred the loss. As a general rule, a corporate officer
We observe though that in the notices sent cannot be held liable for acts done in his
to Arlene and Joseph, first charging them official capacity because a corporation, by
with theft, and later, informing them of their legal fiction, has a personality separate and
dismissal from service, gross negligence was distinct from its officers, stockholders, and
not stated therein as a ground. Hence, members. In illegal dismissal cases,
Arlene and Joseph could not have defended corporate officers may only be held solidarily
themselves against the charge of gross liable with the corporation if the termination
negligence. They cannot be dismissed on was done with malice or bad faith. We find
 124

that the aforementioned circumstance did discovered that Chang had already
not obtain in the case of Jose (vice- redeemed the returned check after paying
president) and Linda (secretary) relative to P15,164.48 to Beltran, who in turn issued an
Arlene and Joseph's dismissal from service. Auxiliary Receipt dated September 30, 1996.
It was also discovered that the payment has
not yet been remitted. This prompted her to
96 Manila Electric Co. vs. Beltran, G.R. No. inquire from Beltran on January 7, 1997
173774, January 30, 2012 about the supposed payment and
immediately ordered the remittance of the
Facts: same. Beltran, however, failed to do so on
Beltran was employed by MERALCO that day and even on the next day when she
and at the time material to this case, she was reported for work. Beltran subsequently
holding the position of Senior Branch Clerk at went on leave of absence on January 9 and
MERALCO’s Pasig branch. While rendering 10, 1997. It was only on January 13, 1997
overtime work on September 28, 1996, a that the money with the pertinent
Saturday, Beltran accepted P15,164.48 from documents was handed over. In a
Collection Route Supervisor Berlin Marcos memorandum dated February 25, 1997, the
(Marcos), which the latter received from investigator found Beltran guilty of
customer Andy Chang (Chang). The cash misappropriating and withholding Chang’s
payment was being made in lieu of a payment of P15,164.48 and recommended
returned check earlier her dismissal from service.
issued as payment for Chang’s electric Beltran filed a complaint for illegal
bill.Beltran received the payment and issued dismissal against MERALCO. She argued that
Auxiliary Receipt No. 87964 which she dated she had no intention to withhold company
September 30, 1996, a Monday, instead of funds. Besides, it was not her customary
September 28, 1996. This was done to show duty to collect and remit payments from
that it was an accommodation, an accepted customers. She claimed good faith, believing
practice in the office. She thereafter placed that her acceptance of Chang’s payment is
the money and the original auxiliary receipt considered goodwill in favor of both
and other documents pertinent to the MERALCO and its customer. If at all, her only
returned check underneath her other files violation was a simple delay in remitting the
inside the drawer of her table. payment, which caused no considerable
Beltran, however, was only able to harm to the company.
remit Chang’s payment on January 13, 1997. In a Decision of the Labor Arbiter
Thus, in a Memorandum dated January 16, regarded the penalty of dismissal as not
1997, she was placed under preventive commensurate to the degree of infraction
suspension effective January 20, 1997 committed as there was no adequate proof
pending completion of an investigation. of misappropriation on the part of Beltran. If
MERALCO considered as misappropriation or there was delay in Beltran’s remittance of
withholding of company funds her failure to Chang’s payment, it was unintentional and
immediately remit said payment in violation same cannot serve as sufficient basis to
of its Code on Employee Discipline. conclude that there was misappropriation of
Garcia, the Administrative Supervisor company funds. In fact, Beltran did not even
of MERALCO’s Pasig branch, on the other attempt to deny possession of, or refuse to
hand, testified that while doing an hand in, the money.
accounting of all outstanding returned The Labor Arbiter thus gave
checks sometime in December 1996, she compassionate consideration for the neglect
noticed that Chang’s returned check was to remit the money promptly, stating that it
missing. Upon further inquiry, she
 125

is excusable for Beltran to commit lapses in January 7, 1997 but denied having been
her work due to serious family difficulties. ordered to remit the money on that day. She
Upon appeal, the NLRC reversed the then reasoned that her continued delay was
Labor Arbiter’s Decision and dismissed caused by an inevitable need to take a leave
Beltran’s complaint against MERALCO in its of absence for her to attend to the needs of
Decision. It found that Beltran withheld her child who was suffering from asthma.
company funds by failing to remit it for MERALCO cannot claim or conclude that
almost four months. The NLRC thus ruled Beltran misappropriated the money based
that MERALCO validly dismissed Beltran on mere suspicion. And even if Beltran
from the service in the exercise of its delayed handing over the funds to the
inherent right to discipline its employees. company, MERALCO still has the burden of
When Beltran brought the case to proof to show clearly that such act of
the CA the NLRC’s ruling was reversed. The negligence is sufficient to justify termination
CA instead agreed with the findings of the from employment. Beltran was remiss in her
Labor Arbiter that there were no serious duties for her failure to immediately turn
grounds to warrant Beltran’s dismissal. The over Chang’s payment to the company. Such
CA held that the penalty of dismissal is harsh negligence, however, is not sufficient to
considering the infraction committed and warrant separation from employment. To
Beltran’s nine years of unblemished service justify removal from service, the negligence
with MERALCO. should be gross and habitual. “Gross
negligence x x x is the want of even slight
Issue: care, acting or omitting to act in a situation
Whether or not Beltran dismissal is where there is duty to act, not inadvertently
valid finding that she is guilty of withholding but willfully and intentionally, with a
company funds. conscious indifference to consequences
insofar as other persons may be affected.”
Ruling: Habitual neglect, on the other hand,
Supreme Court support the CA’s connotes repeated failure to perform one’s
finding that there are no sufficient grounds duties for a period of time, depending upon
to warrant Beltran’s dismissal. For loss of the circumstances. No concrete evidence
trust and confidence to be a valid ground for was presented by MERALCO to show that
dismissal, it must be based on a willful Beltran’s delay in remitting the funds was
breach of trust and founded on clearly done intentionally. Neither was it shown
established facts. A breach is willful if it is that same is willful, unlawful and felonious
done intentionally, knowingly and contrary to MERALCO’s finging as stated in
purposely, without justifiable excuse, as the letter of termination it sent to Beltran.
distinguished from an act done carelessly, Surely, Beltran’s single and isolated act of
thoughtlessly, heedlessly or inadvertently. In negligence cannot justify her dismissal from
addition, loss of trust and confidence must service.
rest on substantial grounds and not on the
employer’s arbitrariness, whims, caprices or 97DOLORES T. ESGUERRA vs. VALLE VERDE
suspicion. COUNTRY CLUB, INC.
In the case at bench, Beltran
attributed her delay in turning over Chang’s FACTS:
payment to her difficult family situation as Valle Verde hired Esguerra as Head F
she and her husband were having marital ood Checker and was promoted to Cost Co
problems and her child was suffering from ntrol Supervisor. The Management found o
an illness. Admittedly, she was reminded of ut that proceeds had been remitted to the a
Chang’s payment by her supervisor on ccounting department for an event were lac
 126

king. There were also unauthorized charges twonotice requirement, no procedural defe
of food on one of the participants. To resolv ct exists in Esguerra’s termination.
e the issue, Valle Verde conducted an invest 2.) Esguerra held the position of Cos
igation; the employees who were assigned i t Control Supervisor and had the duty to re
n that event were summoned and made to mit to the accounting department the cash
explain, in writing, what had transpired. A m sales proceeds from every transaction she
emorandum was sent to Esguerra requiring was assigned to. This is not a routine task th
her to show cause as to why no disciplinary at a regular employee may perform; it is rel
action should be taken against her for the n ated to the handling of business expenditur
onremittance of the Ballroom’s sales. Esgue es or finances. For this reason, Esguerra occ
rra was placed under preventive suspension upies a position of trust and confidence a p
with pay, pending investigation. Unsatisfied osition enumerated in the second class of p
with the explanation, Esguerra was termina ositions of trust(first is for the managerial e
ted. mployees). Any breach of the trust imposed
Petitioner said that she couldn’t be d upon her can be a valid cause for dismissal.
ismissed on the ground of loss of trust and c
onfidence for she was only a regular employ
ee and did not occupy a supervisory positio 98
n vested with trust and confidence. Esguerr MANILA ELECTRIC COMPANY (MERALCO) v
a also questions the manner of dismissal sin s. HERMINIGILDO H. DEJAN
ce the notice was insufficient since it failed t
o contain any intention to terminate her. FACTS:
Dejan was then Meralco’s branch re
ISSUE: presentative in its San Pedro, Laguna branc
 Whether or not intention to terminate s h. His work consisted of accepting payments
hould be included in the notice of inform of the required fees from applicants for ele
ing of charges against an employee. ctric service installation and issuing the corr
 Whether or not Cost Control Supervisor esponding meter sockets/bases after payme
can be dismissed on the ground of loss of nt of a deposit, preceded by an inspection o
trust and confidence. f the premises to be energized by a Meralco
field personnel.
HELD: One afternoon, 20 pieces of meter s
1.) No. The law does not require that ockets take out from the branch and was in
an intention to terminate one’s employme possession of a Meralco field representative
nt should be included in the first notice. It is . Dejan was asked to explain the incident.
enough that employees are properly appris Dejan received a letter charging him
ed of the charges brought against them so t with the unauthorized taking of 20 meter so
hey can properly prepare their defenses; it i ckets, in violation of Section 7, paragraphs 4
s only during the second notice that the inte and 11 of the Company Code of Employee
ntion to terminate one’s employment shoul Discipline, in relation to Article 282 of the La
d be explicitly stated. bor Code. In the Formal investigation, Dejan
The existence of an actual, formal “t alleged that he released the items even wit
rialtype” hearing, although preferred, is not hout authorization as it had been the accept
absolutely necessary to satisfy the employe ed practice in the office, provided the depos
e’s right to be heard. Esguerra was able to p it fee had been paid. Unconvinced, his empl
resent her defenses; and only upon proper c oyment was terminated. NLRC and CA both
onsideration of it did Valle Verde send the s ordered his reinstatement.
econd memorandum terminating her emplo
yment. Since Valle Verde complied with the
 127

ISSUE: he criminal case for qualified theft had been

Whether or not an employee dismiss terminated for failure of the prosecution to
ed on the ground of loss of trust and confid prove his guilt beyond reasonable doubt, p
ence should be reinstated as judicially order etitioner filed a Complaint for Illegal Dismiss
ed. al which the Labor Arbiter .

RULING: ISSUE:
No. Meralco cannot be blamed for lo Whether or not an employee acquitt
sing its trust and confidence in Dejan. He is ed of the criminal charge arising from the sa
no ordinary employee. As branch represent me incident which caused his dismissal, can
ative, “he was principally charged with the f be reinstated.
unction and responsibility to accept paymen
t of fees required for the installation of elec RULING:
tric service and facilitate issuance of meter s No. The LA, the NLRC and the CA all
ockets.” The duties of his position require hi acknowledged that, notwithstanding petitio
m to always act with the highest degree of h ner’s acquittal in the criminal case for qualifi
onesty, integrity and sincerity, as the compa ed theft, respondent PLDT had adequately e
ny puts it. In light of his fraudulent act, Mer stablished the basis for the company’s loss
alco, an enterprise imbued with public inter of confidence as a just cause to terminate p
est, cannot be compelled to continue Dejan’ etitioner. Since proof beyond reasonable do
s employment, as it would be inimical to its ubt of an employee’s misconduct is not req
interest. Needless to say, “the law, in protec uired in dismissing an employee. Rather, as
ting the rights of the laborer, authorizes nei opposed to the “proof beyond reasonable d
ther oppression nor selfdestruction of the e oubt” standard of evidence required incrimi
mployer.” For sure, Dejan was validly dismis nal cases, labor suits require only substantia
sed for serious misconduct, and loss of trust l evidence to prove the validity of the dismis
and confidence. sal
However, assuming that he lawfully
possessed the materials, PLDT still had ampl
99ROMEO E. PAULINO vs. NLRC and PHILIP e reason or basis to already distrust petition
PINE LONG DISTANCE TELEPHONE COMPA er. For more than a month, he did not even
NY, INCORPORATED inform PLDT of the whereabouts of the plan
t materials. Instead, he stocked these mater
FACTS: ials at his residence even if they were neede
Members of the PNP, armed with a s d in the daily operations of the company. In
earch warrant, searched the house of Paulin keeping with the honesty and integrity dem
o, Cable Splicer III of PLDT, found items belo anded by his position, he should have turne
nging to PLDT which was in there for 1 mont d over these materials to the plant’s wareho
h and 11 days use.
Petitioner did not present any docu It would have been unfair for PLDT t
ments or requisition slips that would justify o keep petitioner in its employ. Petitioner di
his possession of the materials. Consequent splayed actions that made him untrustwort
ly, PLDT caused the filing of an Information f hy. Thus, as a measure of selfprotection, PL
or qualified theft against him. PLDT then re DT validly terminated his services for seriou
ceived a security report stating that petition s misconduct and loss of confidence.
er had engaged in the illicit disposal of its pl
ant materials, which were recovered during
the search conducted at his residence. He w
as then terminated.Three years later, after t
 128

100
VICENTE VILLANUEVA, JR. vs. NLRC THIRD
DIVISION, MANILA ELECTRIC COMPANY

FACTS:
There was a report regarding “unusu
al contract modifications” in the transaction
s handled by Villanueva. There are discrepa
ncies not covered by any receipt. Pursuant t
o the complaints, a field investigation was c
onducted by the companydesignated investi
gator who was able to obtain sworn statem
ents from nine (9) out of twenty four (24) co
mplaining customers that it was Villanueva
whom they have transacted with.
Meralco denied the request of Villan
ueva’s counsel to crossexamine the witness
es (complaining customers) who were not
Meralco employees. He was then served a n
otice of termination.

ISSUE:

Whether or not there is violation of

procedural due process when the request t
o cross-examine the affiants was denied.

RULING:
No. As the NLRC and the CA found, V
illanueva was afforded due process when h
e was given the required notices. More imp
ortantly, he was actually given the opportun
ity to be heard. On the date of the schedule
d hearing, Villanueva was assisted by couns
el who requested for time within which to s
ubmit a counteraffidavit. He was able to sub
mit it, where he denied the charges against
him. Undoubtedly, Villanueva was afforded
procedural due process even if the crossexa
mination of the witnesses was not permitte
d by Meralco. Where a party is given the op
portunity to explain his side of the case, the
right to due process is deemed recognized f
or what is frowned upon is the denial of the
right to be heard.
 129

101 CARLOS G. LIBRES vs. NLRC & complaint for illegal suspension and unjust
NATIONAL STEEL CORPORATION discrimination
against respondent NSC
FACTS:
Carlos G. Libres, an electrical ISSUE:
engineer, was holding a manageri al position WON Libres was illegally suspended.
with National
SteelCorporation (NSC) as Assistant HELD:
Manager. One day, he received a Notice of NO. His suspension was both fitting
Investigation and appropriate since it singularly addressed
from his immediate superior, requesting him the
to submit a written explanation relative to issue of a managerial employee committing
the sexual harassment on a subordinate. It even
charge of sexual harassment made by Susan invited
D. Capiral, Hynsons secretary, allegedly the attention of the Court to focus on sexual
committed harassment as a just and valid cause for
by Libres, and subsequently to answer termination.
clarificatory questions on the matter. The Whereas petitioner Libres was only
notice also meted a 30-day suspension by the NLRC,
warned him that failure to file his written Villarama,
explanation would be construed as a waiver in the other case was penalized with
of his termination. As Mr. Justice Puno elucidated,
right to be heard. Libres submitted his As a
written explanation denying the accusation managerial employee, petitioner is bound by
against him more exacting work ethics. He failed to live
and offering to submit himself for up to
clarificatory interrogation. his higher standard of responsibility when he
After deliberation, it was concluded succumbed to his moral perversity. And
that the charges against petitioner when
constituted a such moral perversity is perpetrated against
violation of Item 2, Table V, of the Plants his subordinate, he provides a justifiable
Rules and Regulations. It opined that ground
touching a for his dismissal for lack of trust and
female subordinates hand and shoulder, confidence. It is the right, nay, the duty of
caressing her nape and telling other people every employer
that to protect its employees from oversexed
Capiral was the one who hugged and kissed superiors. Public respondent therefore is
or that she responded to the sexual correct in its
advances are observation that the Labor Arbiter was in
unauthorized acts that damaged her honor. fact lenient in his application of the law and
Referring to the Manual of the Philippine jurisprudence for which petitioner must be
Daily grateful and not gripe against.
Inquirer in defining sexual harassment, the
MEC finally concluded that petitioners acts
clearly 102 DELFIN G. VILLARAMA vs. NLRC AND
constituted sexual harassment as charged GOLDEN DONUTS, INC.
and recommended petitioners suspension
for thirty FACTS:
(30) days without pay. Libres filed a
 130

VILLARAMA was employed by agreement was confirmed by the letter to

GOLDEN DONUTS, INC., as its Materials him by Mr. Prieto
Manager. dated August 7, 1989. A few days after,
Villarama was charged with sexual petitioner reneged on the agreement. He
harassment by Divina Gonzaga, a clerk-typist refused to be
assigned in his terminated on the ground that the
department. The humiliating experience seriousness of his offense would not warrant
compelled her to resign from work. The his separation
letter from service. So he alleged in his letter to Mr.
prompted the President of Golden Donuts, Prieto dated August 16, 1989. But even in
Inc., Prieto, to call Villarama to a meeting. this
Villarama letter, petitioner admitted his "error" vis-a-
was then required to explain the letter vis Miss Gonzaga. As a manager, Petitioner
against him. It appears that petitioner should
agreed to tender know the evidentiary value of his
his resignation. Private respondent moved admissions. Needless to stress, he cannot
swiftly to separate petitioner. Thus, private complain there was
respondent approved petitioner's no valid cause for his separation.
application for leave of absence with pay Moreover, loss of trust and
from August 5-28, confidence is a good ground for dismissing a
1989. It also issued an inter-office managerial
memorandum advising "all concerned" that employee. It can be proved by substantial
petitioner was evidence which is present in the case at
no longer connected with the company. Mr. bench.
Prieto sent a l etter to petitioner confirming As a managerial employee, petitioner is
their bound by a more exacting work ethics. He
agreement that petitioner would be officially failed
separated from the private respondent. to live up to this higher standard of
However, Villarama had a change of mind. responsibility when he succumbed to his
He sought reconsideration of the moral perversity.
management's decision to terminate him. And when such moral perversity is
For his failure to tender his resignation, perpetrated against his subordinate, he
petitioner provides justifiable
was dismissed by private respondent. ground for his dismissal for lack of trust and
Feeling aggrieved, petitioner filed an illegal confidence. It is the right, nay, the duty of
dismissal case every
against private respondent. employer to protect its employees from over
sexed superiors.
ISSUE: To be sure, employers are given
WON the cause of dismissal of wider latitude of discretion in terminating
complainant was valid. the
employment of managerial employees on
HELD: the ground of lack of trust and confidence.
YES. The records show that petitioner
was confronted with the charge against him.
Initially, he voluntarily agreed to be 103 ATTY. GRACE M. VELOSO & MA.
separated from the company. He took a JOEYLYNN B. QUIONES vs JUDGE
leave of absence ANACLETO M.
preparatory to this separation. This CAMINADE
 131

as amended, considers a violation of the

FACTS: Code of Judicial Conduct as a serious offense.
Atty. Veloso, a lawyer of the Public le A respondent found guilty of a serious
discussing the case, she was stunned when charge
Judge may be meted the penalty of:
Caminade suddenly placed his hand on her (1) dismissal from the service,
right thigh and squeezed it. He then took her forfeiture of all or part of the benefits as the
hand Court may
and kissed it. She immediately stood up and determine, and disqualification from
headed towards the door leading to the staff reinstatement or appointment to any public
room. He, however, caught up with her and office,
placed his hand on her shoulder. Before she including government-owned or controlled
could corporations, provided, that the forfeiture of
open the door, Judge Caminade told her Kiss benefits shall in no case include accrued
ko bi (Let me kiss you). Atty. Veloso, who was leave credits;
so (2) suspension from office without
shocked, retorted Kalo-od nimo Judge uy salary and other benefits for more than
(You are so disgusting, Judge). She then three but not
opened the exceeding six months; or
door and went out of his chambers. Justice (3) a fine of more than P20,000 but
Morales found Judge Caminade guilty of not exceeding P40,000.
violating
Canon 2 and Rule 2.01 of the Code of Judicial
Conduct and Canon 3 of the Canons of 104 ATTY. SUSAN M. AQUINO vs. HON.
Judicial ERNESTO D. ACOSTA
Ethics and recommended that respondent
be suspended for six months without pay. FACTS:
Atty. Susan M. Aquino, Chief of the
ISSUE: Legal and Technical Staff of the Court of Tax
WON the suspension was proper. Appeals
(CTA), filed a complaint against Judge
HELD: Ernesto Acosta, Presiding Judge of the same
YES. Judge Caminades behavior must court, with
be sanctioned. We are neither amused by hi sexual harassment under R.A. 7877 and
s violation of the Canons of Judicial Ethics and
claims of innocent playfulness nor impressed Code of
by his excessive display of congeniality. He Professional Responsibility. Aquino alleged
acted several instances when respondent judge
beyond the bounds of decency, morality and sexually
propriety. He failed to meet the standard of harassed her. Respondent judge denied
conduct embodied in the Code of Judicial complainants allegation that he sexually
Conduct. harassed her
His abusive and distasteful acts six times. He claimed that he has always
unmistakably constituted sexual harassment treated her with respect, being the head of
because the CTA
they resulted in an intimidating, hostile, or Legal Staff. In fact, there is no strain in their
offensive environment for his female professional relationship.
subordinates.
Section 8 of Rule 140 of the Rules of Court, HELD:
 132

The court found no convincing or classifying the employee which in anyway

evidence to sustain complainants charges. would
What we discriminate, deprive or diminish
perceive to have been committed by employment opportunities or otherwise
respondent judge are casual gestures of adversely affect said
friendship and employees;
camaraderie, nothing more, nothing less. In 2) The above acts would impair the
kissing complainant, we find no indication employee's right or privileges under existing
that l abor
respondent was motivated by malice or lewd laws; or
design. Evidently, she misunderstood his 3) The above acts would result in an
actuations and construed them as work- intimidating, hostile, or offensive
related sexual harassment under R.A. 7877. environment for
"A mere casual buss on the cheek is not a the employee.
sexual conduct or favor and does not fall "Clearly, under the foregoing
within the purview of sexual harassment provisions, the elements of sexual
under R.A. No. 7877. Section 3 (a) thereof harassment are as
provides, to follows:
wit: 1) The employer, employee,
Sec 3. Work, Education or Training - manager, supervisor, agent of the employer,
related Sexual Harassment Defined. - Work, teacher,
education or training-related sexual instructor, professor, coach, trainor, or any
harassment is committed by an employer, other person has authority, influence or
employee, moral
manager, supervisor, agent of the employer, ascendancy over another;
teacher, instructor, professor, coach, 2) The authority, influence or moral
trainor, or ascendancy exists in a working environment;
any other person who, having authority, 3) The employer, employee,
influence or moral ascendancy over another manager, supervisor, agent of the employer,
in a work Indeed, from the records on hand,
or training or education environment, there is no showing that respondent judge
demands, requests or otherwise requires demanded, requested or required any sexual
any sexual favor from complainant in exchange for
favor from the other, regardless of whether favorable
the demand, request or requirement for compensation, terms, conditions, promotion
submission is accepted by the object of said or privileges specified under Section 3 of R.A.
Act. 7877. Nor did he, by his actuations, violate
a) In a work-related or employment the Canons of Judicial Ethics or the Code of
environment, sexual harassment is Professional Responsibility.
committed
when:
1) The sexual favor is made as a 105 Paiste v Mamenta, Jr.
condition in the hiring or in the employment,
re employment or continued employment of FACTS:
said individual, or in granting said individual In an affidavit-complaint filed with
favorable compensation, terms, conditions, the Office of the Chief Justice, dated August
promotions or privileges; or the refusal to 1 0, 2001
grant , complainant Joanne S. Goltiao charged him
sexual favor results in limiting, segregating with gambling and drinking liquor during
 133

office did you take the client there and even raised
hours, sexual harassment, arrogance and your voice? (Bullshit ka! Okinnam nga babai!
acts unbecoming of a government official. In Apay ta innalam dagita kliyente idiay sanak
another to rinayawan!) She replied that her parents
affidavitcomplaint filed with the Office of the taught
Court Administrator, dated August 28, 2001 them not to answer back at older people. He
, the still shouted: Vulva of your mother! I wish
other complainant Jocelyn C. Paiste charged you will
him with conduct unbecoming of a public die now! Whom are you bragging of? We will
officer try each other. (Okinnam nga babai! Matay
and with violation of the AntiGraft and ka
Corrupt Practices Act for his failure to issue koma itattan! Apay sinno aya ti paglaslastog
official mo? Sige, agpipinnadas tayo. ) Thereafter,
receipt. he
The evidence shows that asked the utility aide to buy him four bottles
complainant Goltiao is a Stenographer I of of beer.
the MCTC of TayugSan Nicolas since 1 997. Goltiao declared that her working
She testified that on August 7, 2000, at about relationship with the respondent is
3:00 p.m., a sometimes good
representative from the Plaridel Insurance and sometimes bad because of his ill temper.
Co. came to their office seeking clearance. He easily gets mad at her even for small,
She trivial
immediately prepared the necessary form mistakes. This situation started, according to
and, together with the representative, went her, when she told him to stop courting and
to see sending her love notes as she is already a
respondent in the courtroom to obtain his married woman. She related an incident
signature. When she asked him to sign the which
document, respondent, who was at that happened early one morning when he asked
time playing tong-its (a card game) at the her to see him inside the judges chamber. At
lawyers table that
with unnamed individuals, got angry and time, the designated judge was not around.
threw his cards. He shouted at her: Why did Once inside, she was told to sit in one of the
you bring chairs
them with you? Did you like them to bring in front of the judges table. The respondent,
me to the Supreme Court? She responded who was sitting at the judges chair, then
that such extended
was not her intention and reminded him of his hand to her, as if he wanted to shake her
his requirement that he must first see the hands. She reciprocated by extending her
applicants before he sign their clearance. He hands
did not sign the clearance, sent then out and and jokingly put his hands on her forehead
shouted Bullshit ka! at her thrice. They all (agmanmano). She afterwards tried to free
then went out of the courtroom and her
proceeded back hands off his but he would no let her.
to the staff room. She went to her table and Instead, he told her, Wait for a while, I would
buried her face in her hands, crying. just like to
Respondent tell you something. I love you, is that okay?
followed her and continued uttering Tell me that you love me too. No strings
unsavory remarks: Bullshit ka! Vulva of your attached.
mother! Why She retorted, As if you are my father.
 134

Spurned, he got mad. This kind of incident respondent

happened at deserves scant considerations.
least ten more times. The evidence shows that on April 21 ,
2001 , complainant Paiste gave to the
ISSUE: respondent
Is he guilty of sexual harassment? the amount of two thousand four hundred
pesos (P2,400.00) as bail bond of the
accused in
HELD: Criminal Case No. 7461 . When she asked for
Under the circumstances, we find an official receipt, he told her to get it the
respondent guilty of sexual harassment. His following Monday at the court. She sent an
severely office representative that Monday as told
outrageous acts, which are an affront to but
women, constitute sexual harassment respondent did not issue any receipt. Further
because they verification from the records of Criminal
necessarily result in an intimidating, hostile, Case No.
and offensive working environment for his 7461 reveals that no copy of the official
female receipt appears on file indicating that no
subordinates. He abused the power and receipt was
authority he exercises over them, which is ever issued to complainant Paiste.
the We also find the rude and boorish
gravamen of the offense in sexual manner respondent treated complainant
harassment. Paiste and
Sexual harassment in the workplace her client on April 3, 2001 uncalled for. His
is not about a man taking advantage of a demeanor bordered on arrogance. He made
woman by them
reason of sexual desire it is about power wait for fifteen minutes before he attended
being exercised by a superior over his to their concern as they found him playing
women cards
subordinates. That power emanates from and gambling. He was very irritable the
the fact that he can remove them if they whole time he was talking to them. After he
refuse his examined
amorous advances. the record, he slammed it an told them to go
There is likewise sufficient evidence to the court at Rosales. He then got annoyed
in A.M. No. P-03-1 697 to hold respondent when they followed him. To be sure, this is
administratively liable for his failure to issue no way to treat court users. High strung and
official receipt after receiving court fees and belligerent behavior has no place in
for government, especially in the judiciary,
discourtesy. The testimony of complainant where the
Paiste is worthy of belief. We find her personnel are enjoined to act with self-
categorical restraint and civility at all times, even when
and consistent declarations credible, confronted
especially when viewed in the light of the with rudeness and insolence. They are
fact that no ill motive on her part was expected to extend prompt, courteous and
established. Against her positive testimony, adequate
supported by documentary service to the people. Such conduct is
evidence based on official court records, the exacted from them so that they will earn and
mere uncorroborated denial of the keep
societys high regard for and confidence in
 135

the judicial service. Conduct violative of this assignment at Pacific Plaza Towers however,
standard petitioners did
quickly and surely corrodes respect for the not report for work because they had
courts. It is the imperative a nd sacred duty subcontracted to perform installation work
of for another
everyone charged with the dispensation of company. Petitioners also demanded for an
justice, from the judge to the lowliest clerk, increase in their wage to P280.00 per day.
to When
uphold the courts good name and standing this was not granted, petitioners stopped
as true temples of justice. reporting for work and filed the illegal
dismissal case.

ISSUE:
106 JENNY M. AGABON and VIRGILIO C. WON Agabon’s termination was
AGABON VS NLRC & RIVIERA HOME valid.
IMPROVEMENTS
HELD:
FACTS: YES. Abandonment is the deliberate
Riviera Home Improvements, Inc. is and unjustified refusal of an employee to
engaged in the business of selling and resume
installing his employment. It is a form of neglect of
ornamental and construction materials. It duty, hence, a just cause for termination of
employed petitioners Virgilio Agabon and employment by the employer. For a valid
Jenny finding of abandonment, these two factors
Agabon as gypsum board and cornice should be
installers until they were dismissed for present:
abandonment of (1) the failure to report for work or
work. absence without valid or justifiable reason;
Petitioners then filed a complaint for and
illegal dismissal and payment of money (2) a clear intention to sever
claims. employer-employee relationship, with the
They assert that they were dismissed second as the
because the private respondent refused to more determinative factor which is
give them manifested by overt acts from which it may
assignments unless they agreed to work on a be deduced
pakyaw basis when they reported for duty. that the employees has no more intention to
They work. The intent to discontinue the
did not agree on this arrangement because it employment
would mean losing benefits as Social Security must be shown by clear proof that it was
System (SSS) members. deliberate and unjustified.
Private respondent, on the other In this case, petitioners were
hand, maintained that petitioners were not frequently absent having subcontracted for
dismissed an installation
but had abandoned their work. In fact, work for another company. Subcontracting
private respondent sent two letters to the for another company clearly showed the
last known intention
addresses of the petitioners advising them to to sever the employer-employee
report for work. They even talked to Virgilio relationship with private respondent. This
Agabon to tell him about the new was not the first
 136

time they did this. In January 1996, they did System (SSS). When Sato kept on telling
not report for work because they were petitioners to update his premium
working for contributions, he was removed as a grader
another company. Private respondent at operator and made to perform manual
that time warned petitioners that they labor, such as tilling the land in a private
would be cemetery and/or digging earthworks in
dismissed if this happened again. Petitioners petitioner corporations construction
disregarded the warning and exhibited a projects. Thereafter, an inspection team
clear from the SSS went to petitioner corporations
intention to sever their employer-employee office to check its compliance with the SSS
relationship. The record of an employee is a law. Petitioners told Sato that they could no
relevant consideration in determining the longer afford to pay his wages, and he was
penalty that should be meted out to him. advised to look for employment in other
The law imposes many obligations on construction companies. Sato, however,
the employer such as providing just found difficulty in finding a job because he
compensation had been blacklisted in other construction
to workers, observance of the procedural companies and was prevented from entering
requirements of notice and hearing in the the project sites of petitioners.
termination of employment. On the other Respondent Nilo Berdin was hired by
hand, the law also recognizes the right of the petitioners as a steelman/laborer;
employer to expect from its workers not only respondent Anecito S. Parantar, Sr. hired as
good performance, adequate work and a steelman; and respondent Romeo M.
diligence, Lacida, Jr. was as a laborer. At the start of
but also good conduct[19] and loyalty. The their employment, they were required by
employer may not be compelled to continue petitioners to sign several documents
to purporting to be employment contracts.
employ such persons whose continuance in They immediately signed the documents
the service will patently be inimical to his without verifying their contents for fear of
interests. forfeiting their employment.
They were tasked to set up steel bars
used in the building foundation, to mix
107 E.G & I. CONSTRUCTION cement, and to perform other tasks required
CORPORATION and EDSEL GALEOS, of them by petitioners.
Petitioners, v. ANANIAS P. SATO, NILO The project engineer of respondents
BERDIN, ROMEO M. LACIDA, JR., and HEIRS Berdin, Parantar, and Lacida instructed them
OF ANECITO S. PARANTAR, SR., namely: to affix their signatures on various
YVONNE, KIMBERLY MAE, MARYKRIS, documents. They refused to sign the
ANECITO, JR., and JOHN BRYAN, all documents because they were written in
surnamed PARANTAR, Respondents. English, a language that they did not
understand. Irked by their disobedience, the
FACTS: project engineer terminated their
Respondent Ananias P. Sato was employment. On the same date, they were
hired by petitioner E.G. & I. Construction given their weekly wages. However, the
Corporation as a grader operator, which is wages that were paid to them were short of
considered as technical labor. He held the three (3) days worth of wages, as penalty for
position for more than thirteen (13) years. In their refusal to sign the documents. The
2004, Sato discovered that petitioner following day, they were not allowed to
corporation had not been remitting his enter the work premises.
premium contributions to the Social Security
 137

Respondents filed their respective Petitioner corporation failed to prove

complaints with the Regional Arbitration that respondents were dismissed for just or
Branch of Cebu City for illegal dismissal, authorized cause. In an illegal dismissal case,
underpayment of wages (wage differentials), the onus probandi rests on the employer to
holiday pay, thirteenth (13th) month pay, prove that the dismissal of an employee is
and service incentive leave pay. for a valid cause.
The Labor Arbiter held that the For abandonment to exist, it is
respondents were illegally dismissed from essential (a) that the employee must have
employment. In lieu of reinstatement, due to failed to report for work or must have been
the strained relations of the parties and as absent without valid or justifiable reason;
prayed for by respondents, each of them was and (b) that there must have been a clear
granted separation pay equivalent to one (1) intention to sever the employer-employee
month pay for every year of service. The relationship manifested by some overt acts.
Labor Arbiter likewise awarded respondents The employer has the burden of proof to
claim for wage differentials, 13th month pay, show the employee's deliberate and
holiday pay, and service incentive leave pay. unjustified refusal to resume his
On appeal, the NLRC, reversed the employment without any intention of
Labor Arbiters decision. returning. Mere absence is not sufficient.
In reversing the decision of the Labor There must be an unequivocal intent on the
Arbiter, the NLRC ratiocinated that, other part of the employee to discontinue his
than respondents bare allegation that they employment. Uniwide Sales Warehouse
were dismissed, they failed to present a Club v. National Labor Relations
written notice of dismissal, and that Commission, G.R. No. 154503, February 29,
respondents individual complaints opted for 2008
the payment of separation pay instead of The reason why respondents failed
reinstatement. The NLRC opined that illegal to report for work was because petitioner
dismissal was inconsistent with the prayer corporation barred them from entering its
for separation pay instead of reinstatement. construction sites. It is a settled rule that
Respondents filed an MR but the same was failure to report for work after a notice to
denied. return to work has been served does not
Aggrieved, respondents filed a necessarily constitute abandonment. The
petition for certiorari under Rule 65 of the intent to discontinue the employment must
Rules of Court before the CA. be shown by clear proof that it was
The CA reinstated the decision of the deliberate and unjustified. Petitioner
Labor Arbiter ruling that respondents were corporation failed to show overt acts
illegally dismissed. Hence, this petition. committed by respondents from which it
may be deduced that they had no more
ISSUE: intention to work. Respondents filing of the
Whether the CA erred in reinstating case for illegal dismissal barely four (4) days
the decision of the Labor Arbiter, declaring from their alleged abandonment is totally
that respondents were illegally terminated inconsistent with our known concept of
from employment by petitioner corporation, what constitutes abandonment.
and that respondents are entitled to their LABOR LAW
monetary claims. Even as the employee must allege
non-payment, the general rule is that the
HELD: burden rests on the employer to prove
The decision of the Court of Appeals payment, rather than on the employee to
is sustained. prove non-payment. The reason for the rule
LABOR LAW is that the pertinent personnel files, payrolls,
 138

records, remittances, and other similar be absent, Harpoon sent him memoranda
documents which will show that overtime, informing him of his absences, which were
differentials, service incentive leave, and filed with the DOLE on August 15, 2001.
other claims of the worker have been paid Francisco was then terminated on July 30,
are not in the possession of the worker but 2001. With regard to the commissions
in the custody and absolute control of the claimed, Harpoon averred that Francisco
employer. Agabon v.NLRC, G.R. No. 158693, was only a regular employee, with a regular
November 17, 2004 salary, and that the supposed "commissions"
In this case, the submission of were merely additional money recognizing
petitioner corporation of the time records Franciscos efforts.
and payrolls of respondents only on their The Labor Arbiter ruled that
appeal before the NLRC is contrary to Francisco was legally dismissed and that due
elementary precepts of justice and fair play. process was served through the several
Respondents were not given the opportunity memoranda sent to him. It also ruled that
to check the authenticity and correctness of commissions were due Francisco, and gave
the same. Thus, we sustain the ruling of the credence to the vouchers. The NLRC,
CA in the grant of the monetary claims of however, held that Francisco was illegally
respondents. dismissed, for his timecard for June 2001
DENIED. only showed three absences, which could
hardly be called habitual and therefore
cannot be a ground for termination. It
108 HARPOON MARINE SERVICES, INC., ET upheld the Labor Arbiter with regard to the
AL.., Petitioner, v. FERNAN H. FRANCISCO, commissions. The CA affirmed the NLRC, and
Respondents. held that Harpoon president Rosit should be
solidarily liable with the company.
FACTS:
Harpoon Marine Services hired ISSUES:
Francisco as a Yard Supervisor. On June 15, 1. Whether or not Francisco was
2001, Francisco averred that Harpoon illegally dismissed
dismissed him from work but promised to 2. Whether or not he was entitled to
pay his separation pay and accrued his commissions
commissions. He continued reporting for 3. Whether Rosit is solidarily liable
work, but was barred from entering the with Harpoon
premises. He thereafter tried to claim his
separation pay and commissions, but HELD:
Harpoon, through its president Rosit, denied The petition is partly meritorious.
payment of his commissions. Refusing to LABOR LAW: Termination of
sign a quitclaim, Francisco demanded employment; liability of corporate officers.
payment of his commissions, then filed a First issue: The SC held that the
case before the Labor Arbiter for illegal termination was illegal. As stated by the
dismissal. He supported his claim for NLRC, Franciscos timecard only showed
commissions with two vouchers evincing three consecutive absences and no record of
payments for vessel repairs, arguing that he tardiness, which hardly constitutes gross or
was paid P10,000 for each vessel he habitual absence/tardiness. Moreso, the
repaired. reasons for Franciscos three-day absence
Harpoon averred that on June 15, were not contested by Harpoon before the
2001, Rosit merely met with Francisco to Labor Arbiter, and no other evidence was
warn him regarding his habitual absences presented before the Labor Arbiter to prove
and tardiness. When Francisco continued to such "habitual" tardiness/absence. The
 139

argument that Francisco abandoned his may be imposed, as when the officer acted
work and went AWOL also does not hold in bad faith or gross negligence in handling
water, since Harpoon failed to prove that the corporate affairs. Here, the CA imposed
two elements of work abandonment existed: personal liability on Rosit based on bad faith,
namely, that there is absence of failure to even though there was no proof that Rosit
report to work for no justifiable reason, and acted with bad faith or outside of his
that there is intent to sever the employee- authority as company president. At most, his
employer relationship. Here, Harpoon failed acts merely showed the absence of a just or
to prove that it was respondent who valid cause in terminating the employment
voluntarily refused to report back for work of Francisco.
by his defiance and refusal to accept the Petition is PARTLY GRANTED.
memoranda and the notices of absences
sent to him.Harpoon failed to present
evidence that they sent these notices to 109 Alert Security and Investigation
respondents last known address for the Agency vs. Pasawilan
purpose of warning him that his continued
failure to report would be construed as Facts:
abandonment of work. Verily, an absence of Respondents Saidali Pasawilan,
three days does not constitute habitual Wilfredo Verceles and Melchor Bulusan
absence justifying a termination from work. were all employed by petitioner Alert
Second issue: The SC held that Security and Investigation Agency, Inc. (Alert
Francisco was not entitled to the Security) as security guards beginning March
commissions. The check vouchers contained 31, 1996, January 14, 1997, and January 24,
very scant details and did not state that they 1997, respectively. They were paid 165.00
were paid for the construction or repair of a pesos a day as regular employees, and
vessel. They did not state the purpose for assigned at the Department of Science and
which the amounts were paid. Moreover, Technology (DOST) pursuant to a security
the list of vessels presented with the service contract between the DOST and Alert
vouchers does not validate Franciscos Security.
monetary claim for it only contains a list of Respondents aver that because they
vessels, and nothing more. The vouchers were underpaid, they filed a complaint for
patent vagueness makes them unreliable as money claims against Alert Security and its
a basis for Franciscos claim of commissions. president and general manager, petitioner
Entitlement to commissions cannot be Manuel D. Dasig, before Labor Arbiter Ariel
proved by vouchers which are silent as to the C. Santos. As a result of their complaint, they
purpose for which they are issued. were relieved from their posts in the DOST
Third issue: The SC disagrees with the and were not given new assignments despite
Labor Arbiter and NLRC in according solidary the lapse of six months. On January 26, 1999,
liability on Rosit and Harpoon for the illegal they filed a joint complaint for illegal
dismissal. As held in the case ofMAM Realty dismissal against petitioners.
Development Corporation v. National Labor Petitioners, on the other hand, deny
Relations Commission, "obligations incurred that they dismissed the respondents.
by [corporate officers], acting as such Petitioners presented "Duty Detail Orders"
corporate agents, are not theirs but the that Alert Security issued to show that
direct accountabilities of the corporation respondents were in fact assigned to LRTA.
they represent." As such, they should not be Respondents, however, failed to report at
generally held jointly and solidarily liable the LRTA and instead kept loitering at the
with the corporation. The Court, however, DOST and tried to convince other security
cited circumstances when solidary liabilities guards to file complaints against Alert
 140

Security. Thus, on August 3, 1998, Alert accept the allegations of petitioners that
Security filed a "termination report" with the respondents unjustifiably refused to report
Department of Labor and Employment for duty in their new posts. A careful review
relative to the termination of the of the records reveals that there is no
respondents. showing that respondents were notified of
their new assignments. Granting that the
Issue: "Duty Detail Orders" were indeed issued,
Whether respondents were illegally they served no purpose unless the intended
dismissed recipients of the orders are informed of
such.
Rulings: The employer cannot simply
We rule in the affirmative. conclude that an employee is ipso facto
As a rule, employment cannot be notified of a transfer when there is no
terminated by an employer without any just evidence to indicate that the employee had
or authorized cause. No less than the 1987 knowledge of the transfer order. Hence, the
Constitution in Section 3, Article 13 failure of an employee to report for work at
guarantees security of tenure for workers the new location cannot be taken against
and because of this, an employee may only him as an element of abandonment.
be terminated for just or authorized causes We acknowledge and recognize the
that must comply with the due process right of an employer to transfer employees
requirements mandated by law. Hence, in the interest of the service. This exercise is
employers are barred from arbitrarily a management prerogative which is a lawful
removing their workers whenever and right of an employer. However, like all rights,
however they want. The law sets the valid there are limitations to the right to transfer
grounds for termination as well as the employees. As ruled in the case of Blue Dairy
proper procedure to take when terminating Corporation v. NLRC:
the services of an employee. x x x The managerial prerogative to
Although we recognize the right of transfer personnel must be exercised
employers to shape their own work force, without grave abuse of discretion, bearing in
this management prerogative must not mind the basic elements of justice and fair
curtail the basic right of employees to play. Having the right should not be confused
security of tenure. There must be a valid and with the manner in which that right is
lawful reason for terminating the exercised. Thus, it cannot be used as a
employment of a worker. Otherwise, it is subterfuge by the employer to rid himself of
illegal and would be dealt with by the courts an undesirable worker. In particular, the
accordingly. employer must be able to show that the
The Labor Code, as amended, transfer is not unreasonable, inconvenient
enumerates several just and authorized or prejudicial to the employee; nor does it
causes for a valid termination of involve a demotion in rank or a diminution of
employment. An employee asserting his his salaries, privileges and other benefits. x x
right and asking for minimum wage is not x
among those causes. Dismissing an In addition to these tests for a valid
employee on this ground amounts to transfer, there should be proper and
retaliation by management for an effective notice to the employee concerned.
employee’s legitimate grievance without It is the employer’s burden to show that the
due process. Such stroke of retribution has employee was duly notified of the transfer.
no place in Philippine Labor Laws. Verily, an employer cannot reasonably
On the element of the failure of the expect an employee to report for work in a
employee to report for work, we also cannot new location without first informing said
 141

employee of the transfer. Petitioners’ In their Position Paper, Polyfoam and

insistence on the sufficiency of mere Cheng insisted that the NLRC has no
issuance of the transfer order is indicative of jurisdiction over the case, because
bad faith on their part. respondent was not their employee. They
likewise contended that respondent money
110 POLYFOAM-RGC INTERNATIONAL, claims had already prescribed. Finally, they
CORPORATION and PRECILLA A. GRAMAJE, fault respondent for including Cheng as a
Petitioners, v.EDGARDO CONCEPCION, party-defendant, considering that she is not
Respondent. even a director of the company.
In her Position Paper,Gramaje
FACTS: claimed that P.A. Gramaje Employment
In his February 08, 2000 complaint Services (PAGES) is a legitimate job
for illegal dismissal against Polyfoam and contractor who provided some manpower
Natividad Cheng, Edgardo Concepcion needs of Polyfoam. It was alleged that
alleged that he was hired by Polyfoam as an respondent was hired as "packer" and
"all-around" factory worker and served as assigned to Polyfoam, charged with packing
such for almost six years. On January 14, the latter finished foam products. She
2000, he allegedly discovered that his time argued, however, that respondent was not
card was not in the rack and was later dismissed from employment, rather, he
informed by the security guard that he could simply stopped reporting for work.
no longer punch his time card. When he On December 14, 2001, Labor Arbiter
protested to his supervisor, the latter rendered a Decision finding respondent to
allegedly told him that the management have been illegally dismissed from
decided to dismiss him due to an infraction employment and holding Polyfoam and
of a company rule. Cheng, the company Gramaje/PAGES solidarily liable for
manager, also refused to face him. respondent money claims.
Respondent counsel later wrote a letter to On appeal by petitioners, the NLRC
Polyfoam manager requesting that modified the LA decision by exonerating
respondent be re-admitted to work, but the Polyfoam from liability for respondent claim
request remained unheeded prompting the for separation pay and deleting the awards
latter to file the complaint for illegal of backwages, 13th month pay, damages,
dismissal. and attorney fees.
On April 28, 2000, Gramaje filed a Aggrieved, respondent elevated the
Motion for Intervention claiming to be the case to the CA in a special civil action for
real employer of respondent. On the other certiorari under Rule 65 of the Rules of
hand, Polyfoam and Cheng filed a Motion to Court. On December 19, 2005, the appellate
Dismiss on the grounds that the NLRC has no court granted the petition. The CA agreed
jurisdiction over the case, because of the with the LA conclusion that Gramaje is not a
absence of employer-employee relationship legitimate job contractor but only a "labor-
between Polyfoam and respondent and that only" contractor. The appellate court
the money claims had already prescribed. affirmed the LA findings of illegal dismissal as
On May 24, 2000, Labor Arbiter respondent was dismissed from the service
Adolfo Babiano issued an Order granting without cause and due
Gramaje motion for intervention, it process.Consequently, separation pay in lieu
appearing that she is an indispensable party of reinstatement was awarded. The CA
and denying Polyfoam and Cheng motion to quoted with approval the LA conclusions on
dismiss as the lack of employer-employee the award of respondent other money
relationship is only a matter of defense. claims.
 142

equipment, machineries, work premises,

ISSUES: among others, and the workers recruited
1. Whether or not Gramaje is an and placed by such person are performing
independent job contractor? activities which are directly related to the
2. Whether or not respondent was principal business of such employer. In such
illegally dismissed from employment? cases, the person or intermediary shall be
considered merely as an agent of the
HELD: employer who shall be responsible to the
The decision of the Court of Appeals workers in the same manner and extent as if
is affirmed. the latter were directly employed by him.
Gramaje is a Labor-Only Contractor - The test of independent
Article 106 of the Labor Code explains the contractorship is "whether one claiming to
relations which may arise between an be an independent contractor has
employer, a contractor, and the contractor contracted to do the work according to his
employees, thus: own methods and without being subject to
ART. 106. Contractor or the control of the employer, except only as
subcontracting. − Whenever an employer to the results of the work." In San Miguel
enters into a contract with another person Corporation v. Semillano, the Court laid
for the performance of the former work, the down the criteria in determining the
employees of the contractor and of the latter existence of an independent and permissible
subcontractor, if any, shall be paid in contractor relationship, to wit:
accordance with the provisions of this Code. x x x [W]hether or not the contractor
In the event that the contractor or is carrying on an independent business; the
subcontractor fails to pay the wages of his nature and extent of the work; the skill
employees in accordance with this Code, the required; the term and duration of the
employer shall be jointly and severally liable relationship; the right to assign the
with his contractor or subcontractor to such performance of a specified piece of work;
employees to the extent of the work the control and supervision of the work to
performed under the contract, in the same another; the employer power with respect
manner and extent that he is liable to to the hiring, firing and payment of the
employees directly employed by him. contractor workers; the control of the
The Secretary of Labor and premises; the duty to supply the premises,
Employment may, by appropriate tools, appliances, materials, and labor; and
regulations, restrict or prohibit the the mode, manner and terms of payment.
contracting out of labor to protect the rights Simply put, the totality of the facts
of workers established under the Code. In so and the surrounding circumstances of the
prohibiting or restricting, he may make case are to be considered. Each case must be
appropriate distinctions between labor-only determined by its own facts and all the
contracting and job contracting as well as features of the relationship are to be
differentiations within these types of considered.
contracting and determine who among the Applying the foregoing tests, we
parties involved shall be considered the agree with the CA conclusion that Gramaje is
employer for purposes of this Code, to not an independent job contractor, but a
prevent any violation or circumvention of "labor-only" contractor.
any provision of this Code. First, Gramaje has no substantial
There is labor-only contracting where capital or investment. The presumption is
the person supplying workers to an that a contractor is a labor-only contractor
employer does not have substantial capital unless he overcomes the burden of proving
or investment in the form of tools, that it has substantial capital, investment,
 143

tools, and the like. The employee should not is all. Prior to his termination, respondent
be expected to prove the negative fact that had been performing the same job in
the contractor does not have substantial Polyfoambusiness for almost six (6) years. He
capital, investment and tools to engage in was even furnished a copy of Polyfoam "Mga
job-contracting. Alituntunin at KarampatangParusa,"which
Gramaje claimed that it has embodied Polyfoam rules on attendance,
substantial capital of its own as well as the manner of performing the employee
investment in its office, equipment and duties, ethical standards, cleanliness, health,
tools. She pointed out that she furnished the safety, peace and order. These rules carried
plastic containers and carton boxes used in with them the corresponding penalties in
carrying out the function of packing the case of violation.
mattresses of Polyfoam. She added that she While it is true that petitioners
had placed in Polyfoam workplace ten (10) submitted the Affidavit of Polyfoam
sealing machines, twenty (20) hand trucks, supervisor Victor Abadia, claiming that the
and two (2) forklifts to enable respondent latter did not exercise supervision over
and the other employees of Gramaje respondent because the latter was not
assigned at Polyfoam to perform their job. Polyfoam but Gramajeemployee, said
Finally, she explained that she had her own Affidavit is insufficient to prove such claim.
office with her own staff. However, aside Petitioners should have presented the
from her own bare statement, neither person who they claim to have exercised
Gramaje nor Polyfoampresented evidence supervision over respondent and their
showing Gramaje ownership of the alleged other employees assigned
equipment and machineries used in the toPolyfoam. It was never established that
performance of the alleged contracted job. Gramaje took entire charge, control and
Considering that these machineries are supervision of the work and service agreed
found in Polyfoam premises, there can be no upon. And as aptly observed by the CA, "it is
other logical conclusion but that the tools likewise highly unusual and suspect as to the
and equipment utilized by Gramaje and her absence of a written contract specifying the
"employees" are owned by Polyfoam. performance of a specified service, the
Neither did Polyfoam nor Gramaje show that nature and extent of the service or work to
the latter had clients other than the former. be done and the term and duration of the
Since petitioners failed to adduce evidence relationship."
that Gramaje had any substantial capital, A finding that a contractor is a "labor-
investment or assets to perform the work only" contractor, as opposed to permissible
contracted for, the presumption that job contracting, is equivalent to declaring
Gramaje is a labor-only contractor stands. that there is an employer-employee
Second, Gramaje did not carry on an relationship between the principal and the
independent business or undertake the employees of the supposed contractor, and
performance of its service contract the "labor-only" contractor is considered as
according to its own manner and method, a mere agent of the principal, the real
free from the control and supervision of its employer.In this case, Polyfoam is the
principal,Polyfoam, its apparent role having principal employer and Gramaje is the labor-
been merely to recruit persons to work for only contractor. Polyfoam and Gramaje are,
Polyfoam.It is undisputed that respondent therefore, solidarily liable for the rightful
had performed his task of packing Polyfoam claims of respondent.
foam products in Polyfoam premises. As to Respondent was Illegally
the recruitment of respondent, petitioners DismissedFrom Employment - Respondent
were able to establish only that respondent stated that on January 14, 2000, his time
application was referred toGramaje, but that card was suddenly taken off the rack. His
 144

supervisor later informed him that Polyfoam feasible as in this case, separation pay
management decided to dismiss him due to equivalent to one-month salary for every
infraction of company rule. In short, year of service shall be awarded as an
respondent insisted that he was dismissed alternative. Thus, the CA is correct in
from employment without just or lawful affirming the LA award of separation pay
cause and without due process. Polyfoam with full backwages and other monetary
did not offer any explanation of such benefits.
dismissal. It, instead, explained that DENIED
respondent real employer is Gramaje.
Gramaje, on the other hand, denied the
claim of illegal dismissal. She shifted the 111 GT PRINTERS and/or TRINIDAD G.
blame on respondent claiming that the latter BARBA vs. NLRC and EDWIN RICARDO
in fact abandoned his work.
The LA gave credence to respondent FACTS:
narration of the circumstances of the case. Edwin Ricardo, was employed in
Said conclusion was affirmed by the CA. We 1968 as an apprentice of GT Printers. He was
find no reason to depart from such findings. promoted
Abandonment cannot be inferred to the position of production manager of GT
from the actuations of respondent. When he Printers and became general manager. In
discovered that his time card was off the February, 1985, Ricardo's wife established
rack, he immediately inquired from his Insta Printers, a rival printing press, with
supervisor. He later sought the assistance of Edwin
his counsel, who wrote a letter addressed to Ricardo himself as consultant and owner.
Polyfoam requesting that he be re-admitted Since the establishment of Insta Printers,
to work. When said request was not acted Ricardo
upon, he filed the instant illegal dismissal became a habitual absentee from his job at
case. These circumstances clearly negate the GT Printers. He neglected his duties and
intention to abandon his work. responsibilities, and became lax in directing
Petitioners failed to show any valid or and supervising the work force, resulting in
authorized cause under the Labor Code numerous major printing errors and failure
which allowed it to terminate the services of to meet printing specifications leading to the
respondent. Neither was it shown that rejection of several job orders from regular
respondent was given ample opportunity to customers. Mrs. Barba noticed that Ricardo
contest the legality of his dismissal. No not only
notice of termination was given to him. used GT Printers' bookcloth and other
Clearly, respondent was not afforded due printing materials for his Insta Printers, but
process. Having failed to establish he also gave
compliance with the requirements of specific instructions to the production staff
termination of employment under the Labor to give priority to book and magazine job
Code, the dismissal of respondent was orders for
tainted with illegality. Consequently, Insta Printers. Eventually, the regular
respondent is entitled to reinstatement customers of GT Printers were pirated by
without loss of seniority rights, and other Insta Printers.
privileges and to his full backwages inclusive Ricardo also manipulated price quotations
of allowances and to his other benefits or during the canvassing of bids to favor his
their monetary equivalent computed from own outfit
the time his compensation was withheld up instead of GT Printers. Because of those
to the time of his actual reinstatement. irregularities, GT Printers suspended Ricardo
However, if reinstatement is no longer as general
 145

manager for 30 days. Richard Barba was conclude[d] that . . . there exist visible
designated to take his place. Contracts conflict of interest amounting to willful
concluded by breach of trust
respondent Ricardo thereafter were no and confidence repose (sic) upon him by his
longer honored. However, he continued to employer, . . . as well as (b) habitual neglect
be a sales of his
agent for GT Printers, hence, he continued to duties . . ."
receive commissions. He stopped reportin g
for
work and soon after filed a complaint for 112 DUNCAN ASSOCIATION OF
illegal dismissal. DETAILMAN-PTGWO and PEDRO A.
TECSON vs. GLAXO
ISSUE: WELLCOME PHILIPPINES, INC.
WON Ricardo was lawfully dismissed
from employment. FACTS:
Pedro A. Tecson (Tecson) was hired
HELD: by respondent Glaxo Wellcome Philippi nes,
YES. The security of tenure accorded Inc.
to labor under the Constitution does not (Glaxo) as medical representative. Tecson
embrace signed a contract of employment which
infractions of accepted company rules stipulates,
amounting to breach of trust and loss of among others, that he agrees to study and
confidence. The abide by existing company rules; to disclose
right of an employer to dismiss a managerial to
employee for breach of trust and loss of management any existing or future
confidence, as in this case, cannot be relationship by consanguinity or affinity with
doubted. As a measure of self-preservation co-employees
against acts or employees of competing drug companies
inimical to its interests, an employer has the and should management find that such
right to dismiss an employee found relationship poses a possible conflict of
committing interest, to resign from the company. Tecson
acts of dishonesty and disloyalty. The was
employer may not be compelled to continue initially assigned to market Glaxos products
to employ in the Camarines Sur-Camarines Norte sales
such a person whose continuance in the area.
service would patently be inimical to his Subsequently, Tecson entered into a
emplo yer's romantic relationship with Bettsy, an
interest. The dismissal of a dishonest employee of Astra
employee is in the best interest not only of Pharmaceuticals (Astra), a competitor of
management Glaxo. Bettsy was Astras Branch Coordinator
but also of labor for the law never intended in Albay.
to impose an unjust situation on either labor She supervised the district managers and
or medical representatives of her company and
management. Reinstatement would be ill- prepared marketing strategies for Astra in
advised and incompatible with the labor that area. Even before they got married,
arbiter's Tecson
finding that "from those documentary received several reminders from his District
evidences presented by respondent, it can Manager regarding the conflict of interest
be safely which his
 146

relationship with Bettsy might engender. and enforcement in the interest of fair play
Still, Tecson married Bettsy. Tecsons In the
superiors case at bar, the record shows that Glaxo gave
informed him that his marriage to Bettsy Tecson several chances to eliminate the
gave rise to a conflict of interest. conflict
of interest brought about by his relationship
HELD: with Bettsy. When their relationship was still
Glaxos policy prohibiting an in its
employee from having a relationship with an initial stage, Tecsons supervisors at Glaxo
employee of a constantly reminded him about its effects on
competitor company is a valid exercise of his
management prerogative. Glaxo has a right employment with the company and on the
to guard companys interests. After Tecson married
its trade secrets, manufacturing formulas, Bettsy,
marketing strategies and other confidential Glaxo gave him time to resolve the conflict
programs by either resigning from the company or
and information from competitors, asking his
especially so that it and Astra are rival wife to resign from Astra. Glaxo even
companies in the expressed its desire to retain Tecson in its
highly competitive pharmaceutical industry. employ
The prohibition against personal or marital because of his satisfactory performance and
relationships with employees of competitor suggested that he ask Bettsy to resign from
companies upon Glaxos employees is her
reasonable company instead. Glaxo likewise acceded to
under the circumstances because his repeated requests for more time to
relationships of that nature m ight resolve the
compromise the interests conflict of interest. When the problem could
of the company. Glaxo only aims to protect not be resolved after several years of
its interests against the possibility that a waiting,
competitor Glaxo was constrained to reassign Tecson to
company will gain access to its secrets and a sales area different from that handled by
procedures. Glaxo possesses the right to his wife
protect its for Astra. Notably, the Court did not
economic interests cannot be denied. No terminate Tecson from em ployment but
less than the Constitution recognizes the only reassigned
right of him to another area where his home
enterprises to adopt and enforce such a province, Agusan del Sur, was included. In
policy to protect its right to reasonable effecting
returns on Tecsons transfer, Glaxo even considered the
investments and to expansion and growth. welfare of Tecsons family. Clearly, the
Indeed, while our laws endeavor to give life foregoing
to the dispels any suspicion of unfairness and bad
constitutional policy on social justice and the faith on the part of Glaxo
protection of labor, it does not mean that
every
labor dispute will be decided in favor of the 113 EASTERN OVERSEAS EMPLOYMENT
workers. The law also recognizes that CENTER, INC. vs CECILIA BEA
management
has rights which are also entitled to respect FACTS:
 147

Bea was hired as Senior Head Staff Nursing

Nurse by Elbualy Group/Su ltan Qaboos Services.
University Bea thereafter filed a case of illegal
Hospital (SQUH), the principal employer dismissal against instant petition er before
through its placement agency in the the POEA
Philippines, Adjudication Office.
Eastern Overseas Employment Center, Inc.
(Eastern). Her contractual employment was HELD:
for two Beas termination was illegal for
(2) years. Beas placement with SQUH was failure of petitioner to prove the existence of
subject to a three-(3) month probationary a just or
period authorized cause for terminating her.
during said contractual employment. We take cognizance of the fact that
Beas probationary status ended on in any given workplace, not all of the
May 1992 but she still continued being in the employees
employ perform in accordance with what is expected
of SQUH. of them. As such, it is not uncommon that an
She, like all other employees of the employees work performance is found to be
hospital, was also periodically subjected to unsatisfactory. As a general concept, poor
performance evaluation. After an alleged performance is equivalent to inefficiency
poor evaluation of Beas performance as a and incompetence in the performance of
nurse, she official
was transferred to the Neo-Natal Unit and duties. Under Article 282 of the Labor Code,
her performance was supposedly under an unsatisfactory rating can be a just cause
observation. for
Later, the Director of Nursing Services dismissal only if it amounts to gross and
notified Bea that her contract would be habitual neglect of duties. The fact that an
terminated. employees’
Because of this, she wrote a letter requesting performance is found to be poor or
for a reconsideration of the decision to unsatisfactory does not necessarily mean
terminate that the
her. Beas contractual employment was employee is grossly and habitually negligent
terminated and she was repatriated to the of his duties. Gross negligence implies a want
Philippines or
on the recommendation of the Department absence of or failure to exercise slight care
of Nursing Services after three very poor or diligence, or the entire absence of care. It
evaluations. evinces
After her second poor evaluation, a thoughtless disregard of consequences
she was given intensive management without exerting any effort to avoid them.
assistance In the present case, petitioner failed to
through a specialized training plan but she present substantial eviden ce to prove that
did not improve. She was unable to function Beas
as a alleged poor performance in her duties as
Senior Head Staff Nurse on the Neonatal Senior Head Staff Nurse amounted to gross
Unit and therefore a recommendation was and
made that habitual neglect. In the first place, the POEA
she should be terminated since she could not Adjudication Office found that aside from
fulfill her contractual obligations within the
Memorandum dated June 8, 1993 issued by
 148

the Acting Director of Nursing Services of the existence of just causes for petitioner’s
Sultan dismissal, however, the appellate court
Qaboos University Hospital where Bea was found that the respondent failed to observe
deployed, petitioner failed to present any the procedural requirements of due process
other and, as a consequence, awarded the
evidence to prove that Beas work petitioner P5,000.00 as Nominal Damages.
performance was indeed poor. Although Issues:
petitioner contends WoN the dismissal based on the
that three separate evaluations of Beas work grounds cited constituted just causes; and
performance were conducted; that after the WoN the amount awarded as Nominal
first Damages of P5,000.00 was valid
evaluation, Bea was notified about the poor
quality of her work; that following the Ruling:
second First, the petitioner’s arbitrary
evaluation, she was given an intensive defiance to Graphics, Inc.’s order for him to
management assistance through a render overtime work constitutes willful
specialized training disobedience. Taking this in conjunction with
program; and, that only after the third his inclination to absent himself and to
evaluation was made that Bea was advised report late for work despite being previously
that her penalized, the CA correctly ruled that the
employment would be terminated, we find petitioner is indeed utterly defiant of the
no error in the findings of the POEA and the lawful orders and the reasonable work
NLRC standards prescribed by his employer.
that these claims of petitioner remain to be Second, the petitioner’s failure to
allegations since no substantial evidence observe Graphics, Inc.’s work standards
was constitutes inefficiency that is a valid cause
presented to prove them. for dismissal. Failure to observe prescribed
In termination cases, the burden of standards of work, or to fulfill reasonable
proving just and valid cause for dismissing an work assignments due to inefficiency may
employee from his employment rests upon constitute just cause for dismissal. Such
the employer, and the latter's failure to inefficiency is understood to mean failure to
discharge attain work goals or work quotas, either by
that burden would result in a finding that the failing to complete the same within the
dismissal is unjustified. alloted reasonable period, or by producing
unsatisfactory results. As the operator of
Graphics, Inc.’s printer, he is mandated to
114 Realda vs. New Age Graphics Inc., G.R. check whether the colors that would be
No. 192190, April 25, 2012 printed are in accordance with the client’s
specifications and for him to do so, he must
Facts: consult the General Manager and the color
Petitioner Realda was dismissed by guide used
Respondent New Age Graphics Inc. for by Graphics, Inc. before making a full run.
unjustified refusal to render overtime work, Unfortunately, he failed to observe this
unexplained failure to observe prescribed simple procedure and proceeded to print
work standards, habitual tardiness and without making sure that the colors were at
chronic absenteeism despite warning and par with the client’s demands. This resulted
non-compliance with the directive for him to to delays in the delivery of output, client
explain his numerous unauthorized dissatisfaction, and additional costs on
absences. The Court of Appeals recognized Graphics, Inc.’s part.
 149

While a penalty in the form of They alleged that they did not voluntarily
suspension had already been imposed on indulge in the said act but were instigated by
the petitioner for his habitual tardiness and a certain
repeated absenteeism, the principle of Jojie Alipato who was introduced to them by
“totality of infractions” sanctions the act of Joseph Ocul, Manager of the Airport
Graphics, Inc. of considering such previous Maintenance
infractions in decreeing dismissal as the Division of PAL. Inside the company
proper penalty for his tardiness and premises, they locked the door and Alipato
unauthorized absences incurred afterwards, lost no time in
in addition to his refusal to render overtime preparing the drugs to be used. When they
work and conform to the started the procedure of taking the drugs,
prescribed work standards. armed
This Court cannot likewise agree to men entered the room, arrested Roquero
the petitioner’s attempt to brush aside his and Pabayo and seized the drugs and the
refusal to render overtime work as paraphernalia used. Roquero and Pabayo
inconsequential when Graphics, Inc.’s order were subjected to a physical examination
for him to do so is justified by Graphics, Inc.’s where the
contractual commitments to its clients. Such results showed that they were positive of
an order is legal under Article 89 of the Labor drugs. They were also brought to the
Code and the petitioner’s unexplained security office
refusal to obey is insubordination that merits of PAL where they executed written
dismissal from service. confessions without the benefit of counsel.
Nonetheless, while the CA finding Roquero and Pabayo then received a notice
that the petitioner is entitled to nominal of administrative charge] for violating the
damages as his right to procedural due PAL Code of Discipline. They were required
process was not respected despite the to answer the charges and were placed
presence of just causes for his dismissal is under
affirmed, this Court finds the CA to have preventive suspension.
erred in fixing the amount that the Company Eventually, they were dismissed by
is liable to pay. The CA should have taken PAL. Thus, they filed a case for illegal
cognizance of the numerous cases decided dismissal.
by this Court where the amount of nominal
damages was fixed at P30,000.00 if the HELD:
dismissal was for a just cause. Roquero is guilty of serious
misconduct for possessing and using shabu.
He violated
115 ALEJANDRO ROQUERO vs. PHILIPPINE Chapter 2, Article VII, section 4 of the PAL
AIRLINES, INC. Code of Discipline which states: Any
employee who,
FACTS: while on company premises or on duty, takes
Roquero, along with Rene Pabayo, or is under the influence of prohibited or
were ground equipment mechanics of controlled drugs, or hallucinogenic
respondent substances or narcotics shall be dismissed.
Philippine Airlines, Inc.. They were caught Serious misconduct is defined as the
red-handed possessing and using transgression of some established and
Methampethamine definite rule
Hydrochloride or shabu in a raid conducted of action, a forbidden act, a dereliction of
by PAL security officers and NARCOM duty, willful in character, and implies
personnel. wrongful intent
 150

and not mere error in judgment. For serious WON the laying off of the 15
misconduct to warrant the dismissal of an employees valid
employee, it (1) must be serious; (2) must
relate to the performance of the employees HELD:
duty; Yes. There was justification for
and (3) must show that the employee has reducing the number of workers in
become unfit to continue working for the respondent's
employer. factoryby the introduction of machinery in
It is of public knowledge that drugs can the manufacture of its products. There is no
damage the mental faculties of the user. question as tothe right of the manufacturer
Roquero was to use new labor-saving devices with the
tasked with the repair and maintenance of view to
PALs airplan es. He cannot discharge that effecting moreeconomy and efficiency in its
duty if he is a drug user. His failure to do his method of production. But the right to
job can mean great loss of lives and reduce
properties. Hence, even if he was instigated personnel should notbe abused. It should
to take drugs he has no right to be reinstated not be made a pretext for easing out laborers
to his position. He took the on
drugs fully knowing that he was on duty and account of their unionactivities. But neither
more so that it is prohibited by company should it be denied when it is shown that
rules. they are
Instigation is only a defense against not discharging theirduties in a manner
criminal liability. It cannot be used as a shield consistent with good discipline and efficient
against dismissal from employment operation
especially when the position involves the of an industrialenterprise.
safety of human lives.

117 EDGAR AGUSTILO vs. COURT OF

APPEALS, SAN MIGUEL CORPORATION
116 Philippine sheet metal workers' union
vs the Court of Industrial Relations, Can FACTS:
Companyand Liberal Labor Union Edgar Agustilo was hired by San
Miguel Corporation (SMC) as a temporary
FACTS: employee at
The respondent company filed a its Mandaue Brewery in Mandaue, Cebu. He
motion, in the case pending in the court of was made permanent and designated as a
industrialrelations, asking for authority to lay safety
off at least 15 workers in its can department clerk and was later transferred to the
on Engineering Department of the SMC
the groundthat the installation and Mandaue Brewery as
operation of nine new labor-saving machines an administrative secretary. SMC Mandaue
in the said Brewery then adopted a policy that
department hadrendered the services of the managers
said workers unnecessary. Petitioner alleged would no longer be assigned secretaries and
that that only director level positions may be
there was morethan sufficient work in the given
company to keep all its workers busy. secretaries. As a result, petitioner’s position
as administrative secretary was abolished
ISSUE: and he
 151

was transferred to the companys Plant which

Directors Office-Quality Improvement Team the laws do not authorize interference. As a
(PDO-QIT). matter of fact, the Labor Code and its
Petitioner was informed that 584 Implementing Rules do not vest in the Labor
employees, including him, would be Arbiters nor in the different divisions of the
retrenched due to the NLRC
modernization program of the company and managerial authority. The employer is free
that his services would be terminated and to determine, using his own discretion and
that he business
would be paid his benefits 30 days after he judgment, all elements of employment from
was cleared of all accounta bilities. SMC hiring to firing (National Federation of Labor
notified the Union
DOLE of its modernization program. v. NLRC, 202 SCRA 346 (1991)). Moreover,
Petitioner was given separation pay the freedom of management to conduct its
representing 175% of business
his entitlements under the Labor Code. operations to achieve its purpose cannot be
Petitioner then filed a complaint denied (Yuco Chemical Industries v. Min. of
against respondents for unfair labor Labor,
practice, illegal 185 SCRA 727 (1990)). For as we see in the
dismissal. case at bench, complainant was not
discriminated
ISSUE: against. In the respondents program of
Whether or not petitioner was modernization, more than 500 others, to be
illegally dismissed. precise,
583 workers, were likewise affected. And we
HELD: cannot view this as a manifestation of bad
NO. Complainants termination was faith
justified and that respon dents adhered to and insincerity of respondents taking into
the account the installation of machineries and
procedural requirements governing the equipment pursuant to the program as a
same. We have noted very clearly that means of streamlining the personnel
petitioners structure. In a
separation from employment was brought program like this, the eventuality of
about by the installation of labor saving personnel being removed cannot be
devices and avoided. To contend
machineries pursuant to the employers otherwise would be to intrude into the
reorganizational and expansion program. conduct of an enterprise whose main reason
The law in for being is
this regard allows such a state of change. Art. the profitability of its operations.
283 of the Labor Code allows the reduction
of
personnel with the installation of labor 118 MAGNOLIA DAIRY PRODUCTS
saving devices. While we sympathize with CORPORATION vs. NLRC and JENNY A.
the CALIBO
complainant recognizing the considerable
period of his employment of more than 11 FACTS:
years, yet Petitioner entered into a contract of
equally too, we recognize the respondents service with Skillpower, Inc., a duly
judgment in the conduct of its business for organized
 152

corporation engaged in the business of separation pay equivalent to at least his one
offering and providing manpower services to (1) month pay or to at least one (1) month
the public. pay for
Skillpower, Inc., assigned Jenny A. Calibo to every year of service, whichever is higher. x
petitioners Tetra Paster Division. When x x A fraction of at least six (6) months shall
petitioners be
contract with Skillpower, Inc., expired, considered one (1) whole year.
Calibo applied with Lippercon Services, Inc., The law authorizes an employer, like
also a the herein petitioner, to terminate the
corporation engaged in providing manpower employment of any employee due to the
services. installation of labor saving devices. The
Lippercon Services, Inc., assigned her installation of
to petitioners Tetra Paster Division as a these devices is a management prerogative,
cleaning and the courts will not interfere with its
aide. Later, Calibo was terminated from exercise in
service due to petitioners installation of the absence of abuse of discretion,
automated arbitrariness, or maliciousness on the part of
machines prompting Calibo to institute a management,
complaint for illegal dismissal against as in this case. Nonetheless, this did not
petitioner. excuse petitioner from complying with the
In answer thereto, petitioner averred that it required
has no employer-employee relationship written notice to the employee and to the
with private respondent and that the Department of Labor and Employment
dismissal was prompted by the installation (DOLE) at
of labor saving least one month before the intended date of
devices - an authorized cause for dismissal termination. This procedure enables an
under the Labor Code, as amended. employee
to contest the reality or good faith character
ISSUE: of the asserted ground for the termination of
WON private respondent was legally his
dismissed since the termination of her services before the DOLE.
employment was due to a cause expressly The failure of petitioner to serve the
authorized by the Labor Code written notice to private respondent and to
the
HELD: DOLE, however, does not ipso facto make
YES. Article 283 of the Labor Code private respondents termination from
provides in part that, the employer may also service illegal
terminate the employment of any employee so as to entitle her to reinstatement and
due to the installation of labor saving payment of backwages. If at all, her
devices, x x termination from
x, by serving a written notice on the workers service is merely defective because it was
and the Ministry of Labor and Employment not tainted with bad faith or arbitrariness
at least and was
one (1) month before the intended date due to a valid cause.
thereof. In case of termination due to the The well settled rule is that the
installation employer shall be sanctioned for non -
of labor saving devices or redundancy, the compliance with
worker affected thereby shall be entitled to the requirements of, or for failure to observe
a
 153

due process in terminating from service its save the

employee. company. Despite the rotation of
employees, petitioner alleged; it continued
to experience
financial losses and private respondent’s
position, Sales Manager of the company,
became
119 WILTSHIRE FILE CO., INC. vs. THE redundant.
NATIONAL LABOR RELATIONS During pendency, petitioner closed
COMMISSION and VICENTE T. ONG, its business. LABOR ARBITER ruled that the
respondents. dismissal
was illegal. NLRC held that the termination
FACTS: was attended by malice and bad faith on the
Private respondent Vicente T. Ong part of
was the Sales Manager of petitioner petitioner, considering the manner of
Wiltshire File private respondent was ordered by the
Co., Inc. On 13 June 1985, upon private President to pack
respondent’s return from a business and up and remove his personal belongings from
pleasure trip the office.
abroad, he was informed by the President of
petitioner Wiltshire that his services were ISSUE:
being WON his dismissal was illegal.
terminated. Private respondent maintains
that he tried to get an explanation from HELD:
management of his dismissal but to no avail. NO, his dismissal was VALID.
On 18 June 1985, when private respondent In the first place, we note that while
again the letter informing private respondent of
tried to speak with the President of the
Wiltshire, the company’s security guard termination of his services used the word
handed him a letter “redundant“, that letter also referred to the
which formally informed him that his company having “incur[red] financial losses
services were being terminated upon the which [in] fact has compelled [it] to resort
ground of to
redundancy. retrenchment to prevent further losses”.
Private respondent filed, on 21 Thus, what the letter was in effect saying was
October 1985, a complaint before the Labor that
Arbiter for because of financial losses, retrenchment
illegal dismissal alleging that his position was necessary, which retrenchment in turn
could not possibly be redundant because resulted
nobody (save in the redundancy of private respondent’s
himself) in the company was then position.
performing the same duties. In the second place, we do not
Petitioner company alleged that the believe that redundancy in an employer’s
termination of respondent’s services was a personnel
costcutting measure: that in December force necessarily or even ordinarily refers to
1984, the company had experienced an duplication of work. That no other person
unusually low was
volume of orders: and that it was in fact holding the same position that private
forced to rotate its employees in order to respondent held prior to the termination of
 154

his services, part of the employee. In such case, there are

does not show that his position had not no
become redundant. Indeed, in any well- allegations which the employee should
organized refute and defend himself from. Thus, to
business enterprise, it would be surprising to require
find duplication of work and two (2) or more petitioner Wiltshire to hold a hearing, at
people doing the work of one person. We which private respondent would have had
believe that redundancy, for purposes of our the right to
Labor be present, on the business and financial
Code, exists where the services of an circumstances compelling retrenchment and
employee are in excess of what is resulting
reasonably demanded in redundancy, would be to impose upon the
by the actual requirements of the employer an unnecessary and inutile hearing
enterprise. Succinctly put, a position is as a
redundant where it condition for legality of termination.
is superfluous, and superfluity of a position This is not to say that the employee
or positions may be the outcome of a may not contest the reality or good faith
number of character
factors, such as overhiring of workers, of the retrenchment or redundancy asserted
decreased volume of business, or dropping as grounds for termination of services. The
of a appropriate forum for such controversion
particular product line or service activity would, however, be the Department of
previously manufactured or undertaken by Labor and
the Employment and not an investigation or
enterprise. hearing to be held by the employer itself. It
Wiltshire, in view of the contraction is precisely
of its volume of sales and in order to cut for this reason that an employer seeking to
down its terminate services of an employee or
operating expenses, effected some changes employees
in its organization by abolishing some because of “closure of establishment and
positions and reduction of personnel”, is legally required
thereby effecting a reduction of its to give a
personnel. Thus, the position of Sales written notice not only to the employee but
Manager was also to the Department of Labor and
abolished and the duties previously Employment
discharged by the Sales Manager simply at least one month before effectivity date of
added to the the termination. In the instant case, private
duties of the General Manager, to whom the respondent did controvert before the
Sales Manager used to report. appropriate labor authorities the grounds
In the instant case, the ground for for termination
dismissal or termination of services does not of services set out in petitioner’s letter to
relate to him dated 17 June 1985.
a blameworthy act or omission on the part of NOTES:
the employee, there appears to us no need Art. 283. Closure of establishment and
for an reduction of personnel. –– The employer
investigation and hearing to be conducted by may also
the employer who does not, to begin with, terminate the employment of any employee
allege due to the installation of labor saving
any malfeasance or non-feasance on the devices,
 155

redundancy, retrenchment to prevent losses employees that implementing a redundancy

or the closing or cessation of operation of program rather than a retrenchment
the program
establishment or undertaking unless the would result in better benefits to those
closing is for the purpose of circumventing dismissed.
the As a result of this redundancy
provisions of this Title, by serving a written program, 135 employees were terminated,
notice on the workers and the Ministry of including
Labor and respondents.
Employment at least one (1) month before Respondents received their
the intended date thereof. In case of respective separation payments and
termination thereafter executed
due to the installation of labor saving devices release waivers and quitclaims in favor of
or redundancy, the worker affected thereby petitioner. In the meantime, 11 of the
shall terminated
be entitled to a separation pay equivalent to employees were rehired by petitioner to
at least his one (1) month pay or to at least different positions but with lower salaries.
one (1) On 8 June
month pay for every year of service, 2000, respondents filed a complaint for
whichever is higher. In case of retrenchment illegal dismissal Respondents asserted in
to prevent their position
losses and in cases of closures or cessation of paper that despite their dismissal due to
operations of establishment or undertaking redundancy, their functions were assigned
not to other
due to serious business losses or financial workers.
reverses, the separation pay shall be Petitioner and Tanco claimed that
equivalent to they had the management prerogative to
one (1) month pay or at least one-half (1/2) implement
month pay for every of service, whichever is a redundancy program as per Article 283 of
higher. the Labor Code. They aver that both
A fraction of at least six (6) months shall be respondents
considered one (1) whole year. were notified that they would be subject to
redundancy and that they never objected
thereto
120 COATS MANILA BAY, INC. vs PURITA as shown by the execution of their
M. ORTEGA respective waivers/quitclaims. It asserts that
the
FACTS: implementation of its redundancy program
Purita M. Ortega and Marina A. was not discriminatory, and that it
Montero were both employed by petitioner implemented
as Clerk reasonable criteria in selecting employees to
Analysts in the Industrial Engineering be retrenched. Moreover, the decision to
Department. On 27 April 2000, petitioner dismiss
issued a respondents was reached after
memorandum announcing that a consultations with the Union Respondents
redundancy plan would be implemented. It contend that
was stated that petitioner cannot invoke redundancy since
the redundancy program was necessary to there was no showing that the functions of
prevent further losses. Petitioner assured its respondents are duplicitous or superfluous.
 156

They also assert that petitioner failed to redundancy does not require the exhibition
show that of proof of losses or imminent losses. In fact,
it was suffering from a serious downturn in of all the statutory grounds provided in
business that would warrant redundancy Article 283 of the Labor Code, it is only
given that retrenchment which requires proof of losses
such serious business downturn was the or possible losses as justification for
cause given by petitioner in the termination termination of employment.
letters It is well settled that the
sent to respondents. They also assert that characterization of an employee’s services
their educational attainment is irrelevant as no longer
since the necessary or sustainable, and, therefore,
compelling factor in their acceptance of properly terminable, is an exercise of
separation pay was the dire economic business
necessity to be judgment on the part of the employer.
caused by their impending loss of jobs. However, the wisdom or soundness of such
characterization or decision is not subject to
discretionary review provided, of course,
that
ISSUE: violation of law or arbitrary or malicious
WON there’s propriety of the action is not shown. In several instances, the
redundancy program implemented by Court has
petitioner; held that it is important for acompany to
have fair and reasonable criteria in
HELD: implementing its
YES. Redundancy exists where the redundancy program, such as but not limited
services of an employee are in excess of to, (a) preferred status, (b) efficiency and (c)
what is seniority.
reasonably demanded by the actual Records shows that respondents
requirements of the enterprise. Succinctly positions were abolished because there was
put, a position is duplicity
redundant where it is superfluous, and of functions of clerk analysts in the Industrial
superfluity of a position or positions may be Engineering Section and finishing production
the clerks in the Operations Department. Even
outcome of a number of factors, such as over the union representatives agreed that
hiring of workers, decreased volume of respondents
business, positions were redundant. Petitioner found
or dropping of a particular product line or that it was more cost-efficient to maintain
service activity previously manufactured or only one
undertaken by the enterprise. That no other employee to handle the computation of
person was holding the same position prior incentives of the production employees with
to the the use of
termination of ones services, does not show computers.
that his position had not become redundant.
Indeed, in any well-organized business
enterprise, it would be surprising to find 121 BONIFACIO ASUFRIN, JR vs SAN
duplication of MIGUEL CORPORATION
work and two (2) or more people doing the
work of one person. Just like installation of FACTS:
laborsaving devices, the ground of
 157

Asufrin is a Stock Clerk of Coca Cola Petitioner was surprised when he

Plant, then a department of respondent San was informed by the Acting Personnel
Miguel Manager that
Beer Corporation. Sometime in 1984, the his name was included in the list of
sales office and operation s at the Sum-ag, employees who availed of the early
Bacolod retirement package.
City Sales Office were reorganized. Several Petitioner’s request that he be given an
positions were abolished including assignment in the company was ignored by
petitioner’s the Acting
position as Stock Clerk. After reviewing Personnel Manager. Petitioner thus filed a
petitioner’s qualifications, he was complaint for illegal dismissal
designated
warehouse checker at the Sum-ag Sales ISSUE:
Office. SMC implemented a new marketing Whether or not the dismissal of
system petitioner is based on a just and authorized
known as the "pre-selling scheme" at the cause.
Sum-ag Beer Sales Office. As a consequence,
all HELD:
positions of route sales and warehouse NO. The determination that
personnel were declared redundant. employee’s services are no longer necessa ry
Respondent or sustainable
notified the DOLE Director. SMC thereafter and, therefore, properly terminable is an
wrote a letter to petitioner informing him exercise of business judgment of the
that, employer. The
owing to the implementation of the "pre- wisdom or soundness of this judgment is not
selling operations" scheme, all positions of subject to discretionary review of the Labor
route and Arbiter and the NLRC, provided there is no
warehouse personnel will be declared violation of law and no showing that it was
redundant and the Sum-ag Sales Office will prompted by an arbitrary or malicious act. In
be closed other words, it is not enough for a company
thus petitioner reported to respondent’s to
Personnel Department at the Sta. Fe merely declare that it has become
Brewery, overmanned. It must produce adequate
pursuant to a previous directive. proof that such is
Thereafter, the employees of Sum-ag the actual situation to justify the dismissal of
sales force were informed that they can avail the affected employees for redundancy. It
of bears
respondent’s early retirement package stressing that whether it be by redundancy
pursuant to the retrenchment program, or retrenchment or any of the other
while those authorized
who will not avail of early retirement would causes, no employee may be dismissed
be redeployed or absorbed at the Brewery or without observance of the fundamentals of
other good faith.
sales offices. Petitioner opted to remain and In selecting employees to be dismissed, a fair
manifested his willingness to be assigned to and reasonable criteria must be used, such
any as but not limited to (a) less preferred status,
job, considering that he had three children in e.g. temporary employee; (b) efficiency; and
college. (c)
seniority. In the case at bar, no criterion
 158

whatsoever was adopted by respondent in company’s retrenchment program, he is

dism issing notified for
petitioner. Furthermore, as correctly his termination as Security Section Head. The
observed by the NLRC, respondent "has not loss of his employment prompted petitioner
shown how to
the cessation of operations of the Sum-ag file a complaint for illegal dismissal.
Sales Office contributed to the ways and Petitioner contends that abolition of private
means of respondent's
improving effectiveness of the organization Security Checkers Section and the
with the end in view of efficiency and cutting employment of an independent security
distribution overhead and other related agency do not fall
costs. Respondent, thus, clearly resorted to under any of the authorized causes for
sweeping dismissal under Art. 283 of the Labor Code.
generalization[s] in dismissing complainant."
It is not difficult for employers to ISSUE:
abolish positions in the guise of a cost- Whether or not there is a valid
cutting measure ground for the dismissal of the complainant.
and we should not be easily swayed by such
schemes which all too often reduce to near HELD:
nothing what is left of the rubble of rights of Yes. Closure of establishment
our exploited workers. Given the nature of and reduction of personnel. — The employer
petitioner’s job as a Warehouse Checker, it is may also terminate the employment of any
inconceivable that respondent could not employee due to the installation of labor-
accommodate his services considering that saving devices,
the warehousing operations at Sum -ag Sales redundancy, retrenchment to prevent losses
Office or the closing or cessation of operations of
has not shut down. the
establishment or undertaking unless the
closing is for the purpose of circumventing
RUBEN SERRANO vs. NLRC and ISETANN the
DEPARTMENT STORE provisions of this Title, by serving a written
notice on the, workers and the Department
FACTS: of Labor
Petitioner was hired by and Employment at least one (1) month
Isetann Department Store as a security before the intended date thereof.
checker to apprehend In case of termination due to the installation
shoplifters and prevent pilferage of of labor-saving devices or redundancy, the
merchandise. 1 Initially hired on contractual worker affected thereby shall be entitled to
basis but a separation pay equivalent to at least one
eventually became a regular employee. He (1)
then became head of the Security Checkers month pay or to at least one (1) month pay
Section. for every year of service, whichever is higher.
As a cost-cutting measure, private In case of retrenchment to prevent losses
respondent decided to phase out its entire and in cases of closure or cessation of
security operations of establishment or undertaking
section and engage the services of an not due to serious business losses or
independent security agency. For this financial
reason, it wrote reverses, the separation pay shall be
sent the petition a notice that in view of equivalent to at least one (1) month pay or
 159

at least onehalf (1/2) month pay for every

year of service, whichever is higher. A 122 CALTEX (PHILS.), INC. vs NLRC &
fraction of at least six (6) ROMEO T. STO. TOMAS
months shall be considered as one (1) whole
year. FACTS:
The "[management of a Romeo T. Sto Tomas was a
company] cannot be denied the faculty of regular employee of Caltex. He was a Senior
promoting efficiency and attaining economy Accounting Analyst.
by a study of what units are essential for its Caltex informed the
operation. To it belongs the ultimate Department of Labor and Employment
determination of whether services should be (DOLE) of its plan to
performed by its personnel or contracted to implement a redundancy program in its
outside agencies . . . [While there] should be Marketing Division and some departments in
mutual consultation, eventually deference is its
to be paid to what management decides." Batangas Refinery. The letter alleged that
Consequently, absent proof that the redundancy program is a response to the
management acted in a malicious or market
arbitrary manner, the Court will not interfere situation which constrained petitioner to
with the exercise of judgment by an rationalize and simplify its business
employer. processes; that
In the case at bar, we have petitioner undertook a review, restructuring
only the bare assertion of petitioner that, in and streamlining of its organization which
abolishing the security section, private resulted
respondent's real purpose was to avoid in consolidation, abolition and outsourcing
payment to the security of certain functions and in the identification
checkers of the wage increases provided in of
the collective bargaining agreement certain redundant positions. The letter also
approved in states that petitioner will provide the DOLE a
1990. Such an assertion is not sufficient basis list of
for concluding that the termination of affected employees as it implements each
petitioner's phase of the redundancy program.
employment was not a bona fide decision of Petitioner, through a letter,
management to obtain reasonable return notified private respondent of his
from its termination due to the redundancy of his
investment, which is a right guaranteed to position and awarded him a separation
employers under the Constitution. package. Due to this, respondent
Indeed, that the phase-out of the security filed with the Labor Arbiter a complaint for
section constituted a "legitimate business illegal dismissal.
decision" is a factual finding of an Respondent alleged there was
administrative agency which must be no independent proof or evidence presented
accorded respect and by
even finality by this Court since nothing can petitioner to substantiate its claim of
be found in the record which fairly detracts redundancy. Petitioner on the other hand,
from averred that private respondents dismissal
such finding. Accordingly, the termination of from the service was due to redundancy of
petitioner's services was for an authorized his position which was determined after
cause, petitioners business process re-engineering
i.e., redundancy. study and organization review, conducted
with private respondents knowledge; that
 160

redundancy is an authorized cause to manufactured or undertaken by the

terminate an employee which is a enterprise, which were adopted by
management prerogative and cannot be petitioner in implementing the redundancy
interfered with absent any abuse of program.
discretion; and that there is nothing in the Petitioner also failed to show
law that requires petitioner to conduct any fair and reasonable criteria in
impartial investigation or hearing to ascertaining what
terminate an employee due to redundancy positions are redundant and how the
ISSUE: selection of employees to be dismissed was
Whether private respondents made.
termination on the ground of redundancy Petitioners failure to show an authorized
was valid cause for private respondents termination is
sufficient
HELD: to declare the dismissal illegal.
NO. There was no substantial
evidence presented by petitioner to justify
private Culili v. Eastern Telecommunications Phils.,
respondent's dismissal due to redundancy. G.R. No. 165381, February 9, 2011
Petitioners evidence to show redundancy
merely Facts:
consisted of a copy of petitioners letter to Nelson Culili was employed by
the DOLE informing the latter of its intention Eastern Telecommunications a Senior
to Technician. In 1998, due to business losses,
implement a redundancy program and ETPI was compelled to implement a Right-
nothing more. The letter which merely Sizing Program which consisted of two
stated that phases: the first phase involved the
petitioner undertook a review, restructuring reduction of ETPI’s workforce to only those
and streamlining of its organization which employees that were necessary and which
resulted ETPI could sustain; the second phase
in consolidation, abolition and outsourcing entailed a company-wide reorganization
of certain functions; and which resulted in which would result in the transfer, merger,
identified absorption or abolition of certain
and redundant positions instead of departments of ETPI. Among the
simplifying its business process departments abolished was the Service
restructuring, does not Quality Department. As a result, Culili’s
satisfy the requirement of substantial position was abolished due to redundancy.
evidence, that is, the amount of evidence Upon filing a complaint, the Labor Arbiter
which a rendered a decision finding ETPI guilty of
reasonable mind might accept as adequate illegal dismissal and unfair labor practice,
to justify a conclusion. which was affirmed by the NLRC. However,
Petitioner failed to the Court of Appeals found that Culili’s
demonstrate the superfluity of private position was validly abolished due to
respondents position as there was nothing in redundancy. It was highly unlikely that ETPI
the records that would establish any would effect a company-wide reorganization
concrete and real factors recognized by law simply for the purpose of getting rid of Culili.
and relevant jurisprudence, such as Also, ETPI cannot be held guilty of unfair
overhiring of workers, decreased volume of labor practice as mere contracting out of
business, or dropping of a particular product services being performed by union members
line or service activity previously does not per se amount to unfair labor
 161

practice unless it interferes with the its duty to observe procedural due process in
employees’ right to self-organization. effecting the termination of Culili. In Mayon
Hotel & Restaurant v.Adana, SC observed
Issue: that the requirement of law mandating the
Whether or not there was an giving of notices was intended: not only to
illegal dismissal. enable the employees to look for another
employment and therefore ease the impact
Ruling: of the loss of their jobs and the
There was a valid dismissal on corresponding income, but more
the ground of redundancy. There is importantly, to give the Department of Labor
redundancy when the service capability of and Employment (DOLE) the opportunity to
the workforce is greater than what is ascertain the verity of the alleged authorized
reasonably required to meet the demands of cause of termination.
the business enterprise. A position becomes With regard to the impleaded
redundant when it is rendered superfluous corporate officers, they cannot be held liable
by any number of factors such as over-hiring for acts done in his official capacity because
of workers, decrease in volume of business, a corporation, by legal fiction, has a
or dropping a particular product line. Among personality separate and distinct from its
the requisites of a valid redundancy program officers, stockholders, and members. To
are: (1) the good faith of the employer in pierce this fictional veil, it must be shown
abolishing the redundant position; and (2) that the corporate personality was used to
fair and reasonable criteria in ascertaining perpetuate fraud or an illegal act, or to evade
what positions are to be declared an existing obligation, or to confuse a
redundant such as but not limited to: legitimate issue. In illegal
preferred status, efficiency, and seniority. dismissal cases, corporate officers may be
The records show that ETPI had sufficiently held solidarily liable with the corporation if
established not only its need to reduce its the termination was done with malice or bad
workforce and streamline its organization, faith.
but also the existence of redundancy in the Culili has failed to prove that
position of a Senior Technician. It was his dismissal was orchestrated by the
decided that, in the judgment of ETPI individual respondents herein for the mere
management, the specialized functions of a purpose of getting rid of him. Hence, the
Senior Technician whose sole function was dismissal is declared valid but Eastern
essentially the repair and servicing of ETPI’s Telecommunications Philippines, Inc. is
telecommunications equipment was no ordered to pay petitioner Nelson A. Culili the
longer needed since the Business and amount of P50,000.00 as nominal damages
Consumer [Accounts] Department had to for non-compliance with statutory due
remain economical and focused yet versatile process, in addition to the mandatory
enough to meet all the multifarious needs of separation pay required under Article 283 of
its small and medium sized clients. It is the Labor Code.
inconceivable that ETPI would effect a
company-wide reorganization of this
scale for the mere purpose of singling out 123 CECILE DE OCAMPO, et.al. vs NLRC
Culili and terminating him. What ETPI did and BALIWAG MAHOGANY CORPORATION
was to abolish the position itself for being
too specialized and limited. FACTS:
SC finds Culili’s dismissal was Petitioners are employees of
for a lawful cause and not an act of unfair Baliwag Mahogany Corporation. They are
labor practice, ETPI, however, was remiss in either officers or members of the Baliwag
 162

Mahogany Corporation Union -CFW, the cost saving and cost-consciousness program
existing collective bargaining agent of the in order to improve production efficiency.
rank and file employees in the company. In
1988, Baliwag Mahogany Corporation ISSUE:
(company) and Baliwag Mahogany Whether or not the dismissals
Corporation Union-CFW (union) entered into of petitioners Cecile de Ocampo, Rene
a collective bargaining agreement Villanueva, and Marcelo dela Cruz from their
containing, among other things, provisions positions by the company on the ground of
on conversion into cash of unused vacation redundancy was done in good faith.
and sick leaves; grievance machinery
procedure; and the right of the company to HELD:
schedule work on Sundays and holidays. The YES. Petitioners' dismissal was
union made several requests from the justified by redundancy due to superfluity
company, one of which was the cash and hence legal.
conversion of unused vacation and sick leave We believe that redundancy,
for 1987- for purposes of our Labor Code, exists where
1988 and 1988-1989. The company ruled to the services of an employee are in excess of
allow payment of unused vacation and sick what is reasonably demanded by the actual
leaves requirement of the enterprise. Succinctly
for the period of 1987-1988 but disallowed put, a position is redundant where it is
cash conversion of the 1988-1989 unused superfluous, and superfluity of a position or
leaves. positions may be the outcome of a number
The company issued suspension orders of factors, such as over hiring of workers,
affecting twenty (20) employees for failure decreased volume of business, or dropping
to render of a pa rticular product line or service activity
overtime work on December 30, 1989. previously manufactured or undertaken by
The suspension was for a the enterprise. The employer had no legal
period of three (3) days. On the same day, obligation to keep in its payroll more
the union filed a notice of strike on the employees, than are necessary for the
grounds of unfair labor practice particularly operation of its business.
the violation of the CBA provisions on non- The reduction of the number
payment of unused leaves and illegal of workers in a company made necessary by
dismissal of seven (7) employees. The the
company then issued a notice of termination introduction of the services of Gemac
to three (3) employees or union members, Machineries in the maintenance and repair
namely, Cecile de Ocampo, Rene Villanueva of its
and Marcelo dela Cruz, of the machinery industrial machinery is justified. There can
department, allegedly to effect cost be no question as to the right of the
reduction and redundancy. company to
Petitioners contend that the contract the services of Gemac Machineries
company acted in bad faith when it to replace the services rendered by the
terminated the services of the three terminated
mechanics because the positions held by mechanics with a view to effecting more
them were not at all abolished but merely economic and efficient methods of
given to Gemac Machineries. On the production.
contrary, the company stresses that when it In the same case, We ruled that "(t)he
contracted the services of Gemac characterization of (petitioners') services as
Machineries for the maintenance and repair no
of its industrial machinery, it only adopted a longer necessary or sustainable, and
 163

therefore properly terminable, was an food and beverage business within the club.
exercise of business ACCI subsequently entered into an
judgment on the part of (private agreement with
respondent) company. The wisdom or La Tasca Restaurant Inc. (La Tasca), for it to
soundness of such operate the F & B Department.
characterization or decision was not subject Subsequently, ACCI
to discretionary review on the part of the sent its F & B Department employees
Labor individual letters informing them that their
Arbiter nor of the NLRC so long, of course, as services were
violation of law or merely arbitrary and being terminated one month from the date
malicious and that they would be paid separation pay
action is not shown" (ibid, p. 673). equivalent to one hundred twenty five
In contracting the services of (125%) percent of their monthly salary for
Gemac Machineries, as part of the every year of
company's cost-saving program, the services service. ACCI also informed them that La
rendered by the mechanics became Tasca agreed to absorb all affected
redundant and superfluous, and therefore employees
properly terminable. The company merely immediately with the status of regular
exercised its business judgment or employees without need of undergoing a
management prerogative. And in the probationary
absence of any proof that the management period, and that all affected employees
abused its would receive the same salary they were
discretion or acted in a malicious or arbitrary receiving from
manner, the court will not interfere with the ACCI at the time of their termination. The
exercise of such prerogative. Union, with the authority of individual
respondents,
filed before the NLRC a complaint for illegal
124 ALABANG COUNTRY CLUB INC. vs. dismissal. The Union and individual
NLRC, ALABANG COUNTRY CLUB respondents
INDEPENDENT alleged that the F & B Division had been
EMPLOYEES UNION reporting gaining profits as shown by the
Statement of
FACTS: Income and Deficit prepared by SGV&Co.
Francisco Ferrer, then President of They thus argued that compliance with the
ACCI, requested its Internal Auditor, Irene standards
CamposUgalde, to conduct a study on the for losses to justify their retrenchment was
profitability of ACCIs Food and Beverage not met by ACCI. ACCI averred, however,
Department that it may
(F & B Department). In her report, it showed exercise management prerogatives to adopt
that F & B Department had been incurring a cost-saving and cost-consciousness
substantial losses. Realizing that it was no program to
longer profitable for ACCI to maintain its improve efficiency in its operations, prevent
own F & B losses, and concentrate on core businesses,
Department, the management decided to and to
cease from operating the department and to lay-off workers and contract out their jobs.
open
the same to a contractor, such as a ISSUE:
concessionaire, which would be willing to WON the respondents were
operate its own dismissed due to retrenchment.
 164

reasons,
HELD: such as to minimize expenses and reduce
NO. Retrenchment on the ground of capitalization. In the present case, when
serious business losses is allowed subject to petitioner
the decided to cease operating its F & B
conditions that (1) the losses expected Department and open the same to a
should be substantial and not merely de concessionaire, it did
minimis in not reduce the number of personnel
extent; (2) the substantial losses assigned thereat. It terminated the
apprehended must be reasonably imminent employment of ALL
as such personnel assigned at the department. As in
imminence can be perceived objectively in the case of retrenchment, however, for the
good faith by the employer; (3) closure
retrenchment must of a business or a department due to serious
be reasonably necessary and likely to business losses to be regarded as an
effectively prevent the expected losses; and authorized
(4) the cause for terminating employees, it must be
alleged losses, if already realized and the proven that the losses incurred are
expected imminent losses sought to be substantial and
forestalled, actual or reasonably imminent; that the
must be proven by sufficient and convincing same increased through a period of time;
evidence. However, the case at bar is one in and that the
volving closure of a business undertaking. condition of the company is not likely to
improve in the near future. Petitioners
Retrenchment is the reduction of failure to prove
personnel for the purpose of cutting down that the closure of its F & B Department was
on costs of due to substantial losses notwithstanding,
operations in terms of salaries and wages this
resorted to by an employer because of losses Court finds that individual respondents were
in dismissed on the ground of closure or
operation of a business occasioned by lack of cessation of
work and considerable reduction in the an undertaking not due to serious business
volume of losses or financial reverses, which is allowed
business. under
Article 283 of the Labor Code.
Closure of a business or undertaking
due to business losses is the reversal of
fortune of 125 LOPEZ SUGAR CORPORATION vs.
the employer whereby there is a complete FEDERATION OF FREE WORKERS
cessation of business operations to prevent
further FACTS:
financial drain upon an employer who Petitioner, allegedly to prevent
cannot pay anymore his employees since losses due to major economic problems, and
business has exercising
already stopped. One of the prerogatives of its privilege under their Collective Bargaining
management is the decision to close the Agreement ("CBA") entered into between
entire petitioner and Philippine Labor Union
establishment or to close or abolish a Association ("PLUA-NACUSIP"), caused the
department or section thereof for economi c retrenchment
 165

and retirement of a number of its may

employees. Petitioner filed with DOLE a also terminate then employment of any
combined report on employee due to the installation of labor
retirement and application for clearance to saving devices,
retrench affecting eighty six (86) of its redundancy, retrenchment to prevent losses
employees in or the closing or cessation of operation of
order to prevent losses. Federation of Free the
Workers ("FFW"), as the certified bargaining establishment or undertaking unless the
agent closing is for the purpose of circumventing
of the rank-and-file employees of petitioner, the
filed a complaint for unfair labor practices provisions of this Title, by serving a written
and notice on the workers and the Ministry of
recovery of union. Labor and
FFW claimed that the terminations Employer at least one (1) month before the
undertaken by petitioner were violative of intended date thereof. In case of
the termination due
security of tenure of its members and were to the installation of labor saving devices or
intended to "bust" the union and hence redundancy, the worker affected thereby
constituted shall be
an unfair labor practice. FFW claimed that entitled to a se pay equivalent to at least his
after the termination of the services of its one (1) month pay or to at least one (1)
members, month pay
petitioner advised 110 casuals to report to for every year of service, whichever is higher.
its personnel office. FFW further argued that In case of retrenchment to prevent losses and
to in
justify retrenchment, serious business cases, of closures or cessation of operations
reverses must be "actual, real and amply of establishment or undertaking not due to
supported by serious
sufficient and convincing evidence. business losses or financial reverses, the
Petitioner denied having hired separation pay shall be equivalent to one (1)
casuals to replace those it had retired or month
retrenched. It pay or at least one half (1/2) month pay for
explained that the announcement calling for every year of service, whichever is higher. A
110 workers to report to its personnel office fraction
was of at least six (6) months shall be considered
only for the purpose of organizing a pool of one (1) whole year.
extra workers which could be tapped (Emphasis supplied) The phrase "to
whenever Prevent losses" means that retrenchment or
there were temporary vacancies by reason termination of the services of some
of leaves of absence of regular workers. employees is authorized to be undertaken by
the employer
ISSUE: sometime before the losses anticipated are
WON the retrenchment was valid. actually sustained or realized. It is not, in
other
HELD: words, the intention of the lawmaker to
NO. Article 283 of the Labor Code compel the employer to stay his hand and
provides: keep all his
Article 283. Closure of establishment employees until sometime after losses shall
and reduction of personnel. — The employer have in fact materialized.
 166

We consider it may be useful to resort,

sketch the general standards in terms of after less drastic means — e.g., reduction of
which the acts both management and rank-and-file
of petitioner employer must be appraised. bonuses and
Firstly, the losses expected should be salaries, going on reduced time, improving
substantial and manufacturing efficiencies, trimming of
not merely de minimis in extent. If the loss marketing
purportedly sought to be forestalled by and advertising costs, etc. — have been tried
retrenchment is clearly shown to be and found wanting.
insubstantial and inconsequential in Lastly, but certainly not the least important,
character, the bona alleged if already real ized, and the expected
fide nature of the retrenchment would imminent losses sought to be forestalled,
appear to be seriously in question. Secondly, must be proved by sufficient and convincing
the evidence. The reason for requiring this
substantial loss apprehended must be quantum of proof is readily apparent: any
reasonably imminent, as such imminence less exacting
can be standard of proof would render too easy the
perceived objectively and in good faith by abuse of this ground for termination of
the employer. There should, in other words, services of
be a employees.
certain degree of urgency for the In this case, there was no proof of
retrenchment, which is after all a drastic actual declining gross and net revenues
recourse with submitted.
serious consequences for the livelihood of No audited financial statements showing the
the employees retired or otherwise laid-off. financial condition of petitioner corporation
Because during the above mentioned crop years were
of the consequential nature of submitted. Since financial statements
retrenchment, it must, thirdly, be reasonably audited by
necessary and independent external auditors constitute
likely to effectively prevent the expected the normal method of proof of the profit and
losses. The employer should have taken loss
other performance of a company, it is not easy to
measures prior or parallel to retrenchment understand why petitioner should have
to forestall losses, i.e., cut other costs than failed to
labor submit such financial statements. Petitioner
costs. An employer who, for instance, lays made passing reference to cost reduction
off substantial numbers of workers while measures it had allegedly undertaken, it was,
continuing once more, a fairly conspicuous failure to
to dispense fat executive bonuses and specify
perquisites or so-called "golden parachutes", the cost-reduction measures actually
can undertaken in good faith before resorting to
scarcely claim to be retrenching in good faith retrenchment.
to avoid losses. To impart operational
meaning to
the constitutional policy of providing "full 126 EDGE APPAREL, INC. vs NLRC
protection" to labor, the employer's
prerogative to FACTS:
bring down labor costs by retrenching must Pursuing its retrenchment program,
be exercised essentially as a measure of last petitioner Edge Apparel, Inc., dismissed
 167

private must be due to

respondents Josephine Antipuesto, Norina business losses or reverses which are
Ando, Juliet Baguio, Apolinaria Velonta, serious, actual and real. Not every loss
Corazon incurred or
Pino and Josephine Cañete from expected to be incurred by the employer will
employment effective 03 September 1992. justify retrenchment, since, in the nature of
Feeling aggrieved, things, the possibility of incurring losses is
Antipuesto, et al., consulted with the constantly present, in greater or lesser
Regional Director of the Department of degree, in
Labor and carrying on the business operations.
Employment ("DOLE") who opined that it Retrenchment is normally resorted
would be best for them to receive the to by management during periods of
separation pay business
being offered by the corporation. His advice reverses and economic difficulties
was heeded. occasioned by such events as recession,
The subsequent receipt of their industrial
separation pay benefits, nevertheless, did n depression, or seasonal fluctuations. It is an
ot deter act of the employer of reducing the work
Antipuesto, et al., from later going through force
with their complaint for illegal dismissal because of losses in the operation of the
against the enterprise, lack of work, or considerable
corporation. The charge averred that the reduction on
retrenchment program was a mere the volume of business. Retrenchment is, in
subterfuge used many ways, a measure of last resort when
by Edge Apparel to give a semblance of other
regularity and validity to the dismissal of the less drastic means have been tried and found
complainants. to be inadequate. A lull caused by lack of
Edge Apparel countered that its orders
financial obligations, amounting to about P8 or shortage of materials must be of such
Million, nature as would severely affect the
had begun to eat up most of its capital outlay continued business
and resulted in unabated losses of operations of the employer to the detriment
P681,280.00 in of all and sundry if not properly addressed.
1989, P262,741.00 in 1990, P162,170.00 in The
1991 and P749,294.00 in 1992, constraining institution of "new methods or more
the efficient machinery, or of automation" is
company to adopt and implement a technically a
retrenchment program. ground for termination of employment by
reason of installation of labor-saving devices
ISSUE: but
WON there was a valid where the introduction of these methods is
retrenchment. resorted to not merely to effect greater
efficiency
HELD: in the operations of the business but
YES. Retrenchment is an economic principally because of serious business
ground to reduce the number of employees. reverses and to
In order avert further losses, the device could then
to be justified, the termination of verily be considered one of retrenchment.
employment by reason of retrenchment In this case, the Labor Arbiter and the NLRC
 168

both concluded that there had been a valid underpayment of

ground for the retrenchment of private wages under Wage Orders Nos. 01 and 02,
respondents. The documents presented in and non -payment of overtime pay and 13th
evidence month
were found to "conclusively show that pay.
(petitioner) suffered serious financial GTI denied the claim of illegal
losses." The dismissal and asserted that it was its
general standards or elements needed for prerogative to lay-off
the retrenchment to be valid — i.e., that the its employees temporarily for a period not
losses exceeding six months to prevent losses due
expected are substantial and not merely de to lack
minimis in extent; that the expected losses of work or job orders from abroad, and that
are the lay-off affected both union and non-
reasonably imminent such as can be union
perceived objectively and in good faith by members. It justified its failure to recall the
the employer; 38 laid-off employees after the lapse of six
that the retrenchment is reasonably months
necessary and likely to effectively prevent because of the subsequent cancellations of
the expected job orders made by its foreign principals, a
losses; and that the imminent losses sought fact
to be forestalled are substantiated — were which was communicated to the petitioners
adequately shown in the present case. and the other complainants who were all
offered
severance pay
127 FE S. SEBUGUERO vs NLRC and G.T.I.
SPORTSWEAR CORPORATION ISSUE:
WON there was a valid
FACTS: retrenchment.
Petitioners were among the thirty-
eight (38) regular employees of private HELD:
respondent YES but it is defective due to lack of
GTI Sportswear Corporation, who were given procedural notice. Retrenchment, on the
"temporary lay-off" notices by the latter due other
to hand, is used interchangeably with the term
alleged lack of work and heavy losses caused "lay-off." It is the termination of
by the cancellation of orders from abroad employment
and by initiated by the employer through no fault of
the garments embargo of 1 990. the employee's and without prejudice to the
Believing that their "temporary lay- latter, resorted to by management during
off" was a ploy to dismiss them, resorted to periods of business recession, industrial
because depression,
of their union activities and was in violation or seasonal fluctuations, or during lulls
of their right to security of tenure since there occasioned by lack of orders, shortage of
was materials,
no valid ground therefor, the 38 laid-off conversion of the plant for a new production
employees filed with the Labor Arbiter's program or the introduction of new methods
office in the or
National Capital Region complaints for illegal more efficient machinery, or of automation.
dismissal, unfair labor practice,
 169

Simply put, it is an act of the the law

employer of dismissing employees because requires is a written notice to the employees
of losses in the concerned and that requirement is
operation of a business, lack of work, and mandatory.
considerable reduction on the volume of his The notice must also be given at least one
business, month in advance of the intended date of
a right consistently recognized and affirmed retrenchment to enable the employees to
by this Court. look for other means of employment and
To determine, therefore, whether therefore
the petitioners were validly retrenched or to ease the impact of the loss of their jobs
were and the corresponding income. That they
illegally dismissed, we must determine were
whether there was compliance with the law already on temporary lay-off at the time
regarding a notice should have been given to them is not
valid retrenchment at anytime within the six an
month-period that they were temporarily excuse to forego the one-month written
laid-off. notice because by this time, their lay-off is to
Under the aforequoted Article 283 of the become
Labor Code, there are three basic requisites permanent and they were definitely losing
for a valid retrenchment: their employment.
(1) the retrenchment is necessary to The lack of written notice to the
prevent losses and such losses are proven; petitioners and to the DOLE does not,
(2) written notice to the employees however, make
and to the Department of Labor and the petitioners' retrenchment illegal such
Employment at that they are entitled to the payment of back
least one month prior to the intended date wages
of retrenchment; and and separation pay in lieu of reinstatement
(3) payment of separation pay as they contend. Their retrenchment, for not
equivalent to one month pay or at least 1/2 having
month pay been effected with the required notices, is
for every year of service, whichever is higher. merely defective. In those cases where we
The requirement of notice to both found the
the employees concerned and the retrenchment to be illegal and ordered the
Department of employees' reinstatement and the payment
Labor and Employment (DOLE) is mandatory of back
and must be written and given at least one wages, the validity of the cause for
month before the intended date of retrenchment, that is the existence of
retrenchment. In this case, it is undisputed imminent or actual
that the serious or substantial losses, was not proven.
petitioners were given notice of the But here, such a cause is present as found by
temporary layoff. There is, however, no both
evidence that any the Labor Arbiter and the NLRC. There is only
written notice to permanently retrench a violation by GTI of the procedure
them was given at least one month prior to prescribed in
the date of Article 283 of the Labor Code in effecting the
the intended retrenchment. The NLRC found retrenchment of the petitioners.
that GTI conveyed to the petitioners the It is now settled that where the dismissal of
impossibility of recalling them due to the an employee is in fact for a just and valid
continued unavailability of work. But what cause and is so proven to be but he is not
 170

accorded his right to due process, i.e., he was Respondents alleged that they did
not not voluntarily relinquish their jobs and that
furnished the twin requirements of notice they were required to sign the waivers and
and the opportunity to be heard, the quitclaims without giving them an
dismissal shall opportunity to read them and without
be upheld but the employer must be explaining their contents; and that Plastimer
sanctioned for non-compliance with the failed to establish the causes/valid reasons
requirements of for the retrenchment and to comply with the
or for failure to observe due process. one-month notice to the DOLE as well as the
standard prescribed under the Collective
Bargaining Agreement between Plastimer
128 Plastimer Industrial Corp. v. Gopo, G.R. and the employees. Petitioners countered
No. 183390, February 16, 2011 that the retrenchment was a management
prerogative and that respondents got their
Facts: retrenchment or separation pay even before
The Personnel and Administration the effective date of their separation from
Manager of Plastimer issued a service.
Memorandum informing all its employees of The Labor Arbiter ruled in favor of
the decision of the Board of Directors to petitioners. It held that petitioners were able
downsize and reorganize its business to prove that there was a substantial
operations due to withdrawal of withdrawal of stocks that led to the
investments and shares of stocks which downsizing of the workforce; that notice to
resulted in the change of its corporate the affected employees were given on 14
structure. On 14 May 2004, the employees May 2004, 30 days before its effective date
of Plastimer, including respondent Gopo and on 14 June 2004, and it was only the notice
other employees were served written to the DOLE that was filed short of the 30-
notices of their termination effective 13 June day period; that respondents claimed their
2004. Plastimer and Plastimer Industrial separation pay in accordance with the MOA;
Corporation Christian Brotherhood (PICCB), and that respondents could not claim
the incumbent sole and exclusive collective ignorance of the contents of the waivers and
bargaining representative of all rank and file quitclaims because they were assisted by the
employees, entered into a Memorandum of union President and their counsel in signing
Agreement (MOA) relative to the terms and them.
conditions that would govern the On appeal, the NLRC affirmed the
retrenchment of the affected employees. On Labor Arbiter’s decision.
26 May 2004, Plastimer submitted to the The Court of Appeals reversed the
DOLE an Establishment Termination Report NLRC decision and found that petitioners
containing the list of the employees affected have been illegally dismissed.
by the reorganization and downsizing. The The Court of Appeals ruled that there
affected employees, including respondents, was no valid cause for retrenchment; that
signed individual “Release Waiver and while Plastimer claimed financial losses from
Quitclaim.” 2001 to 2004, records showed an
Thereafter, respondents filed a improvement of its finances in 2003; that
complaint against Plastimer and its President Plastimer failed to use a reasonable and fair
Teo Kee Bin (petitioners) before the Labor standard or criteria in ascertaining who
Arbiter for illegal dismissal with prayer for would be dismissed and who would be
reinstatement and full backwages, retained among its employees; that the MOA
underpayment of separation pay, moral and between Plastimer and PICCB only
exemplary damages and attorney’s fees. recognized the need for partial
 171

retrenchment and the computation of effectivity. Petitioners’ failure to comply

retrenchment pay without disclosing the with the one-month notice to the DOLE is
criteria in the selection of the employees to only a procedural infirmity and does not
be retrenched; and that the union President render the retrenchment illegal. In Agabon v.
and the PICCB’s counsel were not present NLRC, we ruled that when the dismissal is for
when the retrenched employees were made a just cause, the absence of proper notice
to sign the waivers and quitclaims. should not nullify the dismissal or render it
Hence, the petition before this Court. illegal or ineffectual. Instead, the employer
should indemnify the employee for the
Issue: violation of his statutory rights. Here, the
WON respondents were illegally failure to fully comply with the one-month
retrenched by petitioners. notice of termination of employment did not
render the retrenchment illegal but it
Ruling: entitles respondents to nominal damages.
The petition has merit. Validity of Retrenchment
This Court is not precluded from The fact that there was a net income
reviewing the factual issues when there are in 2003 does not justify the Court of Appeals’
conflicting findings by the Labor Arbiter, the ruling that there was no valid reason for the
NLRC and the Court of Appeals. In this case, retrenchment.
we find that the findings of the Labor Arbiter Records showed that the net income
and the NLRC are more in accord with the of P6,185,707.05 for 2003 was not even
evidence on record. enough for petitioners to recover from the
One-Month Notice of Termination of P52,904,297.88 loss in 2002. Article 283 of
Employment Article 283 of the Labor Code the Labor Code recognizes retrenchment to
provides: prevent losses as a right of the management
ART. 283. Closure of establishment to meet clear and continuing economic
and reduction of personnel. - The employer threats or during periods of economic
may also terminate the employment of any recession to prevent losses. There is no need
employee due to the installation of labor- for the employer to wait for substantial
saving devices, redundancy, retrenchment losses to materialize before exercising
to prevent losses or the closing or cessation ultimate and drastic option to prevent such
of operation of the establishment or losses.
undertaking unless the closing is for the Validity of Waivers and Quitclaims
purpose of circumventing the provisions of The Court has ruled that a waiver or
this Title, by serving a written notice on the quitclaim is a valid and binding agreement
workers and the Department of Labor and between the parties, provided that it
Employment at least one (1) month before constitutes a credible and reasonable
the intended date thereof. xxx settlement, and that the one accomplishing
In this case, Plastimer submitted the notice it has done so voluntarily and with a full
of termination of employment to the DOLE understanding of its import. We agree with
on 26 May 2004. However, notice to the the Labor Arbiter and the NLRC that
affected employees were given to them on respondents were sufficiently apprised of
14 May 2004 or 30 days before the their rights under the waivers and quitclaims
effectivity of their termination from that they signed. Each document contained
employment on 13 June 2004. While the signatures of Marcaida, PICCB President,
notice to the DOLE was short of the one- and Atty. Diwa, the counsel for the union,
month notice requirement, the affected which proved that respondents were duly
employees were sufficiently informed of assisted when they signed the waivers and
their retrenchment 30 days before its quitclaims. Further, Marcaida’s letter to Teo
 172

Kee Bin, dated 28 May 2004, proved that notice of termination, and that his last day of
proper assistance was extended upon work with Petrocon will be on July 1, 1998.
respondents. Hence, we rule that the Petrocon also informed
waivers and quitclaims that respondents respondent that all due benefits in
signed were valid. accordance with the terms and conditions of
WHEREFORE, we SET ASIDE the his employment contract will be paid to
Decision and Resolution of the Court of respondent, including his ticket back to the
Appeals, and hereby REINSTATE the Decision Philippines.
of the Labor Arbiter and the Resolution of Before his departure from Saudi Arabia,
the NLRC upholding the validity of respondent received his final paycheck from
respondents’ retrenchment with Petrocon amounting SR7,488.57.
MODIFICATION that petitioners pay each of Upon his return, respondent filed a
the complaint with the Regional Arbitration
respondents the amount of P30,000 as Branch VII, National Labor Relations
nominal damages for non-compliance with Commission (NLRC), Cebu City, against
statutory due process. 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
129-130 Internation management Services he was illegally dismissed.
vs. Logarta, G.R. No. 163657, April 18, 2012 The Labor Arbiter rendered
judgment in favor of the respondent and
Facts: ordered petitioner to pay the peso
Recruitment agency, International equivalent of US$5,600.00 based on the rate
Management Services (IMS), owned and at the time of actual payment, as payment of
operated by Marilyn C. Pascual, deployed his wages for the unexpired portion of his
respondent Roel P. Logarta to work for contract of employment. The NLRC on
Petrocon Arabia Limited (Petrocon) in appeal affirmed the Labor Arbiter’s decision
Alkhobar, Kingdom of Saudi Arabia, in but reduced the award to only US$4,800.00
connection with general engineering or its peso equivalent at the time of
services of Petrocon for the Saudi Arabian Oil payment. The CA likewise dismissed the
Company (Saudi Aramco). Respondent was petition and affirmed the NLRC decision.
employed for a period of two (2) years,
commencing on October 2, 1997, with a Issue:
monthly salary of eight hundred US Dollars Whether or not respondents
(US$800.00). dismissal through retrenchment illegal.
On April 29, 1998, Saudi Aramco
notified Petrocon that due to changes in the Ruling:
general engineering services work forecast No. Retrenchment is the reduction of
for 1998, the manhours that were formerly work personnel usually due to poor financial
allotted to Petrocon is going to be reduced returns, aimed to cut down costs for
by 40% which constrained Petrocon to operation particularly on salaries and wages.
reduce its personnel. It is one of the economic grounds to dismiss
Thus, on June 1, 1998, Petrocon gave employees and is resorted by an employer
respondent a written notice informing the primarily to avoid or minimize business
latter that due to the lack of project works losses.
related to his expertise, he is given a 30-day
 173

Retrenchment programs are purely (5)That the employer used fair and
business decisions within the purview of a reasonable criteria in ascertaining who
valid and reasonable exercise of would be dismissed and who would be
management prerogative. It is one way of retained among the employees, such as
downsizing an employer's workforce and is status,…efficiency, seniority, physical fitness,
often resorted to by the employer during age, and financial hardship for certain
periods of business recession, industrial workers. 28 Applying the above-stated
depression, or seasonal fluctuations, and requisites for a valid retrenchment in the
during lulls in production occasioned by lack case at bar, it is apparent that the first,
of orders, shortage of materials, conversion fourth and fifth requirements were complied
of the plant for a new production program, with by respondent's employer. However,
or introduction of new methods or more the second and third requisites were absent
efficient machinery or automation. It is a when Petrocon terminated the services of
valid management prerogative, provided it is respondent.
done in good faith and the employer As aptly found by the NLRC and justly
faithfully complies with the substantive and sustained by the CA, Petrocon exercised its
procedural requirements laid down by law prerogative to retrench its employees in
and jurisprudence. good faith and the considerable reduction of
Philippine Law recognizes work allotments of Petrocon by Saudi
retrenchment as a valid cause for the Aramco was sufficient basis for Petrocon to
dismissal of a migrant or overseas Filipino reduce the number of its personnel.
worker under Article 283 of the Labor Code. As for the notice requirement,
Thus, retrenchment is a valid exercise however, contrary to petitioner's
of management prerogative subject to the contention, proper notice to the DOLE within
strict requirements set by jurisprudence, to 30 days prior to the intended date of
wit: retrenchment is necessary and must be
(1)That the retrenchment is complied with despite the fact that
reasonably necessary and likely to prevent respondent is an overseas Filipino worker. In
business losses which, if already incurred, the present case, although respondent was
are not merely de minimis, but substantial, duly notified of his termination by Petrocon
serious, actual and real, or if only expected, 30 days before its effectivity, no allegation or
are reasonably imminent as perceived proof was advanced by petitioner to
objectively and in good faith by the establish that Petrocon ever sent a notice to
employer; the DOLE 30 days before the respondent was
(2)That the employer served written terminated. Thus, this requirement of the
notice both to the employees and to the law was not complied with.
Department of Labor and Employment at In the case at bar, despite the fact
least one month prior to the intended date that respondent was employed by Petrocon
of retrenchment; as an OFW in Saudi Arabia, still both he and
(3)That the employer pays the his employer are subject to the provisions of
retrenched employees separation pay the Labor Code when applicable. The basic
equivalent to one month pay or at least 1/2 policy in this jurisdiction is that all Filipino
month pay for every year of service, workers, whether employed locally or
whichever is higher; overseas, enjoy the protective mantle of
(4)That the employer exercises its Philippine labor and social legislations.
prerogative to retrench employees in good Also, respondent is entitled to the
faith for the advancement of its interest and payment of his separation pay. However,
not to defeat or circumvent the employees' this Court disagrees with the conclusion of
right to security of tenure; and the Labor Arbiter, the NLRC and the CA, that
 174

respondent should be paid his separation

pay in accordance with the provision of FACTS:
Section 10 of R.A. No. 8042. A plain reading Herein respondents were hired for
of the said provision clearly reveals that it Club Waterfront, a division under petitioner
applies only to an illegally dismissed Waterfront Cebu City Hotel which catered to
overseas contract worker or a worker foreign high stakes gamblers for different
dismissed from overseas employment positions.
without just, valid or authorized cause. On 12 May 2003, respondents, along
In the case at bar, notwithstanding with 41 other employees, received identical
the fact that respondent's termination from letters of termination from petitioner
his employment was procedurally infirm, Director of Human Resources informing
having not complied with the notice them of the temporary suspension of
requirement, nevertheless the same business of the Club.
remains to be for a just, valid and authorized The following day, petitioner served
cause, i.e., retrenchment as a valid exercise the notice of suspension of business with the
of management prerogative. To stress, DOLE). The dismissed employees were
despite the employer's failure to comply offered separation pay equivalent to half-
with the one-month notice to the DOLE prior month pay for every year of service. The Club
to respondent's termination, it is only a closure took effect on 15 June 2003.
procedural infirmity which does not render On 26 June 2003, respondents filed a
the retrenchment illegal. In Agabon v. NLRC, complaint before the Labor Arbiter for illegal
this Court ruled that when the dismissal is for dismissal, illegal suspension, and non-
a just cause, the absence of proper notice payment of salaries and other monetary
should not nullify the dismissal or render it benefits. They likewise prayed for damages
illegal or ineffectual. Instead, the employer and attorney fees.
should indemnify the employee for violation Respondents maintained that they
of his statutory rights. Consequently, it is are employees of petitioner assigned to the
Article 283 of the Labor Code and not Section Club, hence they should have been allowed
10 of R.A. No. 8042 that is controlling. Thus, to work in other departments of the hotel.
respondent is entitled to payment of Oppositely, petitioner averred that
separation pay equivalent to one (1) month since April 2002, the Club has been incurring
pay, or at least one-half (1/2) month pay for losses that it had to temporarily cease its
every year of service, whichever is higher. operations effective 15 June 2003. To
Considering that respondent was employed support the allegations of losses, petitioner
by Petrocon for a period of eight (8) months, presented financial statements of
he is entitled to receive one (1) month pay as Waterfront Promotion, Ltd. Petitioner
separation pay. In addition, pursuant to argued that pursuant to Article 286 of the
current jurisprudence, for failure to fully Labor Code, the temporary suspension of
comply with the statutory due process of business operations does not terminate
sufficient notice, respondent is entitled to employment. Thus, respondents have no
nominal damages in the amount P50,000.00. cause of action against them.
On 12 December 2003, the labor
arbiter ruled in favor of petitioner and
131 WATERFRONT CEBU CITY HOTEL, upheld the closure of the Club business
Petitioner, v. MA. MELANIE P. JIMENEZ, operations as a management prerogative.
JACQUELINE C. BAGUIO, LOVELLA V. The petitioner was, however, directed to
CARILLO, and MAILA G. ROBLE, comply with Article 283 of the Labor Code
Respondents. and to pay complainants their separation
pay equivalent to one-half month pay for
 175

every year of service, a fraction of at least 6 and could not have been an option for
months being considered as one year. petitioner Hotel.
Respondents appealed to the NLRC For the purpose of proving financial
which issued a Decision affirming the ruling losses, petitioner presented the financial
of the Labor Arbiter. After the denial of statements of Waterfront Promotion, Ltd.
respondentsmotion for reconsideration, which petitioner describes as the company
they elevated the case to the Court of which promotes, markets and finances the
Appeals. Club.
Respondents argued that the NLRC A review of the corporate structure
should have considered the financial of the Club as contained in the financial
statements of the petitioner Hotel and not statements submitted by petitioner reveals
merely of the Club, which is only a division of that it is actually a wholly-owned subsidiary
the Hotel. According to respondents, the of Waterfront Promotion, Ltd. Strictly
permanent closure of the Club resulted in speaking, the Club is not related to petitioner
retrenchment but petitioner failed to prove except to say that they are two different
that it complied with the standards for subsidiaries of one parent corporation, i.e.,
retrenchment. On 5 July 2006, the Court of Waterfront Philippines. Petitioner, then,
Appeals rendered a Decision reversing the could have right at the beginning avoided
findings and conclusions of the NLRC. the conflict with respondents by setting itself
The appellate court found that apart from them. Petitioner could have
petitioner Hotel is the actual employer of invoked the separateness from the Hotel of
respondents, thus the evidence of losses and the Club which employed respondents.
closure of the Club is immaterial and Petitioner did not do so. Instead, and at the
irrelevant. outset, it formally presented itself as the
Petitioner filed a motion for respondentsemployer when, through its
reconsideration but it was denied in a Director of Human Resources, it informed
Resolution dated 15 August 2006. Hence, respondents about the temporary
this petition for review on certiorari. suspension of the business of the Club and
forthwith served the notices of suspension
of business on DOLE.
ISSUE: The consolidated financial
Whether or not the evidence of losses statements that were prepared in the name
and closure of Club Waterfront is immaterial of Waterfront Promotion refer to the casino
and irrelevant to the termination of operations of the Club. A consolidated
petitioners? financial statement is usually prepared for a
parent company and its subsidiaries, the
HELD: purpose of which is to provide an overview
The ruling of the Court of Appeals is of the financial condition of the group of
reversed and set aside. companies as a single entity. The Club, being
At the outset, it should be stated that a wholly-owned subsidiary of Waterfront
the respondents cannot be accommodated Promotion, Ltd. operates under the
in other departments of the Hotel. The management, supervision and control of
duties and functions they perform are Waterfront Promotion, Ltd. The relationship
peculiar to the positions they hold in the between these two companies is so
Club. It is likewise undisputed that the Club intertwined that the Club is practically
remained closed and there is no other considered a department or division of
department in the Hotel similar to the Club Waterfront Promotion, Ltd.
and which catered to foreign high stakes A review of the consolidated financial
gamblers. Verily, reinstatement cannot be statement proves petitioner assertion that
 176

the losses there reflected refer to the losses losses which, if already incurred, are not
of the Club. The consolidated financial merely de minimis, but substantial, serious,
statement and the corporate relationships it actual and real, or if only expected, are
indicates, cannot, however, be relied upon reasonably imminent as perceived
by petitioner to avoid this particular labor objectively and in good faith by the
dispute because, as already stated, employer;
petitioner itself has been claiming from the (2) That the employer served written
very beginning that the Club is only a notice both to the employees and to the
division/department of the hotel. Department of Labor and Employment at
Verily, retrenchment and not closure least one month prior to the intended date
was effected to warrant the valid dismissal of of retrenchment;
respondents. Petitioner has not totally (3) That the employer pays the
ceased its operations. It merely closed down retrenched employees separation pay
a department. equivalent to one
Retrenchment is the termination of (1) month pay or at least ½ month pay for
employment initiated by the employer every year of service, whichever is higher;
through no fault of and without prejudice to (4) That the employer exercises its
the employees. It is resorted to during prerogative to retrench employees in good
periods of business recession, industrial faith for the advancement of its interest and
depression, or seasonal fluctuations or not to defeat or circumvent the employees
during lulls occasioned by lack of orders, right to security of tenure; and
shortage of materials, conversion of the (5) That the employer used fair and
plant for a new production program or the reasonable criteria in ascertaining who
introduction of new methods or more would be dismissed and who would be
efficient machinery or of automation.It is an retained among the employees, such as
act of the employer of dismissing employees status, efficiency, seniority, physical fitness,
because of losses in the operation of a age, and financial hardship for certain
business, lack of work, and considerable workers.
reduction on the volume of his business. All these elements were successfully
In case of retrenchment, proof of proven by petitioner. First, the huge losses
financial losses becomes the determining suffered by the Club for the past two years
factor in proving its legitimacy. In had forced petitioner to close it down to
establishing a unilateral claim of actual or avert further losses which would eventually
potential losses, financial statements affect the operations of petitioner. Second,
audited by independent external auditors all 45 employees working under the Club
constitute the normal method of proof of were served with notice of termination. The
profit and loss performance of a company. corresponding notice was likewise served to
The condition of business losses justifying the DOLE one month prior to retrenchment.
retrenchment is normally shown by audited Third, the employees were offered
financial documents like yearly balance separation pay, most of whom have
sheets and profit and loss statements as well accepted and opted not to join in this
as annual income tax returns. complaint. Fourth, cessation of or
Retrenchment is subject to faithful withdrawal from business operations was
compliance with the substantative and bona fide in character and not impelled by a
procedural requirements laid down by law motive to defeat or circumvent the tenurial
and jurisprudence. For a valid retrenchment, rights of employees. Neither is there a
the following elements must be present: showing that petitioner carried out the
(1) That retrenchment is reasonably closure of the business in bad faith. No labor
necessary and likely to prevent business dispute existed between management and
 177

the employees when the latter were the CA to review factual issues in the
terminated. exercise of its original jurisdiction to issue
GRANTED writs of certiorari is based on Section 9 of
Batas Pambansa Blg. 129, which pertinently
provides that the CA “shall have the power
132 Legend Hotel (Manila) vs Realuyo AKA to try cases and conduct hearings, receive
Roa evidence and perform any and all acts
necessary to resolve factual issues raised in
Facts: cases falling within its original and appellate
Respondent averred that he had jurisdiction, including the power to grant and
worked as a pianist at the Legend Hotel’s conduct new trials or further proceedings.”
Tanglaw Restaurant from September 1992 YES. Petitioner actually wielded the
with an initial rate of P400.00/night that was power of selection at the time it entered into
given to him after each night’s performance; the service contract dated September 1,
that his rate had increased to P750.00/night; 1992 with respondent. This is true,
and that during his employment, he could notwithstanding petitioner’s insistence that
not choose the time of performance, which respondent had only offered his services to
had been fixed from 7:00 pm to 10:00 pm for provide live music at petitioner’s Tanglaw
three to six times/week. He added that the Restaurant, and despite petitioner’s position
Legend Hotel’s restaurant manager had that what had really transpired was a
required him to conform with the venue’s negotiation of his rate and time of
motif; that he had been subjected to the availability. The power of selection was
rules on employees’ representation checks firmly evidenced by, among others, the
and chits, a privilege granted to other express written recommendation dated
employees; that on July 9, 1999, the January 12, 1998 by Christine Velazco,
management had notified him that as a cost- petitioner’s restaurant manager, for the
cutting measure his services as a pianist increase of his remuneration.
would no longer be required effective July Respondent’s remuneration, albeit
30, 1999; that he disputed the excuse, denominated as talent fees, was still
insisting that Legend Hotel had been considered as included in the term wage in
lucratively operating as of the filing of his the sense and context of the Labor Code,
complaint; and that the loss of his regardless of how petitioner chose to
employment made him bring his complaint. designate the remuneration. Anent this,
Article 97(f) of the Labor Code clearly states:
Issues: xxx wage paid to any employee shall
1. Whether or not petition for mean the remuneration or earnings,
certiorari to the CA is proper. however designated, capable of being
2. Whether or not there is ER-EE expressed in terms of money, whether fixed
relationship. or ascertained on a time, task, piece, or
3. Whether or not retrenchment as a commission basis, or other method of
ground for respondent’s dismissal is valid. calculating the same, which is payable by an
employer to an employee under a written or
Held: unwritten contract of employment for work
YES. There is no longer any doubt done or to be done, or for services rendered
that a petition for certiorari brought to assail or to be rendered, and includes the fair and
the decision of the NLRC may raise factual reasonable value, as determined by the
issues, and the CA may then review the Secretary of Labor, of board, lodging, or
decision of the NLRC and pass upon such other facilities customarily furnished by the
factual issues in the process.8 The power of employer to the employee.
 178

That respondent worked for less than losses. On this matter, Article 283 of the
eight hours/day was of no consequence and Labor Code.
did not detract from the CA’s finding on the The Court has laid down the
existence of the employer-employee following standards that an employer should
relationship. In providing that the “normal meet to justify retrenchment and to foil
hours of work of any employee shall not abuse, namely: (a) The expected losses
exceed eight (8) hours a day,” Article 83 of should be substantial and not merely de
the Labor Code only set a maximum of minimis in extent; (b) The substantial losses
number of hours as “normal hours of work” apprehended must be reasonably imminent;
but did not prohibit work of less than eight (c) The retrenchment must be reasonably
hours. necessary and likely to effectively prevent
The power of the employer to control the expected losses; and (d) The alleged
the work of the employee is considered the losses, if already incurred, and the expected
most significant determinant of the imminent losses sought to be forestalled
existence of an employer-employee must be proved by sufficient and convincing
relationship. This is the so-called control evidence.
test, and is premised on whether the person Anent the last standard of sufficient
for whom the services are performed and convincing evidence, it ought to be
reserves the right to control both the end pointed out that a less exacting standard of
achieved and the manner and means used to proof would render too easy the abuse of
achieve that end. retrenchment as a ground for termination of
A review of the records shows, services of employees.
however, that respondent performed his In termination cases, the burden of
work as a pianist under petitioner’s proving that the dismissal was for a valid or
supervision and control. Specifically, authorized cause rests upon the employer.
petitioner’s control of both the end achieved Here, petitioner did not submit evidence of
and the manner and means used to achieve the losses to its business operations and the
that end was demonstrated by the following, economic havoc it would thereby
to wit: a. He could not choose the time of his imminently sustain. It only claimed that
performance, which petitioners had fixed respondent’s termination was due to its
from 7:00 pm to 10:00 pm, three to six times “present business/financial condition.” This
a week; b. He could not choose the place of bare statement fell short of the norm to
his performance; c. The restaurant’s show a valid retrenchment. Hence, we hold
manager required him at certain times to that there was no valid cause for the
perform only Tagalog songs or music, or to retrenchment of respondent.
wear barong Tagalog to conform to the
Filipiniana motif; and d. He was subjected to
the rules on employees’ representation 133 DIGITAL TELECOMMUNIC ATIONS PHIL.
check and chits, a privilege granted to other , INC. VS. DIGITEL E MPLOYEES UNION
employees. Relevantly, it is worth
remembering that the employer need not FACTS:
actually supervise the performance of duties By virtue of a certification election,
by the employee, for it sufficed that the Digitel Employees Union (Union) became the
employer has the right to wield that power. exclusive bargaining agent of all rank and file
NO. Retrenchment is one of the employees of Digitel in 1994. The Union and
authorized causes for the dismissal of Digitel then commenced collective
employees recognized by the Labor Code. It bargaining negotiations which resulted in a
is a management prerogative resorted to by bargaining deadlock. The Union threatened
employers to avoid or to minimize business to go on strike, but then the Labor Secretary
 179

assumed jurisdiction over the dispute and cancellation of union registration for lack of
eventually directed the parties to execute a merit. The appeal filed by Digitel with the
CBA. 2 However, no CBA was forged BLR was eventually dismissed for lack of
between Digitel and the Union. Some Union merit in a Resolution dated 9 March 2007.
members abandoned their employment In an Order dated 13 July 2005, the
with Digitel. The Union later became Secretary of Labor directed Digitel to
dormant. commence the CBA negotiation with the
Ten (10) years thereafter or on 28 Union and certified for compulsory
September 2004, Digitel received from arbitration before the NLRC the issue of
Esplana, who was President of the Union, a unfair labor practice. In accordance with the
letter containing the list of officers, CBA 13 July 2005 Order of the Secretary of Labor,
proposals and ground rules. 3 Digitel was the unfair labor practice issue was certified
reluctant to negotiate with the Union and for compulsory arbitration before the NLRC.
demanded that the latter Union show On 31 January 2006, NLRC rendered a
compliance with the provisions of the Decision dismissing the unfair labor practice
Union’s Constitution and By-laws on union charge against Digitel but declaring the
membership and election of officers. dismissal of the 13 employees of Digiserv as
On 4 November 2004, Esplana and illegal and ordering their reinstatement. 10
his group filed a case for Preventive The Union manifested that out of 42
Mediation before the National Conciliation employees, only 13 remained, as most had
and Mediation Board based on Digitel’s already accepted separation pay.
violation of the duty to bargain. On 25 In view of this unfavorable decision,
November 2004, Esplana filed a notice of Digitel filed a petition on 9 June 2006 before
strike. On 10 March 2005, the then Labor the Court of Appeals, challenging the above
Secretary issued an Order4 assuming NLRC Decision and Resolution and arguing
jurisdiction over the labor dispute. mainly that Digiserv employees are not
During the pendency of the controversy, employees of Digitel.
Digitel Service, Inc. (Digiserv), a non-profit On 18 June 2008, CA partially granted
enterprise engaged in call center servicing, the case for ULP, thus modifying the assailed
filed with the DOLE an Establishment NLRC dispositions. The CA likewise sustained
Termination Report stating that it will cease the finding that Digiserv is engaged in labor-
its business operation. The closure affected only contracting and that its employees are
at least 100 employees, 42 of whom are actually employees of Digitel.
members of the herein respondent Union. Digitel filed a motion for
Alleging that the affected employees are its reconsideration but was denied in a
members and in reaction to Digiserv’s Resolution dated 9 October 2008. Hence,
action, Esplana and his group filed this petition for review on certiorari.
another Notice of Strike for union busting,
illegal lock-out, and violation of the ISSUES:
assumption order. On 23 May 2005, the 1) Whether Digiserv is a legitimate
Labor Secretary ordered the second notice contractor; and
of strike subsumed by the previous 2) Whether there was a valid
Assumption Order.5 Meanwhile, on 14 dismissal.
March 2005, Digitel filed a petition with the
Bureau of Labor Relations (BLR) seeking RULING:
cancellation of the Union’s registration. In a
Decision dated 11 May 2005, the Regional Digiserv is a labor-only contractor.
Director of the DOLE dismissed the petition Labor-only contracting is expressly
for prohibited by our labor laws. After an
 180

exhaustive review of the records, there is no The NLRC also relied on the letters of
showing that first, Digiserv has substantial commendation, plaques of appreciation and
investment in the form of capital, equipment certification issued by Digitel to the
or tools. The NLRC, as echoed by the CA, did Customer Service Representatives as
not find substantial Digiserv’s authorized evidence of control.
capital stock of P 1,000,000.00. It pointed Considering that Digiserv has been
out that only P 250,000.00 of the authorized found to be engaged in labor-only
capital stock had been subscribed and only P contracting, the dismissed employees are
62,500.00 had been paid up. There was no deemed employees of Digitel.
increase in capitalization for the last 10 The affected employees were
years. 19 illegally dismissed. In addition to finding
Moreover, in the Amended Articles of that Digiserv is a labor-only contractor,
Incorporation, as well as in the General records teem with proof that its dismissed
Information Sheets for the years 1994, 2001 employees are in fact employees of Digitel.
and 2005, the primary purpose of Digiserv is The NLRC enumerated these pieces of
to provide manpower services. In PCI evidence, thus:
Automation Center, Inc. v. National Labor  The remaining affected employees,
Relations Commission,20 the Court made the except for two (2), were already hired by
following distinction: "the legitimate job DIGITEL even before the existence of
contractor provides services while DIGISERV. Likewise, the remaining affected
the labor-only contractor provides only employees continuously held the position of
manpower. The legitimate job contractor Customer Service Representative, which was
undertakes to perform a specific job for the earlier known as Traffic Operator, from the
principal employer while the labor-only time they were appointed on March 1, 1994
contractor merely provides the personnel to until they were terminated on May 30, 2005.
work for the principal employer." The  Further, the Certificates issued to
services provided by employees of Digiserv Customer Service Representative likewise
are directly related to the business of Digitel. show that they are employees of DIGITEL,
It is undisputed that as Take for example the "Service Award" issued
early as March 1994, the affected to Ma. Loretta C. Esen, one of the remaining
employees, except for two, were already affected employees. The "Service Award"
performing their job as Traffic Operator was signed by the officers of DIGITEL – the
which was later renamed as Customer VP-Customer Services Division, the
Service Representative (CSR). It is equally VPHuman Resources Division and the Group
undisputed that all throughout their Head-Human Resources Division. It cannot
employment, their function as CSR remains be gainsaid that it is only the employer that
the same until they were terminated issues service award to its employees. 22 As
effective May 30, 2005. Their long period of an alternative argument, Digitel maintains
employment as such is an indication that that the affected employees were validly
their job is directly related to the main dismissed on the grounds of closure of
business of DIGITEL which is Digiserv, a department within Digitel.
telecommunications. In the recent case of Waterfront Cebu
Furthermore, Digiserv does not City Hotel v. Jimenez, 23 we referred to the
exercise control over the affected closure of a department or division of a
employees. Digiserv shared the same Human company as retrenchment. For a valid
Resources, Accounting, Audit and Legal retrenchment, the following elements must
Departments with Digitel which manifested be present:
that it was Digitel who exercised control over (1) That retrenchment is reasonably
the performance of the affected employees. necessary and likely to prevent business
 181

losses which, if already incurred, are not part of the employees and orders the
merely de minimis, but substantial, serious, employer to maintain the status quo.
actual and real, or if only expected, are There is no doubt that Digitel defied
reasonably imminent as perceived the assumption order by abruptly closing
objectively and in good faith by the down Digiserv. The closure of a department
employer; is not illegal per se. What makes it unlawful
(2) That the employer served written is when the closure is undertaken in bad
notice both to the employees and to the faith. In St. John Colleges, Inc. v. St. John
Department of Labor and Employment at Academy Faculty and Employees Union,26
least one month prior to the intended date bad faith was evidenced by the timing of and
of retrenchment; reasons for the closure and
(3) That the employer pays the the timing of and reasons for the subsequent
retrenched employees separation pay opening.
equivalent to one (1) month pay or at least ½
month pay for every year of service,
whichever is higher; 134 J.A.T. GENERAL SERVICES & JESUSA
(4) That the employer exercises its ADLAWAN TOROBU vs. NLRC & JOSE F.
prerogative to retrench employees in good MASCARINAS
faith for the advancement of its interest and
not to defeat or circumvent the employees’ FACTS:
right to security of tenure; and Jesusa Adlawan Trading & General
(5) That the employer used fair and Services (JAT) hired Jose F. Mascarinas as
reasonable criteria in ascertaining who helper
would be dismissed and who would be tasked to coordinate with the cleaning and
retained among the employees, such as delivery of the heavy equipment sold to
status, efficiency, seniority, physical fitness, customers.
age, and financial hardship for certain Initially, private respondent was
workers.24 Only the first 3 elements of a hired as a probationary employee and was
valid retrenchment had been here satisfied. paid P165 per day that was increased to
Indeed, it is management prerogative to P180 in July 1997 and P185 in January 1998.
close a department of the company. Digitel’s In October 1997, the sales of heavy
decision to outsource the call center equipment declined because of the Asian
operation of the company is a valid reason to currency
close down the operations of a department crisis. Consequently, JAT temporarily
under which the affected employees were suspended its operations. It a dvised its
employed. The fifth element regarding the employees,
criteria to be observed by Digitel clearly does including private respondent, not to report
not apply because all employees under for work starting on the first week of March
Digiserv were dismissed. 1998.
The instant case is all about the JAT indefinitely closed shop effective
fourth element, that is, whether or not the May 1998.
affected employees were dismissed in good A few days after, private respondent
faith. We find that there was no good faith in filed a case for illegal dismissal and
the retrenchment. Prior to the cessation of underpayment
Digiserv’s operations, the Secretary of Labor of wages against petitioners before the
had issued the first and second assumption NLRC. On December 14, 1998, JAT filed an
order. The effects of the assumption order Establishment Termination Report with the
issued by the Secretary of Labor are two- Department of Labor and Employment
fold. It enjoins an impending strike on the (DOLE),
 182

notifying the latter of its decision to close its month pay

business operations due to business losses for every year of service, whichever is higher.
and A fraction of at least six (6) months shall be
financial reverses. considered one (1) whole year.
Article 283 of the Labor Code shows
ISSUE: that closure or cessation of business
Whether or not private respondent operation as a
was illegally dismissed from employment valid and authorized ground of terminating
due to employment is not limited to those resulting
closure of petitioners business from
business losses or reverses. Said provision in
HELD: fact provides for the payment of separation
NO. Closure of business, is the pay to
reversal of fortune of the employer whereby employees terminated because of closure of
there is a business not due to losses, thus implying that
complete cessation of business operations termination of employees other than closure
and/or an actual locking-up of the doors of of business due to losses may be valid.
establishment, usually due to financial In the present case, while petitioners did not
losses. Closure of business as an authorized sufficiently establish substantial losses to
cause for justify closure of the business, its income
termination of employment aims to prevent statement shows declining sales prompting
further financial drain upon an employer the
who petitioners to suspend its business
cannot pay anymore his employees since operations, eventually leading to its
business has already stopped. permanent closure. On
ART. 283. Closure of establishment this score, we agree that undue interference
and reduction of personnel. The employer with an employers judgment in the conduct
may also of his
terminate the employment of any employee business is uncalled for. Even as the law is
due to the installation of labor-saving solicitous of the welfare of employees, it
devices, must also
redundancy, retrenchment to prevent losses protect the right of an employer to exercise
or the closing or cessation of operation of what is clearly a management prerogatives.
the As long
establishment or undertaking unless the as the companys exercise of the same is in
closing is for the purpose of circumventing good faith to advance its interest and not for
the the
provisions of this Title, by serving a written purpose of defeating or circumventing the
notice on the workers and the Department rights of employees under the law or a valid
of Labor agreement such exercise will be upheld.
and Employment at least one (1) month In the event, under Article 283 of the
before the intended date thereof. In case of Labor Code, three requirements are
retrenchment to prevent losses and in cases necessary for
of closures or cessation of operations of a valid cessation of business operations,
establishment or undertaking not due to namely: (a) service of a written notice to the
serious business losses or financial reverses, employees and to the DOLE at least one (1)
the month before the intended date thereof; (b)
separation pay shall be equivalent to one (1) the
month pay or to at least one-half (1/2) cessation of business must be bona fide in
 183

character; and (c) payment to the employees Union

of entered into a Memorandum of Agreement
termination pay amounting to at least one- whereby the company committed to grant
half (1/2) month pay for every year of separation pay equivalent to 150% of the
service, or monthly basic pay for every year of service
one (1) month pay, whichever is higher. plus the
The closure of business operation by additional fixed amount of P27,000.00 to
petitioners, in our view, is not tainted with employees who would be terminated as a
bad result of
faith or other circumstance that arouses the closure of the wet line. In a letter, Senior
undue suspicion of malicious intent. The Executive Vice President, notified the
decision to employees
permanently close business operations was of the its decision to mothball the wet line
arrived at after a suspension of operation for and the termination of those whose
several months precipitated by a slowdown employment
in sales without any prospects of improving. would become unnecessary as a result of the
There closure. The company sent a letter to the
were no indications that an impending strike Department of Labor and Employment
or any labor related union activities (DOLE), informing him about the companys
precipitated decision to
the sudden closure of business. shut down the wet line and furnishing him
the list of affected employees. The company
then
135 LA UNION CEMENT WORKERS UNION sent notices of termination to more or less
& ARNULFO ALMOITE vs NLRC & 200 employees including petitioner Almoite.
BACNOTAN Upon
CEMENT CORPORATION (now HOLCIM the receipt of the separation pay, a number
PHILIPPINES, INC.) of the affected employees signed individual
Release Waiver and Quitclaim. However,
FACTS: some 80 of its members including Almoite
Bacnotan Cement Corporation had filed
been utilizing the wet process technology in complaints for unfair labor practice, illegal
its lay-off and illegal dismissal. They alleged that
operations. It then later introduced the dry while
process technology as part of its the closure affected only the wet line, among
modernization the employees terminated were operating
program. When the new dry process the
technology became fully operational, the dry line or performing support services for
company both wet and dry lines. They further alleged
discovered that the dry process technology that
or the dry line proved to be more efficient after the closure of the wet line, the
than the company contracted out the services
wet process technology. Thus, after studying performed by the
the situation, the company concluded that it employees who were terminated.
would be uncompetitive and impractical to
operate the wet line and decided to close it ISSUE:
down. Whether the termination was valid.
To implement the closure of the wet line, the
company and La Union Cement Workers HELD:
 184

YES. Petitioner Almoites work as an proceeds from the erroneous premise that
oiler for both the wet line and dry line has only
become those exclusively assigned to the wet line can
redundant or superfluous following the be declared redundant. The mere fact that
closure of the wet line. By and large, the an
determination employee was performing support services
of whether to maintain or phase out an for both the wet and the dry line does not in
entire department or section or to reduce any
personnel way exclude him from being declared as
lies with the management. Thus, his redundant. On the contrary, with the closure
termination on the ground of redundancy is of the
an authorized wet line and the consequent scaling down of
cause for termination under Article 283 of activities requiring support services, it stands
the Labor Code. to
As concluded by the NLRC: reason that there was already an excess of
xxx employees performing support services.
There is no dispute as to the fact that Respondent
there was a partial closure or cessation of had therefore all the reason to include such
operations with the mothballing of the old employees among those whom it considered
wet-process production line of the company redundant.
a
situation which falls among the authorized
causes for termination allowed under Article 136 MAYA FARMS EMPLOYEES
283 of ORGANIZATION,,et.al. vs. NLRC, MAYA
the Labor Code. REALTY & LIVESTOCK,
xxx INC., MAYA FARMS, INC., and LIBERTY
Neither is there any dispute that the FLOUR MILLS, INC.
logical and consequence [sic] of such partial
cessation of operations was to render FACTS:
certain employees redundant. Obviously Maya Farms, Inc. and Maya Realty
enough, since and Livestock Corporation belong to the
there was a curtailment in operations, Liberty Mills
certain activities were rendered either group of companies whose undertakings
excess or no include the operation of a meat processing
longer necessary, hence, redundant. plant
xxxx which produces ham, bacon, cold cuts,
The only ostensible argument sausages and other meat and poultry
presented by appellant is the bare allegation products.
that most of Petitioners, on the other hand, are its
them were not exclusively assigned to the exclusive bargaining agents of the
wet process line but were performing employees. Private
support respondents announced the adoption of an
services for both the wet line and the dry early retirement program as a cost-cutting
line. Therefore, they argue that they could measure
not be considering that their business operations
declared redundant by virtue of the closure suffered major setbacks over the years. The
of the wet line alone. This line of argument is program
non was voluntary and could be availed of
sequitur, fallacious and totally untenable. It originally only by employees with at least
 185

eight (8) years redundancy

of service but was reduced to five (5) years. program was an exercise of management
But the response to the program was nil. prerogative which could not be interfered
Thus, the early retirement program was with unless
converted into a special redundancy it is shown to be tainted with bad faith and
program ill motive. Private respondents explained
intended to reduce the work force to an that they
optimum number so as to make operations had no choice but to reduce their work force,
more otherwise, they would suffer more losses.
viable. A total of sixty-nine (69) employees
from the two companies availed of the ISSUE:
special WON their termination was valid.
redundancy program. Later, the two
companies sent letters to sixty-six (66) HELD:
employees YES. The court sustained the
informing them that their respective companies' prerogative to adopt the alleged
positions had been declared redundant. The redundancy/retrenchment program to
notices minimize if not, to avert losses in the
likewise stated that their services would be conduct of its
terminated effective thirty (30) days from operations. However, the companies'
receipt decision on this matter is not absolute. The
thereof. basis for such
Separation benefits, including the an action must be far from being whimsical
conversion of all earned leave credits and and the same must be proved by substantia
other benefits due under existing CBAs were l
thereafter paid to those affected. evidence. In addition, the implementation of
Petitioners accused private such a decision or policy must be in
respondents, among others, of unfair labor accordance
practice, violation of CBA and discrimination. with existing laws, rules and procedure and
They averred that in the dismissal of sixty-six provisions of the CBA between the parties, if
(66) union there
officers and members on the ground of be any. Short of any of these conditions,
redundancy, private respondents management policy to pu rsue and
circumvented the terminate its
provisions in their CBA, which states that “In employees allegedly to avert losses, must
all cases of lay-off or retrenchment resulting fail.
in In subject case, the 66 complaining
termination of employment in the line of employees were separated from service as a
work, the Last-In-First-Out (LIFO) Rule must result
always be of the decision of management to limit its
strictly observed.” They also alleged that the operations and streamline positions and
companies' claim that they were in personnel
economic crisis requirements.
was fabricated because in 1990, a net A close examination of the positions
income of over 83 million pesos was realized retained by management show that said
by Liberty positions
Flour Mills Group of Companies. such as egg sorter, debonner were but the
Private respondents contend that minimal positions required to sustain the
their decision to implement a special limited
 186

functions/operations of the meat processing decided

department. In the absence of any evidence to retire from business when she became
to sickly, when her health did not improve
prove bad faith on the part of management despite
in arriving at such decision, which records on proper medical attention she announced her
hand plan to close the shop. The announcement in
failed to show in instant case, the rationality advance was intended to give the workers
of the act of management in this regard must ample time to look for alternative
be employment.
sustained. While it may be true that the Accordingly, she declined to accept new
Liberty Flour Mills Group of Companies as a projects and proceeded with the winding up
whole of her
posted a net income of P83.3 Million, it is business. Geronimo B. Sison admitted being
admitted that with respect to operations of a part-owner of MBS which, he maintained,
the meat was an
processing and livestock which were entirely separate and distinct business
undertaken by herein companies sustained enterprise from MAME and GBS. MBS was
losses in the engaged in
sum of P2,257,649.88 (Exh. "3"). This is the manufacturing carton boxes and other allied
reason, as advanced by management, for its products. On the other hand, MAME and
decision to streamline positions resulting in GBS
the reduction of manpower compliment. were both engaged in the businesses of
137 MAC ADAMS METAL ENGINEERING machine shop operations, fabrication and
WORKERS UNION-INDEPENDENT vs vs. construction.
MAC ADAMS
METAL ENGINEERING and/or LYDIA SISON, ISSUE:
et.al. WoN the cessation and closure of
business was lawful
FACTS:
MAMEWU charged private HELD:
respondents MAME and GBS with unfair YES. Closure or cessation of business
labor practices operations is allowed even if the business is
(ULP) committed through union busting and not
illegal closure, and illegal dismissal. They undergoing economic losses. The owner, for
insisting any bona fide reason, can lawfully close shop
that the closure of MAME and GBS was at
illegal as it was calculated to bust their anytime. Just as no law forces anyone to go
union, claiming into business, no law can compel anybody to
that MAME and GBS continued doing continue in it. It would indeed be stretching
business under new business names, i.e., the intent and spirit of the law if we were to
MBS Machine unjustly interfere with the managements
and Industrial Supply (MBS) and MVS Heavy prerogative to close or cease its business
Equipment Rental and Builders (MVS). operations
Private just because said business operation or
respondent spouses Geronimo and Lydia V. undertaking is not suffering from any loss or
Sison, proprietors of GBS and MAME simply to
respectively, provide the workers continued employment.
denied the allegations explaining the closure The employer need only comply with
of MAME and GBS, because Lydia V. Sison the following requirements for a valid
 187

cessation of
business operations. (a) service of a written Facts:
notice to the employees and to the DOLE at Petitioner Juliet Apacible was hired
least sometime in 1994 by respondent. She rose
one month before the intended date from the ranks to become Assistant Area
thereof; (b) the cessation of or withdrawal Sales Manager for Cebu Operations, the
from business position she held at the time she was
operations must be bona fide in character separated from the service in 2003.
and (c) payment of termination pay On August 4, 2003, petitioner was
equivalent to at informed by respondent Marlene Orozco
least one-half month pay for each year of (Marlene), her immediate superior, that she
service, or one month pay, whichever is would be transferred to the company's main
higher. office in Pasig City on account of the ongoing
The records reveal that private respondents reorganization. Petitioner requested that
complied with the aforecited requirements. her transfer be made effective in October or
MAMEs employees were adequately November 2003 and that she be given time
informed of the intended business closure to discuss it with her husband and daughter.
and a written A week later, however, or on August
notice to the Regional Director of the 11, 2003, petitioner was informed that her
Department of Labor and Employment transfer would be effective August 18, 2003.
(DOLE) was filed On even date, she was placed under
by private respondents, informing the DOLE investigation for the delayed released of
that except for winding-up operations, BCRs (cash budget for customer
MAME will representation in sealed envelopes which
be closed effective March 8, 1993. Similar are given to loyal clients) which she received
notices were served by Lydia V. Sison to the for distribution earlier in July 2003.
Social Finding that the delay in releasing the
Security System (SSS), Bureau of Internal BCRs amounted to loss of trust and
Revenue (BIR), Department of Trade and confidence, petitioner claims that in a
Industry meeting with the respondents, she was
(DTI) and the Municipal Licensing Division of given four options: resignation, termination,
Antipolo, Rizal. Thus, the licenses and availment of an early retirement package
registration worth P40,000, or transfer to Pasig City.
of respondent MAME with the SSS, the Without availing of any option, petitioner
Municipality of Antipolo, Rizal and the DTI took a leave of absence on August 28, 29 and
were September 1, 2003.
subsequently canceled and/or withdrawn. On September 3, 2003, respondent
Further, private respondents closure company sent petitioner a memorandum-
of business was bona fide and that private directive for her to immediately report to the
respondents did not engage in the operation head office in Pasig City and to return the
of run-away shops. Finally, since private company vehicle assigned to her to the Cebu
respondents cessation and closure of Office within 24 hours. Petitioner did not
business was lawful, there was no illegal heed the directive, however. She instead
dismissal to filed an application for sick leave until
speak of. September 11, 2003, and another until
September 27, 2003.
On October 6, 2003, petitioner
138 Apacible vs. Multimed Industries Inc., requested that she be given her daily work
G.R. No. 178903, May 30, 2011 assignment in Cebu, which request was later
 188

to be denied by Olga by letter dated October equity and social justice. The same, however,
8, 2003. On October 7, 2003, petitioner was has been curbed and rationalized in
given a show cause notice for her to explain Philippine Long Distance Telephone
in writing why she should not be sanctioned Company v. National Labor Relations
for insubordination for failure to comply Commission. In that case, we recognized the
with the transfer order. harsh realities faced by employees that
On November 4, 2002, respondent company forced them, despite their good intentions,
sent petitioner a notice of termination to violate company policies, for which the
effective November 7, 2003 for employer can rightly terminate their
insubordination, prompting petitioner to file employment. For these instances, the award
a complaint for illegal dismissal, non- of financial assistance was allowed. But, in
payment of overtime pay, 13th month pay, clear and unmistakable language, we also
service incentive leave pay, separation pay, held that the award of financial assistance
damages and attorney's fees before the shall not be given to validly
Labor Arbiter. terminated employees, whose offenses are
The Court of Appeals ruled that iniquitous or reflective of some depravity in
petitioner was not entitled to separation pay their moral character. When the employee
because, contrary to the NLRC's finding, she commits an act of dishonesty, depravity, or
"lacked good faith." It noted that petitioner, iniquity, the grant of financial assistance is
from the start, knew and accepted the misplaced compassion. It is tantamount not
company policy on transfers whenever so only to condoning a
required, and could not thus refuse "another patently illegal or dishonest act, but an
valid reassignment by treating it as an endorsement thereof. It will be an insult to
imposition and burden." all the laborers who despite their economic
difficulties, strive to maintain good values
ISSUE: and moral conduct.
Whether petitioner is entitled In fact, in the recent case of Toyota
separation pay by way of financial Motors Philippines, Corp. Workers
assistance. Association (TMPCWA) v. National Labor
Relations Commission, we ruled that
RULING: separation pay shall not be granted to all
NO. Reno Foods, Inc. v. Nagkakaisang employees who are dismissed on any of the
Lakas ng Manggagawa (NLM)-Katipunan 16 four grounds provided in Article 282 of the
explains the propriety of granting separation Labor Code. Such ruling was reiterated and
pay in termination cases in this wise: further explained in Central Philippines
The law is clear. Separation pay is Bandag Retreaders, Inc. v. Diasnes:
only warranted when the cause for To reiterate our ruling in Toyota,
termination is not attributable to the labor adjudicatory officials and the CA must
employee's fault, such as those provided in demur the award of separation pay based on
Articles 283 and 284 of the Labor Code, as social justice when an employee's dismissal
well as in cases of illegal dismissal in which is based on serious misconduct or wilful
reinstatement is no longer feasible. It is not disobedience; gross and habitual neglect of
allowed when an employee is dismissed for duty; fraud or wilful breach of trust; or
just cause, such as serious misconduct. commission of a crime against the person of
xxx xxx xxx the employer or his immediate family —
It is true that there have been grounds under Art. 282 of the Labor Code
instances when the Court awarded financial that sanction dismissals of employees. They
assistance to employees who were must be most judicious and circumspect in
terminated for just causes, on grounds of awarding separation pay or financial
 189

assistance as the constitutional policy to of Investigation-Litigation Office issued to

provide full protection to labor is not meant the petitioner a notice of investigation.
to be an instrument to oppress the Meralcos Litigation Investigation
employers. The commitment of the Court to Office summarized the results of Meralco's
the cause of labor should not embarrass us findings in a memorandum which indicated
from sustaining the employers when they that Yabuts electric service was
are right, as assistance to the undeserving disconnected for account delinquency.
and those who are unworthy of the liberality Notwithstanding the disconnection and the
of the law. (italics in the original, emphasis fact that Meralcos service had not been
and underscoring supplied) ASTIED reconnected, Yabut's meter registered
Petitioner was, it bears reiteration, electric consumption. In view of these
dismissed for wilfully disobeying the lawful findings, respondent Meralco, issued a
order of her employer to transfer from Cebu notice of dismissaladdressed to the
to Pasig City. As petitioner. The notice cites violation of
correctly noted by the appellate court, Section 7, paragraph 3 of Meralco's
petitioner knew and accepted respondent Company Code on Employee Discipline and
company's policy on transfers when she was Article 282 (a), (c), (d) and (e) of the Labor
hired and was in fact even transferred many Code of the Philippines as bases for the
times from one area of operations to dismissal.
another — Bacolod City, Iloilo City and Cebu. Aggrieved by the decision of the
Clearly, petitioner's adamant refusal management, Yabut filed with the National
to transfer, coupled with her failure to heed Labor Relations Commission (NLRC) a
the order for her return the company vehicle complaintfor illegal dismissal and money
assigned to her and, more importantly, claims against Meralco and Lopez.
allowing her counsel to write letters couched Labor Arbiter Antonio R. Macam
in harsh language to her superiors rendered his Decision,declaring the
unquestionably show that she was guilty of petitioner illegally dismissed from the
insubordination, hence, not entitled to the service and hence, entitled to reinstatement
award of separation pay plus backwages and attorney's fees. NLRC
rendered its Resolutiondismissing the herein
respondents' appeal for lack of merit.
139 NORMAN YABUT, Petitioner, v. CA rendered the now assailed
MANILA ELECTRIC COMPANY AND Decisionreversing the rulings of the NLRC. In
MANUEL M. LOPEZ, Respondents. finding the petitioner's dismissal lawful, the
appellate court attributed unto Yabut
FACTS: authorship of the meter tampering and
This case stems from a complaint for illegal use of electricity acts which it
illegal dismissal and monetary claims filed by regarded as serious misconduct.
herein petitioner Norman Yabut (Yabut)
against respondents Manila Electric ISSUE:
Company (Meralco) and Meralco officer Whether or not petitioners dismissal
Manuel M. Lopez (Lopez). is illegal?
The petitioner had worked with
Meralco from February 1989 until his HELD:
dismissal from employment on February 5, Court of Appeals decision is
2004. Meralco's Inspection Office issued a sustained.
memorandum informing it of an illegal LABOR LAW
service connection at the petitioner's Article 279 of the Labor Code of the
residence. Given this report, Meralco's Head Philippines provides that (i)n cases of regular
 190

employment, the employer shall not misconduct to justify dismissal, the following
terminate the services of an employee requisites must be present:
except for a just cause or when authorized (a) it must be serious;
by this Title. x x x The just causes are (b) it must relate to the performance
enumerated in Article 282, which provides: of the employee's duties; and
Article 282.Termination by employer. (c) it must show that the employee
- An employer may terminate an has become unfit to continue working for
employment for any of the following causes: the employer.
(a) Serious misconduct or willful The dismissal is also justified as the
disobedience by the employee of the lawful act imputed upon the petitioner qualifies as
orders of his employer or representative in fraud or willful breach by the employee of
connection with his work; the trust reposed in him by his employer or
(b) Gross and habitual neglect by the duly authorized representative under Article
employee of his duties; 282 (c) of the Labor Code. While the
(c) Fraud or willful breach by the petitioner contests this ground by denying
employee of the trust reposed in him by his that his position is one of trust and
employer or duly authorized representative; confidence, it is undisputed that at the time
(d) Commission of a crime or offense of his dismissal, he was holding a supervisory
by the employee against the person of his position after he rose from the ranks since
employer or any immediate member of his commencement of his employment with
family or his duly authorized representative; Meralco. As a supervisor with duty and
and power that included testing of service
(e) Other causes analogous to the meters and investigation of violations of
foregoing. contract of customers, his position can be
Significantly, tampering with electric treated as one of trust and confidence,
meters or metering installations of the requiring a high degree of honesty as
Company or the installation of any device, compared with ordinary rank-and-file
with the purpose of defrauding the Company employees.
is classified as an act of dishonesty from We emphasize that dismissal of a
Meralco employees, expressly prohibited dishonest employee is to the best interest
under company rules. It is reasonable that its not only of the management but also of
commission is classified as a severe act of labor. As a measure of self-protection
dishonesty, punishable by dismissal even on against acts inimical to its interest, a
its first commission, given the nature and company has the right to dismiss its erring
gravity of the offense and the fact that it is a employees. An employer cannot be
grave wrong directed against their compelled to continue employing an
employer. employee guilty of acts inimical to the
Article 282 (a) provides that an employer's interest, justifying loss of
employer may terminate an employment confidence in him.
because of an employee's serious DENIED
misconduct, a cause that was present in this
case in view of the petitioner's violation of
his employer's code of conduct. Misconduct 140 ROMEO A. GALANG, Petitioner, v.
is defined as the transgression of some CITYLAND SHAW TOWER, INC. and
established and definite rule of action, a VIRGILIO BALDEMOR, Respondents.
forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and FACTS:
not mere error in judgment. For serious Romeo Galang was employed by
Gayren Maintenance Services as a janitor.
 191

When his contract with the agency expired, On appeal, the National Labor
he was absorbed by Cityland Shaw Tower. Relations Commission (NLRC) affirmed the
Galang alleged that he was absorbed labor arbiter findings.
as a janitor by Cityland with a promise of After reaching the CA, the appellate
regular employment after the completion of court annulled the NLRC decision and
his six-month probation. He claimed that declared that Galang had been dismissed for
even after the lapse of the period, he a just cause. The CA took exception to the
continued working for Cityland although he conclusion of both the labor arbiter and the
had no idea about his employment status. NLRC that the respondents failed to
He did not know his status for certain until discharge the burden of proving that Galang
he was shown a document on May 21, 2002 had been dismissed for cause. It pointed out
informing him that his employment would that the records are replete with proof that
be terminated effective May 20, 2002. Thus, Galang committed acts justifying the
he filed a complaint for illegal dismissal termination of his employment.
against Cityland and its Building Manager, The CA stressed that prior to the
Virgilio Baldemor. incidents leading to Galang dismissal, he had
Cityland countered that they already committed serious negligence in his
absorbed Galang as a casual employee after work. It referred to the flooding of the 32nd
the expiration of his contract with Gayren floor of the condominium where he was
Maintenance Services. They alleged that assigned, due to his failure to secure tightly
during his employment with them, they the valve filter room. The flooding severely
found him to be remiss in the performance damaged the building elevator, resulting in
of his job and he failed, too, to conduct repair work amounting to P23,952.65. The
himself as a good employee. CA stressed that despite this act of gross
The respondents further alleged that negligence, he still remained in employment
in the face of Galang negative work attitude and it was only "on account of subsequent
and job performance, Cityland charged him events x x x that [the respondents] were
with gross insubordination, harassment of compelled to dismiss him."
his co-employees and conduct unbecoming While the CA had no doubt that
an employee. Galang dismissal was for cause, it
The respondents stressed that nonetheless believed that he was not
Cityland Board of Directors terminated afforded procedural due process for lack of
Galang services, for gross insubordination, notice. Consequently, it awarded Galang
effective May 20, 2002, after a nominal damages of P30,000.00, pursuant to
"comprehensive examination of the the Agabon doctrine.
accusation against complainant."
In a decision dated September 22, ISSUE:
2003, the Labor Arbiter found that Galang Whether or not there was a just cause
had been illegally dismissed because for Galang dismissal based on evidence not
Cityland failed to present evidence to presented before the labor arbiter and the
support Galang dismissal for cause after NLRC.
observance of due process. The LA observed
that the alleged board resolution dismissing HELD:
Galang was unsubstantiated and self- Galang petition is unmeritorious.
serving, and carries no probative value. The There was just cause for the dismissal
LA also noted that there was no proof that - The CA committed no reversible error and
Galang was notified of the charges against neither did it commit grave abuse of
him before he was dismissed. discretion in declaring that Galang had been
dismissed for cause. Contrary to Galang
 192

submission, there is substantial evidence as he had no clear idea what the charges
such relevant evidence that a reasonable were. Thus, the CA committed no error in
mind might accept as adequate to support a sustaining his dismissal and awarding him
conclusion supporting the CA decision. nominal damages as indemnity.
The affidavits executed in 2005, As a final point, Galang posits that
simply amplified the evidence Cityland vis--vis the matter of dismissal for just cause
submitted in 2002, including documents, without due process, the CA "was incorrect
which cited Galang serious negligence in when it retroactively applied the later ruling
causing the flooding of his assigned of the High Court in Agabon v. NLRC,
condominium floor, which resulted in a considering that when this case was filed,
costly repair of the buildingselevator. the applicable doctrine was Serrano."
Additionally, there was Tupasmemo to The Supreme Court disagrees with
Cityland President which "pertains to the this position. As the respondents correctly
case of Romeo Galang xxx for harassment to pointed out, the decision of the NLRC did not
co-janitors, insubordination to Supervisor attain finality as it was brought to the CA on
and conduct unbecoming an employee." a petition for certiorari and was overturned.
Tupas made a report of an incident Galang simply did not have the benefit of any
where Galang took pictures of his co-janitors final arbiter or NLRC decision to which the
whom he considered as suspects in the Serrano ruling could be applied. When the
alleged loss of money (P4,000.00) kept in his CA ruled on the case, this Court had
locker. Tupas called a meeting to investigate abandoned the Serrano doctrine in favor of
the matter. She asked Galang to surrender Agabon. Thus, the CA committed no error in
the pictures, but he refused and harassed applying Agabon to the case.
the janitors and insulted Tupas in front of DENIED
everybody. Tupas also reported that on
several occasions, Galang disobeyed her
orders, often finding fault with his co- 141-142 Armando Ailing vs. Jose B.
employees, and was very hard to deal with. Feliciano
She believed that Galang had been grossly
insubordinate and had committed acts of The Facts
harassment against his co-employees. Thus, Via a letter dated June 2, 2004, 6
he was already a liability to the organization. respondent Wide Wide World Express
In light of the circumstances, the Corporation (WWWEC) offered to employ
Supreme Court found that Galang had petitioner Armando Aliling (Aliling) as
become unfit to continue in employment. Account Executive (Seafreight Sales), with
The evidence supports the view that he the following compensation package: a
continued to exhibit undesirable traits as an monthly salary of PhP 13,000, transportation
employee and as a person, in relation to both allowance of PhP 3,000, clothing allowance
his co-workers and his superiors, particularly of PhP 800, cost of living allowance of PhP
Tupas, her immediate supervisor. 500, each payable on a per month basis and
On the due process - The finding of a a 14 th month pay depending on the
just cause for Galang dismissal profitability and availability of financial
notwithstanding, the Court concurs with the resources of the company. The offer came
CA conclusion that Cityland did not afford with a
Galang the required notice before he was six (6)-month probation period condition
dismissed. As the CA noted, the investigation with this express caveat: Performance during
conference Tupas called to look into the [sic] probationary period shall be made as
janitorscomplaints against Galang, did not basis for confirmation to Regular or
constitute the written notice required by law Permanent Status.
 193

On June 11, 2004, Aliling and tender my resignation effective October 15,
WWWEC inked an Employment Contract7 2004. While WWWEC took no action on his
under the following terms, among others: tender, Aliling nonetheless demanded
 Conversion to regular status shall reinstatement and a written apology,
be determined on the basis of work claiming in a subsequent letter dated
performance; and October 1, 200414 to management that San
 Employment services may, at any Mateo had forced him to resign.
time, be terminated for just cause or in Lariosas response-letter of October
accordance with the standards defined at 1, 2004, 15 informed Aliling that his case was
the time of engagement. 8 still in the process of being evaluated. On
Training then started. However, October 6, 2004, 16 Lariosa again wrote, this
instead of a Seafreight Sale assignment, time to advise Aliling of the termination of
WWWEC asked Aliling to handle Ground his services effective as of that date owing to
Express (GX), a new company product his non-satisfactory performance during his
launched on June 18, 2004 involving probationary period. Records show that
domestic cargo forwarding service for Luzon. Aliling, for the period indicated, was paid his
Marketing this product and finding daily outstanding salary which consisted of:
contracts for it formed the core of Alilings PhP 4,988.18 (salary for the
new assignment. September 25, 2004 payroll)
Barely a month after, Manuel F. San 1,987.28 (salary for 4 days in October
Mateo III (San Mateo), WWWEC Sales and 2004)
Marketing Director, emailed Aliling9 to PhP 6,975.46 Total
express dissatisfaction with the latters Earlier, however, or on October 4,
performance, thus: 2004, Aliling filed a Complaint 17 for illegal
Armand, dismissal due to forced resignation,
My expectations is [sic] that GX nonpayment of salaries as well as damages
Shuttles should be 80% full by the 3 rd week with the NLRC against WWWEC. Appended
(August 5) after launch (July 15). Pls. make to the complaint was Alilings Affidavit dated
that happen. It has been more than a month November 12, 2004, 18 in which he stated:
since you came in. I am expecting sales to be 5. At the time of my engagement,
pumping in by now. Thanks. Nonong respondents did not make known to me the
Thereafter, in a letter of September standards under which I will qualify as a
25, 2004, 10 Joseph R. Lariosa (Lariosa), regular employee.
Human Resources Manager of WWWEC, Refuting Alilings basic posture,
asked Aliling to report to the Human WWWEC stated in its Position Paper dated
Resources Department to explain his November 22, 2004 19 that, in addition to
absence taken without leave from the letter-offer and employment contract
September 20, 2004. adverted to, WWWEC and Aliling have
Aliling responded two days later. He signed a letter of appointment20 on June 11,
denied being absent on the days in question, 2004 containing the following terms of
attaching to his reply-letter 11 a copy of his engagement:
timesheet12 which showed that he worked Additionally, upon the effectivity of
from September 20 to 24, 2004. Alilings your probation, you and your immediate
explanation came with a query regarding the superior are required to jointly define your
withholding of his salary corresponding to objectives compared with the job
September 11 to 25, 2004. In a separate requirements of the position. Based on the
letter dated September 27, 2004, 13 Aliling pre-agreed objectives, your performance
wrote San Mateo stating: Pursuant to your shall be reviewed on the 3rd month to assess
instruction on September 20, 2004, I hereby your competence and work attitude. The 5
 194

th month Performance Appraisal shall be the P17,300.00

basis in elevating or confirming your 10/06/04 12/07/04
employment status from Probationary to P17,300.00 x 2.7 mos. = P35,811.00
Regular. Complainants 13th month pay
Failure to meet the job requirements proportionately for 2004 was not shown to
during the probation stage means that your have been paid to complainant, respondent
services may be terminated without prior be made liable to him therefore computed at
notice and without recourse to separation SIX THOUSAND FIVE HUNDRED THIRTY TWO
pay. PESOS AND 50/100 (P6,532.50).
WWWEC also attached to its Position For engaging the services of counsel
Paper a memo dated September 20, 2004 21 to protect his interest, complainant is
in which San Mateo asked Aliling to explain likewise
why he should not be terminated for failure entitled to a 10% attorneys fees of the
to meet the expected job performance, judgment amount. Such other claims for lack
considering that the load factor for the GX of basis
Shuttles for the period July to September sufficient to support for their grant are
was only 0.18% as opposed to the allegedly unwarranted.
agreed upon load of 80% targeted for August WHEREFORE, judgment is hereby
5, 2004. According to WWWEC, Aliling, rendered ordering respondent company to
instead of explaining himself, simply pay
submitted a resignation letter. complainant Armando Aliling the sum of
In a Reply-Affidavit dated December THIRTY FIVE THOUSAND EIGHT HUNDRED
13, 2004, 22 Aliling denied having received a ELEVEN PESOS (P35,811.00) representing his
copy of San Mateos September 20, 2004 salaries and other benefits as discussed
letter. above.
Issues having been joined, the Labor Respondent company is likewise
Arbiter issued on April 25, 2006 23 a Decision ordered to pay said complainant the amount
declaring Alilings termination as unjustified. of TEN
In its pertinent parts, the decision reads: THOUSAND SEVEN HUNDRED SIXTY SIX
The grounds upon which PESOS AND 85/100 ONLY (10.766.85)
complainants dismissal was based did not representing his proportionate 13 th month
conform not only the standard but also the pay for 2004 plus 10% of the total judgment
compliance required under Article 281 of the as and by way of attorneys fees.
Labor Code, Necessarily, Other claims are hereby denied for
complainants termination is not justified for lack of merit. (Emphasis supplied.)
failure to comply with the mandate the law The labor arbiter gave credence to
requires. Respondents should be ordered to Alilings allegation about not receiving and,
pay salaries corresponding to the unexpired therefore, not bound by, San Mateos
portion of the contract of employment and purported September 20, 2004 memo. The
all other benefits amounting to a total of memo, to reiterate, supposedly apprised
THIRTY FIVE THOUSAND EIGHT HUNDRED Aliling of the sales quota he was, but failed,
ELEVEN PESOS (P35,811.00) covering the to meet. Pushing the point, the labor arbiter
period from October 6 to December 7, 2004, explained that Aliling cannot be validly
computed as follows: terminated for non-compliance with the
Unexpired Portion of the Contract: quota threshold absent a prior advisory of
Basic Salary P13,000.00 the reasonable standards upon which his
Transportation 3,000.00 performance would be evaluated.
Clothing Allowance 800.00 Both parties appealed the above
ECOLA 500.00 decision to the NLRC, which affirmed the
 195

Decision in toto in its Resolution dated May Aliling raises the following issues for
31, 2007. The separate motions for consideration:
reconsideration were also denied by the A. The failure of the Court of Appeals
NLRC in its Resolution dated August 31, to order reinstatement (despite its finding
2007. that petitioner was illegally dismissed from
Therefrom, Aliling went on certiorari employment) is contrary to law and
to the CA, which eventually rendered the applicable jurisprudence.
assailed Decision, the dispositive portion of B. The failure of the Court of Appeals
which reads: to award backwages (even if it did not order
WHEREFORE, the petition is PARTLY reinstatement) is contrary to law and
GRANTED. The assailed Resolutions of applicable jurisprudence.
respondent (Third Division) National Labor C. The failure of the Court of Appeals
Relations Commission are AFFIRMED, with to award moral and exemplary damages
the following (despite its finding that petitioner was
MODIFICATION/CLARIFICATION: dismissed to prevent the acquisition of his
Respondents Wide Wide World Express regular status) is contrary to law and
Corp. and its officers, Jose B. Feliciano, applicable jurisprudence. 25
Manuel F. San Mateo III and Joseph R. In their Comment, 26 respondents
Lariosa, are jointly and severally liable to pay reiterated their position that WWWEC hired
petitioner Armando Aliling: (A) the sum of petitioner on a probationary basis and fired
Forty Two Thousand Three Hundred Thirty him before he became a regular employee.
Three & 50/100 (P42,333.50) as the total
money judgment, (B) the sum of Four The Courts Ruling
Thousand Two Hundred Thirty Three & The petition is partly meritorious.
35/100 (P4,233.35) as attorneys fees, and (C) Petitioner is a regular employee
the additional sum equivalent to one-half On a procedural matter, petitioner
(1/2) month of petitioners salary as Aliling argues that WWWEC, not having
separation pay. SO ORDERED. 24 (Emphasis appealed from the judgment of CA which
supplied.) declared Aliling as a regular employee from
The CA anchored its assailed action the time he signed the employment
on the strength of the following premises: (a) contract, is now precluded from questioning
respondents failed to prove that Alilings the appellate courts determination as to the
dismal performance constituted gross and nature of his employment.
habitual neglect necessary to justify his Petitioner errs. The Court has, when
dismissal; (b) not having been informed at a case is on appeal, the authority to review
the time of his engagement of the matters not specifically raised or assigned as
reasonable standards under which he will error if their consideration is necessary in
qualify as a regular employee, Aliling was reaching a just conclusion of the case. We
deemed to have been hired from day one as said as much in Sociedad Europea de
a regular employee; and (c) the strained Financiacion, SA v. Court of Appeals,27 It is
relationship existing between the parties axiomatic that an appeal, once accepted by
argues against the propriety of this Court, throws the entire case open to
reinstatement. review, and that this Court has the authority
Alilings motion for reconsideration to review matters not specifically raised or
was rejected by the CA through the assailed assigned as error by the parties, if their
Resolution dated December 15, 2008. consideration is necessary in arriving at a just
Hence, the instant petition. resolution of the case.
The issue of whether or not
The Issues petitioner was, during the period material, a
 196

probationary or regular employee is of was deemed to have been hired from day
pivotal import. Its resolution is doubtless one as a regular employee.30 (Emphasis
necessary at arriving at a fair and just supplied.)
disposition of the controversy. WWWEC, however, excepts on the
The Labor Arbiter cryptically held in argument that it put Aliling on notice that he
his decision dated April 25, 2006 that: would be evaluated on the 3rd and 5th
Be that as it may, there appears no months of his probationary employment. To
showing that indeed the said September 20, WWWEC, its efforts translate to sufficient
2004 compliance with the requirement that a
Memorandum addressed to complainant probationary worker be apprised of the
was received by him. Moreover, reasonable standards for his regularization.
complainants tasked WWWEC invokes the ensuing holding in
where he was assigned was a new developed Alcira v. National Labor Relations
service. In this regard, it is noted: Commission31 to support its case:
Due process dictates that an Conversely, an employer is deemed
employee be apprised beforehand of the to substantially comply with the rule on
conditions notification
of his employment and of the terms of of standards if he apprises the employee that
advancement therein. Precisely, implicit in he will be subjected to a performance
Article evaluation
281 of the Labor Code is the requirement on a particular date after his hiring. We agree
that reasonable standards be previously with the labor arbiter when he ruled that:
made In the instant case, petitioner cannot
known by the employer to the employee at successfully say that he was never informed
the time of his engagement (Ibid, citing by private respondent of the standards that
Sameer Overseas Placement Agency, Inc. vs. he must satisfy in order to be converted into
NLRC, G.R. No. 132564, October 20, regular status. This rans (sic) counter to the
1999).28 agreement between the parties
From our review, it appears that the that after five months of service the
labor arbiter, and later the NLRC, considered petitioners performance would be
Aliling a probationary employee despite evaluated. It is only but natural that the
finding that he was not informed of the evaluation should be made vis--vis the
reasonable standards by which his performance standards for the job. Private
probationary employment was to be judged. respondent Trifona Mamaradlo speaks of
The CA, on the other hand, citing Cielo v. such standard in her affidavit referring to the
National Labor Relations Commission,29 fact that petitioner did not perform well in
ruled that petitioner was a regular employee his assigned work and his attitude was below
from the outset inasmuch as he was not par compared to the companys standard
informed of the standards by which his required of him. (Emphasis supplied.)
probationary employment would be WWWECs contention is untenable.
measured. The CA wrote: Petitioner was Alcira is cast under a different factual
regularized from the time of the execution of setting. There, the labor arbiter, the NLRC,
the employment contract on June 11, 2004, the CA, and even finally this Court were one
although respondent company had in their findings that the employee
arbitrarily shortened his tenure. As pointed concerned knew, having been duly informed
out, respondent company did not make during his engagement, of the standards for
known the reasonable standards under becoming a regular employee. This is in stark
which he will qualify as a regular employee contrast to the instant case where the
at the time of his engagement. Hence, he element of being informed of the
 197

regularizing standards does not obtain. As Section 6(d) of the Implementing

such, Alcira cannot be made to apply to the Rules of Book VI, Rule VIII-A of the Labor
instant case. Code
To note, the June 2, 2004 letter-offer Sec. 6. Probationary employment. There is
itself states that the regularization standards probationary employment where the
or the performance norms to be used are still employee, upon his engagement, is made to
to be agreed upon by Aliling and his undergo a trial period where the employee
supervisor. WWWEC has failed to prove that determines his fitness to qualify for regular
an agreement as regards thereto has been employment, based on reasonable
reached. Clearly then, there were actually no standards made
performance standards to speak of. And lest known to him at the time of engagement.
it be overlooked, Aliling was assigned to GX Probationary employment shall be governed
trucking sales, an activity entirely different by the following rules:
to the Seafreight Sales he was originally xxxx
hired and trained for. Thus, at the time of his (d) In all cases of probationary
engagement, the standards relative to his employment, the employer shall make
assignment with GX sales could not have known to
plausibly been communicated to him as the employee the standards under which he
he was under Seafreight Sales. Even for this will qualify as a regular employee at the
reason alone, the conclusion reached in time of his engagement. Where no standards
Alcira is of little relevan to the instant case. are made known to the employee at
Based on the facts established in this that time, he shall be deemed a regular
case in light of extant jurisprudence, the CAs employee. (Emphasis supplied.)
holding as to the kind of employment To repeat, the labor arbiter, NLRC
petitioner enjoyed is correct. So was the and the CA are agreed, on the basis of
NLRC ruling, affirmatory of that of the labor documentary evidence adduced, that
arbiter. In the final analysis, one common respondent WWWEC did not inform
thread runs through the holding of the labor petitioner Aliling of the reasonable
arbiter, the NLRC and the CA, i.e., petitioner standards by which his probation would be
Aliling, albeit hired from managements measured against at the time of his
standpoint as a probationary employee, was engagement. The Court is loathed to
deemed a regular employee by force of the interfere with this factual determination. As
following self-explanatory provisions: We have held:
Article 281 of the Labor Code ART. Settled is the rule that the findings of the
281. Probationary employment. - Labor Arbiter, when affirmed by
Probationary employment shall not exceed the NLRC and the Court of Appeals, are
six (6) months from the date the employee binding on the Supreme Court, unless
started working, unless it is covered by an patently erroneous. It is not the function of
apprenticeship agreement stipulating a the Supreme Court to analyze or weigh all
longer period. The services of an employee over
who has been engaged on a probationary again the evidence already considered in the
basis may be terminated for a just cause or proceedings below. The jurisdiction of this
when he fails to qualify as a regular Court in a petition for review on certiorari is
employee in accordance with reasonable limited to reviewing only errors of law, not of
standards made known by the employer to fact, unless the factual findings being
the employee at the time of his engagement. assailed are not supported by evidence on
An employee who is allowed to work after a record or the impugned
probationary period shall be considered a judgment is based on a misapprehension of
regular employee. (Emphasis supplied.) facts. 32 The more recent Peafrancia Tours
 198

and Travel Transport, Inc., v. Sarmiento 33 for his continued employment, i.e., that the
has reaffirmed the above ruling, to wit: GX trucks should already be 80% full by
Finally, the CA affirmed the ruling of August 5, 2004. Contrary to respondents
the NLRC and adopted as its own the latter's contention, San Mateos email cannot
factual findings. Long-established is the support their allegation on Aliling being
doctrine that findings of fact of quasi-judicial informed of the standards for his
bodies x x continued employment, such as the sales
x are accorded respect, even finality, if quota, at the time of his engagement. As it
supported by substantial evidence. When were, the email message was sent to Aliling
passed upon more than a month after he signed his
and upheld by the CA, they are binding and employment contract with WWWEC. The
conclusive upon this Court and will not aforequoted Section 6 of the Implementing
normally be Rules of Book VI, Rule VIII-A of the Code
disturbed. Though this doctrine is not specifically requires the employer to inform
without exceptions, the Court finds that the probationary employee of such
none are reasonable standards at the time of his
applicable to the present case. engagement, not at any time later; else, the
WWWEC also cannot validly argue latter shall be considered a regular
that the factual findings being assailed are employee. Thus, pursuant to the explicit
not supported by evidence on record or the provision of Article 281 of the Labor Code,
impugned judgment is based on a Section 6(d) of the Implementing Rules of
misapprehension of facts . Its very own Book VI, Rule VIII-A of the Labor Code and
letter-offer of employment argues against its settled jurisprudence, petitioner Aliling is
above posture. Excerpts of the letter-offer: deemed a regular employee as of June
Additionally, upon the effectivity of 11, 2004, the date of his employment
your probation, you and your immediate contract. Petitioner was illegally dismissed
superior are required to jointly define your To justify fully the dismissal of an employee,
objectives compared with the job the employer must, as a rule, prove that the
requirements of the position. Based on the dismissal was for a just cause and that the
pre-agreed objectives, your performance employee was afforded due process prior to
shall dismissal. As a complementary principle, the
be reviewed on the 3rd month to assess your employer has the onus of proving with clear,
competence and work attitude. The 5th accurate, consistent, and convincing
month Performance Appraisal shall be the evidence the validity of the dismissal. 34
basis in elevating or confirming your WWWEC had failed to discharge its twin
employment status burden in the instant case. First off, the
from Probationary to Regular. attendant circumstances in the instant case
Failure to meet the job requirements aptly show that the issue of petitioners
during the probation stage means that your alleged
services may be terminated without prior failure to achieve his quota, as a ground for
notice and without recourse to separation terminating employment, strikes the Court
pay. (Emphasis supplied.) as a mere afterthought on the part of
Respondents further allege that San WWWEC. Consider: Lariosas letter of
Mateos email dated July 16, 2004 shows that September 25, 2004 already betrayed
the standards for his regularization were management intention to dismiss the
made known to petitioner Aliling at the time petitioner for alleged unauthorized
of his engagement. To recall, in that email absences. Aliling was in fact made to explain
message, San Mateo reminded Aliling of the and h did so satisfactorily. But, lo and
sales quota he ought to meet as a condition behold, WWWEC nonetheless proceeded
 199

with its plan to dismiss the petitioner for We cannot but agree with PEPSI that
non-satisfactory performance, although the gross inefficiency falls within the purview of
corresponding termination letter dated other causes analogous to the foregoing, this
October 6, 2004 did not constitutes, therefore, just cause to
even specifically state Alilings non- terminate an employee under Article 282 of
satisfactory performance, or that Alilings the Labor Code. One is analogous to another
termination was by reason of his failure to if it is susceptible of comparison with the
achieve his set quota. latter either in general or in some specific
What WWWEC considered as the detail; or has a close relationship with the
evidence purportedly showing it gave Aliling latter. Gross inefficiency is closely related to
the chance to explain his inability to reach gross neglect, for both involve specific acts
his quota was a purported September 20, of omission on the part of the employee
2004 memo of San Mateo addressed to the resulting in damage to the employer or to his
latter. However, Aliling denies having business. In Buiser vs. Leogardo, this Court
received such letter and WWWEC has failed ruled that failure to observed prescribed
to refute his contention of non receipt. In net standards to inefficiency may constitute just
effect, WWWEC was at a loss to explain the cause for dismissal. (Emphasis supplied.)
exact just reason for dismissing Aliling. At It did so anew in Leonardo v. National
any event, assuming for argument that the Labor Relations Commission36 on the
petitioner indeed failed to achieve his sales following rationale:
quota, his termination from employment on An employer is entitled to impose
that ground would still be unjustified. Article productivity standards for its workers, and in
282 of the Labor Code considers any of the fact, non compliance may be visited with a
following acts or omission on the part of the penalty even more severe than demotion.
employee as just cause or ground for Thus,
terminating employment: [t]he practice of a company in laying off
(a) Serious misconduct or willful workers because they failed to make the
disobedience by the employee of the lawful work quota has been recognized in this
orders of his employer or representative in jurisdiction. (Philippine American
connection with his work; Embroideries vs. Embroidery and Garment
(b) Gross and habitual neglect by the Workers, 26 SCRA 634, 639). In the case at
employee of his duties; bar, the petitioners' failure to meet the sales
(c) Fraud or willful breach by the quota assigned to each of them constitute a
employee of the trust reposed in him by his just cause of their dismissal, regardless of
employer the permanent or probationary status of
or duly authorized representative; their employment. Failure to observe
(d) Commission of a crime or offense prescribed standards of work, or to fulfill
by the employee against the person of his reasonable work assignments due to
employer or any immediate member of his inefficiency may constitute
family or his duly authorized just cause for dismissal. Such inefficiency is
representatives; and understood to mean failure to attain
(e) Other causes analogous to the work goals or work quotas, either by failing
foregoing. (Emphasis supplied) to complete the same within the allotted
In Lim v. National Labor Relations reasonable period, or by producing
Commission,35 the Court considered unsatisfactory results. This management
inefficiency as an analogous just cause for prerogative of requiring standards may be
termination of employment under Article availed of so long as they are
282 of the Labor Code: exercised in good faith for the advancement
 200

of the employer's interest. Employees must be reminded that

(Emphasis supplied.) while probationary employees do not enjoy
In fine, an employees failure to meet permanent status, they enjoy the
sales or work quotas falls under the concept constitutional protection of security of
of gross inefficiency, which in turn is tenure. They can only be terminated for
analogous to gross neglect of duty that is a cause or when they otherwise fail to meet
just cause for dismissal under Article 282 of the reasonable standards made known to
the Code. However, in order for the quota them by the employer at the time of their
imposed to be considered a valid engagement. 37 Respondent WWWEC
productivity standard and thereby validate a miserably failed to prove the termination of
dismissal, managements prerogative of petitioner was for a just cause nor was there
fixing the quota must be exercised in good substantial evidence to demonstrate the
faith for the advancement of its interest. The standards were made known to the latter at
duty to prove good faith, however, rests with the time of his engagement. Hence,
WWWEC as part of its burden to petitioners right to security of tenure was
show that the dismissal was for a just cause. breached.
WWWEC must show that such quota was Alilings right to procedural due
imposed in good faith. process was violated As earlier stated, to
This WWWEC failed to do, effect a legal dismissal, the employer must
perceptibly because it could not. The fact of show not only a valid ground therefor, but
the matter is that the alleged imposition of also that procedural due process has
the quota was a desperate attempt to lend a properly been observed. When the Labor
semblance of validity to Alilings illegal Code speaks of procedural
dismissal. It must be stressed that even due process, the reference is usually to the
WWWECs sales manager, Eve Amador two (2)-written notice rule envisaged in
(Amador), in an internal e-mail to San Section 2 (III), Rule XXIII, Book V of the
Mateo, hedged on whether petitioner Omnibus Rules Implementing the Labor
performed below or above expectation: Code, which provides:
Could not quantify level of Section 2. Standard of due process:
performance as he as was tasked to handle a requirements of notice. In all cases of
new product (GX). Revenue report is not yet termination of
administered by IT on a month-to-month employment, the following standards of due
basis. Moreover, this in a way is an process shall be substantially observed.
experimental activity. Practically you have a I. For termination of employment
close monitoring with Armand with based on just causes as defined in Article 282
regards to his performance. Your of the
assessment of him would be more accurate. Code:
Being an experimental activity and (a) A written notice served on the
having been launched for the first time, the employee specifying the ground or grounds
sales of GX services could not be reasonably for
quantified. This would explain why Amador termination, and giving to said employee
implied in her email that other bases besides reasonable opportunity within which to
sales figures will be used to determine explain
Alilings performance. And yet, despite such a his side;
neutral observation, Aliling was still (b) A hearing or conference during
dismissed for his dismal sales of GX services. which the employee concerned, with the
In any event, WWWEC failed to demonstrate assistance of counsel if the employee so
the reasonableness and the bona fides on desires, is given opportunity to respond to
the quota imposition. the
 201

charge, present his evidence or rebut the 288 [of the Labor Code] is being charged
evidence presented against him; and against the employees
(c) A written notice [of] termination (2) After serving the first notice, the
served on the employee indicating that upon employees should schedule and conduct a
due consideration of all the circumstance, hearing
grounds have been established to justify his or conference wherein the employees will be
termination. given the opportunity to (1) explain and
In case of termination, the foregoing clarify
notices shall be served on the employees last their defenses to the charge against them;
known address. (2) present evidence in support of their
MGG Marine Services, Inc. v. NLRC38 defenses; and
tersely described the mechanics of what may (3) rebut the evidence presented
be considered a two-part due process against them by the management. During
requirement which includes the two-notice the hearing or conference, the employees
rule, x x x one, of the intention to dismiss, are given the chance to defend themselves
indicating therein his acts or omissions personally, with the
complained against, and two, notice of the assistance of a representative or counsel of
decision to dismiss; and an opportunity to their choice x x x. (3) After determining that
answer and rebut the charges against him, in termination is justified, the employer shall
between such notices. serve the employees a written notice of
King of Kings Transport, Inc. v. termination indicating that: (1) all the
Mamac39 expounded on this procedural circumstances involving the charge against
requirement in this manner: the employees have been considered; and
(1) The first written notice to be (2) grounds have been established to justify
served on the employees should contain the the severance of their employment.
specific (Emphasis in the original.)
causes or grounds for termination against Here, the first and second notice
them, and a directive that the employees are requirements have not been properly
given the opportunity to submit their written observed, thus tainting petitioners dismissal
explanation within a reasonable period. with illegality.
Reasonable The adverted memo dated
opportunity under the Omnibus Rules means September 20, 2004 of WWWEC supposedly
every kind of assistance that management informing Aliling of the likelihood of his
must termination and directing him to account for
accord to the employees to enable them to his failure to meet the expected job
prepare adequately for their defense. This performance would have had constituted
should be construed as a period of at least the charge sheet, sufficient to answer for the
five calendar days from receipt of the notice first notice requirement, but for the fact that
xxxx Moreover, in order to enable the there is no proof such letter had been sent
employees to intelligently prepare their to and received by him. In fact, in his
explanation and defenses, the notice should December 13, 2004 Complainants Reply
contain a detailed narration of the facts and Affidavit, Aliling goes on to tag such
circumstances that will serve as basis for the letter/memorandum as fabrication.
charge against the employees. A general WWWEC did not adduce proof to show that
description of the charge will not suffice. a copy of the letter was duly served upon
Lastly, the notice should specifically mention Aliling. Clearly enough, WWWEC did not
which company rules, if any, are violated comply with the first notice requirement.
and/or which among the grounds under Art. Neither was there compliance with
the imperatives of a hearing or conference.
 202

The Court need not dwell at length on this by

particular breach of the due procedural this Title. An employee who is unjustly
requirement. Suffice it to point out that the dismissed from work shall be entitled to
record is devoid of any showing of a hearing reinstatement without loss of seniority
or conference having been conducted. On rights and other privileges and to his full
the contrary, in its October 1, 2004 letter to backwages, inclusive of allowances, and to
Aliling, or barely five (5) days after it served his other benefits or their monetary
the notice of termination, WWWEC equivalent computed from the time his
acknowledged that it was still evaluating his compensation was withheld from him up to
case. And the written notice of termination the time of his actual reinstatement.
itself did not indicate all the (Emphasis
circumstances involving the charge to justify supplied)
severance of employment. Clearly, the law intends the award of
Aliling is entitled to backwages and backwages and similar benefits to
separation pay in lieu of reinstatement accumulate past
As may be noted, the CA found Alilings the date of the Labor Arbiters decision until
dismissal as having been illegally effected, the dismissed employee is actually
but nonetheless concluded that his reinstated. But
employment ceased at the end of the if, as in this case, reinstatement is no longer
probationary period. Thus, the appellate possible, this Court has consistently ruled
court merely affirmed the monetary award that backwages shall be computed from the
made by the NLRC, which consisted of the time of illegal dismissal until the date
payment of that amount corresponding to the decision becomes final. (Emphasis
the unserved portion of the contract of supplied.)
employment. Additionally, Aliling is entitled to
The case disposition on the award is separation pay in lieu of reinstatement on
erroneous. the ground of strained relationship.
As earlier explained, Aliling cannot be In Golden Ace Builders v. Talde,41 the
rightfully considered as a mere probationary Court ruled:
employee. Accordingly, the probationary The basis for the payment of
period set in the contract of employment backwages is different from that for the
dated June 11, 2004 was of no moment. award of separation pay. Separation pay is
In net effect, as of that date June 11, granted where reinstatement is no longer
2004, Aliling became part of the WWWEC advisable because of strained relations
organization as a regular employee of the between the employee and the employer.
company without a fixed term of Backwages represent compensation that
employment. Thus, he is entitled to should have been earned but were not
backwages reckoned from the time he was collected because of the unjust dismissal.
illegally dismissed on October 6, 2004, with The basis for computing backwages is usually
a PhP 17,300.00 monthly salary, until the the length of the employee's service while
finality of this Decision. This disposition hews that for separation pay is the actual period
with the Courts ensuing holding in Javellana when the employee was unlawfully
v. Belen: 40 Article 279 of the Labor Code, as prevented from working.
amended by Section 34 of Republic Act 6715 As to how both awards should be
instructs: computed, Macasero v. Southern Industrial
Art. 279. Security of Tenure. - In cases Gases
of regular employment, the employer shall Philippines instructs:
not terminate the services of an employee [T]he award of separation pay is
except for a just cause or when authorized inconsistent with a finding that there was no
 203

illegal dismissal, for under Article 279 of the from the grossly unpalatable obligation of
Labor Code and as held in a catena of cases maintaining in its employ a worker it could
an employee who is dismissed without just no longer
cause and without due process is entitled to trust.
backwages and reinstatement or payment of Strained relations must be
separation pay in lieu thereof: demonstrated as a fact, however, to be
Thus, an illegally dismissed employee adequately
is entitled to two reliefs: backwages and supported by evidence substantial evidence
reinstatement. The two reliefs provided are to show that the relationship between the
separate and distinct. In instances where employer and the employee is indeed
reinstatement is no longer feasible because strained as a necessary consequence of the
of strained relations between the employee judicial controversy.
and the employer, separation pay is granted. In the present case, the Labor Arbiter
In effect, an illegally dismissed employee is found that actual animosity existed
entitled to either reinstatement, if viable, or between petitioner Azul and respondent as
separation pay if reinstatement is no longer a result of the filing of the illegal
viable, and backwages. dismissal case. Such finding, especially when
The normal consequences of affirmed by the appellate court as in
respondents illegal dismissal, then, are the case at bar, is binding upon the Court,
reinstatement without loss of seniority consistent with the prevailing rules that
rights, and payment of backwages computed this Court will not try facts anew and that
from the time compensation was withheld findings of facts of quasi-judicial bodies
up to the date of actual reinstatement. are accorded great respect, even finality.
Where reinstatement is no longer viable as (Emphasis supplied.)
an option, separation As the CA correctly observed, To
pay equivalent to one (1) month salary for reinstate petitioner [Aliling] would only
every year of service should b awarded as an create an atmosphere of antagonism and
alternative. The payment of separation pay distrust, more so that he had only a short
is in addition to payment of backwages. x x x stint with respondent company. 42 The
Velasco v. National Labor Relations Court need not belabor the fact that the
Commission emphasizes: patent animosity that had developed
The accepted doctrine is that between employer and employee generated
separation pay may avail in lieu of what may be considered as the arbitrary
reinstatement if reinstatement is no longer dismissal of the petitioner.
practical or in the best interest of the parties. Following the pronouncements of
Separation pay this Court Sagales v. Rustans Commercial
in lieu of reinstatement may likewise be Corporation,43 the computation of
awarded if the employee decides not to be separation pay in lieu of reinstatement
reinstated. (emphasis in the original; italics includes the period for which backwages
supplied) were awarded:
Under the doctrine of strained Thus, in lieu of reinstatement, it is
relations, the payment of separation pay is but proper to award petitioner separation
considered an acceptable alternative to pay
reinstatement when the latter option is no computed at one-month salary for every
longer desirable or viable. On one hand, such year of service, a fraction of at least six (6)
payment liberates the employee from what months considered as one whole year. In the
could be a highly oppressive work computation of separation pay, the
environment. On the other hand, it releases period where backwages are awarded must
the employer be included. (Emphasis supplied.)
 204

Thus, Aliling is entitled to both In alleging that WWWEC acted in bad

backwages and separation pay (in lieu of faith, Aliling has the burden of proof to
reinstatement) in the amount of one (1) present evidence in support of his claim, as
months salary for every year of service, that ruled in Culili v. Eastern Telecommunications
is, from June 11, 2004 (date of employment Philippines, Inc.: 46
contract) until the finality of this decision According to jurisprudence, basic is
with a fraction of a year of at least six (6) the principle that good faith is presumed and
months to be considered as one (1) whole he who alleges bad faith has the duty to
year. As determined by the labor arbiter, the prove the same. By imputing bad faith to the
basis for the computation of backwages and actuations of ETPI, Culili has the burden of
separation pay will be Alilings monthly salary proof to present substantial evidence to
at PhP 17,300. support the allegation of unfair labor
Finally, Aliling is entitled to an award practice. Culili failed to discharge this burden
of PhP 30,000 as nominal damages in and his bare allegations deserve no credit.
consonance with prevailing jurisprudence44 This was reiterated in United
for violation of due process. Petitioner is not Claimants Association of NEA (UNICAN) v.
entitled to moral and exemplary damages In National Electrification Administration
Nazareno v. City of Dumaguete,45 the Court (NEA),47 in this wise:
expounded on the requisite elements for a It must be noted that the burden of
litigants entitlement to moral damages, proving bad faith rests on the one alleging it.
thus: As the
Moral damages are awarded if the Court ruled in Culili v. Eastern
following elements exist in the case: (1) an Telecommunications, Inc., According to
injury jurisprudence, basic is
clearly sustained by the claimant; (2) a the principle that good faith is presumed and
culpable act or omission factually he who alleges bad faith has the duty to
established; (3) a prove the
wrongful act or omission by the defendant as same. Moreover, in Spouses Palada v.
the proximate cause of the injury sustained Solidbank Corporation, the Court stated,
by the claimant; and (4) the award of Allegations of
damages predicated on any of the cases bad faith and fraud must be proved by clear
stated Article 2219 of the Civil Code. In and convincing evidence.
addition, the person claiming moral Similarly, Aliling has failed to
damages must prove the existence of bad overcome such burden to prove bad faith on
faith by clear and convincing evidence for the part of WWWEC. Aliling has not
the law always presumes good faith. It is not presented any clear and convincing evidence
enough that one merely suffered sleepless to show bad faith. The fact that he was
nights, mental anguish, and serious anxiety illegally dismissed is insufficient to prove bad
as the result of the actuations of the other faith. Thus, the CA correctly ruled that
party. Invariably such action must be shown [t]here was no sufficient showing of bad faith
to have been willfully done in bad faith or or abuse of management prerogatives in the
with ill motive. Bad faith, under the law, does personal action taken against petitioner. 48
not simply connote In Lambert Pawnbrokers and Jewelry
bad judgment or negligence. It imports a Corporation v. Binamira,49 the Court ruled:
dishonest purpose or some moral obliquity A dismissal may be contrary to law
and conscious doing of a wrong, a breach of but by itself alone, it does not establish bad
a known duty through some motive or faith to
interest or ill will that partakes of the nature entitle the dismissed employee to moral
of fraud. (Emphasis supplied.) damages. The award of moral and exemplary
 205

damages severally liable with the defendant

cannot be justified solely upon the premise corporations for
that the employer dismissed his employee the labor claims of Complainants Alba and
without De Guzman. x x x
authorized cause and due process. xxxx
The officers of WWWEC cannot be As reflected above, the Labor Arbiter
held jointly and severally liable with the held that respondents liability is solidary.
company There is solidary liability when the obligation
The CA held the president of WWWEC, Jose expressly so states, when the law so
B. Feliciano, San Mateo and Lariosa jointly provides, or when the nature of the
and severally liable for the monetary awards obligation so requires. MAM Realty
of Aliling on the ground that the officers are Development
considered employers acting in the interest Corporation v. NLRC, on solidary liability of
of the corporation. The CA cited NYK corporate officers in labor disputes,
International Knitwear Corporation enlightens:
Philippines (NYK) v. National Labor Relations x x x A corporation being a juridical
Commission50 in support of its argument. entity, may act only through its directors,
Notably, NYK in turn cited A.C. Ransom Labor officers and employees. Obligations incurred
Union-CCLU v. NLRC.51 Such ruling has been by them, acting as such corporate agents
reversed by the Court in Alba v. Yupangco,52 are not theirs but the direct accountabilities
where the Court ruled: of the corporation they represent. True
By Order of September 5, 2007, the Labor solidary liabilities may at times be incurred
Arbiter denied respondents motion to quash but only when exceptional circumstances
the 3rd alias writ. Brushing aside warrant such as, generally, in the following
respondents contention that his liability is cases:
merely joint, the 1. When directors and trustees or, in
Labor Arbiter ruled: appropriate cases, the officers of a
Such issue regarding the personal corporation:
liability of the officers of a corporation for (a) vote for or assent to patently
the unlawful acts of the corporation;
payment of wages and money claims to its (b) act in bad faith or with gross
employees, as in the instant case, has long negligence in directing the corporate
been affairs;
resolved by the Supreme Court in a long list xxxx
of cases [A.C. Ransom Labor Union-CLU vs. In labor cases, for instance, the Court
NLRC has held corporate directors and officers
(142 SCRA 269) and reiterated in the cases of solidarily
Chua vs. NLRC (182 SCRA 353), Gudez vs. liable with the corporation for the
NLRC termination of employment of employees
(183 SCRA 644)]. In the aforementioned done with malice or in bad faith.
cases, the Supreme Court has expressly held A review of the facts of the case does
that the not reveal ample and satisfactory proof that
irresponsible officer of the corporation (e.g. respondent officers of WWEC acted in bad
President) is liable for the corporations faith or with malice in effecting the
obligations termination of petitioner Aliling. Even
to its workers. Thus, respondent Yupangco, assuming arguendo that the actions of
being the president of the respondent YL WWWEC are ill-conceived and erroneous,
Land and respondent officers cannot be held jointly
Ultra Motors Corp., is properly jointly and and solidarily with it. Hence, the ruling on
 206

the joint and solidary liability of individual Appeals in CA-G.R. SP No. 101309 is hereby
respondents must be recalled. MODIFIED to read:
Aliling is entitled to Attorneys Fees WHEREFORE, the petition is
and Legal Interest Petitioner Aliling is also PARTIALLY GRANTED. The assailed
entitled to attorneys fees in the amount of Resolutions of
ten percent (10%) of his total monetary respondent (Third Division) National Labor
award, having been forced to litigate in order Relations Commission are AFFIRMED, with
to seek redress of his grievances, pursuant to the
Article 111 following MODIFICATION/CLARIFICATION:
of the Labor Code and following our ruling in Respondent Wide Wide World Express Corp.
Exodus International Construction is liable to pay Armando Aliling the following:
Corporation v. Biscocho,53 to wit: (a) backwages reckoned from October 6,
In Rutaquio v. National Labor 2004 up
Relations Commission, this Court held that: to the finality of this Decision based on a
It is settled that in actions for recovery of salary of PhP 17,300 a month, with interest
wages or where an employee was forced to at 6% per
litigate and, thus, incur expenses to protect annum on the principal amount from
his rights and interest, the award of October 6, 2004 until fully paid; (b) the
attorneys additional sum
fees is legally and morally justifiable. equivalent to one (1) month salary for every
In Producers Bank of the Philippines year of service, with a fraction of at least six
v. Court of Appeals this Court ruled that: (6)
Attorneys fees may be awarded when a months considered as one whole year based
party is compelled to litigate or to incur on the period from June 11, 2004 (date of
expenses employment contract) until the finality of
to protect his interest by reason of an this Decision, as separation pay; (c) PhP
unjustified act of the other party. 30,000 as
While in Lambert Pawnbrokers and Jewelry nominal damages; and (d) Attorneys Fees
Corporation,54 the Court specifically ruled: equivalent to 10% of the total award.
However, the award of attorneys fee is SO ORDERED.
warranted pursuant to Article 111 of the
Labor
Code. Ten (10%) percent of the total award 143 Kakampi and Its Members Panuelos vs.
is usually the reasonable amount of Kingspoint Express & Logistics
attorneys fees
awarded. It is settled that where an Facts:
employee was forced to litigate and, thus, Petitioners were former drivers of
incur expenses to protect his rights and the respondent Kingspoint Express, a sole
interest, the award of attorneys fees is proprietorship under the name of Co which
legally and morally justifiable. is engaged in the business of transporting
Finally, legal interest shall be goods.
imposed on the monetary awards herein They were dismissed from service on
granted at the rate of 6% per annum from January 20, 2006 on the grounds of serious
October 6, 2004 (date of termination) until misconduct, dishonesty, loss of trust and
fully paid. confidence and commission of acts inimical
WHEREFORE, the petition is PARTIALLY to the interest of Kingspoint Express.
GRANTED. The July 3, 2008 Decision of the Kingspoint Express issued separate
Court of notices to explain to the individual
petitioners on January 16, 2006 the charges
 207

of dishonesty, serious misconduct and loss of Ruling:

confidence by filing with the NLRC false, Yes, the dismissal was valid. It is
malicious and fabricated cases against the fundamental that in order to validly dismiss
company, and their allegedly an employee, the employer is required to
unwarranted refusal to undergo drug observe both substantive and procedural
testing. They were required to submit their due process — the termination of
answer to the charges within forty-eight (48) employment must be based on a just or
hours from receipt of the notices with a authorized cause and the dismissal must be
warning that failure to do so would mean effected after due notice and hearing.
waiver of their answer. They were also As to the substantive requirements
placed under preventive suspension in the of due process, the employees' refusal to
meantime. submit themselves to drug test is a just cause
Petitioners failed to submit their for their dismissal.
written explanation within the stated period. An employer may terminate an
Subsequently, Kingspoint Express issued to employment on the ground of serious
them separate yet uniformly worded notices misconduct or willful disobedience by the
on January 20, 2006, informing them of their employee of the lawful orders of his
dismissal for the abovementioned charges employer or representative in connection
based on the following acts: fabrication of with his work. Willful disobedience requires
baseless money claims against the company, the concurrence of two elements: (1) the
misleading fellow co-workers to sign the employee's assailed conduct must have
malicious complaint for money claims been willful, that is, characterized by a
against the company, refusal to undergo the wrongful and perverse attitude; and, (2) the
company's general drug test, and extorting order violated must have been reasonable,
money from co-workers to fund activities lawful, made known to the employee, and
that they were never fully informed of. Also, must pertain to the duties which he had
petitioner Dacara was dismissed for been engaged to discharge. Both elements
consummating his sexual relations with Co’s are present in this case.
helper inside her residence and As to the first element, the dismissed
thus impregnating the help. employees did not deny their refusal to
A complaint for illegal dismissal was undergo drug testing nor did they explain
subsequently filed, alleging that the charges their refusal. The utter lack of reason or
against them were fabricated and that their justification for their insubordination
dismissal was prompted by Kingspoint indicates that it was prompted by mere
Express' aversion to their union activities. obstinacy, hence, willful and warranting of
The Labor Arbiter ruled in favor of the dismissal. As to the second element, the
petitioners as the charges are subject order is relevant in the performance
purportedly mere unsubstantiated of their functions as drivers of Kingspoint
allegations. This was affirmed by the NLRC Express. As the NLRC correctly pointed out,
on appeal but the latter reversed itself on a drivers are indispensable to Kingspoint
subsequent MR filed by Kingspoint. The CA Express' primary business of rendering door-
initially reversed the NLRC’s ruling but on an to-door delivery services. It is common
MR, they too reversed their earlier ruling and knowledge that the use of dangerous drugs
favored Kingspoint. Thus, this petition for has adverse effects on driving abilities that
certiorari before the SC. may render the dismissed employees
incapable
Issue: of performing their duties to Kingspoint
WON the dismissal was valid. Express and acting against its interests, in
 208

addition to the threat they pose to the explaining that he only hid the phone as a
public. practical joke and had every intention of
The existence of a single just cause is returning it to Braga.
enough to order their dismissal and it is now After conducting an investigation,
inconsequential if the other charges against COSMOS found Fermin guilty of stealing
them do not merit their dismissal from Bragas phone in violation of company rules
service. Nonetheless, while Kingspoint and regulations. Consequently, on 2 October
Express had reason to sever their 2003,the company terminated Fermin from
employment relations, this Court finds its employment after 27 years of
supposed observance of the requirements of service,effective on 6 October 2003.
procedural due process pretentious. While Following the dismissal of Fermin
Kingspoint Express required the dismissed from employment, Braga executed an
employees to explain their refusal to submit affidavit, which stated the belief that the
to a drug test, the two (2) days afforded to former had merely pulled a prank without
them to do so cannot qualify as "reasonable any intention of stealing the cellphone, and
opportunity", which the Court construed in withdrew from COSMOS his complaint
King of Kings Transport, Inc. v. Mamacas a against Fermin.
period of at least five (5) calendar days from Meanwhile, Fermin filed a Complaint
receipt of the notice. for Illegal Dismissal, which the Labor Arbiter
Thus, even if Kingspoint Express' (LA) dismissed for lack of merit on the
defective attempt to comply with procedural ground that the act of taking a fellow
due process does not negate the existence of employees cellphone amounted to gross
a just cause for their dismissal, Kingspoint misconduct.Further, the LA likewise took
Express is still liable to indemnify the into consideration Fermins other infractions,
dismissed employees, with the exception of namely: (a) committing acts of disrespect to
Panuelos, Dizon and Dimabayao, who did a superior officer, and (b) sleeping on duty
not appeal the dismissal of their complaints, and abandonment of duty.
with nominal damages in the amount of Fermin filed an appeal with the
P30,000.00. National Labor Relations Commission
(NLRC), which affirmed the ruling of the
LA[and denied Fermins subsequent Motion
144 COSMOS BOTTLING CORP., Petitioner, for Reconsideration.
v. WILSON FERMIN, Respondent; WILSON Thereafter, Fermin filed a Petition for
B. FERMIN,Petitioner, v. COSMOS Certiorari with the Court of Appeals
BOTTLING CORPORATION and CECILIA (CA),which reversed the rulings of the LA and
BAUTISTA, Respondents. the NLRC and awarded him his full
retirement benefits.Although the CA
FACTS: accorded with finality the factual findings of
Wilson B. Fermin (Fermin) was a the lower tribunals as regards Fermins
forklift operator at Cosmos Bottling commission of theft, it nevertheless held
Corporation (COSMOS), where he started his that the penalty of dismissal from service
employment on 27 August 1976.On 16 was improper on the ground that the said
December 2002, he was accused of stealing violation did not amount to serious
the cellphone of his fellow employee, Luis misconduct or wilful disobedience.
Braga (Braga). Fermin was then given a Show COSMOS and Fermin moved for
Cause Memorandum, requiring him to reconsideration, but the CA likewise denied
explain why the cellphone was found inside their motions.Thus, both parties filed the
his locker.In compliance therewith, he present Petitions for Review.
submitted an affidavit the following day,
 209

Nonetheless, Article 282(e) of the

ISSUE: Labor Code talks of other analogous causes
Whether the imposition of the or those which are susceptible of
penalty of dismissal was appropriate comparison to another in general or in
specific detail.For an employee to be validly
HELD: dismissed for a cause analogous to those
We rule in the affirmative. enumerated in Article 282, the cause must
LABOR LAW: theft against a co- involve a voluntary and/or willful act or
employee is analogous to serious omission of the employee.
misconduct A cause analogous to serious
Theft committed against a co- misconduct is a voluntary and/or willful act
employee is considered as a case analogous or omission attesting to an employees moral
to serious misconduct, for which the penalty depravity.Theft committed by an employee
of dismissal from service may be meted out against a person other than his employer, if
to the erring employee,viz: proven by substantial evidence, is a cause
Article 282 of the Labor Code analogous to serious misconduct.
provides: In this case, the LA has already made
Article 282. Termination by a factual finding, which was affirmed by both
Employer. - An employer may terminate an the NLRC and the CA, that Fermin had
employment for any of the following causes: committed theft when he took Bragas
(a)Serious misconductor willful cellphone. Thus, this act is deemed
disobendience by the employee of the lawful analogous to serious misconduct, rendering
orders of his employer or his Fermins dismissal from service just and valid.
representativesin connection with his work; Further, the CA was correct in ruling
xxxxxxxxx that previous infractions may be cited as
(e) Other causes analogous to the justification for dismissing an employee only
foregoing. if they are related to the subsequent
LABOR LAW: misconduct offense. However, it must be noted that such
Misconduct involves the a discussion was unnecessary since the theft,
transgression of some established and taken in isolation from Fermins other
definite rule of action, forbidden act, a violations, was in itself a valid cause for the
dereliction of duty, willful in character, and termination of his employment.
implies wrongful intent and not mere error Finally, it must be emphasized that
in judgment.For misconduct to be serious the award of financial compensation or
and therefore a valid ground for dismissal, it assistance to an employee validly dismissed
must be: from service has no basis in law. Therefore,
1. of grave and aggravated character considering that Fermins act of taking the
and not merely trivial or unimportant and cellphone of his co-employee is a case
2. connected with the work of the analogous to serious misconduct, this Court
employee. is constrained to reverse the CAs ruling as
In this case, petitioner dismissed regards the payment of his full retirement
respondent based on the NBI's finding that benefits. In the same breath, neither can this
the latter stole and used Yusecos credit Court grant his prayer for backwages.
cards. Butsince the theft was not committed G.R. No. 194303 is DENIED.
against petitioner itself but against one of its G.R. No. 193676 is GRANTED.
employees,respondent's misconduct was
not work-related and therefore, she could
not be dismissed for serious misconduct.
 210

LABOR LAW: illegal dismissal; mass

leave; strike
145 ALEX Q. NARANJO, DONNALYN DE Petitioners were not afforded
GUZMAN, RONALD V. CRUZ, ROSEMARIE P. procedural due process.Thus, the Court
PIMENTEL, and ROWENA B. elaborated in King of Kings Transport, Inc. v.
BARDAJE,Petitioners, v. BIOMEDICA Mamac that a mere general description of
HEALTH CARE, INC. and CARINA "KAREN" J. the charges against an employee by the
MOTOL, Respondents. employer is insufficient to comply with the
above provisions of the law. Clearly,
FACTS: petitioners were charged with conducting an
Petitioners Alex Naranjo (Naranjo), illegal strike, not a mass leave, without
Ronald Allan Cruz, Rowena Bardaje, specifying the exact acts that the company
Donnalyn De Guzman and Rosemarie considers as constituting an illegal strike or
Pimentel were all employees of Biomedica violative of company policies.
Health Care, Inc. (Biomedica). Further, while Biomedica cites the
On November 7, 2006, Naranjo, et al. provisions of the company policy which
were all absent for various personal reasons. petitioners purportedly violated, it failed to
The next day, Naranjo, et al. came in for work quote said provisions in the notice so
but were not allowed to enter the premises. petitioners can be adequately informed of
Carina Motol (Motol), Biomedicas president, the nature of the charges against them and
informed them using foul language, to just intelligently file their explanation and
find other employment. defenses to said accusations.
Subsequently, Biomedica issued Moreover, the period of 24 hours
notices to Naranjo, et al. accusing them of allotted to petitioners to answer the notice
having conducted an illegal strike and were was severely insufficient and in violation of
accordingly directed to explain within the implementing rules of the Labor Code.
twenty-four (24) hours to explain why they Under the implementing rule of Art. 277, an
should not be held guilty of and dismissed employee should be given "reasonable
for violating the company policy against opportunity" to file a response to the notice.
illegal strikes under Article XI, Category Four, King of Kings Transport, Inc. elucidates in this
Sections 6, 8, 12, 18 and 25 of the Company wise: " Reasonable opportunity under the
Policy.Biomedica, however, failed to furnish Omnibus Rules means every kind of
them with the copy of the said company assistance that management must accord to
policy. the employees to enable them to prepare
Naranjo, et al. failed to submit their adequately for their defense. This should be
written explanation. Thus, Biomedica served construed as a period of at least five (5)
Notices of Termination stating that Naranjo, calendar days from receipt of the notice to
et al. engaged in illegal strike. Consequently, give the employees an opportunity to study
Naranjo et al. filed a complaint for illegal the accusation against them, consult a union
dismissal. The LA dismissed the complaint. official or lawyer, gather data and evidence,
The NLRC reversed the LA. On appeal to the and decide on the defenses they will raise
CA, the CA reinstated the decision of the LA. against the complaint."
In addition, Biomedica did not set the
ISSUE: charges against petitioners for hearing or
Whether or not Naranjo, et al. were conference in accordance with Sec. 2, Book
illegally dismissed? V, Rule XIII of the Implementing Rules and
Regulations of the Labor Code and in line
HELD: with ruling in King of Kings Transport, Inc.,
The petition is meritorious. where the Court explained: "After serving
 211

the first notice, the employers should Petitioners did not go on strike. Art.
schedule and conduct a hearing or 212(o) of the Labor Code defines a strike as
conference wherein the employees will be "any temporary stoppage of work by the
given the opportunity to: (1) explain and concerted action of employees as a result of
clarify their defenses to the charge against any industrial or labor dispute." "Concerted"
them; (2) present evidence in support of is defined as "mutually contrived or
their defenses; and (3) rebut the evidence planned" or "performed in unison." In the
presented against them by the case at bar, the 5 petitioners went on leave
management." for various reasons.Petitioners were in
Petitioners were denied substantive different places on November 7, 2006 to
due process. Clearly, to justify the dismissal attend to their personal needs or affairs.
of an employee on the ground of serious They did not go to the company premises to
misconduct, the employer must first petition Biomedica for their grievance. This
establish that the employee is guilty of shows that there was NO intent to go on
improper conduct, that the employee strike.
violated an existing and valid company rule Dismissal is not the proper penalty.
or regulation, or that the employee is guilty But setting aside from the nonce the facts
of a wrongdoing. In the instant case, established above, the most pivotal
Biomedica failed to even establish that argument against the dismissal of
petitioners indeed violated company rules, petitioners is that the penalty of dismissal
failing to even present a copy of the rules from employment cannot be imposed even
and to prove that petitioners were made if we assume that petitioners went on an
aware of such regulations. illegal strike. It has not been shown that
Petitioners did not stage a mass petitioners are officers of the Union. On this
leave. The term "Mass Leave" has been left issue, the NLRC correctly cited Gold City
undefined by the Labor Code. Plainly, the Integrated Port Service, Inc. v. NLRC,
legislature intended that the terms ordinary wherein We ruled that: "An ordinary striking
sense be used. "Mass" is defined as worker cannot be terminated for mere
"participated in, attended by, or affecting a participation in an illegal strike. There must
large number of individuals; having a large- be proof that he committed illegal acts
scale character." While the term "Leave" is during a strike."
defined as "an authorized absence or The CA is REVERSED and SET ASIDE.
vacation from duty or employment usually The NLRC is REINSTATED with
with pay." Thus, the phrase "mass leave" MODIFICATION.
may refer to a simultaneous availment of
authorized leave benefits by a large number
of employees in a company. It is undeniable 146 3RD ALERT SECURITY AND DETECTIVE
that going on leave or absenting ones self SERVICES, INC., Petitioner, v. ROMUALDO
from work for personal reasons when they NAVIA, Respondent.
have leave benefits available is an
employees right. Here, the five (5) FACTS:
petitioners were absent on November 7, Romualdo Navia filed an illegal
2006. The records are bereft of any evidence dismissal case against 3rd Alert. In its
to establish how many workers are November 30, 2005 decision, the Labor
employed in Biomedica. There is no evidence Arbiter issued a decision in favor or 3rd Alert.
on record that 5 employees constitute a The NLRC, after appeal, affirmed the ruling
substantial number of employees of of the Labor Arbiter and on October 19,
Biomedica. 2008, it also denied 3rd Alert motion for
reconsideration.
 212

From this ruling, 3rd Alert filed an on reinstatement had been sent to Navia
appeal with the CA (CA-G.R. SP No. 106963) counsel and was received by a certain
with a prayer for the issuance of a temporary "Biznar", the Supreme Court did not see any
restraining order. The CA denied the appeal; grave abuse of discretion.
3rd Alert moved for a motion for Since it was ruled that there had
reconsideration but the motion was also been no notice of reinstatement sent to
denied. Navia or his counsel, as also affirmed by the
In the meantime, on January 29, CA, the Court cannot rule otherwise in the
2009, the NLRC issued an Entry of Judgment absence of any compelling evidence. Time
certifying that the NLRC resolution dated and again, it has been held that this Court is
October 19, 2008 has become final and not a trier of facts. In the absence of any
executory. Thus, Navia filed with the labor attendant grave abuse of discretion, these
arbiter an ex-parte motion for findings are entitled not only to respect, but
recomputation of back wages and an ex- to our final recognition in this appellate
parte motion for execution based on the review.
recomputed back wages. Article 223 of the Labor Code
On November 10, 2009, the labor provides that in case there is an order of
arbiter issued a writ of execution to enforce reinstatement, the employer must admit the
the recomputed monetary awards. 3rd Alert dismissed employee under the same terms
appealed the recomputed amount stated in and conditions, or merely reinstate the
the writ of execution to the NLRC. 3rd Alert employee in the payroll. The order shall be
also alleged that the writ was issued with immediately executory. Thus, 3rd Alert
grave abuse of discretion since there was cannot escape liability by simply invoking
already a notice of reinstatement sent to that Navia did not report for work. The law
Navia. states that the employer must still reinstate
The NLRC dismissed the appeal, the employee in the payroll. Where
ruling that 3rd Alert is guilty of bad faith reinstatement is no longer viable as an
since there was no earnest effort to reinstate option, separation pay equivalent to one (1)
Navia. The NLRC also ruled that there was no month salary for every year of service could
notice or reinstatement sent to Navia be awarded as an alternative.
counsel. A motion for reconsideration was Since the proceedings below indicate
filed, but it was likewise denied. that 3rd Alert failed to adduce additional
3rd Alert filed a petition for certiorari evidence to show that it tried to reinstate
with the CA which found the petition Navia, either physically or in the payroll, it s
without merit because Navia had not been safe to conclude that there was no earnest
reinstated either physically or in the payroll. effort to reinstate Navia.
The CA also denied the motion for It is also noteworthy that 3rd Alert
reconsideration filed by 3rd Alert; hence, resorted to legal tactics to frustrate the
this petition. execution of the labor arbiter order; for
about four (4) years, it evaded the obligation
ISSUE: to reinstate Navia. By so doing, 3rd Alert has
Did the Court of Appeals err in ruling made a mockery of justice. It is thus proper
that the NLRC did not commit any grave to impose treble costs against 3rd Alert for
abuse of discretion? its utter disregard to comply with the writ of
execution. To reiterate, no indication exists
HELD: showing that 3rd Alert exerted any efforts to
After a close examination of the reinstate Navia; worse, 3rd Alert lame
petition and the attached records where 3rd excuse of having sent a notice of
Alert insists that a copy of the manifestation reinstatement to a certain "Biznar" only
 213

compounded the intent to mislead the Whether or not Dakila was illegally
courts. dismissed?
DENIED
HELD:
The petition is partly granted.
147 THE NEW PHILIPPINE SKYLANDERS, The issue of illegal dismissal is
INC. and/or JENNIFER M. ENANO-BOTE, premised on the existence of an employer-
Petitioners, v. FRANCISCO N. DAKILA, employee relationship between the parties
Respondent. herein. Records reveal that both the LA and
the NLRC, as affirmed by the CA, have found
FACTS: substantial evidence to show that
Respondent Francisco Dakila (Dakila) respondent Dakila was a regular employee
was employed by The New Philippine who was dismissed without cause.
Skylanders, Inc. (Skylanders) as early as 1987 Following Article 279 of the Labor
and terminated for cause in April 1997 when Code, an employee who is unjustly dismissed
the latter was sold. In May 1997, he was from work is entitled to reinstatement
rehired as consultant by Skylanders under a without loss of seniority rights and other
Contract for Consultancy Services. privileges and to his full backwages
Thereafter, in a letter dated April 19, computed from the time he was illegally
2007, Dakila informed Skylanders of his dismissed. However, considering that
compulsory retirement effective May 2, respondent Dakila was terminated on May 1,
2007 and sought for the payment of his 2007, or one (1) day prior to his compulsory
retirement benefits. His request, however, retirement on May 2, 2007, his
was not acted upon. Instead, he was reinstatement is no longer feasible. His
terminated from service effective May 1, backwages should be computed only for
2007. days prior to his compulsory retirement
Thus, Dakila filed a complaint for which in this case is only a day.
constructive illegal dismissal. He averred Petition is PARTLY GRANTED.
that the consultancy contract was a scheme
to deprive him of the benefits of
regularization, claiming to have assumed 148 NORKIS TRADING CORPO RATION VS.
tasks necessary and desirable in the trade or JOAQUIN B UENAVISTA, ET AL.
business of Skylanders and under their direct
control and supervision. On the contrary, FACTS:
Skylanders argued that Dakila was not their The respondents were hired by
regular employee as he was not required to Norkis Trading, a domestic corporation
observe regular working hours and was free engaged in the business of manufacturing
to adopt means and methods to accomplish and marketing of Yamaha motorcycles and
his task except as to the results of the work multi-purpose vehicles, on separate dates
required of him. Hence, no employer- and for various positions as welders and
employee relationship existed between operators.
them. Although they worked for Norkis
Both the Labor Arbiter and the NLRC Trading as skilled workers assigned in the
ruled that Dakila was illegally dismissed. The operation of industrial and welding
Court of Appeals affirmed the findings of the machines owned and used by Norkis Trading
Labor Arbiter and the NLRC. for its business, they were not treated as
regular employees by Norkis Trading.
ISSUE: Instead, they were regarded by
Norkis Trading as members of Panaghiusa sa
 214

Kauswagan Multi-Purpose Cooperative respondents in the performance of their

(PASAKA) and deemed an independent duties were all owned by Norkis Trading and
contractor that merely deployed the not by PASAKA; 23 (3) the
respondents to render services for Norkis respondents’ membership with PASAKA as a
Trading.4 The respondents nonetheless cooperative was inconsequential to their
believed that they were regular employees employment with Norkis Trading; 24 (4)
of Norkis Trading citing various Norkis Trading and PASAKA failed to prove
circumstances in their position paper. that their sub-contracting arrangements
Hence, the respondents filed with the DOLE were covered by any of the conditions set
a complaint against Norkis Trading and forth in Section 6 of Department Order No.
PASAKA for labor-only contracting and non- 10, Series of 1997; 25 (5) Norkis Trading and
payment of minimum wage and overtime PASAKA failed to dispute the respondents’
pay. claim that their work was supervised by
The filing of the complaint for labor- leadmen and production supervisors of
only contracting allegedly led to the Norkis Trading; 26 and (6) Norkis Trading and
suspension of the respondents’ membership PASAKA failed to dispute the respondents’
with PASAKA. The suspension prompted the allegation that their salaries were paid by
respondents to file with the NLRC the employees of Norkis Trading.27 Norkis
complaint for illegal suspension against Trading and PASAKA were then declared
Norkis Trading and PASAKA. On October 13, solidarily liable for the monetary claims of
1999, the respondents were to report back therein complainants.
to work but during the hearing in their NLRC Regional Director Balanag’s Order was later
case, they were informed by PASAKA that affirmed by then DOLE Secretary Sto. Tomas.
they would be transferred to Norkis When the rulings of the DOLE Secretary were
Tradings’ sister company, Porta Coeli appealed before the CA via the petitions for
Industrial Corporation (Porta Coeli), as certiorari, the CA affirmed the Orders of the
washers of Multicab vehicles. The DOLE Secretary.31 A motion for
respondents opposed the transfer as it reconsideration of the CA decision was
would allegedly result denied in a Resolution32. The two petitions
in a change of employers and that the docketed as G.R. Nos. 180078-79, which
transfer would result in a demotion since were brought before the SC to question the
from being skilled workers in Norkis Trading; CA’s rulings, were later denied with finality
they would be reduced to being utility by the SC. The respondents informed the
workers. NLRC of Regional Director Balanag’s Order by
Labor Arbiter (LA) Gutierrez filing a Manifestation. However, the NLRC
dismissed the complaint for lack of merit. LA rendered its Decision35 affirming with
directed complainants to report back to modification the decision of LA Gutierrez. It
PASAKA for work assignment. Likewise, held that the respondents were not illegally
respondent PASAKA is directed to accept the suspended from work. The NLRC declared
complainants back for work. In the that the LA had no jurisdiction over the
meantime (in a separate case) DOLE dispute because the respondents
Regional Director Balanag issued on August were not employees, but members of
22, 2000 his Order20 in LSED Case No. PASAKA.
RO700-9906-CI-CS-168. Regional Director The respondents’ motion for
Balanag ruled that PASAKA was engaged in reconsideration was denied by the NLRC.
labor-only contracting.21 It was found that: Undaunted, the respondents questioned the
(1) PASAKA had failed to prove that it had NLRC’s rulings before the CA via a petition
substantial capital; 22 (2) the machineries, for certiorari. Finding merit in the petition
equipment and supplies used by the for certiorari, the CA rendered its decision
 215

reversing and setting aside the decision and prohibited act, is an arrangement where the
resolution of the NLRC. The CA considered contractor or subcontractor merely recruits,
Regional Director Balanag’s finding in LSED supplies, or places workers to perform a job,
Case No. RO700-9906-CI-CS-168 that work, or service for a principal. In labor-only
PASAKA was engaged in labor-only contracting, the following elements are
contracting. In ruling that the respondents present: (a) the contractor or subcontractor
were illegally dismissed, the CA held that does not have substantial capital or
Norkis Trading’s refusal to accept the investment to actually perform the job,
respondents back to their former positions, work, or service under its own account and
offering them instead to accept a new responsibility; and (b) the employees
assignment as washers of vehicles in its sister recruited, supplied or placed by such
company, was a demotion that amounted to contractor or subcontractor perform
a constructive dismissal. Norkis Trading’s activities which are directly related to the
motion for reconsideration was denied by main business of the principal. These
the CA. Hence, this petition. differentiate it from
permissible or legitimate job contracting or
ISSUES: subcontracting, which refers to an
(1) Whether the CA erred in revering arrangement whereby a principal agrees to
of LA Gutierrez’s and the NLRC’s rulings. put out or farm out with the contractor or
(2) Whether PASAKA is a labor-only subcontractor the performance or
contractor. completion of a specific job, work, or service
(3) Whether the respondents were within a definite or predetermined period,
illegally dismissed by Norkis Trading regardless of whether such job, work, or
service is to be performed or completed
RULING: within or outside the premises of the
Factual findings of labor officials principal. A person is considered engaged in
may be examined by the courts when there legitimate job contracting or subcontracting
is a showing that they were arrived at if the following conditions concur: (a) the
arbitrarily or in disregard of evidence on contractor carries on a distinct and
record. Nonetheless, these findings are not independent business and partakes the
infallible. When there is a showing that they contract work
were arrived at arbitrarily or in disregard of on his account under his own responsibility
the evidence on record, they may be according to his own manner and method,
examined by the courts. The CA can then free from the control and direction of his
grant a petition for certiorari if it finds that employer or principal in all matters
the NLRC, in its assailed decision or connected with the performance of his work
resolution, has made a factual finding that is except as to the results thereof; (b) the
not supported by substantial evidence. It is contractor has substantial capital or
within the jurisdiction of the CA, whose investment; and (c) the agreement between
jurisdiction over labor cases has been the principal and the contractor or
expanded to review the findings of the NLRC. subcontractor assures the contractual
47 This case falls within the exception to the employees’ entitlement to all labor and
general rule that findings of fact of labor occupational safety and health standards,
officials are to be accorded respect and free exercise of the right to self-organization,
finality on appeal. security of tenure, and social welfare
Norkis Trading is the principal benefits. 49 SC emphasized that the
employer of the respondents, considering petitioner’s arguments against the
that PASAKA is a mere labor-only respondents’ claim that PASAKA is a labor-
contractor. Labor-only contracting, a only contractor, which is thus to be regarded
 216

as a mere agent of Norkis Trading for which labor-only contractor. The statute
the respondents rendered service, are establishes this relationship for a
already comprehensive purpose: to prevent a
mooted by the finality of this SC’s circumvention of labor laws. The contractor
Resolutions in G.R. Nos. 180078-79, which is considered merely an agent of the
stems from the CA’s and the DOLE principal employer and the latter is
Secretary’s review of the DOLE Regional responsible to the employees of the labor-
Director’s Order dated August 22, 2000 in only
LSED Case No. RO700-9906-CI-CS-168. contractor as if such employees had been
Applying the doctrine of res judicata, all directly employed by the principal employer.
matters that have been fully resolved with
finality by this Court’s dismissal of the appeal
that stemmed from Regional Director 149 EQUITABLE BANKING CORPORATION
Balanag’s Order in LSED Case No. RO700- (EQUITABLE PCI BANK) vs RICARDO SADAC
9906-CI-CS-168 are already
conclusive between the parties. The rule on FACTS:
conclusiveness of judgment then now Sadac was appointed Vice President
precludes this Court from re-opening the of the Legal Department of PCI Bank and
issues that were already settled with finality subsequently General Counsel thereof. Nine
in G.R. Nos. 180078-79, which effectively lawyers of PCI Banks Legal Department,
affirmed the CA’s findings that PASAKA was accused
engaged in labor-only contracting, and that Sadac of abusive conduct, inter alia, and
Norkis Trading shall be treated as the ultimately, petitioned for a change in
employer of the respondents. leadership of the
Termination of an employment for department. On the ground of lack of
no just or authorized cause amounts to an confidence in Sadac, under the rules of client
illegal dismissal. Where an entity is declared and lawyer
to be a labor-only contractor, the employees relationship, PCI Bank instructed Sadac to
supplied by said contractor to the principal deliver all materials in his custody in all cases
employer become regular employees of the in
latter. Having gained regular status, the which the latter was appearing as its counsel
employees are entitled to security of tenure of record. In reaction thereto, Sadac
and can only be requested for
dismissed for just or authorized causes and a full hearing and formal investigation but
after they had been afforded due process. 66 the same remained unheeded. Sadac filed a
Termination of employment without just or complaint for illegal dismissal with damages
authorized cause and without observing against PCI Bank and individual members of
procedural due process is illegal. the
In claiming that they were illegally Board of Directors thereof. After learning of
dismissed from their employment, the the filing of the complaint, PCI Bank
respondents alleged having been informed terminated the
by PASAKA that they would be transferred, services of Sadac. Finally, Sadac was
upon the behest of Norkis Trading, as removed from his office and ordered
Multicab washers or utility workers to Porta disentitled to any
Coeli, a sister company of Norkis Trading. compensation and other benefits. In this
Norkis. Where labor-only contracting exists, case, the SC already decided that Sadacs
the Labor Code itself establishes an dismissal was
employer-employee relationship between not grounded on any of the causes stated in
the employer and the employees of the Article 282 of the Labor Code and that PCI
 217

Bank differentials is not allowed, the established

disregarded the procedural requirements in rule being
terminating respondent Sadacs that upon reinstatement, illegally dismissed
employment, thus employees are to be paid their backwages
Sadac was entitled to backwages from without
termination of employment until turning deduction and qualification as to any wage
sixty (60) years increases or other benefits that may have
of age (in 1995 ) xxx. However, in Sadacs been
computation, the total amount of the received by their co-workers who were not
monetary award dismissed or did not go on strike.
is P6,030,456.59, representing his
backwages and other benefits, including the ISSUE:
general Whether general salary increases
increases which he should have earned should be included in the base figure to be
during the period of his illegal termination. used in the
According to computation of backwages.
Sadac, the catena of cases uniformly holds
that it is the obligation of the employer to HELD:
pay an NO. Backwages in general are
illegally dismissed employee the whole granted on grounds of equity for earnings
amount of the salaries or wages, plus all which a worker
other benefits or employee has lost due to his illegal
and bonuses and general increases to which dismissal. [37] It is not private compensation
he would have been normally entitled had or damages
he not but is awarded in furtherance and
been dismissed; and therefore, salary effectuation of the public objective of the
increases should be deemed a component in Labor Code. Nor is
the it a redress of a private right but rather in the
computation of backwages. Moreover, nature of a command to the employer to
Sadac contended that his checkup benefit, make
clothing public reparation for dismissing an employee
allowance, and cash conversion of vacation either due to the formers unlawful act or bad
leaves must be included in the computation faith. Article 279 mandates that an
of his employees full backwages shall be inclusive
backwages. PCI Bank disputed respondent of allowances
Sadacs computation. Per its computation, and other benefits or their monetary
the equivalent. Contrary to the ruling of the
amount of monetary award due respondent Court of Appeals,
Sadac is P2,981,442.98 only, to the exclu sion we do not see that a salary increase can be
of the latters general salary increases and interpreted as either an allowance or a
other claimed benefits which, it maintained, benefit.
were Salary increases are not akin to allowances
unsubstantiated, that an unqualified award or benefits, and cannot be confused with
of backwages means that the employee is either. The
paid at term allowances is sometimes used
the wage rate at the time of his dismissal. synonymously with emoluments, as indirect
Furthermore, petitioner Bank argued before or contingent
the remuneration, which may or may not be
Labor Arbiter that the award of salary earned, but which is sometimes in the nature
 218

of aware that his stint with respondent Royale

compensation, and sometimes in the nature lasted only for one (1) month and three (3)
of reimbursement. [47]Allowances and days such that it is our considered view that
benefits his backwages should be limited to only
are granted to the employee apart or three (3) months. The petitioner does not
separate from, and in addition to the wage deny that he has received the full amount of
or salary. In his backwages and separation pay as
contrast, salary increases are amounts which provided under the NLRC's November 2005
are added to the employees salary as an Decision. However, he claims that this does
increment thereto for varied reasons not preclude this Court from modifying a
deemed appropriate by the employer. Salary decision that is tainted with grave abuse of
increases discretion or issued without jurisdiction.
are not separate grants by themselves but
once granted, they are deemed part of the ISSUE:
employees salary. To extend the coverage of Whether the petitioner's backwages
an allowance or a benefit to include salary should be limited to his salary for three (3)
increases would be to strain both the months
imagination of the Court and the language of
law. As aptly
observed by the NLRC, to otherwise give the
meaning other than what the law speaks for RULING:
by No. In case separation pay is awarded
itself, will open the floodgates to various and reinstatement is no longer feasible,
interpretations.[48] Indeed, if the intent backwages shall be computed from the time
were to of illegal dismissal up to the finality of the
include salary increases as basis in the decision should separation pay not be paid in
computation of backwages, the same should the meantime. It is the employee's actual
have been receipt of the full amount of his separation
explicitly stated in the same manner that the pay that will effectively terminate the
law used clear and unambiguous terms in employment of an illegaly dismissed
expressly providing for the inclusion of employee. Otherwise, the employer-
allowances and other benefits. employee relationship subsists and
the illegally dismissed employee is entitled
to backwages, taking into account the
150 Timoteo H. Sarona v. NLRC increases and other benefits, including the
13th month pay, that were received by his co-
FACTS: employees who are not dismissed. It is the
The petitioner, who was hired by obligation of the employer to pay
Sceptre as a security guard, was asked by an illegallydismissed employee or worker
Karen Therese Tan, Sceptre's Operations the whole amount of the salaries or wages,
Manager, to submit a resignation letter as plus all other benefits and bonuses and
the same was supposedly required for general increases, to which he would have
applying for a position at Royale. been normally entitled had he not been
Martin informed him that he would dismissed and had not stopped working.
no longer be given any assignment per the
instructions of Aida Sabalones-Tan, general
manager of Sceptre. This prompted him 151 ROBINSONS GALLERIA/ROBINSONS
to file a complaint for illegal dismissal. While SUPERMARKET CORPORATION and/or JESS
complainant is entitled to backwages, we are
 219

MANUEL, petitioners, vs. IRENE R. ISSUE:

RANCHEZ, respondents. Whether respondent was
illegally terminated from
FACTS: employment by petitioners.
Respondent Ranchez was a
probationary employee for 5 months. She HELD:
was hired as a cashier by Robinsons The petition is unmeritorious.
sometime within that period. Two weeks LABOR LAW: Probationary
after she was hired, she reported the loss of employees; termination of employment
cash which she had placed in the company There is probationary employment
locker. She offered to pay for the lost when the employee upon his engagement is
amount but the Operations Manager of made to undergo a trial period during which
Robinsons had her strip-searched then the employer determines his fitness to
reported her to the police even though they qualify for regular employment based on
found nothing on her person. An information reasonable standards made known to him at
for Qualified Theft was filed with the Quezon the time of engagement.
City Regional Trial Court. She was detained A probationary employee, like a
for 2 weeks for failure to immediately post regular employee, enjoys security of
bail. Weeks later, respondent Ranchez filed tenure.However, in cases of probationary
a complaint for illegal dismissal and employment, aside from just or authorized
damages. A year later, Robinsons sent to causes of termination, an additional ground
respondent by mail a notice of termination is provided under Article 281 of the Labor
and/or notice of expiration of probationary Code,i.e., the probationary employee may
employment. also be terminated for failure to qualify as a
The Labor Arbiter dismissed the regular employee in accordance with
complaint for illegal dismissal, alleging that reasonable standards made known by the
at the time of filing respondent Ranchez had employer to the employee at the time of the
not yet been terminated. She was merely engagement.Thus, the services of an
investigated. However, the NLRC reversed employee who has been engaged on
this ruling, stating that Ranchez was illegally probationary basis may be terminated for
dismissed and that Robinson's should any of the following:
reinstate her. It held that Ranchez was (1) a just or
deprived of due process when she was strip- (2) an authorized cause; and
searched and sent to jail for two weeks (3) when he fails to qualify as a
because such amounted to constructive regular employee in accordance with
dismissal, making it impossible for the reasonable standards prescribed by the
respondent to continue under the employer.
employment. Even though she was merely a Article 277(b) of the Labor Code
probationary employee, the lapse of the mandates that the employer shall furnish the
probationary contract did not amount to a worker, whose employment is sought to be
valid dismissal because there was already an terminated, a written notice containing a
unwarranted constructive dismissal statement of the causes of termination, and
beforehand. shall afford the latter ample opportunity to
The NLRC denied Robinson's motion be heard and to defend himself with the
for reconsideration. The CA affirmed the assistance of a representative if he so
decision of the NLRC. desires, in accordance with company rules
and regulations pursuant to the guidelines
set by the Department of Labor and
Employment.
 220

In the instant case, based on the facts a quitclaim as they were given their
on record, petitioners failed to accord separation pay. Petitioners still pursued a
respondent substantive and procedural due complaint with the Labor Arbiter for illegal
process.The haphazard manner in the dismissal. They also claim that the illegal
investigation of the missing cash, which was dismissal was done as retaliation for a sexual
left to the determination of the police harassment complaint they filed against one
authorities and the Prosecutor's Office, left of the company managers. The Labor Arbiter
respondent with no choice but to cry found the dismissal to be illegal as the
foul.Administrative investigation was not financial difficulties of Bio Research were
conducted by petitioner Supermarket.On unproven, and that no criteria was
the same day that the missing money was established in selecting the employees to be
reported by respondent to her immediate let go. The LA ordered for payment of
superior, the company already pre-judged backwages and reinstatement, as well as the
her guilt without proper investigation, and subsidiary liability of respondent Ang, for
instantly reported her to the police as the having acted in bad faith. The NLRC, on
suspected thief, which resulted in her appeal, affirmed the findings of the LA. Upon
languishing in jail for two weeks. appeal to the Court of Appeals, the appellate
The due process requirements under court affirmed the finding of illegal dismissal,
the Labor Code are mandatory and may not but upheld the quitclaim executed by the
be replaced with police investigation or petitioners. In addition, the CA found that
court proceedings. An illegally or since there was no proof of bad faith on the
constructively dismissed employee, part of Respondent Ang, he should not be
respondent is entitled to: (1) either held subsidiarily liable. Petitioners question
reinstatement, if viable, or separation pay, if these findings in the Supreme Court.
reinstatement is no longer viable; and (2)
backwages. These two reliefs are separate ISSUES:
and distinct from each other and are Is the quitclaim is valid?
awarded conjunctively. Is Respondent Ang subsidiarily liable
In this case, since respondent was a to petitioners?
probationary employee at the time she was
constructively dismissed by petitioners, she HELD:
is entitled to separation pay and backwages. A quitclaim does not prevent an
Reinstatement of respondent is no longer illegally dismissed employee from instituting
viable considering the circumstances. an illegal dismissal case. And since the CA
DENIED affirmed the findings of illegal dismissal, Bio
Research is indeed liable. Petitioners are
ordered reinstated, with payment of
152 BERNADETH LONDONIO AND JOAN backwages. If not possible, then a payment
CORCORO v. BIO RESEARCH, INC. AND of separation pay of one-half month salary
WILSON Y. ANG for every year served.
The acts of corporate officers, done
FACTS: in behalf of the corporation, are separate
Petitioners were employees of from their personal acts. Absent a showing
respondent Bio Research. They were of bad faith, the ruling of the CA is proper.
subsequently dismissed from employment. Respondent Ang should not have been held
Bio Research claims that due to financial liable for the corporate acts.
difficulties, it was forced to retrench
petitioners in a move towards financial
efficiency. Petitioners were made to execute
 221

153 APO CHEMICAL MANUFACTURING should be proved that it is likely that, if

CORPORATION and MICHAEL CHENG, reinstated, an atmosphere of antipathy and
Petitioners, v. RONALDO A. BIDES, antagonism would be generated as to
Respondent. adversely affect the efficiency and
productivity of the employee concerned.
FACTS: Under the doctrine of strained
Ronaldo Bides (Bides) was an relations, the payment of separation pay is
employee of Apo Chemical Manufacturing considered an acceptable alternative to
Corporation (ACMC) for eleven (11) years. reinstatement when the latter option is no
Matthew Cheng (Matthew), the plant longer desirable or viable. On one hand, such
manager of ACMC, sent a written payment liberates the employee from what
memorandum requiring Bides to explain his could be a highly oppressive work
refusal to sign the disciplinary form in environment. On the other hand, it releases
connection with his alleged infractions of the employer from the grossly unpalatable
loitering in the comfort room for about five obligation of maintaining in its employ a
(5) to eight (8) minutes, two (2) to three (3) worker it could no longer trust. Moreover,
times a day, on March 5, 6, 7, 8, 9 and 10, the doctrine of strained relations has been
2003 under pain of revocation of his housing made applicable to cases where the
privileges. Bides explained that urinating, as employee decides not to be reinstated and
he was “nababalisawsaw” at the time, was demands for separation pay.
not an infraction. In the present case, Bides has
Allegedly, Matthew confronted Bides consistently maintained, from the
and prohibited him from working the proceedings in the LA up to the CA, his
following day as he would be terminated refusal to be reinstated due to his fear of
from the ACMC. Thus, Bides filed a complaint reprisal which he could experience as a
for illegal dismissal against ACMC. consequence of his return. By doing so, Bides
The LA ruled that Bides was illegally unequivocally foreclosed reinstatement as a
dismissed. The NLRC reversed the LA’s relief. DENIED.
decision. The CA affirmed with modification 154 WENPHIL CORPORATION, vs. NLRC
the NLRC’s decision. The CA ruled that there AND ROBERTO MALLARE
was no illegal dismissal but ordered ACMC to
pay Bides separation pay in lieu of FACTS:
reinstatement, taking into account the Mallare was hired by petitioner as a
strained relations between the parties. crew member at its Cubao Branch. He
thereafter
ISSUE: became the assistant head of the Backroom
Whether strained relations exist department of the same bran ch. Private
between ACMC and Bides to bar the latter’s respondent had an altercation with a co-
reinstatement and justify the award of employee, Job Barrameda, as a result of
separation pay? which he and
Barrameda were suspended on the following
HELD: morning and in the afternoon of the same
The Court finds no merit in the day a
petition. memorandum was issued by the Operations
LABOR LAW: doctrine of strained Manager advising private respondent of his
relations dismissal from the service in accordance
The Court is well aware that with their Personnel Manual, prompting
reinstatement is the rule and, for the private
exception of “strained relations” to apply, it respondent to file a complaint against
 222

petitioner for unfair labor practice, illegal means

suspension and giving notice and opportunity to be heard
illegal dismissal. before judgment is rendered. Hence, since
Petitioner
ISSUE: committed an infraction of the second
WON Mallare was afforded with due requirement. Thus, it must be imposed a
process. sanction for its
failure to give a formal notice and conduct an
HELD: investigation as required by law before
NO. Under Section 1, Rule XIV of the dismissing
Implementing Regulations of the Labor petitioner from employment.
Code, it is
provided that "No worker shall be dismissed
except for just or authorized cause provided 155 RUBEN SERRANO vs.NLRC and
by ISETANN DEPARTMENT STORE
law and after due process." Sections 2, 5, 6,
and 7 of the same rules require that before FACTS:
an Serrano was hired by Isetann
employer may dismiss an employee the Department Store as a security checker to
latter must be given a written notice stating apprehend
the shoplifters and prevent pilferage of
particular act or omission constituting the merchandise. Initially hired on contractual
grounds thereof; that the employee may basis and
answer the eventually became a regular employee He
allegations within a reasonable period; that later became head of the Security Checkers
the employer shall afford him ample Section
opportunity to of private respondent. As a cost-cutting
be heard and to defend himself with the measure, private respondent decided to
assistance of his representative, if he so phase out its
desires; and entire security section and engage the
that it is only then that the employer may services of an independent security agency.
dismiss the employee by notifying him of the For this
decision reason, the company sent Serrano of a
in writing stating clearly the reasons verbal notice of its termination In view of the
therefor. Such dismissal is without prejudice retrenchment program of the company. The
to the right of loss of his employment prompted petitioner
the employee to contest its validity in the to file
Regional Branch of the NLRC. complaint for illegal dismissal, illegal layoff,
The failure of petitioner to give unfair labor practice, underpayment of
private respondent the benefit of a hearing wages, and
before he non-payment of salary and overtime pay.
was dismissed constitutes an infringement The Labor Arbiter rendered a
of his constitutional right to due process of decision finding petitioner to have been
law and illegally dismissed.
equal protection of the laws. The standards He ruled that private respondent failed to
of due process in judicial as well as establish that it had retrenched its security
administrative section to
proceedings have long been established. In prevent or minimize losses to its business;
its bare minimum due process of law simply that private respondent failed to accord due
 223

process whether services should be performed by its

to petitioner; that private respondent failed personnel
to use reasonable standards in selecting or contracted to outside agencies . . . [While
employees there] should be mutual consultation,
whose employment would be terminated; eventually
that private respondent had not shown that deference is to be paid to what management
petitioner and other employees in the decides." Consequently, absent proof that
security section were so inefficient so as to management acted in a malicious or
justify their arbitrary manner, the Court will not interfere
replacement by a security agency, or that with the
"cost-saving devices [such as] secret video exercise of judgment by an employer.
cameras In the case at bar, we have only the
(to monitor and prevent shoplifting) and bare assertion of petitioner that, in
secret code tags on the merchandise" could abolishing the
not have security section, private respondent's real
been employed; instead, the day after purpose was to avoid payment to the
petitioner's dismissal, private respondent security
employed a checkers of the wage increases provided in
safety and security supervisor with duties the collective bargaining agreement
and functions similar to those of petitioner. approved in
Private respondent appealed to the NLRC 1990. Such an assertion is not sufficient basis
which, in its resolution of March 30, 1994; for concluding that the termination of
reversed the decision of the Labor Arbiter petitioner's
and ordered petitioner to be given employment was not a bona fide decision of
separation pay management to obtain reasonable return
equivalent to one month pay for every year from its
of service, unpaid salary, and proportionate investment, which is a right guaranteed to
13th employers under the Constitution. Indeed,
month pay. Petitioner contends that that the
abolition of private respondent's Security phase-out of the security section constituted
Checkers Section a "legitimate business decision" is a factual
and the employment of an independent finding
security agency do not fall under any of the of an administrative agency which must be
authorized accorded respect and even finality by this
causes for dismissal under Art. 283 of the Court
Labor Code. since nothing can be found in the record
which fairly detracts from such finding.
ISSUE: Accordingly, the termination of petitioner's
WON the dismissal was for an services was for an authorized cause, i.e.,
authorized cause. redundancy.
Hence, pursuant to Art. 283 of the
HELD: Labor Code, petitioner should be given
YES. The "[management of a separation
company] cannot be denied the faculty of pay at the rate of one month pay for every
promoting year of service.
efficiency and attaining economy by a study
of what units are essential for its operation. ISSUE:
To it WON the employer's failure to
belongs the ultimate determination of comply with the notice requirement
 224

constitute a denial in the letter of an attorney has no legal

of due process. effect, and the vendee can make payment
even after
HELD: the due date since no valid notice of
NO. Art. 283 also provides that to rescission has been given.
terminate the employment of an employee Indeed, under the Labor Code, only
for any of the absence of a just cause for the
the authorized causes the employer must termination of
serve "a written notice on the workers and employment can make the dismissal of an
the employee illegal, that if in proceedings for
Department of Labor and Employment at reinstatement under Art. 283, it is shown
least one (1) month before the intended that the termination of employment was
date due to an
thereof." In the case at bar, petitioner was authorized cause, then the employee
given a notice of termination on October 11, concerned should not be ordered reinstated
1991. even though
On the same day, his services were there is failure to comply with the 30-day
terminated. He was thus denied his right to notice requirement. Instead, he must be
be given written granted
notice before the termination of his separation pay in accordance with Art. 283.
employment, and the question is the If the employee's separation is
appropriate sanction without cause, instead of being given
for the violation of petitioner's right. separation pay, he
The employer's failure to comply should be reinstated. In either case, whether
with the notice requirement does not he is reinstated or only granted separation
constitute a pay, he
denial of due process but a mere failure to should be paid full backwages if he has been
observe a procedure for the termination of laid off without written notice at least 30
employment which makes the termination days in
of employment merely ineffectual. It is advance.
similar to the On the other hand, with respect to
failure to observe the provisions of Art. dismissals for cause under Art. 282, if it is
1592, in relation to Art. 1191, of the Civil shown that
Code in the employee was dismissed for any of the
rescinding a contract for the sale of just causes mentioned in said Art. 282, then,
immovable property. Under these in
provisions, while the accordance with that article, he should not
power of a party to rescind a contract is be reinstated. However, he must be paid
implied in reciprocal obligations, backwages
nonetheless, in cases from the time his employment was
involving the sale of immovable property, terminated until it is determined that the
the vendor cannot exercise this power even termination of
though employment is for a just cause because the
the vendee defaults in the payment of the failure to hear him before he is dismissed
price, except by bringing an action in court or renders
giving the termination of his employment without
notice of rescission by means of a notarial legal effect.
demand. Consequently, a notice of
rescission given
 225

156 JENNY M. AGABON and VIRGILIO C. 2(d) of

AGABON,vs NLRC & RIVIERA HOME the Omnibus Rules Implementing the Labor
IMPROVEMENTS, INC. Code:
Standards of due process:
FACTS: requirements of notice. In all cases of
Riviera Home Improvements, Inc. termination of
employed petitioners Virgilio Agabon and employment, the following standards of due
Jenny process shall be substantially observed:
Agabon as gypsum board and cornice I. For termination of employment based on
installers until they were dismissed for just causes as defined in Article 282 of the
abandonment of Code:
work. Petitioners assert that they were (a) A written notice served on the
dismissed because the private respondent employee specifying the ground or grounds
refused to for
give them assignments unless they agreed to termination, and giving to said employee
work on a pakyaw basis. They did not agree reasonable opportunity within which to
on explain h is
this arrangement because it would mean side;
losing benefits as Social Security System (b) A hearing or conference during
(SSS) which the employee concerned, with the
members. Petitioners also claim that private assistance
respondent did not comply with the twin of counsel if the employee so desires, is
requirements of notice and hearing. Private given opportunity to respond to the charge,
respondent, on the other hand, maintained present his
that evidence or rebut the evidence presented
petitioners were not dismissed but had against him; and
abandoned their work. In fact, private (c) A written notice of termination
respondent sent served on the employee indicating that upon
two letters to the last known addresses of due
the petitioners advising them to report for consideration of all the circumstances,
work. grounds have been established to justify his
Private respondents manager even talked to termination.
petitioner Virgilio Agabon by telephone In case of termination, the foregoing notices
sometime shall be served on the employees l ast
in June 1999 to tell him about the new known address.
assignment at Pacific Plaza Towers involving In this case, the dismissal should be
40,000 upheld because it was established that the
square meters of cornice installation work. petitioners abandoned their jobs to work for
However, petitioners did not report for work another company, a just cause under Art.
because they had subcontracted to perform 282.
installation work for another company. Private respondent, however, did not follow
the notice requirements and instead argued
ISSUE: that
WON the procedure for dismissal sending notices to the last known addresses
were observed would have been useless because they did
not
HELD: reside there anymore. Unfortunately for the
The procedure for terminating an private respondent, this is not a valid excuse
employee is found in Book VI, Rule I, Section because the law mandates the twin notice
 226

requirements to the employees last known What are the legal implications of a
address. situation where an empl oyee is dismissed
Thus, it should be held liable for non- for cause
compliance with the procedural but such dismissal was effected without the
requirements of due employers compliance with the notice
process. requirement
The violation of petitioners right to under the Labor Code.
statutory due process by the private
respondent
warrants the payment of indemnity in the
form of nominal damages. The amount of HELD:
such A dismissal for just cause under
damages is addressed to the sound Article 282 implies that the employee
discretion of the court, taking into account concerned has
the relevant committed, or is guilty of, some violation
circumstances. against the employer, i.e. the employee has
committed some serious misconduct, is
guilty of some fraud against the employer,
157 JAKA FOOD PROCESSING or, as in
CORPORATION vs. DARWIN PACOT, et.al Agabon, he has neglected his duties. Thus, it
can be said that the employee himself
FACTS: initiated the
Respondents were earlier hired by JAKA dismissal process.
Foods Processing Corporation until the latter On another breath, a dismissal for an
terminated their employment because the authorized cause under Article 283 does not
corporation was in dire financial straits. It is necessarily imply delinquency or culpability
not on the part of the employee. Instead, the
disputed, however, that the termination was dismissal
effected without JAKA complying with the process is initiated by the employers
requirement under Article 283 of the Labor exercise of his management prerogative, i.e.
Code regarding the service of a written when the
notice upon employer opts to install labor saving devices,
the employees and the Department of Labor when he decides to cease business
and Employment at least one (1) month operations or
before when, as in this case, he undertakes to
the intended date of termination. implement a retrenchment program.
Respondents separately filed complaints for In dismissal for just cause under Article 282,
illegal dismissal the payment of separation pay, as a rule, is
wherein after due proceedings, the Labor not required and a dismissal for authorized
Arbiter rendered a decision declaring the cause under Article 283, the law requires
termination payment
illegal and ordering JAKA and its HRD of separation pay.
Manager to reinstate respondents with full Accordingly, it is wise to hold that: (1)
backwages, if the dismissal is based on a just cause under
and separation pay if reinstatement is not Article 282 but the employer failed to
possible. comply with the notice requirement, the
sanction to be
ISSUE: imposed upon him should be tempered
because the dismissal process was, in effect,
 227

initiated
by an act imputable to the employee; and (2)
if the dismissal is based on an authorized
cause 158 NELSON A. CULILI, Petitioner, v.
under Article 283 but the employer failed to EASTERN TELECOMMUNICATIONS
comply with the notice requirement, the PHILIPPINES, INC., SALVADOR HIZON
sanction (President and Chief Executive Officer),
should be stiffer because the dismissal EMILIANO JURADO (Chairman of the
process was initiated by the employers Board), VIRGILIO GARCIA (Vice President)
exercise of his and STELLA GARCIA (Assistant Vice
management prerogative. President), Respondents.
In this case, JAKA was suffering from
serious business losses at the time it FACTS:
terminated Respondent Eastern
respondents employment. It is, therefore, Telecommunications Philippines, Inc. (ETPI)
established that there was ground for is a telecommunications company engaged
respondents mainly in the business of establishing
dismissal, i.e., retrenchment, which is one of commercial telecommunications systems
the authorized causes enumerated under and leasing of international datalines or
Article circuits that pass through the international
283 of the Labor Code. Likewise, it is gateway facility (IGF). The other respondents
established that JAKA failed to comply with are ETPIs officers.
the notice Petitioner Nelson A. Culili was
requirement under the same Article. employed by ETPI as a Technician in its Field
Considering the factual circumstances in the Operations Department in 1981. In 1996,
instant case Culili was promoted to Senior Technician in
and the above ratiocination, we, therefore, the Customer Premises Equipment
deem it proper to fix the indemnity at Management Unit of the Service Quality
P50,000.00. Department.
In all cases of business closure or cessation As a telecommunications company
of operation or undertaking of the employer, and an authorized IGF operator, ETPI was
the required, under RA No. 7925 and EO No. 109,
affected employee is entitled to separation to establish landlines in Metro Manila and
pay. This is consistent with the state policy of certain provinces. However, due to
treating labor as a primary social economic interconnection problems with the PLDT,
force, affording full protection to its rights as poor subscription and cancellation of
well as subscriptions, and other business difficulties,
its welfare. The exception is when the ETPI was forced to halt its roll out of 129,000
closure of business or cessation of landlines already allocated to a number of its
operations is due to employees.
serious business losses or financial In 1998, due to business troubles and
reverses; duly proved, in which case, the losses, ETPI was compelled to implement a
right of affected Right-Sizing Program which consisted of two
employees to separation pay is lost for phases: the first phase involved the
obvious reasons. 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,
 228

absorption or abolition of certain Bargaining Agreement (CBA) and the Labor

departments of ETPI. Code. Aside from these, Culili also alleged
As part of the first phase, ETPI that he was discriminated against when ETPI
offered to its employees who had rendered offered some of his co-employees an
at least fifteen years of service, the Special additional benefit in the form of motorcycles
Retirement Program, which consisted of the to induce them to avail of the Special
option to voluntarily retire at an earlier age Retirement Program, while he was not.
and a retirement package equivalent to two ETPI denied singling Culili out for
and a half (2) months salary for every year of termination. ETPI claimed that because
service. This offer was initially rejected by there was no more work for Culili, it was
the Eastern Telecommunications Employees constrained to serve a final notice of
Union (ETEU), ETPIs duly recognized termination to Culili, which Culili ignored.
bargaining agent, which threatened to stage Thus, on March 26, 1999, ETPI tendered to
a strike. ETPI explained to ETEU the exact Culili his final pay check of P859,033.99
details of the Right-Sizing Program and the consisting of his basic salary, leaves, 13th
Special Retirement Program and after month pay and separation pay. ETPI claimed
consultations with ETEUs members, ETEU that Culili refused to accept his termination
agreed to the implementation of both and continued to report for work.
programs. Thus, ETPI re-offered the Special Culili filed a complaint against ETPI
Retirement Program and the corresponding and its officers for illegal dismissal, unfair
retirement package to the one hundred two labor practice, and money claims before the
(102) employees who qualified for the Labor Arbiter.
program. Of all the employees who qualified The Labor Arbiter found ETPI guilty of
to avail of the program, only Culili rejected illegal dismissal and unfair labor practice.
the offer. On appeal, the NLRC affirmed the
Among the departments abolished Labor Arbiters decision but modified the
was the Service Quality Department. The amount of moral and exemplary damages
functions of the Customer Premises awarded.
Equipment Management Unit, Culilis unit, The Court of Appeals found that
were absorbed by the Business and Culilis position was validly abolished due to
Consumer Accounts Department. As a result, redundancy. It further held that ETPI cannot
Culilis position was abolished due to be held guilty of unfair labor practice as mere
redundancy and his functions were absorbed contracting out of services being performed
by the Business and Consumer Accounts by union members does not per se amount
Department. to unfair labor practice unless it interferes
ETPI, through its Assistant Vice with the employees right to self-
President Stella Garcia, informed Culili of his organization. Hence, this petition.
termination from employment effective
April 8, 1999. ISSUE:
Culili alleged that neither he nor the Whether or not Culili is illegally
DOLE were formally notified of his dismissed.
termination. Culili believed that ETPI had
already decided to dismiss him even prior to HELD:
the March 8, 1999 letter. Moreover, Culili The decision of the Court of Appeals
asserted that ETPI had contracted out the is sustained.
services he used to perform to a labor-only LABOR LAW
contractor which not only proved that his There is redundancy when the
functions had not become unnecessary, but service capability of the workforce is greater
which also violated their Collective than what is reasonably required to meet the
 229

demands of the business enterprise. A For termination of employment as

position becomes redundant when it is defined in Article 283 of the Labor Code, the
rendered superfluous by any number of requirement of due process shall be deemed
factors such as over-hiring of workers, complied with upon service of a written
decrease in volume of business, or dropping notice to the employee and the appropriate
a particular product line or service activity Regional Office of the Department of Labor
previously manufactured or undertaken by and Employment at least thirty days before
the enterprise. Soriano, Jr. v. NLRC, G.R. No. effectivity of the termination, specifying the
165594, April 23, 2007 ground or grounds for termination.
This Court also held that the ETPI does not deny its failure to
following evidence may be proffered to provide DOLE with a written notice regarding
substantiate redundancy: the new staffing Culilis termination. It, however, insists that it
pattern, feasibility studies/ proposal on the has complied with the requirement to serve
viability of the newly created positions, job a written notice to Culili as evidenced by his
description and the approval by the admission of having received it and
management of the restructuring. forwarding it to his union president.
In the case at bar, ETPI was upfront The Court of Appeals, in finding that
with its employees about its plan to Culili was not afforded procedural due
implement a Right-Sizing Program. Even in process, held that Culilis dismissal was
the face of initial opposition from and ineffectual, and required ETPI to pay Culili
rejection of the said program by ETEU, ETPI full backwages in accordance with our
patiently negotiated with ETEUs officers to decision in Serrano v. NLRC, 387 Phil. 345
make them understand ETPIs business (2000).
dilemma and its need to reduce its Hence, since it has been established
workforce and streamline its organization. that Culilis termination was due to an
This evidently rules out bad faith on the part authorized cause and cannot be considered
of ETPI. unfair labor practice on the part of ETPI, his
The records show that ETPI had dismissal is valid. However, in view of ETPIs
sufficiently established not only its need to failure to comply with the notice
reduce its workforce and streamline its requirements under the Labor Code, Culili is
organization, but also the existence of entitled to nominal damages in addition to
redundancy in the position of a Senior his separation pay.
Technician. ETPI explained how it failed to DENIED.
meet its business targets and the factors that
caused this, and how this necessitated it to
reduce its workforce and streamline its 159 PHILIPPINE CHARITY SWEEPSTAKES
organization. ETPI also submitted its old and OFFICE BOARD OF DIRECTORS and
new tables of organization and sufficiently REYNALDO P. MARTIN v. MARIE JEAN C.
described how limited the functions of the LAPID
abolished position of a Senior Technician
were and how it decided on whom to absorb FACTS:
these functions. An administrative complaint was
LABOR LAW filed against the Respondent for allegedly
Although the Court finds Culilis confronting, badmouthing and shouting
dismissal was for a lawful cause and not an invectives at Mr. Guemo, in the presence of
act of unfair labor practice, ETPI, however, other employees and seeking assistance
was remiss in its duty to observe procedural from the PSCO. The PCSO Board of Directors
due process in effecting the termination of found her guilty of discourtesy in the course
Culili. of official duties and grave misconduct and
 230

imposed on her the penalty of dismissal from In the case at bench, the CSC itself
service. found that Lapid was denied due process as
On appeal with the CSC, the she was never formally charged with the
Commission dismissed the respondent’s administrative offenses of Discourtesy in the
appeal for being moot and academic. Course of Official Duties and Grave
Moreover, they ruled that the respondent is Misconduct, for which she was dismissed
a casual employee which means that she is from the service. To somehow remedy the
not entitled to security of tenure. However, situation, the petitioners mentioned in their
the CA reversed the decision of the Memorandum before the CA that there was
Commission by reinstating the respondent in no reason anymore to pursue the
the service until the expiration of her casual administrative charge against Lapid and to
employment. investigate further as this was superseded by
Memorandum dated September 14, 2005
ISSUE: recommending the termination of
Did the CA gravely err in granting the respondent Lapid’s casual employment.
respondent’s petition, in effect, reversing They pointed out that this was precisely the
the CSC’s resolutions. reason why no Formal Charge was issued.
Clearly, the action of petitioners clearly
HELD: violated Lapid’s basic rights as a casual
A new ruling recognizes that casual employee.
employees are covered by the security of Therefore, the petition is denied and
tenure and cannot be terminated within the the respondent is allowed to continue
period of his employment except for cause. rendering services as teller of PCSO and is
Despite this new ruling, it is not the intention also entitled to payment of backwages.
of the Court to make the status of a casual DENIED.
employee at par with that of a regular
employee, who enjoys permanence of
employment. The rule is still that casual 160 Concepcion vs. Minex Import Corp.,
employment will cease automatically at the G.R. No. 153569, January 24, 2012
end of the period unless renewed as stated
in the Plantilla of Casual Employment. Casual Facts:
employees may also be terminated anytime Respondent is engaged in the retail
though subject to certain conditions or of semi-precious stones, selling them in
qualifications. Thus, they may be laid-off kiosks or stalls installed in various shopping
anytime before the expiration of the centers. It employed the petitioner initially
employment period provided any of the as a salesgirl then later on as supervisor.
following occurs:(1) when their services are Working under her supervision were
no longer needed; (2) funds are no longer salesgirls Cristina Calung and Lida Baquilar.
available; (3) the project has already been One day the petitioner and her
completed/finished; or (4) their salesgirls had sales of crystal items totaling
performance are below par. P39,194.50. At the close of business that
Equally important, they are entitled day, they conducted a cashcount of their
to due process especially if they are to be sales proceeds, including those from the
removed for more serious causes or for previous two days and determined their
causes other than the reasons mentioned in total for the three days to be P50,912.00.
CSC Form No. 001. The reason for this is that The petitioner wrapped the amount in a
their termination from the service could plastic bag and deposited it in the drawer of
carry a penalty affecting their rights and the locked wooden cabinet of the kiosk.
future employment in the government.
 231

The following day petitioner phoned The petitioner argued that there was
respondent Vina Mariano to report that the no evidence at all upon which Minex could
P50,912.00 was missing, explaining how she validly dismiss her considering that she had
and her salesgirls had placed the wrapped not yet been found guilty beyond reasonable
amount at the bottom of the cabinet the doubt of the crime of qualified theft.
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. Issues:
Later, while the petitioner was giving Whether or not there was valid
a detailed statement on the theft to the ground to terminate the petitioner.
security investigator of Harrison Plaza, Vina
and Sylvia Mariano, her superiors, arrived Ruling:
with a policeman who immediately placed The petitioner’s argument is not
the petitioner under arrest and brought her novel. It has been raised and rejected many
to a police station where she was times before on the basis that neither
investigated her and detained for a day. conviction beyond reasonable doubt for a
Subsequently petitioner filed a case crime against the employer nor acquittal
for illegal dismissal against respondent and after criminal prosecution was
two days later respondent filed a criminal indispensable. Nor was a formal charge in
case for qualified theft against petitioner. court for the acts prejudicial to the interest
The petitioner insisted on her innocence, of the employer a pre-requisite for a valid
reiterating that on the time the alleged crime dismissal. The criminal charges initiated by
took place she, together with her two the company against private respondents
salesgirls, had first counted the cash before and the finding after preliminary
placing it in a plastic bag that she deposited investigation of their prima facieguilt of the
inside the drawer of the cabinet with the offense charged constitute substantial
knowledge of the other salesgirls. One of the evidence ermination based on loss of trust
salesgirls however averred that she had left and confidence.
the petitioner alone because the latter had The Labor Tribunal need not have
still to change her clothes; and that that was gone further as to require private
the first time that the petitioner had ever respondent’s conviction of the crime
asked to be left behind, for they had charged, or inferred innocence on their part
previously left the kiosk together. from their release from detention, which
Respondent Vina declared that the was mainly due to their posting of bail. While
petitioner did not call the office of Minex for there is a valid ground to terminate
the pick-up of the P39,194.50 cash sales on petitioner, respondent however failed to
that faithful day in violation of the standard comply with the requirements of due
operating procedure (SOP) requiring cash process prior to the termination under the
proceeds exceeding P10,000.00 to be implementing rules and regulations of the
reported for pick-up if the amount could not Labor Code.
be In all cases of termination of
deposited in the bank. After the preliminary employment, the following standards of due
investigation, the fiscal rendered a process shall be substantially observed. For
resolution finding probable cause for termination of employment based on just
qualified theft and recommending the filing causes as defined in Article 282 of the Labor
of an information against the petitioner. Code:
Thus, she was charged with qualified theft (i) A written notice served on the
before the Regional Trial Court. employee specifying the ground or grounds
 232

for termination, and giving said employee master. De Gracia left the master’s cabin
reasonable opportunity within which to after a few minutes and was heard shouting
explain his side. very loudly somewhere down the corridors.
(ii) A hearing or conference during The incident was evidenced by the Captain’s
which the employee concerned, with the Report sent on said date.
assistance of counsel if he so desires is given Furthermore, Skippers also claim
opportunity to respond to the charge, that on January 22, 1999, Aprosta, De Gracia,
present his evidence, or rebut the evidence Lata and Daza arrived in the master’s cabin
presented against him. and demanded immediate repatriation
(iii) A written notice of termination because they were not satisfied with the
served on the employee, indicating that ship. De Gracia, et al. threatened that they
upon due consideration of all the may become crazy any moment and
circumstances, grounds have been demanded for all outstanding payments due
established to justify his termination to them. The incident is evidenced by a telex
In this case the respondents of Cosmoship MV Wisdom to skippers but
immediately had her arrested and had conflicting dates.
investigated by the police authorities for De Gracia claims that Skippers failed
qualified theft which constitutes a denial of to remit their respective allotments,
her right to due process of law, consisting in compelling them to vent their grievances
the opportunity to be heard and to defend with the Romanian Seafarers Union. On
herself. In fact, their decision to dismiss her January 28, 1999, the Filipino seafarers were
was already final even before the police unceremoniously discharged and
authority commenced an investigation of immediately repatriated. Upon arrival in the
the theft, the finality being confirmed by no Philippines, they filed a complaint for illegal
less than Sylvia Mariano herself telling the dismissal with the LA.
petitioner during their phone conversation The LA dismissed the seafarers’
following the latter’s release from police complaint as the seafarers’ demand for
custody that she (Sylvia) “no longer wanted immediate repatriation due to the
to see” her. dissatisfaction with the ship is considered a
The fact that the petitioner was the voluntary pre-termination of employment.
only person suspected of being responsible Such act was deemed akin to resignation
for the theft aggravated the denial of due recognized under Article 285 of the LC. The
process. LA gave credence to the telex of the master’s
report that the seafarers indeed demanded
immediate repatriation.
The NLRC agreed with the LA’s
decision. The CA however reversed the LA’s
and the NLRC’s decision. The Court deemed
161 Skippers United Pacific vs. Doza, G.R. the telex message as a self-serving
No. 175558, February 8, 2012 document that does not
satisfy the requirement of substantial
Facts: evidence, or that amount of relevant
Petitioner deployed De Gracia, Lata evidence which a reasonable mind might
and Aprosta to work on board the vessel MV accept as adequate to justify the conclusion
Wisdom Star. On December 3 1998, Skippers that petitioners indeed voluntarily
alleges that De Garcia smelling strongly of demanded their immediate repatriation.
alcohol, went to the cabin of Gabriel Oleszek, Aggrieved, Skippers appeals the case with
MV Wisdom Stars’ Master. Skippers claims the Supreme Court.
that he was rude and shouted noisily to the
 233

indeed, De Gracia, et al., voluntarily pre-

Issue: terminated their contracts, then De Gracia,
Whether or not the seafarer’s et al., should have submitted their written
demand for immediate repatriation can be resignations. Article 285 of the Labor Code
considered an act of voluntary resignation. recognizes termination by the employee of
the employment contract by "serving
Ruling: written notice on the employer at least one
For a worker's dismissal to be (1) month in advance." Given that provision,
considered valid, it must comply with both the law contemplates the requirement of a
procedural and substantive due process. The written notice of resignation. In the absence
legality of the manner of dismissal of a written resignation, it is safe to presume
constitutes procedural due process, while that the employer terminated the seafarers.
the legality of the act of dismissal constitutes In addition, the telex message relied upon by
substantive due process. the Labor Arbiter and NLRC bore conflicting
Procedural due process in dismissal cases dates of 22 January 1998 and 22 January
consists of the twin requirements of notice 1999, giving doubt to the veracity and
and hearing. The employer must furnish the authenticity of the document.
employee with two written notices before In 22 January 1998, De Gracia, et al., were
the termination of employment can be not even employed yet by the foreign
effected: (1) the first notice apprises the principal.
employee of the particular acts or omissions
for which his dismissal is sought; and (2) the
second notice informs the employee of the 162 SEBASTIAN F. OASAY, JR. Petitioner, v.
employer's decision to dismiss him. Before PALACIO DEL GOBERNADOR
the issuance of the second notice, the CONDOMINIUM CORPORATION and/or
requirement of a hearing must be complied OMAR T. CRUZ, Respondents.
with by giving the worker an opportunity to
be heard. It is not necessary that an actual FACTS:
hearing be conducted. Respondent Palacio Del Gobernador
Substantive due process, on the other hand, Condominium Corporation (PDGCC) is a
requires that dismissal by the employer be government-owned and controlled
made under a just or authorized cause under corporation organized for the purpose of
Articles 282 to 284 of the Labor Code. owning and arranging the common areas of
In this case, there was no written Palacio Del Gobernador Condominium. The
notice furnished to De Gracia, et al., said condominium, all the units therein
regarding the cause of their dismissal. having been acquired by the government,
Cosmoship furnished a written notice (telex) houses various government agencies such as
to Skippers, the local manning agency, the Commission on Elections (COMELEC),
claiming that De Gracia, et al., were Bureau of Treasury and the Intramuros.
repatriated because the latter voluntarily The Board of Directors of PDGCC,
pre-terminated their contracts. This telex through its Board Resolution No. 013 dated
was given credibility and weight by the Labor October 27, 1994, appointed the petitioner
Arbiter and NLRC in deciding that there was as its permanent Building Administrator
pre-termination of the employment contract effective September 1, 1994.
"akin to resignation" and no illegal dismissal. PDGCC President Omar T. Cruz (Cruz)
However, as correctly ruled by the CA, the required the petitioner to submit a written
telex message is "a biased and self-serving report on the allowances and other
document that does not satisfy the compensation, in connection with his duties
requirement of substantial evidence." If, as Building Administrator, that he received
 234

from the government offices housed in the Whether or not the dismissal by
condominium. Apparently, the petitioner reason of breach of trust was valid
had been earning additional income for
services that he rendered for the COMELEC. HELD:
Petitioner submitted his written Yes.
report wherein he admitted that he had Labor Law
received additional compensation from the The first requisite for dismissal on the
COMELEC for services which he rendered ground of loss of trust and confidence is that
after his regular working hours and on the employee concerned must be holding a
Saturdays, Sundays and holidays. He position of trust and confidence.
explained that the COMELEC had caused the Here, it is indubitable that the
rehabilitation of the 8th floor of the petitioner holds a position of trust and
condominium and that he was tasked by the confidence. The position of Building
former, for a stated compensation, to Administrator, being managerial in nature,
supervise and monitor the rehabilitation. necessarily enjoys the trust and confidence
After investigating the allegations of the employer.
against the petitioner, Atty. Bernardo The second requisite is that there
recommended to Cruz and the PDGCC Board must be an act that would justify the loss of
of Directors the filing of appropriate charges trust and confidence. Loss of trust and
against the petitioner for violation of confidence, to be a valid cause for dismissal,
Republic Act No. 3019 (Anti-Graft and must be based on a willful breach of trust
Corrupt Practices Act) and Republic Act No. and founded on clearly established facts. The
6713 (Code of Conduct and Ethical Standards basis for the dismissal must be clearly and
for Public Officials and Employees). convincingly established but proof beyond
Cruz then directed the petitioner to reasonable doubt is not necessary.
turn over all of his accountabilities to PDGCC. PDGCC had established, by clear and
The foregoing was acknowledged by the convincing evidence, the petitioners acts
petitioner in his letter to the PDGCC Board of which justified its loss of trust and
Directors dated November 17, 2006. confidence on the former. On this score, the
Nevertheless, on January 23, 2007, LA keenly observed that:
the petitioner filed a Complaint for Complainants breach of the trust
constructive dismissal with the arbitration reposed in him as Building Administrator is
branch of the National Labor Relations sufficiently supported by the evidence on
Commission (NLRC) in Quezon City against record. Complainants admission that he
PDGCC and Cruz. received remuneration from Commission on
The Labor Arbiter (LA) rendered a Elections (COMELEC) whose office is housed
Decision dismissing the petitioners at respondent Palacio Del Gobernador
complaint, finding that there was substantial Condominium justified his termination of
evidence to conclude that the petitioner had employment. Complainant cannot assert
breached the trust and confidence of that he rendered services to COMELEC only
PDGCC. The NLRC affirmed the LA decision. after office hours as his functions as Building
Petitioner filed a petition for certiorari Coordinator would definitely have favored
before the CA but the same was denied. COMELEC in the performance of his
Undaunted, the petitioner instituted the functions during regular office hours.
instant petition for review on certiorari Likewise, as Building Administrator,
before this Court. his active vigilance in reporting and
informing the respondents as to the expired
ISSUE: license to operate of the EGB Security
Agency and its revoked SEC Certificate of
 235

Registration was his duty and look-out. In the Relying on the finding and Nasipit Lumber
instant case, complainant instead of Company v. NLRC, 257 Phil. 937 (1989),
informing the respondents, kept this Lynvil asserted there was sufficient basis for
information from the knowledge of the valid termination of employment of
respondents and allowed the security respondents based on serious misconduct
agency to render security services to the and/or loss of trust and confidence.
premises of respondents despite its expired
license and revoked SEC Certificate of Issues:
Registration. Whether a finding of the city
What escapes the foregoing prosecutor of probable cause to indict
argument of the petitioner is that he is an employees of qualified theft is sufficient
employee of PDGCC and not of the basis for valid termination for serious
COMELEC. It is undisputed that PDGCC did misconduct and/or loss of trust or
not authorize nor was it informed of the confidence?
services rendered by the petitioner in favor Whether the employees were validly
of the COMELEC. To make matters worse, terminated?
the said services rendered by the petitioner
are, essentially, related to the performance Ruling:
of his duties as a Building Administrator of On the first issue, the Supreme Court
the condominium. ruled in the negative. We ruled that proof
DENIED beyond reasonable doubt of an employee’s
misconduct is not required when loss of
confidence is the ground for dismissal. It is
163 Lynvil Fishing Enterprises vs. Ariola, sufficient if the employer has “some basis”
G.R. No. 181974, February 1, 2012 to lose confidence or that the employer has
reasonable ground to believe or to entertain
Facts: the moral conviction that the employee
Petitioner Lynvil Fishing Enterprises, concerned is responsible for the misconduct
Inc. (Lynvil) is engaged in deep-sea fishing. and that the nature of his participation
Respondents’ services were engaged in therein rendered him absolutely unworthy
various capacities: of the trust and confidence demanded by his
Andres G. Ariola, captain; Jessie D. position.
Alcovendas, chief mate; Jimmy B. Calinao, Lynvil cannot argue that since the
chief engineer; Ismael G. Nubla, cook; Elorde Office of the Prosecutor found probable
Bañez, oiler; and Leopoldo G. Sebullen, cause for theft the Labor Arbiter must follow
bodegero. the finding as a valid reason for the
On Aug. 1, 1998, Lynvil received a termination of respondents’ employment.
report from Ramonito Clarido, one of its The proof required for purposes that differ
employees, that on July 31, 1998, he from one and the other are likewise
witnessed that while on board the company different.
vessel Analyn VIII, respondents conspired On the second question, the Court
with one another and stole eight tubs of stated that nonetheless, even without
“pampano” and “tangigue” fish and reliance on the prosecutor’s finding, we find
delivered them to another vessel. that there was valid cause for respondents’
Petitioner filed a criminal complaint dismissal.
against respondents before the office of the Just cause is required for a valid
City Prosecutor of Malabon City which found dismissal. The Labor Code provides that an
probable cause for indictment of employer may terminate an employment
respondents for the crime of qualified theft. based on fraud or willful breach of the trust
 236

reposed on the employee. Such breach is second, it satisfactorily appears that the
considered willful if it is done intentionally, employer and the employee dealt with each
knowingly, and purposely, without other on more or less equal terms with no
justifiable excuse, as distinguished from an moral dominance exercised by the former or
act done carelessly, thoughtlessly, the latter.
heedlessly or inadvertently. It must also be In the context of the facts that: (1) the
based on substantial evidence and not on respondents were doing tasks necessarily to
the employer’s whims or caprices or Lynvil’s fishing business with positions
suspicions otherwise, the employee would ranging from captain of the vessel to
eternally remain at the mercy of the bodegero; (2) after the end of a trip, they will
employer. Loss of confidence must not be again be hired for another trip with new
indiscriminately used as a shield by the contracts; and (3) this arrangement
employer against a claim that the dismissal continued for more than ten years, the clear
of an employee was arbitrary. And, in order intention is to go around the security of
to constitute a just cause for dismissal, the tenure of the respondents as regular
act complained of must be work-related and employees. And respondents are so by the
shows that the employee concerned is unfit express provisions of the second paragraph
to continue working for the employer. In of Article 280, thus: xxx Provided, That any
addition, loss of confidence as a just cause employee who has rendered
for termination of employment is premised at least one year of service, whether such
on the fact that the employee concerned service is continuous or broken, shall be
holds a position of responsibility, trust and considered a regular employee with respect
confidence or that the employee concerned to the activity in which he is employed and
is entrusted with confidence with respect to his employment shall continue while such
delicate matters, such as the handling or activity exists.
care and protection of the property and Having found that respondents are
assets of the employer. The betrayal regular employees who may be, however,
of this trust is the essence of the offense for dismissed for cause as we have so found in
which an employee is penalized. Breach of this case, there is a need to look into the
trust is present in this case. procedural requirement of due process in
However, Lynvil contends that it Section 2, Rule XXIII, Book V of the Rules
cannot be guilty of illegal dismissal because Implementing the Labor Code. It is required
the private respondents were employed that the employer furnish the employee with
under a fixed-term contract which expired at two written notices: (1) a written notice
the end of the voyage. Contrarily, the private served on the employee specifying the
respondents (employees) contend that they ground or grounds for termination, and
became regular employees by reason of giving to said employee reasonable
their continuous hiring and performance of opportunity within which to explain his side;
tasks necessary and desirable in the usual and (2) a written notice of termination
trade and business of Lynvil. served on the employee indicating that upon
Jurisprudence, laid two conditions due consideration of all the circumstances,
for the validity of a fixed-contract agreement grounds have been established to justify his
between the employer and employee: first, termination. In this case, it is clear that the
the fixed period of employment was employees were not given the final written
knowingly and voluntarily agreed upon by notices of dismissal.
the parties without any force, duress, or The Court ruled that since employees
improper pressure being brought to bear were dismissed for just cause, they were not
upon the employee and absent any other entitle to separation pay and backwages.
circumstances vitiating his consent; or However, they were to be granted nominal
 237

damages for failure of the employer to Petitioners appealed to NLRC. NLRC reversed
comply with statutory due process. the LA’s decision and found respondent to
have been validly dismissed. The NLRC,
however, upheld the LA’s finding that
164 Norkis vs. Buat - GR No. 185255 petitioners are liable to respondent for
unpaid wages. Respondent filed MR. It was
FACTS: denied so he filed with the CA a petition for
Respondent Delfin S. Descallar was certiorari. CA reinstated with modification
assigned at the Iligan City Branch of the decision of the LA. Respondent filed a
petitioner Norkis Distributors, Inc., a motion for clarification as to the awards of
distributor of Yamaha motorcycles. He separation pay and back wages while
became a regular employee and was petitioners filed MR. CA issued a Resolution
promoted as Branch Manager. He acted as stating that as regards respondent’s motion
branch administrator and had supervision for clarification, the separation pay and back
and control of all the employees. wages shall be reckoned from the time
Respondent was also responsible for sales respondent was illegally suspended until
and collection finality of its earlier Decision. The CA likewise
In a memorandum, petitioners denied petitioners’ MR. Hence, petitioners
required respondent to explain in writing filed the present petition.
within 48 hrs why he should not be penalized
or terminated for being absent without ISSUE:
official leave (AWOL) or rendering under- Was the failure of respondent to
time service on certain dates. Respondent reach his monthly sales quota a valid basis
explained that he reported to the office on for loss of trust and confidence?
those dates, but he either went to the bank
or followed-up on prospects. As he was still RULING:
within city limits, he did not file any official NO. Loss of trust and confidence as a
leave or travel record. ground for termination of an employee
Norkis conducted an investigation. under Article 282 of the Labor Code requires
Finding that respondent was not able to that the breach of trust be willful, meaning it
prove that he was really in the branch or on must be done intentionally, knowingly, and
official travel, petitioners suspended him for purposely, without justifiable excuse. The
15 days without pay. According to basic premise for dismissal on the ground of
petitioners, respondent admitted during the loss of confidence is that the employee
investigation that he used company time for concerned holds a position of trust and
his personal affairs, but only for a few hours confidence. It is the breach of this trust that
and not the whole day. results in the employer’s loss of confidence
While respondent was still in the employee.
suspended, Norkis also found that Here, there is no question that as
Respondent committed some inappropriate petitioners’ Branch Manager in Iligan City,
and irregular acts such as unexplained low respondent was holding a position of trust
performance of his branch, missing funds, and confidence. He was responsible for the
unauthorized disbursement of funds, administration of the branch, and exercised
irregular transactions. supervision and control over all the
Petitioners terminated respondent’s employees. He was also incharge of sales
services for loss of trust and confidence and and collection.
gross inefficiency. Respondent filed a In termination cases, the burden of
complaint for illegal suspension and illegal proof rests upon the employer to show that
dismissal. LA favored respondent. the dismissal is for a just and valid cause and
 238

failure to do so would necessarily mean that up to the finality of its decision modifying the
the dismissal was illegal. The quantum of LA’s decision. In view of the modification of
proof required in determining the legality of monetary awards in the Labor Arbiter’s
an employee’s dismissal is only substantial decision, the time frame for the payment of
evidence. CA correctly held that petitioners back wages and separation pay is
failed to discharge this burden. accordingly modified to the finality of the CA
Failure to reach the monthly sales decision.
quota cannot be considered an intentional WHEREFORE, the petition for review
and unjustified act of respondent amounting on certiorari is DENIED.
to a willful breach of trust on his part that
would call for his termination based on loss
of confidence. This is not the willful breach 165 Armando Ailing, Petitioner vs. Jose B.
of trust and confidence contemplated in Feliciano, Manuel F. San Mateo III, et al.,
Article 282(c) of the Labor Code. Low sales Respondents
performance could be attributed to several
factors which are beyond respondent’s FACTS:
control. To be a valid ground for an Via a letter dated June 2, 2004,
employee’s dismissal, loss of trust and respondent Wide Wide World Express
confidence must be based on a willful Corporation (WWWEC) offered to employ
breach. To repeat, a breach is willful if it is petitioner Armando Aliling (Aliling) as
done intentionally, knowingly and “Account Executive (Seafreight Sales),” with
purposely, without justifiable excuse. the following compensation package: a
Petitioners having failed to establish monthly salary of PhP 13,000, transportation
by substantial evidence any valid ground for allowance of PhP 3,000, clothing allowance
terminating respondent’s services, we of PhP 800, cost of living allowance of PhP
uphold the finding of the Labor Arbiter and 500, each payable on a per month basis and
the CA that respondent was illegally a 14th month pay depending on the
dismissed. profitability and availability of financial
An illegally dismissed employee is resources of the company. The offer came
entitled to two reliefs: back wages and with a six (6)-month probation period
reinstatement. The two reliefs provided are condition with this express caveat:
separate and distinct. In instances where “Performance during probationary period
reinstatement is no longer feasible because shall be made as basis for confirmation to
of strained relations between the employee Regular or Permanent Status.”
and the employer, separation pay is granted. On June 11, 2004, Aliling and
The normal consequences of respondent’s WWWEC inked an Employment Contract
illegal dismissal, then, are reinstatement under the following terms, among others:
without loss of seniority rights, and payment Conversion to regular status shall be
of back wages computed from the time determined on the basis of work
compensation was withheld from him up to performance; and
the date of actual reinstatement. Where
reinstatement is no longer viable as an Employment services may, at any
option, separation pay equivalent to one time, be terminated for just cause or in
month salary for every year of service should accordance with the standards defined at
be awarded as an alternative. The payment the time of engagement.
of separation pay is in addition to payment Training then started. However,
of back wages. instead of a Seafreight Sale assignment,
The CA merely clarified the period of WWWEC asked Aliling to handle Ground
payment of back wages and separation pay Express (GX), a new company product
 239

launched on June 18, 2004 involving Earlier, however, or on October 4,

domestic cargo forwarding service for Luzon. 2004, Aliling filed a Complaint for illegal
Marketing this product and finding daily dismissal due to forced resignation,
contracts for it formed the core of Aliling’s nonpayment of salaries as well as damages
new assignment. with the NLRC against WWWEC. Appended
Barely a month after, Manuel F. San to the complaint was Aliling’s Affidavit dated
Mateo III (San Mateo), WWWEC Sales and November 12, 2004, in which he stated: “5.
Marketing Director, emailed Aliling to At the time of my engagement, respondents
express dissatisfaction with the latter’s did not make known to me the standards
performance. under which I will qualify as a regular
Thereafter, in a letter of September employee.”
25, 2004, Joseph R. Lariosa (Lariosa), Human Refuting Aliling’s basic posture,
Resources Manager of WWWEC, asked WWWEC stated in its Position Paper dated
Aliling to report to the Human Resources November 22, 2004 that, in addition to the
Department to explain his absence taken letter-offer and employment contract
without leave from September 20, 2004. adverted to, WWWEC and Aliling have
Aliling responded two days later. He signed a letter of appointment on June 11,
denied being absent on the days in question, 2004 containing the following terms of
attaching to his reply-letter a copy of his engagement:
timesheet which showed that he worked Additionally, upon the effectivity of
from September 20 to 24, 2004. Aliling’s your probation, you and your immediate
explanation came with a query regarding the superior are required to jointly define your
withholding of his salary corresponding to objectives compared with the job
September 11 to 25, 2004. requirements of the position. Based on the
In a separate letter dated September pre-agreed objectives, your performance
27, 2004, Aliling wrote San Mateo stating: shall be reviewed on the 3rd month to assess
“Pursuant to your instruction on September your competence and work attitude. The 5th
20, 2004, I hereby tender my resignation month Performance Appraisal shall be the
effective October 15, 2004.” While WWWEC basis in elevating or confirming your
took no action on his tender, Aliling employment status from Probationary to
nonetheless demanded reinstatement and a Regular.
written apology, claiming in a subsequent Failure to meet the job requirements
letter dated October 1, 2004 to management during the probation stage means that your
that San Mateo had forced him to resign. services may be terminated without prior
Lariosa’s response-letter of October notice and without recourse to separation
1, 2004, informed Aliling that his case was pay.
still in the process of being evaluated. On WWWEC also attached to its Position
October 6, 2004, Lariosa again wrote, this Paper a memo dated September 20, 2004 in
time to advise Aliling of the termination of which San Mateo asked Aliling to explain
his services effective as of that date owing to why he should not be terminated for failure
his “non-satisfactory performance” during to meet the expected job performance,
his probationary period. Records show that considering that the load factor for the GX
Aliling, for the period indicated, was paid his Shuttles for the period July to September
outstanding salary which consisted of: was only 0.18% as opposed to the allegedly
PhP 4,988.18 (salary for the agreed upon load of 80% targeted for August
September 25, 2004 payroll) 5, 2004. According to WWWEC, Aliling,
Php 1,987.28 (salary for 4 days in instead of explaining himself, simply
October 2004) submitted a resignation letter.
PhP 6,975.46 Total
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In a Reply-Affidavit dated December previously made known by the employer to

13, 2004, Aliling denied having received a the employee at the time of his engagement
copy of San Mateo’s September 20, 2004 (Ibid, citing Sameer Overseas Placement
letter. Agency, Inc. vs. NLRC, G.R. No. 132564,
October 20, 1999).
ISSUE: From our review, it appears that the
Whether or not there was a due labor arbiter, and later the NLRC, considered
process. Aliling a probationary employee despite
finding that he was not informed of the
RULING: reasonable standards by which his
No. The petition is partly meritorious. probationary employment was to be judged.
Petitioner is a regular employee. The CA, on the other hand, citing Cielo
On a procedural matter, petitioner v. National Labor Relations Commission,
Aliling argues that WWWEC, not having ruled that petitioner was a regular employee
appealed from the judgment of CA which from the outset inasmuch as he was not
declared Aliling as a regular employee from informed of the standards by which his
the time he signed the employment probationary employment would be
contract, is now precluded from questioning measured. The CA wrote:
the appellate court’s determination as to the Petitioner was regularized from the
nature of his employment. time of the execution of the employment
Petitioner errs. The Court has, when contract on June 11, 2004, although
a case is on appeal, the authority to review respondent company had arbitrarily
matters not specifically raised or assigned as shortened his tenure. As pointed out,
error if their consideration is necessary in respondent company did not make known
reaching a just conclusion of the case. We the reasonable standards under which he
said as much in Sociedad Europea de will qualify as a regular employee at the time
Financiacion, SA v. Court of Appeals, “It is of his engagement. Hence, he was deemed
axiomatic that an appeal, once accepted by to have been hired from day one as a regular
this Court, throws the entire case open to employee.
review, and that this Court has the authority WWWEC, however, excepts on the
to review matters not specifically raised or argument that it put Aliling on notice that he
assigned as error by the parties, if their would be evaluated on the 3rd and 5th
consideration is necessary in arriving at a just months of his probationary employment. To
resolution of the case.” WWWEC, its efforts translate to sufficient
The Labor Arbiter cryptically held in compliance with the requirement that a
his decision dated April 25, 2006 that: probationary worker be apprised of the
Be that as it may, there appears no showing reasonable standards for his regularization.
that indeed the said September 20, 2004 WWWEC invokes the ensuing holding in
Memorandum addressed to complainant Alcira v. National Labor Relations
was received by him. Moreover, Commission to support its case:
complainant’s tasked where he was assigned Conversely, an employer is deemed to
was a new developed service. In this regard, substantially comply with the rule on
it is noted: notification of standards if he apprises the
“Due process dictates that an employee that he will be subjected to a
employee be apprised beforehand of the performance evaluation on a particular date
conditions of his employment and of the after his hiring. We agree with the labor
terms of advancement therein. Precisely, arbiter when he ruled that:
implicit in Article 281 of the Labor Code is the In the instant case, petitioner cannot
requirement that reasonable standards be successfully say that he was never informed
 241

by private respondent of the standards that Vallota was employed by Prudential

he must satisfy in order to be converted into Guarantee as a Junior Programmer on May
regular status. This rans counter to the 16, 1995. He reported directly to Gerald Dy
agreement between the parties that after Victory, then head of the EDP, until his
five months of service the petitioner’s replacement by respondent Jocelyn Retizos
performance would be evaluated. It is only sometime in 1997. In August of 2005, Vallota
but natural that the evaluation should be was elected to the Board of Directors of the
made vis-à-vis the performance standards Union.
for the job. Private respondent Trifona On November 11, 2005, HR Manager,
Mamaradlo speaks of such standard in her Atty. Rillo informed Union President, Mike
affidavit referring to the fact that petitioner Apostol that PGAI was going to conduct an
did not perform well in his assigned work on-the-spot security check in the
and his attitude was below par compared to Information and Technology Department.
the company’s standard required of him. The inspection team proceeded to
WWWEC’s contention is untenable. the IT Department, and the EDP head,
To note, the June 2, 2004 letter-offer through PGAI network administrator Angelo
itself states that the regularization standards Gutierrez initiated the spot check of IT
or the performance norms to be used are still Department computers, beginning with the
to be agreed upon by Aliling and his one assigned to Vallota. After exploring the
supervisor. WWWEC has failed to prove that contents of all the folders and subfolders in
an agreement as regards thereto has been the "My Documents" folder, a folder named
reached. Clearly then, there were actually no AAwas found, which Vallota claimed to be
performance standards to speak of. And lest about a mutual life fund. Retizos, on the
it be overlooked, Aliling was assigned to GX other hand, asked Vallota if was working for
trucking sales, an activity entirely different MAA Mutual Life and sending them
to the Seafreight Sales he was originally confidential documents of PGAI.
hired and trained for. Thus, at the time of his Sensing that Vallota was being
engagement, the standards relative to his singled out, Apostol insisted that all the
assignment with GX sales could not have computers in the IT Department, including
plausibly been communicated to him as he that of Retizos, be also subjected to a spot
was under Seafreight Sales. Even for this security check. Later, at Retizosoffice, and in
reason alone, the conclusion reached in the presence of Atty. Rillo, Vallota was
Alcira is of little relevant to the instant case. informed that Retizos and Atty. Rillo would
Finally, legal interest shall be imposed print the files found in his computer under
on the monetary awards herein granted at the folder "MAA." Vallota did not object.
the rate of 6% per annum from October 6, After the files were printed, Vallota and the
2004 (date of termination) until fully paid. Union Secretary were asked to sign each
page of the printout. Vallota, however, was
not given a copy of the printed file.
166 PRUDENTIAL GUARANTEE AND On November 14, 2005, Vallota
ASSURANCE EMPLOYEE LABOR UNION and received a memorandum directing him to
SANDY T. VALLOTA, Petitioners, vs. explain within 72 hours why highly
NATIONAL LABOR RELATIONS confidential files were stored in his
COMMISSION, PRUDENTIAL GUARANTEE computer, which also informed him that he
AND ASSURANCE INC., and/or JOCELYN was being placed under preventive
RETIZOS, Respondents. suspension for 30 days effective upon
receipt of the said notice. A second
FACTS: memorandum, also dated November 14,
2005, notified Vallota of the extension of his
 242

preventive suspension for another 30 days,

in view of the fact that the management ISSUE:
needed more time to evaluate the Whether or not Vallota was validly
administrative case against him. dismissed on the ground of loss of trust and
On November 24, 2005, PGAI sent confidence?
him another memorandum requesting
further details on some of the matters he HELD:
raised in his response. In a letter dated The Court discussion in Mabeza v.
December 6, 2005, Vallota requested a National Labor Relations Commission is
conference, to be attended by a Union instructive:
representative and counsel. PGAI sent Loss of confidence as a just cause for
Vallota another memorandum dated dismissal was never intended to provide
December 7, 2005, which, among others, set employers with a blank check for
a new deadline for Vallota to submit his reply terminating their employees. Such a vague,
and evidence in his defense. In compliance all-encompassing pretext as loss of
with the deadline set, Vallota submitted his confidence, if unqualifiedly given the seal of
reply-memorandumdated December 12, approval by this Court, could readily reduce
2005, outlining his response to the charges. to barren form the words of the
Meanwhile, the Union sent a letterto constitutional guarantee of security of
PGAI President Philip K. Rico requesting that tenure. Having this in mind, loss of
a grievance committee be convened and confidence should ideally apply only to cases
that the contents of the computers of other involving employees occupying positions of
IT personnel be similarly produced. The trust and confidence or to those situations
request for the convening of a grievance where the employee is routinely charged
committee was ignored. On December 21, with the care and custody of the employer's
2005, Vallota was given a notice of money or property. To the first class belong
termination of his employment effective managerial employees, i.e., those vested
January 10, 2006 on the ground of loss of with the powers or prerogatives to lay down
trust and confidence. management policies and/or to hire,
Thus, the petitioners filed a transfer, suspend, lay-off, recall, discharge,
complaint for illegal dismissal with claims for assign or discipline employees or effectively
full backwages, moral and exemplary recommend such managerial actions; and to
damages, and attorney fees. the second class belong cashiers, auditors,
On March 31, 2006, Labor Arbiter property custodians, etc., or those who, in
Aliman D. Mangandog rendered a decisionin the normal and routine exercise of their
favor of the petitioners. The respondents functions, regularly handle significant
filed their Memorandum of Appealdated amounts of money or property.
May 19, 2006. On June 30, 2006, the In Bristol Myers Squibb (Phils.), Inc. v.
National Labor Relations Commission Baban,the Court discussed the requisites for
dismissed the appeal on the ground that the a valid dismissal on the ground of loss of
respondents failed to submit a certificate of trust and confidence:
non-forum shopping in accordance with the It is clear that Article 282(c) of the
Rules of Procedure of the NLRC. Labor Code allows an employer to terminate
The respondents filed their Motion the services of an employee for loss of trust
for Reconsideration dated July 17, 2006, and confidence. The right of employers to
which the Union opposed. On October 31, dismiss employees by reason of loss of trust
2007, the NLRC granted the and confidence is well established in
respondentsmotion for reconsideration and jurisprudence.
reversed and set aside the decision of the LA.
 243

The first requisite for dismissal on the and confidence of Vallota employer so as to
ground of loss of trust and confidence is that constitute a valid cause for dismissal. It must,
the employee concerned must be one thus, be determined whether the alleged
holding a position of trust and confidence. basis for dismissal was based on clearly
There are two (2) classes of positions of established facts.
trust. The first class consists of managerial The act alleged to have caused the
employees. They are defined as those vested loss of trust and confidence of PGAI in
with the powers or prerogatives to lay down Vallota was the presence in his computer
management policies and to hire, transfer hard drive of a folder named "MAA"
suspend, lay-off, recall, discharge, assign or allegedly containing files with information
discipline employees or effectively on MAA Mutual Life Philippines, a domestic
recommend such managerial actions. The corporation selling life insurance policies to
second class consists of cashiers, auditors, the buying public, and files relating to PGAI
property custodians, etc. They are defined as internal affairs.
those who in the normal and routine While the law and this Court
exercise of their functions, regularly handle recognize the right of an employer to dismiss
significant amounts of money or property. an employee based on loss of trust and
Xxx confidence, the evidence of the employer
The second requisite is that there must clearly and convincingly establish the
must be an act that would justify the loss of facts upon which the loss of trust and
trust and confidence. Loss of trust and confidence in the employee is based.
confidence to be a valid cause for dismissal To be a valid ground for dismissal,
must be based on a willful breach of trust loss of trust and confidence must be based
and founded on clearly established facts. The on a willful breach of trust and founded on
basis for the dismissal must be clearly and clearly established facts. A breach is willful if
convincingly established but proof beyond it is done intentionally, knowingly and
reasonable doubt is not necessary. purposely, without justifiable excuse, as
Thus, the first question to be distinguished from an act done carelessly,
addressed is whether Vallota held a position thoughtlessly, heedlessly or inadvertently. It
of trust and confidence. Vallota was must rest on substantial grounds and not on
employed by PGAI as a Junior Programmer the employer arbitrariness, whims, caprices
assigned to the EDP Department. Based on or suspicion; otherwise, the employee would
the standards set by previous jurisprudence, remain eternally at the mercy of the
Vallota position as Junior Programmer is employer.Further, in order to constitute a
analogous to the second class of positions of just cause for dismissal, the act complained
trust and confidence. Though he did not of must be work-related and show that the
physically handle money or property, he employee concerned is unfit to continue
became privy to confidential data or working for the employer.Such ground for
information by the nature of his functions. At dismissal has never been intended to afford
a time when the most sensitive of an occasion for abuse because of its
information is found not printed on paper subjective nature.
but stored on hard drives and servers, an In this case, there was no other
employee who handles or has access to data evidence presented to prove fraud in the
in electronic form naturally becomes the manner of securing or obtaining the files
unwilling recipient of confidential found in Vallota computer. In fact, aside
information. from the presence of these files in Vallota
Having addressed the nature of his hard drive, there was no other evidence to
position, the next question is whether the prove any gross misconduct on his part.
act complained of justified the loss of trust There was no proof either that the presence
 244

of such files was part of an attempt to following the Court ruling in the Perez case,
defraud his employer or to use the files for a which was later cited in the recent case of
purpose other than that for which they were Lopez v. Alturas Group of Companies, such
intended. If anything, the presence of the formal hearing became mandatory. After
files reveals some degree of carelessness or PGAI failed to affirmatively respond to such
neglect in his failure to delete them, but it is request, it follows that the hearing
an extremely farfetched conclusion requirement was not complied with and,
bordering on paranoia to state that it is part therefore, Vallota was denied his right to
of a larger conspiracy involving corporate procedural due process.
espionage. Reinstatement and backwages - In
Moreover, contrary to the light of the above discussion, Vallota is
respondentsallegations, the MAA files found entitled to reinstatement and backwages,
in Vallota computer, the prospectus and reckoned from the date he was illegally
corporate profile, are not sensitive dismissed until the finality of this decision in
corporate documents. These are documents accordance with jurisprudence.
routinely made available to the public, and In view of the strained relations
serve as means to inform the public about between Vallota and PGAI, however, it is not
the company and to disseminate in the best interest of the parties, nor is it
information about the products it sells or the advisable or practical to order
services it provides, in order that potential reinstatement. Where reinstatement is no
clients may make a sound and informed longer viable as an option, separation pay
decision whether or not to purchase or avail equivalent to one (1) month salary for every
of such goods and services. year of service should be awarded as an
If anything, the presence of the files alternative. It must be stressed, however,
would merely merit the development of that an illegally dismissed employee is
some suspicion on the part of the employer, entitled to two reliefs: backwages and
but should not amount to a loss of trust and reinstatement, which are separate and
confidence such as to justify the termination distinct. In Golden Ace Builders v. Tagle, it
of his employment. Such act is not of the was written:
same class, degree or gravity as the acts that Thus, an illegally dismissed employee
have been held to be of such character. is entitled to two reliefs: backwages and
While Vallota act or omission may have been reinstatement. The two reliefs provided are
done carelessly, it falls short of the standard separate and distinct. In instances where
required for termination of employment. It reinstatement is no longer feasible because
does not manifest either that the employee of strained relations between the employee
concerned is unfit to continue working for and the employer, separation pay is granted.
his employer. In effect, an illegally dismissed employee is
Procedural due process entitled to either reinstatement, if viable, or
requirements for termination - In this case, separation pay if reinstatement is no longer
the two-notice requirement was complied viable, and backwages.
with. By the petitionersown admission, PGAI The normal consequences of
issued to Vallota a written Notice of Charges respondentsillegal dismissal, then, are
& Preventive Suspension dated November reinstatement without loss of seniority
14, 2005. After an exchange of memoranda, rights, and payment of backwages computed
PGAI then informed Vallota of his dismissal from the time compensation was withheld
in its decision dated December 21, 2005. up to the date of actual reinstatement.
Given, however, that the petitioners Where reinstatement is no longer viable as
expressly requested a conference or a an option, separation pay equivalent to one
convening of a grievance committee, (1) month salary for every year of service
 245

should be awarded as an alternative. The Private respondent contends that it never

payment of separation pay is in addition to terminated petitioners services. Private
payment of backwages. respondent claims that Fuerte was demoted
Velasco v. National Labor Relations pursuant to a company policy intended to
Commission, emphasizes: foster
The accepted doctrine is that competition among its employees.
separation pay may avail in lieu of Under this scheme, private
reinstatement if reinstatement is no longer respondents employees are required to
practical or in the best interest of the parties. comply with a
Separation pay in lieu of reinstatement may monthly sales quota. Should a supervisor
likewise be awarded if the employee decides such as FUERTE fail to meet his quota for a
not to be reinstated. certain
Under the doctrine of strained number of consecutive months, he will be
relations, the payment of separation pay is demoted, whereupon his supervisors
considered an acceptable alternative to allowance will
reinstatement when the latter option is no be withdrawn and be given to the individual
longer desirable or viable. On one hand, such who takes his place. When the employee
payment liberates the employee from what concerned succeeds in meeting the quota
could be a highly oppressive work again, he is re-appointed supervisor and his
environment. On the other hand, it releases allowance is restored.
the employer from the grossly unpalatable
obligation of maintaining in its employ a
worker it could no longer trust. ISSUE:
GRANTED WON Fuerte was constructively
dismissed.

167 DANILO LEONARDO vs. NATIONAL HELD:

LABOR RELATIONS COMMISSION NO. An employer acts well within its
rights in transferring an employee as it sees
FACTS: fit
AURELIO FUERTE was employed by provided that there is no demotion in rank or
REYNALDOS MARKETING CORPORATION his diminution in pay. ] The two circumstances
compensation was P122.00 a day, are
augmented by a weekly supervisors deemed badges of bad faith, and thus
allowance of P600.00. constitutive of constructive dismissal.
FUERTE alleges that he was instructed to Constructive
report at private respondents main office dismissal is defined in the following manner:
where he was informed by the companys an involuntary resignation resorted to when
personnel manager that he would be continued employment becomes
transferred to impossible, unreasonable, or unlikely; when
its Sucat plant due to his failure to meet his there is a
sales quota, and for that reason, his demotion in rank or diminution in pay; or
supervisors when a clear discrimination, insensibility or
allowance would be withdrawn. For a short disdain by
time, FUERTE reported for work at the Sucat an employer becomes unbearable to the
plant; employee. To constitute such a ground for
however, he protested his transfer, dismissal,
subsequently filing a complaint for illegal there must be (1) failure to report for work
termination. or absence without valid or justifiable
 246

reason; and Delicana during their discussions for a

(2) a clear intention, as manifested by some possible settlement since respondents
overt acts, to sever the employer-employee themselves later on informed the said
relationship. tribunal that at the time of the said
discussions, they no longer considered Atty.
Delicana as their counsel. Despite this, the
168 Julie’s Bakeshop and/or Edgar Labor Arbiter still required the parties to
Reyes, Petitioners, vs. HENRY ARNAIZ, submit their respective position papers. And
EDGAR NAPAL,⃰ and Jonathan as respondents’ position paper was filed late
Tolores, Respondents. and no evidence was attached to prove the
allegations therein, the Labor Arbiter
FACTS: resolved to dismiss the complaints.
Julie’s Bakeshop and/or Edgar Reyes NLRC overruled the Decision of the
(Reyes) assail the decision of the CA which Labor Arbiter and held that the burden of
reversed the Resolutions of the NLRC and proof lies on herein petitioners as Reyes
ordered petitioners to reinstate respondents admitted being the employer of Tolores.
Henry Arnaiz (Arnaiz), Edgar Napal (Napal) Hence, petitioners not Tolores, had the duty
and Jonathan Tolores (Tolores) and to pay to advance proof. With respect to Arnaiz and
them their backwages for having been Napal, the NLRC noted that since their
constructively dismissed, as well as their alleged employer was not impleaded, said
other monetary benefits. respondents’ cases should be remanded to
the Labor Arbiter, and tried as new and
THE CASE: separate cases.
Reyes hired respondents as chief NLRC (MR) found merit in
bakers in his three franchise branches of respondents’ Motion for
Julie’s Bakeshop in Sibalom and San Jose, Reconsideration. The NLRC ruled that
Antique. Respondents filed separate respondents’ demotion in rank from chief
complaints against petitioners for bakers to utility/security personnel is
underpayment of wages, payment of tantamount to constructive dismissal which
premium pay for holiday and rest day, entitles them to the reliefs available to
service incentive leave pay, 13th month pay, illegally dismissed employees. NLRC
cost of living allowance (COLA) and ratiocinated that the employer bears the
attorney’s fees. These complaints were later burden of proving that the employees
on consolidated. received their wages and benefits. In this
Subsequently, in a memorandum case, however, no proof of such payment
dated February 16, 2000, Reyes reassigned was presented by the petitioners.
respondents as utility/security personnel NLRC (MR NANAMAN), in its
tasked to clean the outside vicinity of his Resolution dated December 18, 2003, again
bakeshops and to maintain peace and order reconsidered its own ruling and held that
in the area. Upon service of the memo, respondents were not dismissed, either
respondents, however, refused to sign the actually or constructively, but instead
same and likewise refused to perform their willfully disobeyed the return to work order
new assignments by not reporting for work. of their employer. The NLRC upheld
petitioners’ prerogative to transfer
LABOR ARBITER: respondents if only to serve the greater
expressed dismay over respondents’ interest, safety and well-being of the buying
lack of good faith in negotiating a public by forestalling irregular acts of said
settlement. The Labor Arbiter denounced employees. The NLRC then put the blame on
the way respondents dealt with Atty. respondents for disobeying the lawful orders
 247

of their employer, noting that it was the In constructive dismissal cases, the
same attitude displayed by them in their employer has the burden of proving that
dealings with their counsel, Atty. Delicana, in the transfer of an employee is for just or
the proceedings before the Labor Arbiter. valid ground, such as genuine business
CA ruled that respondents were necessity. The employer must demonstrate
constructively dismissed since their that the transfer is not unreasonable,
designation from chief bakers to inconvenient, or prejudicial to the
utility/security personnel is undoubtedly a employee and that the transfer does not
demotion in rank which involved “a drastic involve a demotion in rank or a diminution
change in the nature of work resulting to a in salary and other benefits. “If the
demeaning and humiliating work employer fails to overcome this burden of
condition.” Further, respondents could not proof, the employee’s transfer is
be held guilty of abandonment of work as tantamount to unlawful constructive
this was negated by their immediate filing of dismissal.”
complaints to specifically ask for In this case, petitioners insist that the
reinstatement. transfer of respondents was a measure of
self-preservation and was prompted by a
ISSUE: desire to protect the health of the buying
WAS THE TRANSFER/REASSIGNMENT public, claiming that respondents should be
OF RESPONDENTS TO ANOTHER POSITION transferred to a position where they could
WITHOUT DIMINUTION IN PAY AND OTHER not sabotage the business pending
PRIVILEGES TANTAMOUNT TO resolution of their cases. According to
CONSTRUCTIVE DISMISSAL? petitioners, the possibility that respondents
might introduce harmful substances to the
HELD: bread while in the performance of their
The Court of Appeals is correct in duties as chief bakers is not imaginary but
reviewing the findings of the National Labor real as borne out by what Tolores did in one
Relations Commission. ( reinstatement of the bakeshops in Culasi, Antique where he
without loss of seniority rights, full was assigned as baker.
backwages, inclusive of allowances, and This postulation is not well-taken. On
other benefits or their monetary equivalent, the contrary, petitioners failed to satisfy the
computed from the time their compensation burden of proving that the transfer was
was withheld up to the time of their actual based on just or valid ground. Petitioners’
reinstatement, should be granted) bare assertions of imminent threat from the
The transfer/reassignment of respondents respondents are mere accusations which are
constitutes constructive dismissal. not substantiated by any proof. This Court is
We have held that management is proscribed from making conclusions based
free to regulate, according to its own on mere presumptions or suppositions. An
discretion and judgment, all aspects of employee’s fate cannot be justly hinged
employment, including hiring, work upon conjectures and surmises.
assignments, working methods, time, place The act attributed against Tolores
and manner of work, processes to be does not even convince us as he was merely
followed, supervision of workers, working a suspected culprit in the alleged sabotage
regulations, transfer of employees, work for which no investigation took place to
supervision, lay off of workers and discipline, establish his guilt or culpability. Besides,
dismissal and recall of workers. The exercise Reyes still retained Tolores as an employee
of management prerogative, however, is not and chief baker when he could have
absolute as it must be exercised in good faith dismissed him for cause if the allegations
and with due regard to the rights of labor. were indeed found true. In view of these,
 248

this Court finds no compelling reason to Relations Commission against Galang.

justify the transfer of respondents from Malasugui alleged that she was hired by
chief bakers to utility/security personnel. Galang to take care, oversee and man the
What appears to this Court is that premises of the Davao Royal Garden
respondents’ transfer was an act of Compound (Pangi Property) the main
retaliation on the part of petitioners due to compound of Galang where the orchids and
the former’s filing of complaints against other ornamental plants used for the
them, and thus, was clearly made in bad business were nursed and propagated. In
faith. In fact, petitioner Reyes even admitted November 1998, she became sick with
that he caused the reassignments due to the severe cough and asked for financial
pending complaints filed against him. assistance from Galang for medical check-
“[D]emotion involves a situation in up. The coughing became incessant which
which an employee is relegated to a prompted Galang to bring her to a doctor
subordinate or less important position and made to undergo a series of
constituting a reduction to a lower grade or examinations including chest radiographic
rank, with a corresponding decrease in examination. Thereafter, she was
duties and responsibilities, and usually terminated from work and barred from
accompanied by a decrease in salary.“ entering the Pangi property.
Although there was no diminution in Galang, on the other hand, denied
pay, there was undoubtedly a demotion in that Malasugui was her employee. When the
titular rank. One cannot deny the disparity family driver left the other bunkhouse,
between the duties and functions of a chief Malasugui occupied it and brought along her
baker to that of a utility/security personnel family as well.The Galang family tolerated
tasked to clean and manage the orderliness this arrangement for around six years as an
of the outside premises of the bakeshop. act of kindness. During these times,
Respondents were even prohibited from Malasugui did not look for any job as initially
entering the bakeshop. The change in the intended. They did not require Malasugui to
nature of their work undeniably resulted to pay for rentals, electricity, water and other
a demeaning and humiliating work utilities. In return, Malasugui helped in
condition. weeding, watering, spraying chemicals on
Respondents cannot be faulted for the orchids in gratitude for the hospitality of
refusing to report for work as they were the Galang family. Admittedly, Galang
compelled to quit their job due to a occasionally gave money to Malasugui out of
demotion without any just cause. Moreover, charity. She even answered for the medical
we have consistently held that a charge of expenses of Malasugui when the latter
abandonment is inconsistent with the filing became sick of excessive coughing early in
of a complaint for constructive 1999. She even made an arrangement with a
dismissal. Respondents’ demand to maintain radiologist for her diagnostic examination
their positions as chief bakers by filing a case but Malasugui did not show up at the
and asking for the relief of reinstatement appointed time. When confronted by Galang
belies abandonment. about this, Malasugui packed her belongings
and left the Pangi property. She was not
asked nor forced to leave the premises by
169 MA. MELISSA A. GALANG, Petitioner, any member of the Galang family.
v. JULIA MALASUGUI, Respondent. The Labor Arbiter ruled that there
was an employer-employee relationship
FACTS: between Galang and Malasugui, however, it
Malasugui filed a complaint for illegal ruled that there was no substantial evidence
dismissal before the National Labor that Malasugui was illegally dismissed and
 249

barred from entering the property after she, (5) When the findings of fact are
without any notice to her employer, packed conflicting;
her belongings and left the Pangi property. (6) When the Court of Appeals, in
The NLRC affirmed the decision of the Labor making its findings, went beyond the issues
Arbiter. The CA however ruled that of the case and the same is contrary to the
respondent was illegally dismissed by admissions of both appellant and appellee;
Galang. (7) When the findings are contrary to
those of the trial court [in this case the
ISSUES: administrative bodies of Labor Arbiter and
1. Whether or not Malasugui is an NLRC];
employee of Galang. (8) When the findings of fact are
2. Whether or not Malasugui was conclusions without citation of specific
constructively dismissed. evidence on which they are based;
(9) When the facts set forth in the
HELD: petition as well as in the petitioners' main
Court of Appeals decision is and reply briefs are not disputed by the
affirmed. respondents; and
LABOR LAW (10) When the findings of fact of the
All three, Labor Arbiter, the NLRC and Court of Appeals are premised on the
the CA ruled that there was an employer- supposed absence of evidence and
employee relationship between Galang and contradicted by the evidence on record.
Malasugui, therefore, there is no need to Jurisprudence provides that the
routinely undertake the re-examination of burden of proof to show that the dismissal
the evidence presented by the contending was for a just cause is on the employer.
parties for the factual findings of the labor Respondent has been in the employ
officials who have acquired expertise in their of petitioner for six years when the alleged
own fields are accorded respect and even abandonment happened. Being scolded, if it
finality if affirmed on appeal to the Court of were true, is hardly a reason for a gardener
Appeals. of six years to just pack up and leave the
Such principle cannot, however, work premises where she was even allowed
apply to the finding of illegal dismissal to reside, at a time when she was ill and
against Galang. The Labor Arbiter and the needed medical attention. Indeed, the
NLRC both ruled that there was no illegal alleged scolding is itself incredible. The given
dismissal, but the Court of Appeals reversed reason was that respondent failed to show
such findings. When supported by up at her arranged appointment with the
substantial evidence, the findings of fact of radiologist. It is hard to believe that a sick
the CA are conclusive and binding on the gardener, certainly of minimal means, would
parties and are not reviewable by this Court, refuse the offer of medical services. In fact,
unless the case falls under any of the the basic allegation in respondents
following recognized exceptions: complaint for illegal dismissal was that
(1) When the conclusion is a finding petitioners treatment to her became sour
grounded entirely on speculation, surmises especially when she requested that she be
and conjectures; examined by a doctor for her cough. And,
(2) When the inference made is completely belying the petitioners assertion
manifestly mistaken, absurd or impossible; that respondent failed to show up at the
(3) Where there is a grave abuse of appointed time with the radiologist are two
discretion; certificates issued by Radiologist Susan R.
(4) When the judgment is based on a Gaspar stating that on 30 January 1999 and
misapprehension of facts; on 1 February 1999 respondent had her
 250

chest x-ray taken at the Radiology Section of - In a memorandum dated May 16,
the Polyclinic Davao. 2002 the Ke-e explained that said transfer
The overt act relied upon by was not a demotion since he was holding the
petitioner is not only a doubtful occurrence position only by mere designation and not
but is, if it did transpire, even consistent with appointment. Meanwhile and in view of
the dismissal from employment posited by Cagalawan’s transfer, Ke-e issued an order
the respondent. The factual appraisal of the recalling the former’s previous designation
Court of Appeals is correct. Petitioner was as Acting Head of the disconnection crew of
displeased after incurring expenses for the Balingasag sub-offi.
respondents medical check-up and, it is - Cagalawan eventually stopped
credible that, thereafter, respondent was reporting for work. On July 1, 2002, he fied a
prevented entry into the work premises. This complaint for constructive dismissal before
is tantamount to constructive dismissal. the Arbitration branch of the NLRC against
Constructive dismissalexists where MORESCO II and its
there is cessation of work because continued offirs, Ke-e and Danilo Subrado, in their
employment is rendered impossible, capacities as General Manager and Board
unreasonable or unlikely, as an offer Chairman, respectively.
involving a demotion in rank and a - In reply, Cagalawan claimed that
diminution in pay. Constructive dismissal is a was transferred because he executed an
dismissal in disguise or an act amounting to Affivit in support of his co-employee Jessie
dismissal but made to appear as if it were Rances, who fied an illegal dismissal case
not. against MORESCO II.
DENIED
Issues
MORESCO II thus fied this petition
170 MISAMIS ORIENTAL II ELECTRIC raising the following issues:
SERVICE COOPERATIVE (MORESCO II) VS (1)Was the respondent
VIRGILIO CAGALAWAN constructively dismissed by the petitioner?
(2) Did the Court of Appeals err in
Facts reversing the NLRC?
- MORESCO II, a rural electric
cooperative, hired Cagalawan as a Ruling
Disconnection Lineman on a probationary The petition has no merit MORESCO
basis. On March 1, 1994 Cagalawan was II’s belated submission of evidence cannot
appointed to the same post this time on a be permitted.
permanent basis. Labor tribunals, such as the NLRC, are
- July 17, 2001, he was designated as not precluded from receiving evidence
Acting Head of the disconnection crew in submitted on appeal as technical rules are
one of the sub-offi in Misamis Oriental. In a not binding in cases submitted before them.
Memorandum, MORESCO II General However, any delay in the submission of
Manager Ke-e evidence should be adequately explained
transferred Cagalawan to another area as a and should adequately prove the allegations
member of the disconnection crew. sought to be proven. In the present case,
- In a letter dated May 15, 2002, MORESCO II did not cite any reason why it
cagalawan assailed his transfer claiming he had failed to fie its position paper or present
was effctively demoted to his position as its cause before the Labor Arbiter despite
head of the disconnection crew to a mere suffient notice and time given to do so. Only
member. He also averted that such transfer after an adverse decision was rendered did it
was inconvenient and prejudicial to him. present its defense and rebut the evidence
 251

of Cagalawan by alleging that his transfer legitimate interests. But this prerogative
was should be exercised
made in response to the letter-request of the without grave abuse of discretion and with
area manager of the Gingoog sub-offi asking due regard to the basic elements of justice
for additional personnel to meet its and fair play, such that if there is a showing
collection quota. To our mind, however, the that the transfer was unnecessary or
belated submission of the said letter- inconvenient and prejudicial to the
request without any valid explanation casts employee, it cannot be upheld.46 Here,
doubt on while we fid that the transfer of Cagalawan
its credibility, specially so when the same is neither entails any demotion in rank since he
not a newly discovered evidence. For one, did not have tenurial security over
the letter-request was dated May 8, 2002 or the position of head of the disconnection
a day before the memorandum for crew, nor result to diminution in pay as this
Cagalawan’s transfer was issued. was not suffiently proven by him, MORESCO
MORESCO II could have easily II’s evidence is nevertheless not enough to
presented the letter in the proceedings show that
before the Labor Arbiter for serious said transfer was required by the exigency of
examination. Why it was not presented at the electric cooperative’s business interest.
the earliest opportunity is a serious question Simply stated, the evidence sought to be
which lends credence to Cagalawan’s theory admitted by MORESCO II is not substantial to
that it may have just prove that there was a genuine business
been fabricated for the purpose of appeal. urgency that necessitated the transfer.
It should also be recalled that after xxx xxxClearly, not only was the delay
Cagalawan received th memorandum for his in the submission of MORESCO II’s evidence
transfer to the Gingoog sub-offi, h not explained, there was also failure on its
immediately questioned the basis thereof part to suffiently support its allegation that
through a letter addressed the transfer of Cagalawan was for a
to Ke-e. If at that time there was already a legitimate purpose. This being the case,
letter- request from the Gingoog area MORESCO II’s plea that its evidence be
manager, Ke-e could have easily referred to admitted in the interest of justice does not
o specifid this in his subsequent deserve any merit.xxx xxx
memorandum of May 16, 2002 WHEREFORE, the petition is DENIED.
which served as his response to Cagalawan’s The Decision dated July 26, 2005 or the Court
queries about the transfer. However, the of Appeals in CA-G.R. SP No. 84991 and its
said memorandum was silent in this respect. Resolution dated September 6, 2006, are
Nevertheless, Cagalawan, for his AFFIRMED.
part, faithfully complied with t transfer order SO ORDERED.
but with the reservation to contest its
validity precisely because he was not
adequately informed of its real basis. 171 STANDARD ELECTRIC
The rule is that it is within the ambit MANUFACTURING CORPORATION vs
of the employer’s prerogative to transfer an STANDARD ELECTRIC
employee for valid reasons and according to EMPLOYEES UNION-NAFLU-KMU and
the requirement of its business, provided ROGELIO JAVIER,
that the transfer does not result in demotion
in rank or diminution of salary, benefis and FACTS:
other privileges.45 This Court has always Rogelio Javier was employed by the
considered the management’s prerogative Standard Electric Manufacturing
to transfer its employees in pursuit of its Corporation
 252

(SEMC) as radial spot machine operator in its

Production Department. Javier was a HELD:
member of NO. Respondent Javier was dismissed
the Standard Electric Employees Union- by the petitioner effective February 5, 1996
NAFLU (Union). Javier failed to report for for (a)
work and being AWOL from July 31, 1995 up to January
failed to notify the SEMC of the reason for his 30, 1996; and (b) committing rape. However,
absences. He was arrested and detained for on
the demurrer to evidence, respondent Javier
charge of rape. Later, the SEMC received a was acquitted of the charge. With
letter from Javier, through counsel, respondent Javiers
informing the acquittal, the cause of his dismissal from his
SEMC that Javier was detained for the charge employment turned out to be non-existent.
of rape and for that reason failed to report Respondent Javiers absence from August 9,
for 1995 cannot be deemed as an
work. He requested the SEMC to defer the abandonment of his work.
implementation of its intention to dismiss Abandonment is a matter of
him. The intention and cannot lightly be inferred or
SEMC denied Javiers request and issued a legally presumed
Memorandum terminatin g his employment from certain equivocal acts. To constitute as
for (a) such, two requisites must concur: first, the
having been absent without leave (AWOL) employee must have failed to report for
for more than fifteen days; and (b) for work or must have been absent without valid
committing or
rape. Javier was his release from jail and justifiable reason; and second, there must
shortly thereafter reported for work, but the have been a clear intention on the part of the
SEMC employee to sever the employer-employee
refused to accept him back. relationship as manifested by some overt
Javier filed a Complaint for illegal acts, with
dismissal and averred that since the reason the second element being the more
for his determinative factor. Abandonment as a just
detention for rape was non-existent, the ground for
termination of his employment was illegal. dismissal requires clear, willful, deliberate,
The SEMC averred that Javiers prolonged and unjustified refusa l of the employee to
absences caused irreparable damages to its resume
orderly operation; he had to be replaced so his employment.
that the continuity and flow of production Mere absence or failure to report for
would work, even after notice to return, is not
not be jeopardized. It could not afford to tantamount to abandonment.
wait for Javiers indefinite return from The petitioner acted with precipitate
detention, if at haste in terminating respondent Javiers
all. The SEMC insisted that conformably with employment on the ground that he had
its Rules and Regulations, it was justified in raped the complainant therein. Respondent
dismissing Javier for being absent without Javier had
leave for fifteen days or so. yet to be tried for the said charge. In fine, the
petitioner prejudged him, and pre-empted
ISSUE: the
WON Javier dismissal was valid. ruling of the RTC. The petitioner had, in
effect, adjudged respondent Javier guilty
 253

without due RESOURCES,

process of law. While it may be true that INC.
after the preliminary investigation of the
complaint, FACTS:
probable cause for rape was found and Rufina Soriano worked as Investment
respondent Javier had to be detained, these Counselor in 1977 and eventu ally became
cannot be the
made as legal bases for the immediate Vice-President, Marketing of Kingly
termination of his employment. Commodities Traders and Multi-Resources,
Moreover, the petitioner did not Inc.
accord respondent Javier an opportunity to On 1984, she was charged with allowing or
explain his failing to supervise and monitor certain
absences. It bears stressing that for a activities of investment counsellors in her
dismissal to be validly effected, the twin department (which includes the signing of a
requirements of contract
due process notice and hearing must be opening an account for client, transfer of
observed. In dismissing an employee, an funds and so on, without the knowledge and
employer has authority
the burden of proving that the former of the client of the said Corporation) which
worker has been served two notices: (1) one results in loss of confidence in her.
to apprise Soriano was preventively suspended and
him of the particular acts or omissions for was required to explain her acts of failure to
which his dismissal is sought; and (2) the act. She submitted her detailed answer in
other to her explanation. Thereafter, unsatisfied with
inform him of his employers decision to the
dismiss him. As to the requirement of a explanation of Soriano, the Executive VP and
hearing, the General Manager of Kingly notified Soriano
essence of due process lies in an opportunity that
to be heard, and not always and the Corporation has lost confidence in her
indispensably in ability to discharge the functions of her
an actual hearing. office, thus
But Javier is not entitled to any salary terminated her services.
during the period of his detention. His Soriano filed a complaint for illegal
entitlement suspension and dismissal against Kingly.
to full backwages commenced from the time That, Kingly
the petitioner refused his reinstatement. In acted in bad faith in suspending and
the termination her services and that kingly
instant case, when respondent Javier was violated her right
freed by virtue of the judgment of acquittal, to due process by suspending her
he immediately without the benefit of hearing
immediately proceeded to the petitioner but and argues that
was not accepted back to work; hence, the the notice of preventive suspension was the
reckoning point for the grant of backwages living proof that the corporation had already
started therefrom. concluded she was guilty of the charges
levelled against her even before she could
submit her
172 RUFINA SORIANO vs NLRC & KINGLY written explanation.
COMMODITIES TRADERS AND MULTI-
ISSUE:
 254

Whether or not Rufina Soriano was the grievance procedure was ongoing.
illegally suspended. MPH replied and told respondent to report
to his new assignment for the time being,
HELD: without prejudice to the resolution of the
No. Preventive suspension does not grievance involving the transfer. He
in itself prove that the company had adamantly refused to assume his new post at
prejudged that the Seasons Coffee Shop and instead
Soriano was guilty of the charges she was continued to report to his previous
asked to answer and explain. assignment at Rotisserie. Thus, MPH sent
Preventive suspension may be him several memoranda on various dates,
necessary for the protection of the company, requiring him to explain in writing why he
its should not be penalized for the following
operation and assets, pending investigation offenses: serious misconduct; willful
of the alleged malfeasance or misfeasance disobedience of the lawful orders of the
on the employer; gross insubordination; gross and
part of officers or employees of the company habitual neglect of duties; and willful breach
and pending a decision on the part of th e of trust. Despite the notices from MPH,
company. Delada persistently rebuffed orders for him
Hence, considering the very senior to report to
and sensitive character of petitioner’s his new assignment. According to him, since
position as the grievance machinery under their CBA
head of a Department, a line position and had already been initiated, his transfer must
considering the unauthorized transactions be held in abeyance. Thus, on 9 May 2007,
then just MPH initiated administrative proceedings
discovered by the Kingly, the Court belie that against him.
the preventive suspension was an arbitrary
and Issue:
capricious act amounting to bad faith on the Whether MPH retained the authority
part of Kingly. to continue with the administrative case
against Delada for insubordination and
173 Manila Pavilion Hotel vs. Delada, G.R. willful disobedience of the transfer order.
No. 189947, January 25, 2012
Rulings:
Facts: Accordingly, we rule in this case that
Delada was the Union President of MPH did not lose its authority to discipline
the Manila Pavilion Supervisors Association respondent for his continued refusal to
at MPH. He was originally assigned as Head report to his new assignment. In relation to
Waiter of Rotisserie, a fine-dining restaurant this point, we recall our Decision in Allied
operated by petitioner. Pursuant to a Banking Corporation v. Court of Appeals. In
supervisory personnel reorganization Allied Banking Corporation, employer Allied
program, MPH reassigned him as Bank reassigned respondent Galanida from
Head Waiter of Seasons Coffee Shop, its Cebu City branch to its Bacolod and
another restaurant operated by petitioner at Tagbilaran branches. He refused to follow
the same hotel. Respondent declined the the transfer order and instead filed a
inter-outlet transfer and instead asked for a Complaint before the Labor Arbiter for
grievance meeting on the matter, pursuant constructive dismissal. While the case was
to their Collective Bargaining Agreement pending, Allied Bank insisted that he report
(CBA). He also requested his to his new assignment. When he continued
retention as Head Waiter of Rotisserie while to refuse, it directed him to explain in writing
 255

why no disciplinary action should be meted this respect. MPH had the authority to
out to him. Due to his continued refusal to continue with the administrative
report to his new assignment, Allied Bank proceedings for insubordination and willful
eventually terminated his services. When disobedience against Delada and to impose
the issue of whether he could validly refuse on him the penalty of suspension. As a
to obey the transfer orders was brought consequence, petitioner is not liable to pay
before this Court, we ruled thus: The refusal back wages and other benefits for the period
to obey a valid transfer order constitutes corresponding to the penalty of 90-day
willful disobedience of a lawful order of an suspension.
employer. Employees may object to,
negotiate and seek redress against
employers for rules or orders that they 174 VICENTE SY,,et.al vs. HON. COURT OF
regard as unjust or illegal. However, until APPEALS and JAIME SAHOT
and unless these rules or orders are declared
illegal or improper by competent authority, FACTS:
the employees ignore or disobey them at Jaime Sahot started working as a
their peril. For Galanida’s continued refusal truck helper for family-owned trucking
to obey Allied Bank's transfer orders, we business named
hold that the bank dismissed Galanida for Vicente Sy Trucking. In 1965, he became a
just cause in accordance with Article 282(a) truck driver of the same family business,
of the Labor Code. renamed T.
Galanida is thus not entitled to Paulino Trucking Service, later 6B’s Trucking
reinstatement or to separation pay. Corporation in 1985, and thereafter known
(Emphasis supplied, citations omitted). as SBT
It is important to note what the PVA Trucking Corporation since 1994. In April
said on Delada’s defiance of the transfer 1994, Sahot was already 59 years old. He had
order: been
In fact, Delada cannot hide under the legal incurring absences as he was suffering from
cloak of the grievance machinery of the CBA various ailments. Particularly causing him
or the voluntary arbitration proceedings to pain was
disobey a valid order of transfer from the his left thigh, which greatly affected the
management of the hotel. While it is true performance of his task as a driver. He
that Delada’s transfer to Seasons is the inquired about
subject of the grievance his medical and retirement benefits with the
machinery in accordance with the provisions Social Security System (SSS) on April 25,
of their CBA, Delada is expected to comply 1994, but
first with the said lawful directive while discovered that his premium payments had
awaiting th results of the decision in the not been remitted by his employer.
grievance proceedings. This issue falls Sahot had filed a week-long leave as
squarely in the case of Allied Banking he was medically examined and treated for
Corporation vs. Court of Appeals x x x. EOR,
Pursuant to Allied Banking, unless presleyopia, hypertensive retinopathy G II,
the order of MPH is rendered invalid, there HPM, UTI, Osteoarthritis, and heart
is a presumption of the validity of that order. enlargement.
Since the PVA eventually ruled that the On said grounds, Belen Paulino of the SBT
transfer order was a valid exercise of Trucking Service management told him to
management prerogative, we hereby file a
reverse the Decision and the Resolution of formal request for extension of his leave. At
the CA affirming the Decision of the PVA in the end of his week-long absence, Sahot
 256

applied Art. 284. Disease as a ground for

for extension of his leave for the whole termination- An employer may terminate
month of June, 1994. It was at this time the services
when of an employee who has been found to be
petitioners allegedly threatened to suffering from any disease and whose
terminate his employment should he refuse continued
to go back to employment is prohibited by law or
work. Petitioners then carried out their prejudicial to his health as well as the health
threat and dismissed him from work. He of his co employees: xxx
ended up sick, However, in order to validly
jobless and penniless. Sahot filed, a terminate employment on this ground, Book
complaint for illegal dismissal Petitioners VI, Rule I,
contend that Section 8 of the Omnibus Implementing
Sahot was not illegally dismissed as a driver Rules of the Labor Code requires:
because he was in fact petitioner’s industrial Sec. 8. Disease as a ground for dismissal-
partner. Sahot become an employee of the Where the employee suffers from a disease
company only in year 1994 wh en SBT and his continued employment is prohibited
Trucking by law or prejudicial to his health or to the
Corporation was established and prior he health
went on leave, Sahot was not able to report of his coemployees, the employer shall not
for work terminate his employment unless there i s a
for almost seven days. And after the certification by competent public health
expiration of his leave, he never reported authority that the disease is of such nature
back to work nor or at such a
did he file an extension of his leave. Instead, stage that it cannot be cured within a period
he filed the complaint for illegal dismissal of six (6) months even with proper medical
against treatment. If the disease or ailment can be
the trucking company and its owners. cured within the period, the employer shall
Petitioners add that due to Sahot’s refusal to not
work after terminate the employee but shall ask the
the expiration of his authorized leave of employee to take a leave. The employer shall
absence, he should be deemed to have reinstate such employee to his former
voluntarily position immediately upon the restoration
resigned from his work. They contended that of his normal
Sahot had all the time to extend his leave or health. (Italics supplied).
at The requirement for a medical
least inform petitioners of his health certificate under Article 284 of the Labor
condition. Code cannot be
dispensed with; otherwise, it would sanction
ISSUE: the unilateral and arbitrary determination by
Whether or not there was valid the
dismissal employer of the gravity or extent of the
employee’s illness and thus defeat the public
HELD: policy in
There was an invalid dismissal. Article the protection of labor.
284 of the Labor Code authorizes an In the case at bar, the employer
employer to terminate an employee on the clearly did not comply with the medical
ground of disease, viz: certificate
requirement before Sahot’s dismissal was
 257

effected. In the same case of Sevillana vs. I.T. opportunity to answer and to be heard on his
(International) Corp., we ruled: defense. These, the petitioners failed to do,
Since the burden of proving the even
validity of the dismissal of the employee only for record purposes. What
rests on the management did was to threaten the
employer, the latter should likewise bear employee with dismissal,
the burden of showing that the requisites then actually implement the threat when the
for a valid occasion presented itself because of private
dismissal due to a disease have been respondent’s painful left thigh.
complied with. In the absence of the All told, both the substantive and
required procedural aspects of due process were
certification by a competent public health violated.
authority, this Court has ruled against the Clearly, therefore, Sahot’s dismissal is
validity tainted with invalidity.
of the employee’s dismissal. It is therefore
incumbent upon the private respondents to
prove 175 ALEXANDER B. GATUS v. SOCIAL
by the quantum of evidence required by law SECURITY SYSTEM
that petitioner was not dismissed, or if
dismissed, FACTS:
that the dismissal was not illegal; otherwise, Gatus worked at the Central
the dismissal would be unjustified. This Azucarera de Tarlac beginning on January 1,
Court will 1972. He was a covered member of the SSS.
not sanction a dismissal premised on mere He optionally retired from Central Azucarera
conjectures and suspicions, the evidence de Tarlac upon reaching 30 years of service
must be on January 31, 2002, at the age of 62
substantial and not arbitrary and must be years.By the time of his retirement, he held
founded on clearly established facts the position of Tender assigned at the
sufficient to Distillery Cooling Tower.
warrant his separation from work. In Sometime in 1995, he was diagnosed
addition, we must likewise determine if the to be suffering from Coronary Artery Disease
procedural (CAD): Triple Vessel and Unstable Angina. His
aspect of due process had been complied medical records showed him to be
with by the employer. hypertensive for 10 years and a smoker.
From the records, it clearly appears On account of his CAD, he was given
that procedural due process was not by the SSS the following EC/SSS Permanent
observed in Partial Disability (PPD) benefits: (a) 8
the separation of private respondent by the monthly pensions effective September 1,
management of the trucking company. The 1994 and (b) 4 monthly pensions effective
employer is required to furnish an employee January 3, 1997. He became an SSS
with two written notices before the latter is retirement pensioner on February 1, 2002.
dismissed: (1) the notice to apprise the Sometime in 2003, an SSS audit
employee of the particular acts or omissions revealed the need to recover the EC benefits
for which already paid to him on the ground that his
his dismissal is sought, which is the CAD, being attributed to his chronic
equivalent of a charge; and (2) the notice smoking, was not work-related. He was
informing the notified thereof through a letter dated July
employee of his dismissal, to be issued after 31, 2003.
the employee has been given reasonable
 258

Convinced that he was entitled to the disability or death be compensable, the

benefits, he assailed the decision but the SSS sickness must be the result of an
maintained its position. The SSS also denied occupational disease listed under Annex "A"
his motion for reconsideration. of the said rules with the conditions set
Gatus then elevated the case to the therein satisfied. Otherwise, proof must be
Employers Compensation Commission, shown that the risk of contracting the
which held that although his CAD was a disease is increased by the working
cardiovascular disease listed as an conditions.
occupational disease under Annex A of the Moreover, according to the Annex
Implementing Rules on Employees "A" of the Amended Rules, for an
Compensation, nothing on record occupational disease and the resulting
established the presence of the qualifying disability or death to be compensable, all of
circumstances for responsibility; that it was the following conditions must be satisfied:
incumbent upon him to prove that the 1. The employee's work must involve
nature of his previous employment and the the risks described herein;
conditions prevailing therein had increased 2. The disease was contracted as a
the risk of contracting his CAD; and that he result of the employee's exposure to the
had failed to prove this requisite. described risks;
The Court of Appeals also agreed 3. The disease was contracted within
with the Employees Compensation a period of exposure and under such other
Commission despite petitioner Gatus's factors necessary to contract it;
allegation that his ailment was caused by his 4. There was no notorious negligence
exposure to harmful fuel and smoke on the part of the employee.
emissions due to the presence of methane Cardiovascular diseases are
gas from a nearby biological waste as well as considered as occupational when contracted
a railway terminal where diesel-fed under any of the following conditions:
locomotive engines spewed black smoke. (a) If the heart disease was known to
This allegation, according to the findings, have been present during employment there
was not backed up by any scientific and must be proof that an acute exacerbation
factual evidence. clearly precipitated by the unusual strain by
reason of the nature of his work.
ISSUE: (b) The strain of work that brings
Did the Court of Appeals commit about an acute attack must be of sufficient
grave abuse of discretion in affirming the severity and must be followed within
finding of the ECC that petitioners ailment twenty-four (24) hours by the clinical signs of
is not compensable under Presidential a cardiac insult to constitute causal
Decree No. 626, as amended? relationship.
(c) If a person who was apparently
HELD: asymptomatic before subjecting himself to
Social Security System Benefits - As strain at work showed signs and symptoms
found by the Court of Appeals, petitioner of cardiac injury during the performance of
failed to submit substantial evidence that his work and such symptoms and signs
might have shown that he was entitled to persisted, it is reasonable to claim a causal
the benefits he had applied for. The Supreme relationship.
Court affirmed the findings of the CA that The petitioner failed to submit
according to Section 1, Rule III of the substantial evidence that might have shown
Amended Rules on Employees' that he was entitled to the benefits he
Compensation, a ground for compensability applied for. The quantum of proof needed in
is that for the sickness and the resulting this case is substantial evidence, which
 259

means such relevant evidence as a however, the said amount

reasonable mind might accept as adequate corresponds only to the period between
to support a conclusion. Gatus did not 1993 and 1999; petitioner prayed that he be
discharge the burden of proof imposed granted separation pay computed from his
under the Labor Code to show that his first day of employment in June 1963, but
ailment was work-related. While he might respondent refused. Aside from separation
have been exposed to various smoke pay, petitioner prayed for the payment of
emissions at work for 30 years, he did not service incentive leave for three years as well
submit satisfactory evidence proving that as attorney's fees.
the exposure had contributed to the The Labor Arbiter found for the
development of his disease or had increased respondent, granting him separation pay
the risk of contracting the illness. Neither did from the June 1963 up to the time of
he show that the disease had progressed due separation, and service incentive leave
to conditions in his job as a factory worker. equivalent to 15 days. The NLRC affirmed.
In fact, he did not present any physicians On appeal, the CA reversed the NLRC on the
report in order to substantiate his allegation issue of separation pay.
that the working conditions had increased
the risk of acquiring the cardiovascular Issue:
disease. The assigned errors in the instant
DENIED petition essentially boil down to the
question of whether petitioner is entitled to
separation pay under the provisions of the
176 Villaruel vs. Yeo Han Guan, G.R. No. Labor Code, particularly Article 284 thereof,
169191, June 1, 2011 which reads as follows:
An employer may terminate the
Facts: services of an employee who has been found
Petitioner alleged that in June 1963, to be suffering from any disease and whose
he was employed as a machine operator by continued employment is prohibited by law
Ribonette Manufacturing Company, an or is prejudicial to his health as well as to the
enterprise engaged in the business of health of his co-employees: Provided, That
manufacturing and selling PVC pipes and is he is paid separation pay equivalent to at
owned and managed by herein respondent least one (1) month salary or to one-half (½)
Yeo Han Guan. Over a period of almost month salary for every year of service
twenty (20) years, the company changed its whichever is greater, a fraction of at least six
name four times. Starting in 1993 up to the months being considered as one (1) whole
time of the filing of petitioner's complaint in year.
1999, the company was operating under the
name of Yuhans Enterprises. Despite the Held:
changes in the company's name, petitioner A plain reading of the abovequoted
remained in the employ of respondent. provision clearly presupposes that it is the
Petitioner further alleged that on October 5, employer who terminates the services of the
1998, he got sick and was confined in a employee found to be suffering from any
hospital; on December 12, 1998, he reported disease and whose continued employment is
for work but was no longer permitted to go prohibited by law or is prejudicial to his
back because of his illness; he asked that health as well as to the health of his
respondent allow him to continue working coemployees. It does not contemplate a
but be assigned a lighter kind of work but his situation where it is the employee who
request was denied; instead, he was offered severs his or her employment ties. This is
a sum of P15,000.00 as his separation pay; precisely the reason why Section 8, Rule 1,
 260

Book VI of the Omnibus Rules Implementing way of exception, this Court has allowed
the Labor Code, directs that an employer grants of separation pay to stand as “a
shall not terminate the services of the measure of social justice” where the
employee unless there is a certification by a employee is validly dismissed for causes
competent public health authority that the other than serious misconduct or those
disease is of such nature or at such a stage reflecting on his moral character. [18]
that it cannot be cured within a period of six However, there is no provision in the Labor
(6) months even with proper medical Code which grants separation pay to
treatment. voluntarily resigning employees. In fact, the
On the other hand, the Court agrees rule is that an employee who voluntarily
with the CA in its observation of the resigns from employment is not entitled to
following circumstances as proof that separation pay, except when it is stipulated
respondent did not terminate petitioner's in the employment contract or CBA, or it is
employment: first, the only cause of action sanctioned by established employer practice
in petitioner's original complaint is that he or policy. [19] In the present case, neither
was “offered a very low separation pay”; the abovementioned provisions of the Labor
second, there was no allegation of illegal Code and its implementing rules and
dismissal, both in petitioner's original and regulations nor the exceptions apply
amended complaints and position paper; because petitioner was not dismissed from
and, third, there was no prayer for his employment and there is no evidence to
reinstatement. show that payment of separation pay is
In consonance with the above stipulated in his employment contract or
findings, the Court finds that petitioner was sanctioned by established practice or policy
the one who initiated the severance of his of herein respondent, his employer.
employment relations with respondent. It is Since petitioner was not terminated
evident from the various pleadings filed by from his employment and, instead, is
petitioner that he never intended to return deemed to have resigned therefrom, he is
to his employment with respondent on the not entitled to separation pay under the
ground that his health is failing. Indeed, provisions of the Labor Code. The foregoing
petitioner did not ask for reinstatement. In notwithstanding, this Court, in a number of
fact, he rejected respondent's offer for him cases, has granted financial assistance to
to return to work. separated employees as a measure of social
This is tantamount to resignation. and compassionate justice and as an
Resignation is defined as the voluntary act of equitable concession. Taking into
an employee who finds himself in a situation consideration the factual circumstances
where he believes that personal reasons obtaining in the present case, the Court finds
cannot be that petitioner is entitled to this kind of
sacrificed in favor of the exigency of the assistance.
service and he has no other choice but to In this regard, the Court finds credence in
disassociate himself from his employment. petitioner's contention that he is in the
It may not be amiss to point out at employ of respondent for more than 35
this juncture that aside from Article 284 of years. In the absence of a substantial
the Labor Code, the award of separation pay refutation on the part of respondent, the
is also authorized in the situations dealt with Court agrees with the findings of the Labor
in Article 283 [16] of the same Code and Arbiter and the NLRC that respondent
under Section 4 (b), Rule I, Book VI of the company is not distinct from its
Implementing Rules and Regulations of the predecessors but, in fact, merely continued
said Code[17] where there is illegal dismissal the operation of the latter under the same
and reinstatement is no longer feasible. By owners and the same business venture. The
 261

Court further notes that there is no evidence the higher amount of disability benefits
on record to show that petitioner has any under the Collective Bargaining Agreement
derogatory record during his long years of which respondent entered into with a union
service with respondent and that his of which petitioner was a member. The
employment was severed not by reason of Court of Appeals den ied the petitioner‟s
any infraction on his part but because of his claim. The Supreme Court, in upholding the
failing physical Court of Appeals, held that the burden of
condition. Add to this the willingness of proof rests upon the party who asserts the
respondent to give him financial assistance. affirmative of an issue. And in labor cases,
Hence, based on the foregoing, the Court the quantum of proof necessary is
finds that the award of P50,000.00 to substantial evidence, or such amount of
petitioner as financial assistance is deemed relevant evidence which a reasonable mind
equitable under the circumstances. might accept as adequate to justify a
conclusion. Petitioner had the duty to prove
by substantial evidence his own positive
177 Wilfredo Y. Antiquina v. Magsaysay assertions. He did not discharge this burden
Maritime Corporation and/or Masterbulk of proof when he submitted
Pte., Ltd., G.R. No. 168922. April 13, 2011. photocopied portions of a different CBA
with a different union. Wilfredo Y. Antiquina
Rules of Procedure; liberal construction in v. Magsaysay Maritime Corporation and/or
favor of working class. Masterbulk Pte., Ltd., G.R. No. 168922. April
Petitioner claimed disability benefits 13, 2011. Public office; casual employees.
under a Collective Bargaining Agreement Respondent was a casual teller who was
that the respondent employer entered into dismissed from service by petitioner
with a foreign union. The Court of Appeals without being formally charged. On appeal,
refused to admit the evidence of petitioner the Civil Service Commission (CSC) upheld
showing his membership in the union on the the dismissal and reasoned that respondent
ground that it was submitted only with the was a casual employee, and therefore her
Motion for Reconsideration. The Supreme services may be terminated at any time,
Court, in agreeing to examine the evidence without need of a just cause. Upon review,
belatedly submitted by petitioner, pointed both the Court of Appeals and the Supreme
out that technical rules of procedure shall be Court found that respondent was illegally
liberally construed in favor of the working terminated. The Supreme Court recognized
class in accordance with the demands of its prono uncement in a recent case that
substantial justice. Rules of procedure and “Even a casual or temporary employee
evidence should not be applied in a very rigid enjoys security of tenure and cannot be
and technical sense in labor cases in order dismissed except for cause enumerated in
that technicalities would not stand in the Sec. 22, Rule XIV of the Omnibus Civil Service
way of equitably and completely resolving Rules and Regulations and other pertinent
the rights and obligations of the parties. laws.” However, the Court also went on to
Wilfredo Y. Antiquina v. Magsaysay Maritime state that, despite this new ruling on casual
Corporation and/or Masterbulk Pte., employees, it is not the intention of the
Ltd., G.R. No. 168922. April 13, Court to make the status of a casual
2011. Disability Benefits; entitlement and employee at par with that of a regular
burden of proof. Petitioner suffered a employee, who enjoys permanence of
fractured arm while working on employment. The rule is still that casual
respondent‟s vessel. He filed a complaint for employment will cease automatically at the
permanent disa bility benefits, among end of the period unless renewed. Casual
others. Petitioner claims that he is entitled to employees may also be terminated anytime
 262

though subject to certain conditions or Elmer T. Esguerra (Esguerra) was

qualifications with reference to the CSC hired by Coastal Safeway Marine Services,
Form No. 001. Thus, they may be laid-off Inc. (CSMSI) sometime in 2003 as Third Mate
anytime before the expiration of the for the M/V Mr. Nelson, an ocean-going
employment period provided any of the vessel under the flag of the United Arab
following occurs: (1) when their services are Emirates (UAE) owned by its foreign
no longer needed; (2) funds are no longer principal, Canada & Middle East General
available; (3) the project has already been Trading (CMEGT). Subject to the provisions
completed/finished; or (4) of the POEA-SEC, the contract of
their performance are below par. Philippine employment executed by the parties on 9
Charity Sweepstakes Office Board of May 2003 provided a term of one (1) year
Directors and Reynaldo P. Martin v. Marie and a basic monthly salary of US$800.00 for
Jean C. Lapid, G.R. No. 191940. April 12, a 48-hour work-week, with provisions for
2011. Public office; security of tenure. overtime pay and vacation leave with
Respondent was a casual teller who, having pay.Rather than the aforesaid vessel,
been found guilty of „Discourtesy in the however, it appears that, on 13 May 2003,
Course of Official Duties‟ and of „Grave Esguerra, as Second Officer, eventually
Misconduct‟, was dismissed from service by boarded the vessel M/V Gondwana which
petitioner. On appeal, the Civil Service was likewise manned by CSMSI on behalf of
Commission (CSC) ruled that despite lapses Nabeel Shipmanagement Ltd. Fze. (NSLF).
in procedural due process committed by On 28 June 2003 or after forty six (46)
petitioner employer, the dismissal was days of shipboard employment, Esguerra
proper since respondent belonged to the requested medical attention for back and
category of a casual employee which does chest pains while M/V Gondwana was
not enjoy security of tenure. Hence, she may docked at Port Jebel Ali, UAE. Examined on 5
be separated from service at any time, there July 2003 at the Jebel Ali Medical Centre,
being no need to show cause. The Court of Esguerra was declared "not fit for work until
Appeals disagreed and declared the complete cardiac evaluation is done" and
dismissal illegal. The Supreme Court "advised to rest until then" by Dr. Zarga S.
affirmed the findings of the Court of Appeals. Tulmar. Thereafter, Esguerra insisted on
In doing so, the Court relied on Section 3(2), going home on the ground that he had been
Article XIII of the Constitution which rendered unfit for work. Alleging that he had
guarantees the rights of all workers to yet to receive his salary for June 2003 and
security of tenure. The Court also recognized that his employer was making him shoulder
its pronouncement in a recent case that his repatriation expenses as a consequence
“Even a casual or temporary employee of his failure to finish his contract, Esguerra
enjoys security of tenure and cannot be also sought assistance from the Jebel Ali
dismissed except for cause enumerated in police/coastguard regarding his
Sec. 22, Rule XIV of the Omnibus Civil Service predicament.Subsequent to his arrival in the
Rules and Regulations and other pertinent Philippines on 7 July 2003, Esguerra went to
laws.” the Philippine Heart Center (PHC), the
Philippine Orthopedic Hospital (POH) and
the Philippine General Hospital (PGH) for
178 COASTAL SAFEWAY MARINE SERVICES medical evaluation and treatment.
INC., Petitioner, v. ELMER T. ESGUERRA, On 16 July 2003, Esguerra filed
Respondent. against CSMSI, its president, Benedicto C.
Morcilla (Morcilla), and CMEGT, the
FACTS: complaint for medical reimbursement,
sickness allowance, permanent disability
 263

benefits, damages and attorney fees before the 2000 POEA-SEC which took effect on 25
the arbitral level of the NLRC. Subsequent to June 2000. Deemed written in the seafarer's
the filing of said complaint, Dr. Vicaldo and contract of employment,the 2000 POEA-SEC
Dr. Saguin of the PGH issued separate like its predecessor was designed primarily
medical certificates both declaring Esguerra for the protection and benefit of Filipino
unfit for work. seamen in the pursuit of their employment
In refutation, CSMSI, Morcilla and on board ocean-going vessels.ection 20-B (3)
CMEGT averred that the tests administered thereof has been interpreted to mean that it
on Esguerra at the Jebel Ali Medical Centre is the company-designated physician who is
revealed that he was in good health; and, entrusted with the task of assessing the
that disregarding the finding that he seaman's disability,whether total or partial,
continued to be fit for work, Esguerra due to either injury or illness, during the
insisted on his repatriation and filed his term of the latter's employment.
complaint without submitting himself to a Concededly, this does not mean that
post-employment medical examination the assessment of said physician is final,
within three (3) working days upon his binding or conclusive on the claimant, the
return. labor tribunal or the courts. Should he be so
The Labor Arbiter, as affirmed by the minded, the seafarer has the prerogative to
NLRC, dismissed the complaint on the request a second opinion and to consult a
ground that Esguerra failed to prove his physician of his choiceregarding his ailment
disability and to submit himself to a post- or injury, in which case the medical report
employment medical examination by a issued by the latter shall be evaluated by the
company-designated physician, pursuant to labor tribunal and the court, based on its
Section 20-B of the POEA SEC. inherent merit.For the seaman claim to
Through a petition for certiorari with prosper, however, it is mandatory that he
the CA, Esguerra received a favorable should be examined by a company-
decision. The CA reversed the NLRC ruling designated physician within three days from
and CSMSI subsequent motion for his repatriation.Failure to comply with this
reconsideration was denied. Hence, this mandatory reporting requirement without
petition. justifiable cause shall result in forfeiture of
the right to claim the compensation and
ISSUE: disability benefits provided under the POEA-
Whether or not the Court of Appeals SEC.
misappreciated the evidence and applied the There is no dispute regarding the fact
POEA Standard Employment Contract of that Esguerra had altogether failed to
1996 instead of the Revised Terms and comply with the above-discussed mandatory
Conditions for Seafarers on Board Ocean- reporting requirement. Beyond his bare
Going vessels, which is part and parcel of the assertion, however, that CSMSI "never gave
Contract of Employment entered into him referrals to continue his medications as
between Esguerra and the petitioner on May recommended by the foreign doctor"
9, 2003? despite his call on 8 July 2003 "to inform
them that he will report the next day in order
HELD: to submit his medical evaluation abroad,"
The petition is impressed with merit. Esguerra did not present any evidence to
Viewed in light of the fact that prove justification for his inability to submit
Esguerra contract of employment was himself to a post-employment medical
executed on 9 May 2003, CSMSI correctly examination by a company-designated
faults the CA for applying POEA physician. If a written notice is required of a
Memorandum Circular No. 055-96 instead of seafarer who is physically incapacitated for
 264

purposes of compliance with said Granted that strict rules of evidence

requirement, the Court fails to see why a are not applicable in claims for
more tangible proof should not likewise be compensation and mere probability and not
expected of Esguerra who, after his arrival the ultimate degree of certainty is regarded
on 7 July 2003, appears to have been well as the touchstone or test of proof in
enough to consult with Dr. Vicaldo and Dr. compensation proceedings, it cannot be
Saguin on 9 July 2003. gainsaid that awards of compensation
Esguerra compliance with the cannot rest in speculations or presumptions.
mandatory reporting requirement under the In the absence of showing of adequate tests
POEA-SEC was made even more imperative and reasonable findings to support the
by the fact that his repatriation for medical same, the divergent Impediment Grades
reasons was categorically disputed by assessed by Dr. Vicaldo and Dr. Saguin
CSMSI. Consistent with the 5 July 2003 cannot be expediently taken at face value. In
diagnosis made by Dr. Tulmar at the Jebel Ali Magsaysay Maritime Corporation vs.
Medical Centre declaring him "not fit for Velasquez,this Court significantly brushed
work until complete cardiac evaluation is aside the evidentiary value of a
done" and advising him "to rest until then," recommendation made by Dr. Vicaldo which
it appears that Esguerra underwent was likewise "based on a single medical
serology, hematology, biochemistry and x- report which outlined the alleged findings
ray diagnostic tests which yielded no and medical history" of the claimant-
significant findings relative to the back and seafarer. In Montoya vs. Transmed Manila
chest pains he claims to have Corporation, a similar fate was dealt the
suffered.Although the 5 July 2003 notation same doctor's plain statement of the
made on the M/V Gondwana Chief Officer supposed work-relation/work-aggravation
Logbook states that he was "advised to be of a seafarer's ailment which was "not
repatriated" on the same day and "to supported by any reason or proof submitted
continue his medication in the Philippines," together with the assessment or in the
no less than Esguerra himself confirmed in course of the arbitration."
his 6 July 2003 letter to the Jebel Ali GRANTED.
police/coastguard that he had yet to
undergo a compete cardiac evaluation and
that CSMSI foreign principal, NSLF, had 179 MAGSAYSAY MARITIME
refused to shoulder his repatriation CORPORATION and/or WASTFEL-LARSEN
expenses on the ground that he was unable MANAGEMENT A/S, Petitioners, v.
to finish his contract. OBERTO S. LOBUSTA, Respondent.
Quite significantly, Esguerra also filed
his complaint on 16 July 2003, before his FACTS:
impediment rating was definitively assessed Respondent Oberto S. Lobusta is a
by either Dr. Vicaldo or Dr. Saguin. Perusal of seaman who has worked for Magsaysay
the record further shows that, by and of Maritime Corporation since 1994. In March
themselves, the medical certifications upon 1998, he was hired again as Able Seaman by
which Esguerra anchored his claims for Magsaysay Maritime Corporation. Lobusta
disability benefits and sickness allowance boarded MV "Fossanger" on March 16, 1998.
were not supported by such diagnostic tests After two months, he complained of
and/or procedures as would adequately breathing difficulty and back pain.
refute the normal results of those On May 12, 1998, while the vessel
administered to him at the Jebel Ali Medical was in Singapore, Lobusta was admitted at
Centre. Gleneagles Maritime Medical Center and
was diagnosed to be suffering from severe
 265

acute bronchial asthma with secondary instead of the provisions of the POEA
infection and lumbosacral muscle strain. Dr. contract in determining Lobustas disability,
C K Lee certified that Lobusta was fit for and in ruling that the mere lapse of 120 days
discharge on May 21, 1998, for repatriation entitles Lobusta to total and permanent
for further treatment. disability benefits.
Upon repatriation, Lobusta was
referred to Metropolitan Hospital. The HELD:
medical coordinator, Dr. Robert Lim, issued No. CA Decision Affirmed.
numerous medical reports regarding Labor Law
Lobustas condition. Upon reexamination by Standard terms of the POEA Standard
the Orthopedic Surgeon on August 11, 1998, Employment Contract agreed upon are
he opined that Lobusta needs surgery, called intended to be read and understood in
decompression laminectomy, which was accordance with Philippine laws,
done on August 30, 1998. particularly, Articles 191 to 193 of the Labor
As the parties failed to reach a Code, as amended, and the applicable
settlement as to the amount to which implementing rules and regulations in case
Lobusta is entitled, Lobusta filed on October of any dispute, claim or grievance.
2, 2000, a complaint for disability/medical Petitioners are mistaken that it is
benefits against petitioners before the only the POEA Standard Employment
National Labor Relations Commission Contract that must be considered in
(NLRC). determining Lobusta's disability. In Palisoc v.
The Labor Arbiter rendered a Easways Marine, Inc., we said that whether
decision ordering petitioners to pay Lobusta the Labor Codes provision on permanent
(a) US$2,060 as medical allowance, (b) total disability applies to seafarers is already
US$20,154 as disability benefits, and (c) 5% a settled matter.
of the awards as attorneys fees. On appeal, In Palisoc, we cited the earlier case of
the NLRC affirmed the LA decision. Remigio v. National Labor Relations
Unsatisfied, Lobusta brought the case to the Commission where we said (1) that the
CA. The CA granted the petition for certiorari standard employment contract for seafarers
of Lobusta and modified the findings of the was formulated by the POEA pursuant to its
NLRC. As aforesaid, the CA declared that mandate under Executive Order No. 247 "to
Lobusta is suffering from permanent total secure the best terms and conditions of
disability and increased the award of employment of Filipino contract workers
disability benefits in his favor to US$60,000. and ensure compliance therewith," and "to
Hence, this petition. promote and protect the well-being of
Petitioners argue that the CA erred in Filipino workers overseas"; (2) that Section
applying the provisions of the Labor Code 29 of the 1996 POEA Standard Employment
instead of the provisions of the POEA Contract itself provides that all rights and
contract in determining Lobustas disability, obligations of the parties to the contract,
and in ruling that the mere lapse of 120 days including the annexes thereof, shall be
entitles Lobusta to total and permanent governed by the laws of the Republic of the
disability benefits. The CA allegedly erred Philippines, international conventions,
also in holding them liable for attorneys fees, treaties and covenants where the Philippines
despite the absence of legal and factual is a signatory; and (3) that even without this
bases. provision, a contract of labor is so impressed
with public interest that the Civil Code
ISSUE: expressly subjects it to the special laws on
Whether or not the CA erred in in labor unions, collective bargaining, strikes
applying the provisions of the Labor Code and lockouts, closed shop, wages, working
 266

conditions, hours of labor and similar been unable to work since 14 May 1998 to
subjects. the present or for more than 120 days." This
Temporary total disability only period is more than eight years, counted
becomes permanent when so declared by until the CA decided the case in August 2006.
the company physician within the periods he On the CA ruling that Lobustas disability is
is allowed to do so, or upon the expiration of permanent since he was unable to work "for
the maximum 240-day medical treatment more than 120 days," we have clarified in
period without a declaration of either fitness Vergara that this "temporary total disability
to work or the existence of a permanent period may be extended up to a maximum of
disability. 240 days."
To be sure, there is one Labor Code Thus, we affirm the award to Lobusta
concept of permanent total disability, as of US$60,000 as permanent total disability
stated in Article 192(c)(1) of the Labor Code, benefits, the maximum award under Section
as amended, and the ECC Rules. We also 30 and 30-A of the 1996 POEA Standard
note that the first paragraph of Section Employment Contract. We also affirm the
20(B)(3) of the 2000 POEA Standard award of US$2,060 as sickness allowance
Employment Contract was lifted verbatim which is not contested and appears to have
from the first paragraph of Section 20(B)(3) been accepted by the parties.
of the 1996 POEA Standard Employment DENIED
Contract, to wit:
Upon sign-off from the vessel for
medical treatment, the seafarer is entitled to 180 Philasia Shipping Agency Corporation,
sickness allowance equivalent to his basic et al. vs. Andres G. Tomacruz. G.R. No.
wage until he is declared fit to work or the 181180, August 15, 2012.
degree of permanent disability has been
assessed by the company-designated Disability benefits; entitlement.
physician, but in no case shall this period Entitlement of seafarers to disability
exceed one hundred twenty (120) days. benefits is governed not only by medical
Applying the foregoing findings but also by contract and by law. By
considerations, we agree with the CA that contract, Department Order No. 4, series of
Lobusta suffered permanent total disability. 2000, of the Department of Labor and
On this point, the NLRC ruling was not in Employment and the parties’ Collective
accord with law and jurisprudence. Bargaining Agreement bind the seafarer and
Upon repatriation, Lobusta was first the employer. By law, the Labor Code
examined by the Pulmonologist and provisions on disability apply with equal
Orthopedic Surgeon on May 22, 1998. The force to seafarers. The seafarer, upon sign-
maximum 240-day (8-month) medical- off from his vessel, must report to the
treatment period expired, but no declaration company-designated physician within three
was made that Lobusta is fit to work. Nor (3) days from arrival for diagnosis and
was there a declaration of the existence of treatment. For the duration of the treatment
Lobustas permanent disability. On February but in no case to exceed 120 days, the
16, 1999, Lobusta was still prescribed seaman is on temporary total disability as he
medications for his lumbosacral pain and is totally unable to work. He receives his
was advised to return for reevaluation. May basic wage during this period until he is
22, 1998 to February 16, 1999 is 264 days or declared fit to work or his temporary
6 days short of 9 months. disability is acknowledged by the company
In fact, the CA has found that Lobusta to be permanent, either partially or totally,
was not able to work again as a seaman and as his condition is defined under the POEA
that his disability is permanent "as he has Standard Employment Contract and by
 267

applicable Philippine laws. If the 120 days intolerable pain on his left foot. Thus, David
initial period is exceeded and no such was repatriated to the Philippines to
declaration is made because the seafarer undergo treatment.
requires further medical attention, then the Immediately after his return to the
temporary total disability period may be country, OSG Manila referred David to the
extended up to a maximum of 240 days, company-designated physician, Dr. Robert
subject to the right of the employer to Lim, who referred him to the Cardinal Santos
declare within this period that a permanent Medical Center for a Magnetic Resonance
partial or total disability already exists. The Imaging (MRI). The pathology report showed
seaman may of course also be declared fit to that David was suffering from malignant
work at any time such declaration is justified fibrous histiocytoma (MFH) in his left thigh.
by his medical condition. Due to his condition, David underwent
From the time Tomacruz was chemotherapy. However, despite several
repatriated on November 18, 2002, he requests, OSG Manila and Michaelmar
submitted himself to the care and treatment refused to shoulder Davids expenses and
of the company-designated physician. When medication.
the company-designated physician made a Hence, David filed a complaint to
declaration on July 25, 2003 that Tomacruz recover his disability benefits. The LA ruled
was already fit to work, 249 days had already in favor of David. The NLRC affirmed the
lapsed from the time he was repatriated. As Decision of the LA. However, the CA ruled
such, his temporary total disability should be against Davids entitlement to the benefits he
deemed total and permanent, pursuant to claimed.
Article 192 (c)(1) of the Labor Code and its
implementing rule. ISSUE:
Whether or not Davids illness is
181-182 JESSIE V. DAVID, represented by compensable?
his wife, MA. THERESA S. DAVID, and
children, KATHERINE AND KRISTINA HELD:
DAVID,Petitioners, v. OSG The petition has merit.
SHIPMANAGEMENT MANILA, INC. AND/OR LABOR LAW: compensability of
MICHAELMAR SHIPPING SERVICES, illness
Respondents. In this case, David suffered from
malignant fibrous histiocytoma (MFH) in his
FACTS: left thigh. MFH is not one of the diseases
Petitioner Jessie David (David) enumerated under Sec. 32 of the POEA-SEC.
entered into a six-month Contract of However, Sec. 20(B)(4) of the POEA-SEC
Employment with respondent OSG clearly established a disputable presumption
Shipmanagement Manila, Inc. (OSG Manila), in favor of the compensability of an illness
for and in behalf of its principal Michaelmar suffered by a seafarer during the term of his
Shipping Services, Inc., (Michaelmar) as a contract. This disputable presumption works
Third Officer of the crude tanker M/T in favor of the employee pursuant to the
Raphael. Part of his duties as a Third Officer mandate under Executive Order No. (EO)
of the crude tanker involved overseeing the 247 dated July 21, 1987 under which the
loading, stowage, securing and unloading of POEA-SEC was created: "to secure the best
cargoes. David was also frequently exposed terms and conditions of employment of
to the crude oil that M/T Raphael was Filipino contract workers and ensure
carrying. compliance therewith" and "to promote and
Barely six months into his protect the well-being of Filipino workers
employment, David complained of an overseas." Hence, unless contrary evidence
 268

is presented by the seafarers employer/s, Lata and Daza arrived in the master’s cabin
this disputable presumption stands. and demanded immediate repatriation
David showed that part of his duties because they were not satisfied with the
as a Third Officer of the crude tanker M/T ship. De Gracia, et al. threatened that they
Raphael involved "overseeing the loading, may become crazy any moment and
stowage, securing and unloading of demanded for all outstanding payments due
cargoes." As a necessary corollary, David was to them. The incident is evidenced by a telex
frequently exposed to the crude oil that M/T of Cosmoship MV Wisdom to skippers but
Raphael was carrying. The chemical had conflicting dates.
components of crude oil include, among De Gracia claims that Skippers failed
others, sulphur, vanadium and arsenic to remit their respective allotments,
compounds. Hydrogen sulphide and carbon compelling them to vent their grievances
monoxide may also be encountered, while with the Romanian Seafarers Union. On
benzene is a naturally occurring chemical in January 28, 1999, the Filipino seafarers were
crude oil. It has been regarded that these unceremoniously discharged and
hazardous chemicals can possibly contribute immediately repatriated. Upon arrival in the
to the formation of cancerous masses. Philippines, they filed a complaint for illegal
It is not necessary that the nature of dismissal with the LA.
the employment be the sole and only reason The LA dismissed the seafarers’
for the illness suffered by the seafarer. It is complaint as the seafarers’ demand for
sufficient that there is a reasonable linkage immediate repatriation due to the
between the disease suffered by the dissatisfaction with the ship is considered a
employee and his work to lead a rational voluntary pre-termination of employment.
mind to conclude that his work may have Such act was deemed akin to resignation
contributed to the establishment or, at the recognized under Article 285 of the LC. The
very least, aggravation of any pre-existing LA gave credence to the telex of the master’s
condition he might have had. report that the seafarers indeed demanded
Petition is GRANTED. immediate repatriation.
The NLRC agreed with the LA’s
decision. The CA however reversed the LA’s
183 Skippers United Pacific vs. Doza, G.R. and the NLRC’s decision. The Court deemed
No. 175558, February 8, 2012 the telex message as a self-serving
document that does not
Facts: satisfy the requirement of substantial
Petitioner deployed De Gracia, Lata evidence, or that amount of relevant
and Aprosta to work on board the vessel MV evidence which a reasonable mind might
Wisdom Star. accept as adequate to justify the conclusion
On December 3 1998, Skippers that petitioners indeed voluntarily
alleges that De Garcia smelling strongly of demanded their immediate repatriation.
alcohol, went to the cabin of Gabriel Oleszek, Aggrieved, Skippers appeals the case
MV Wisdom Stars’ Master. Skippers claims with the Supreme Court.
that he was rude and shouted noisily to the
master. De Gracia left the master’s cabin Issue:
after a few minutes and was heard shouting Whether or not the seafarer’s
very loudly somewhere down the corridors. demand for immediate repatriation can be
The incident was evidenced by the Captain’s considered an act of voluntary resignation.
Report sent on said date.
Furthermore, Skippers also claim Ruling:
that on January 22, 1999, Aprosta, De Gracia,
 269

For a worker's dismissal to be Article 285 of the Labor Code

considered valid, it must comply with both recognizes termination by the employee of
procedural and substantive due process. The the employment contract by "serving
legality of the manner of dismissal written notice on the employer at least one
constitutes procedural due process, while (1) month in advance." Given that provision,
the legality of the act of dismissal constitutes the law contemplates the requirement of a
substantive due process. written notice of resignation. In the absence
Procedural due process in dismissal of a written resignation, it is safe to presume
cases consists of the twin requirements of that the employer terminated the seafarers.
notice and hearing. The employer must In addition, the telex message relied upon by
furnish the employee with two written the Labor Arbiter and NLRC bore conflicting
notices before the termination of dates of 22 January 1998 and 22 January
employment can be effected: (1) the first 1999, giving doubt to the veracity and
notice apprises the employee of the authenticity of the document.
particular acts or omissions for which his In 22 January 1998, De Gracia, et al.,
dismissal is sought; and (2) the second notice were not even employed yet by the foreign
informs the employee of the employer's principal.
decision to dismiss him. Before the issuance
of the second notice, the requirement of a 184 Eligir v. PAL, G.R. No. 181995, July 16,
hearing must be complied with by giving the 2012
worker an opportunity to be heard. It is not
necessary that an actual hearing be Facts:
conducted. Petitioner Bibiano C. Elegir
Substantive due process, on the (petitioner) was hired by Philippine Airlines,
other hand, requires that dismissal by the Inc.
employer be made under a just or (PAL) as a commercial pilot in 1971. Pursuant
authorized cause under Articles 282 to 284 to a new flght program adopted by
of the Labor Code. PAL, petitioner was appointed as one of the
In this case, there was no written pilots for the B747-400 captain
notice furnished to De Gracia, et al., positions. He and the other pilots were sent
regarding the cause of their dismissal. to Seattle to undergo training for the
Cosmoship furnished a written notice (telex) new aircraft which he completed in 1995. He
to Skippers, the local manning agency, decided to retire on May 5, 1996,
claiming that De Gracia, et al., were after rendering a total of more than 25 years
repatriated because the latter voluntarily in service which is an option
pre-terminated their contracts. This telex allowed by the CBA between the airline and
was given credibility and weight by the Labor the Airline Pilots Association of the
Arbiter and NLRC in deciding that there was Philippines where he is a member of good
pre-termination of the employment contract standing. PAL asked him to reconsider
"akin to resignation" and no illegal dismissal. his decision saying that they have not yet
However, as correctly ruled by the CA, the fully recovered the full value of his
telex message is "a biased and self-serving training and that if he should continue with
document that does not satisfy the his decision to retire the airline will
requirement of substantial evidence." If, be constrained to deduct the expenses of his
indeed, De Gracia, et al., voluntarily pre- training from his retirement pay.
terminated their contracts, then De Gracia, On November 6, 1996, the petitioner went
et al., should have submitted their written on terminal leave for thirty (30) days
resignations. and thereafter made effctive his retirement
from service. Upon securing his
 270

clearance, however, he was informed that was eligible for retirement under the
the costs of his training will be CBA since he had served for more than 25
deducted from his retirement pay, which will years with the same company. It ruled
be computed at the rate of P that the benefis should be computed in
5,000.00 per year of service. The petitioner accordance with both Article 287 of the
argued that his retirement benefis Code and the Retirement Plan of the CBA. It
should be based on the computation stated also ruled that petitioner is under
in Article 287 of the Labor Code, as obligation to reimburse a portion of the
amended by Republic Act (R.A.) No. 7641, expense for his training program as
and that the costs of his training captain since it would be grossly unfair for
should not be deducted therefrom. petitioner to reap the fruits of his
PAL refused and argued that training if he would not be made to return
petitioner's retirement pay should be based the said benefis in form of service for
on a reasonable period of time. Both parties
PALALPAP Retirement Plan of 1967 (PAL- fied MR’s. It denied PAL’s MR
ALPAP Retirement Plan) and that he CA: Reversed the decision of the NLRC. It
should reimburse the company with the ruled that retirement pay should be
proportionate costs of his training. Thus, computed in accordance with CBA
on August 27, 1997, the petitioner fied a retirement plan as ruled in PAL v. Airline
complaint for non-payment of Pilots
retirement pay, moral damages, exemplary Association of the Philippines. It denied
damages and attorney’s fees against petitioner’s MR.
PAL.
LA: On February 6, 1998, the Labor Issues:
Arbiter (LA) rendered the decision for the Should retirement benefis be
payment of retirement benefis to the computed based on Article 287 of the
petitioner for a total of P 4,150,106.20 Labor Code?
saying that the law intended to give bigger
and better benefis to workers under Ruling:
existing laws or CBA agreements and that Petitioner’s retirement pay should be
PAL had no right to withhold the based on the PAL retirement plans. The two
petitioner's retirement benefis due to his retirement schemes are alternative in nature
retirement before the lapse of three such that the retired pilot
years. There was no document showing that can only be entitled to that which provides
the petitioner was required to stay for the superior benefi. Even if there
with the airline for three years after the is an existing CBA but if it provides lesser
training or that he was required to benefis than what is provided in the
reimburse the cost of his training from his Labor Code , the Code will apply to assure
retirement benefis should he retire the retiree of the reasonable amount
earlier than the three year period. The LA of retirement pay. Consistent with the
also dismissed PAL's claim that purpose of the law, the CA correctly held
petitioner's submission of his bid for the that the PAL retirement plan applies because
position created an innominate contract it provides for higher benefis.
du ut facis between him and the company. Under the PAL retirement plan
NLRC: Modifid the decision of the LA. petitioner qualifid for late retirement sine he
Petitioner was only 52 years old when he rendered more than 20 years as pilot and is
opted to retire and therefore was not entitled to receive a lump sum of P
qualifid to receive the benefis offred 125, 000 for his services. He is also entitled
under Article 287 of the Labor Code, but he to equity of the retirement fund
 271

under the Retirement Benefi Plan. This is disability benefits under the Philippine
more compared to what he will receive Overseas Employment Agency Standard
under the Labor Code which is equivalent to Employment Contract (POEA-SEC), in the
at least ½ of his monthly salary for amount of US$60,000.00, which petitioners
every year of service. The benefis under the refused to heed.
PAL retirement plan are to the The petitioners denied respondent's
petitioner’s advantage. claims, contending his injury was self-
It also ruled that the petitioner shall inflicted. They denied that the incinerator
reimburse PAL for his training costs. The exploded and claimed that respondent
court recognized PAL’s right to recoup losses burned himself by pouring paint thinner on
incurred due to pilot training and his overalls and thereafter set himself on
modifid the provision on age limits for pilots fire. They averred that he was led to commit
seeking advanced positions. Pilots such act after he was caught stealing the
57 years old shall be frozen in their position vessels supplies. They also alleged that there
while those 55 years of age that was a flooding incident caused by the
have previously qualifid in the company respondent. All allegations were supported
turbo jet aircraft are permitted to by affidavits and statements executed by
occupy any position in the turbo jet flet. vessel officers and crew members. In
Allowing the petitioner to leave the addition, Antonio Gile (Gile), attested that he
company before he has t fulfiled is saw respondent go to the paint room and
reasonable expectation of service will result there soak his hands in a can full of thinner.
to unjust enrichment since the training gave The Labor Arbiter ruled in favor or
him new skills and increased his petitioners, dismissing respondents
salary. Reason and fairness dictate that he complaint for lack of merit. The Labor Arbiter
must return to PAL a proportionate also held that respondent's injury was self-
costs of training. inflicted and that no incinerator explosion
185 INC SHIPMANAGEMENT, INC., occurred that would have caused the latter's
CAPTAIN SIGFREDO E. MONTERROYO injuries.
AND/OR INTERORIENT NAVIGATION The National Labor Relations
LIMITED, Petitioners, v. ALEXANDER L. Commission (NLRC) sustained the findings of
MORADAS, Respondent. the Labor Arbiter. It pointed out that
respondents mental or physical fitness was
FACTS: not at issue since respondent was motivated
Alexander L. Moradas (respondent) to inflict injury to himself for reasons related
was employed as wiper for the vessel MV to his impending discharge and not because
Commander (vessel) by petitioner INC of his disposition. The NLRC denied the
Shipmanagement, Inc., for a period of 10 motion for reconsideration filed by the
months. respondent.
On October 13, 2000, respondent The CA rendered a decision holding
claimed that while he was disposing of the that grave abuse of discretion tainted the
garbage in the incinerator room of the NLRC ruling. It found that it was contrary to
vessel, certain chemicals splashed all over human nature and experience for
his body because of an explosion. He was respondent to burn himself. It also pointed
sent to the hospital. The attending physician out that no evidence was presented to show
of St. Luke's Medical Center, Dr. Alegre, that respondent had no business near the
reported that the respondents thermal engine room. The CA denied the motion for
burns were estimated to fully heal within a reconsideration filed by the petitioners.
period of 3 to 4 months. Respondent
demanded for the payment of his full ISSUE:
 272

Did the CA err in finding that the Accordingly, an inspection of the incinerator
NLRC gravely abused its discretion when it after the incident showed that there were
denied respondent's claim for disability unburnt cardboard cartons found inside with
benefits? no sign of explosion and the steel plates
surrounding it were cool to the touch.
Both the LA and the NLRC made a
factual finding that prior to the burning
HELD: incident, respondent was caught pilfering
The prevailing rule under Section the vessels supplies for which he was told
20(B) of the 1996 POEA-SEC on that he was to be relieved from his duties.
compensation and benefits for injury or This adequately supports the reasonable
illness was that an employer shall be liable conclusion that respondent may have
for the injury or illness suffered by a seafarer harbored a grudge against the captain and
during the term of his contract. There was no the chief steward who denied giving him the
need to show that such injury was work- questioned items. At the very least, it was
related except that it must be proven to have natural for him to brood over feelings of
been contracted during the term of the resentment considering his impending
contract. The rule, however, is not absolute dismissal. These incidents shore up the
and the employer may be exempt from theory that he was motivated to commit an
liability if he can successfully prove that the act of sabotage which, however, backfired
cause of the seaman's injury was directly into his own burning.
attributable to his deliberate or willful act as GRANTED
provided under Section 20 (D) thereof, to
wit: D. No compensation shall be payable in
respect of any injury, incapacity, disability or 186 ALPHA SHIP MANAGEMENT
death of the seafarer resulting from his CORPORATION/JUNEL M CHAN and/or
willful or criminal act, provided however, CHUO-KAIUN COMPANY, LIMITED v.
that the employer can prove that such injury, ELEOSIS v.
incapacity, disability or death is directly
attributable to seafarer. FACTS:
Records show that the LA and NLRC Respondent Calo worked for
gave credence to the corroborating petitioners Alpha Ship, Junel M. Chan and
testimonies of the crewmen pointing to their foreign principal, (CKCL) under 7
respondent as the person who deliberately employment contracts. While MV Iris was in
caused the flooding incident. In particular, China, respondent suffered back pain on the
respondent was seen alone in the vicinity of lower part of his lumbar region and urinated
the portside sea chest which cover was with solid particles. On checkup, the doctor
found to have been intentionally removed found him suffering from urinary tract
and thereby caused the flooding. infection and renal colic, and was given
The purported explosion in the antibiotics. When respondent’s condition
incinerator was belied by Gile who also did not improve, he consulted another
claimed that there was no fire in the doctor in Chile and was found to have kidney
incinerator room at the time respondent got problems and urinary tract infection but was
burned. This was corroborated by Bejada declared fit for work on a "light duty" basis.
who testified having ordered an ordinary In Japan, respondent was diagnosed with
seaman that was burning deck waste in the suspected renal and/or ureter calculus and
incinerator early that day to extinguish the was declared "unfit for work”. Respondent
fire with water and close up the incinerator was thus repatriated and was referred by
door because of bad weather conditions. petitioners to Dr. Cruz, the company-
 273

designated physician who continously fitness or disability; thus, respondent’s

examined respondent from 2004-2005. medical condition remained unresolved. It
Respondent, who felt that his condition has was only on July 18, 2006 that respondent
not improved – consulted another specialist was declared fit to work by Dr. Cruz. Such
in internal medicine, Dr. Vicaldo, who issued declaration, however, became irrelevant, for
the following diagnosis: that it was by then, respondent had been under medical
Impediment Grade X, that he is now unfit to treatment and unable to engage in gainful
resume work as seaman in any capacity and employment for more than 240 days.
that his illness is considered work Pursuant to the doctrine in Kestrel, the
aggravated/related. Respondent filed a conclusive presumption that the respondent
claim for disability benefits with petitioners, is totally and permanently disabled thus
but the claim was denied. LA: granted arose. 48 4S (A.Y. 2015-2016) That in all
permanent total disability benefits and things, God may be glorified! San Beda
attorney’s fees to respondent, but denied his College of Law LABOR LAW REVIEW CASE
claim for moral and exemplary damages. DIGESTS In the same manner, the issue of
NLRC: Appeal is granted. The decision of the which among the two diagnoses or opinions
Labor Arbiter was vacated and set aside. The should prevail – that of Dr. Cruz or Dr.
complaint for dismissed for lack of merit. CA: Vicaldo – is rendered irrelevant in view of the
NLRC decision was reversed. Decision of the lapse of the said 240-day period. As far as the
Labor Arbiter was reinstated. parties are concerned, respondent’s medical
treatment and disability continued for more
ISSUE: than 240 days without any finding or
Whether respondent’s claim for diagnosis by the company-designated
disability benefits should prosper. SC physician that he was fit to resume work.
Thus, consonant with law and jurisprudence,
RULING: respondent is entitled to a declaration of
YES. An employee’s disability permanent total disability, as well as the
becomes permanent and total when so corresponding benefit attached thereto in
declared by the company-designated the amount of US$60,000.00.
physician, or, in case of absence of such a
declaration either of fitness or permanent
total disability, upon the lapse of the 120 or 187 Social Security System vs. Efren
24045-day treatment period, while the Capada, et al., G.R. No. 168501, January
employee’s disability continues and he is 31, 2011.
unable to engage in gainful employment
during such period, and the company- Collection of accrued wages; two-fold test.
designated physician fails to arrive at a After the Labor Arbiter’s decision is
definite assessment of the employee’s reversed by a higher tribunal, the employee
fitness or disability. This is true "regardless of may be barred from collecting the accrued
whether the employee loses the use of any wages, if it is shown that the delay in
part of his body." Respondent was enforcing the reinstatement pending appeal
repatriated on October 12, 2004 and was without fault on the part of the
underwent treatment by the company- employer. The two-fold test in determining
designated physician, Dr. Cruz, until October whether an employee is barred from
14, 2005, or for a continuous period of over recovering his accrued wages requires that
one year – or for more than the statutory — (1) there must be actual delay or that the
120-day47 or even 240-day48 period. During order of reinstatement pending appeal was
said treatment period, Dr. Cruz did not arrive not executed prior to its reversal; and (2) the
at a definite assessment of respondent’s delay must not be due to the employer’s
 274

unjustified act or omission. If the delay is suspension period, Axalan resumed teaching
due to the employer’s unjustified refusal, the in the university.
employer may still be required to pay the Axalan filed a complaint against the
salaries notwithstanding the reversal of the University for illegal suspension,
Labor Arbiter’s Decision. constructive dismissal, reinstatement with
backwages and unfair labor practice. The
university moved to dismiss the complaint
188 THE UNIVERSITY OF THE IMMACULATE on the ground of jurisdiction but this was
CONCEPCION and MO. MARIA ASSUMPTA denied.
DAVID, RVM, petitioners, vs. NATIONAL The Labor Arbiter ruled that Axalan's
LABOR RELATIONS COMMISSION and suspension amounted to constructive
TEODORA AXALAN, respondents. dismissal, entitling her to reinstatement and
payment of backwages, salary differentials,
FACTS: damages and attorney's fees. The university
Private respondent Axalan is a appealed the decision to the NLRC on the
regular faculty member in the University of subject of jurisdiction but the NLRC upheld
Immaculate Concepcion and also the elected the ruling of the Labor Arbiter and so did the
president of the employees' union. She CA.
attended a seminar in Quezon City on
website development. However, she ISSUE:
received a letter from the Dean asking her to Whether the CA erred in ruling that
explain why she should not be dismissed for Axalan was constructively dismissed.
having been absent without official leave.
She explained that she still held online HELD:
classes while she was away and that she The petition is meritorious.
thought she would not be considered absent LABOR LAW; Constructive dismissals
because of such action. The Dean asked her Constructive dismissal occurs when
to write a letter of apology but she opted not there is cessation of work because continued
to comply, believing she could not be employment is rendered impossible,
deemed absent since she held online classes. unreasonable, or unlikely as when there is a
By then, an ad hoc grievance committee had demotion in rank or diminution in pay or
been created to investigate the AWOL when a clear discrimination, insensibility, or
charge. disdain by an employer becomes unbearable
Thereafter, Axalan attended another to the employee leaving the latter with no
seminar, this time on advanced paralegal other option but to quit.
training. The Dean informed her that her In this case however, there was no
participation in said seminar was the subject cessation of employment relations between
of a second AWOL charge. Axalan explained the parties. It is unrefuted that Axalan
that she sought the approval of the Vice- promptly resumed teaching at the university
President for Academics. However, the Vice- right after the expiration of the suspension
President denied having approved the period. In other words, Axalan never quit.
application for official leave. Hence,Axalan cannot claim that she was left
Meanwhile, the ad hoc grievance with no choice but to quit, a crucial element
committee found Axalan to have incurred in a finding of constructive dismissal.
AWOL on both instances and recommended Thus,Axalan cannot be deemed to have been
that Axalan be suspended without pay for 6 constructively dismissed.
months on each AWOL charge. The Significantly, at the time the Labor
university president approved the Arbiter rendered his Decision on 11 October
recommendation. After the expiration of the 2004, Axalan had already returned to her
 275

teaching job at the university on 1 October subject of their controversy. In the absence
2004. The Labor Arbiters Decision ordering of these factors RTC will not have jurisdiction
the reinstatement of Axalan, who at the time
had already returned to work, is thus absurd. OPINION:
Petition is DENIED. The case at bar is a termination
dispute not an intra-corporate dispute. Not
all conflicts between the stockholders and
189 RENATO REAL VS. SANGU the corporations are classified as intra-
PHILIPPINES, INC AND/OR KIICHI ABE corporate dispute. There are factors to
consider in determining whether the dispute
FACTS: involves corporate matters as to consider
Real was the manager Sangu Phils. them, intra-corporate controversies. The
Inc., which is engaged in providing fact that Real is a stockholder does not
manpower for general services. automatically classifies the case as intra-
Petitioner was dismissed from corporate dispute, therefore Labor arbiter
employment due to alleged gross act of correctly assumed jurisdiction over the case
misconduct and for his participation in
staging strike and barricading the premises
of the respondent company. The Labor 190 PAQUITO V. ANDO VS. ANDRESITO Y.
Arbiter decided in favor of Real and ordered CAMPO ET. AL.
for his reinstatement with full backwages.
On appeal, the NLRC dismissed the case FACTS:
holding that Real is a stockholder and Campo and co-respondents were
corporate officer of the respondent hired by Premier Allied Contracting Services,
company and therefore it is a intra- Inc. (PACSI), an independent labor
corporate dispute over which the Labor contractor headed by Ando as its president.
Arbiter has no jurisdiction. They filed an illegal dismissal case and some
money claims with the NLRC against PACSI.
ISSUE: The Labor Arbiter ruled in favor of Campo
Does the complaint constitutes an and his co-respondents. A writ of execution
intra-corporate dispute and thus beyond the of personal property was issued to answer
jurisdiction of the Labor Arbiter? for the monetary award.
Ando filed an action for prohibition
LAW: and damages with TRO before the RTC
Art. 217 of the Labor Code on claiming that the property belong to him
Jurisdiction of Labor Arbiters and the and his wife and not to the corporation. RTC
Commission denied the petition holding that it has no
jurisdiction to try and decide the case and
RULING: ruled that the petitioner’s remedy is to file a
This case is not intra-corporate third party complaint with the NLRC Sheriff.
dispute but rather is a termination dispute
and, consequently falls under jurisdiction of
the Labor Arbiter pursuant to Section 217 of ISSUE:
the Labor Code. The better policy to be Did RTC correctly rule that it has no
followed in determining jurisdiction over a jurisdiction over the case?
case should be to consider concurrent
factors such as status or relationship of the LAW:
parties or the nature of the question that is
 276

NLRC Manual in Execution of safety-related operations in the Bonifacio

Judgment (in relation to Scope of Jurisdiction Global City (BGC). In August 2001, Bello was
of Labor Tribunals under the Labor Code) posted at the Negros Navigation Company in
Pier 2, North Harbor, to supervise sectoral
RULING operations. In November 2001, he was
Yes, RTC correctly ruled that it has no assigned at BGC as assistant detachment
jurisdiction over the case. The regular courts commander. After a week, he was
have no jurisdiction to hear and decide transferred to Pacific Plaza Towers as
questions which arise from and are assistant detachment commander and later
incidental to the enforcement of decisions, as detachment commander. In June 2002, he
orders and awards rendered in labor cases was assigned at Pier 2, North Harbor as
by appropriate officers and tribunals of assistant detachment commander, but later
DOLE. To hold otherwise is to sanction reassigned to BGC. In August 2002, the BSSI
splitting jurisdiction which is obnoxious to hired a new operations manager, resulting in
the orderly administration of justice. It is the the reorganization of posts. In October 2002,
NLRC Manual on the Execution of Judgment Bello was assigned as roving traffic marshal
that governs any question on the execution at the BGC. On October 25, 2002, he filed an
of judgment of that body. The Rules of Court indefinite leave of absence when his new
apply only by analogy of in a suppletory assignment took effect.
character. On November 5, 2002, Bello filed a
complaint against the BSSI and its General
OPINION: Manager, respondent Samuel Tomas, with
I concur with the decision of the the National Labor Relations Commission
Supreme Court that the RTC has no (NLRC), claiming that he had been
jurisdiction over the case as the subject constructively dismissed when he was
matter of the petition is the execution of demoted from a detachment commander to
judgment of the NLRC’s decision. We must a mere traffic marshal. He alleged that he
take note that, jurisdiction once acquired, received a series of promotions from 2001 to
continues until the case is finally terminated 2002, from traffic marshal to supervisor, to
and there can be no end to a case without assistant detachment commander, and to
the implementation of the decision which detachment commander.
decision must be exercised by the body who The BSSI denied Bello's claim of
rendered it and not the courts. Especially in constructive dismissal, arguing that no
this case, the NLRC Manual specifically promotion took place; Bello's designation as
provides for the procedures to be followed assistant detachment commander or
in the execution of judgment promulgated detachment commander was not an
by NLRC employment position but a duty-related
assignment; Bello abandoned his job when
he went on an indefinite leave of absence
191 Bello vs. Bonifacio Security Services, and did not report for work.
G.R. No. 188086, August 3, 2011 Labor Arbiter Cresencio G. Ramos, Jr.
found that Bello was illegally dismissed,
Facts: noting that the BSSI failed to adduce
Respondent Bonifacio Security evidence that Bello abandoned his
Services, Inc. (BSSI)is a domestic private employment.
corporation engaged in the business of In its March 26, 2008 resolution, the
providing security services. In July 2001, the NLRC affirmed the labor arbiter's decision,
BSSI hired Bello as a roving traffic marshal to finding that Bello had been constructively
manage traffic and to conduct security and dismissed when he was demoted to the
 277

rank-and-file position of traffic marshal after prerogative of transferring and reassigning

occupying the supervisory position of employees from one area of operation to
assistant detachment commander and another in order to meet the requirements
detachment commander. of
The CA nullified the NLRC the business is generally not constitutive of
resolutions, finding the records bereft of constructive dismissal. We see this to be the
evidence substantiating the labor arbiter's case in the present dispute so that the
and the NLRC's conclusions that Bello had consequent reassignment of Bello to a traffic
been constructively dismissed. It noted that marshal post was well within the scope of
Bello offered no evidence to prove that there the BSSI's management prerogative.
was a series of promotions that would justify
his claim of subsequent demotion. The CA
denied 192 CLAUDIA S. YAP, Petitioner, v.
the BSSI's motion for reconsideration, paving THENAMARIS SHIPS MANAGEMENT and
the way for the present petition. INTERMARE MARITIME AGENCIES,
INC.,Respondents.
Issue:
Whether or not, Bello was illegally FACTS:
dismissed. Petitioner was employed as an
electrician of the vessel, M/T SEASCOUT by
Ruling: Intermare Maritime Agencies, Inc. in behalf
We find no reason to disturb the CA of its principal, Vulture Shipping Limited.The
conclusion that there was no constructive contract was for 12 months.On 23 August
dismissal. Case law defines constructive 2001,Yapboarded M/T SEASCOUT and
dismissal as a cessation of work because commenced his job as electrician. However,
continued employment has been rendered on or about 08 November 2001, the vessel
impossible, unreasonable, or unlikely, as was sold.
when there is a demotion in rank or Yap received his seniority bonus,
diminution in pay, or both, or when a clear vacation bonus, extra bonus along with the
discrimination, insensibility, or disdain by an scrapping bonus.However, he insisted that
employer becomes unbearable to the he was entitled to the payment of the
employee. unexpired portion of his contract since he
Other than his bare and self-serving was illegally dismissed from employment.He
allegations, Bello has not offered any alleged that he opted for immediate transfer
evidence that he was promoted in a span of but none was made.
four months since his employment as traffic Respondents contended that Yap
marshal in July 2001 to a detachment was not illegally dismissed.They further
commander in November 2001. During his alleged that Yaps contract was validly
six-month probationary period of terminated due to the sale of the vessel and
employment, it is highly improbable that no arrangement was made for Yaps transfer
Bello would be promoted after just a month to Thenamaris other vessels.
of employment, from a traffic marshal in July Thus, Yap brought the issue before
2001 to supervisor in August 2001, and three the Labor Arbiter (LA) which ruled that
months later to assistant detachment petitioner was illegally dismissed; that
commander and to detachment commander respondents acted in bad faith when they
in November 2001. At most, the BSSI merely assured petitioner of re-embarkation but he
changed his assignment or transferred him was not able to board; and that petitioner
to the post where his service would be most was entitled to his salaries for the unexpired
beneficial to its clients. The management's portion of his contract for a period of nine
 278

months (US$12,870.00), P100,000 for moral

damages, and P50,000 for exemplary HELD:
damages with 10% of the same for Attys The petition is impressed with merit.
fees. We have previously declared that the
Respondents sought recourse from clause "or for three months for every year of
the NLRC which modified the award of the unexpired term, whichever is less" is
salaries from that corresponding to nine unconstitutional for being violative of the
months to only three months (US$4,290.00) rights of (OFWs) to equal protection.
pursuant to Section 10 R.A. No. 8042. Moreover, the subject clause does not state
Respondents and petitioner both any definitive governmental purpose, hence,
filed a Motion for Partial Reconsideration. it also violates petitioner's right to
NLRC affirmed the finding of Illegal substantive due process.
Dismissal and Bad Faith on the part of Generally, an unconstitutional act is
respondent. However, the NLRC reversed its not a law. An exception to this is the doctrine
earlier Decision, holding that "there can be of operative fact applied when a declaration
no choice to grant only 3 months salary for of unconstitutionality will impose an undue
every year of the unexpired term because burden on those who have relied on the
there is no full year of unexpired term which invalid law. This case should not be included
this can be applied." in the exception. It was not the fault of
Respondents filed an MR, which the petitioner that he lost his job due to an act
NLRC denied. Undaunted, respondents filed of illegal dismissal committed by
a petition forcertiorariunder Rule 65 before respondents.
the CA. Also, we cannot subscribe to
The CA affirmed the findings and respondents postulation that the tanker
ruling of the LA and the NLRC. However, the allowance of US$130.00 should not be
CA ruled that the NLRC erred in sustaining included in the computation of the lump-
the LAs interpretation of Section 10 of R.A. sum salary. First, fair play, justice, and due
No. 8042. The CA relied on the clause "or for process dictate that this Court cannot now,
three months for every year of the unexpired for the first time on appeal, pass upon this
term, whichever is less" provided in the 5th question. Second, the allowance was
paragraph of Section 10 of R.A. No. 8042. encapsulated in the basic salary clause.
Both parties filed their respective
MRs which the CA denied. Thus, this
petition. 193 E.G & I. CONSTRUCTION
CORPORATION and EDSEL GALEOS,
ISSUE: Petitioners, v. ANANIAS P. SATO, NILO
[1] Whether Section 10 of R.A. 8042, BERDIN, ROMEO M. LACIDA, JR., and HEIRS
to the extent that it affords an illegally OF ANECITO S. PARANTAR, SR., namely:
dismissed migrant worker the lesser benefit YVONNE, KIMBERLY MAE, MARYKRIS,
of "salaries for [the] unexpired portion of his ANECITO, JR., and JOHN BRYAN, all
employment contract for three (3) months surnamed PARANTAR, Respondents.
for every year of the unexpired
term,whichever is less" is constitutional; FACTS:
[2] Assuming that it is, whether the Respondent Sato was hired in
CA gravely erred in granting petitioner only October 1990 by petitioner E.G. & I.
three (3) months backwages when his Construction Corporation as a grader
unexpired term of 9 months is far short of the operator, which is considered as technical
"every year of the unexpired term" threshold. labor. In April 2004, Sato discovered that
petitioner corporation had not been
 279

remitting his premium contributions to the LABOR LAW: Abandonment

Social Security System (SSS). When Sato kept Petitioner corporation failed to prove
on telling petitioners to update his premium that respondents were dismissed for just or
contributions, he was removed as a grader authorized cause. In an illegal dismissal case,
operator and made to perform manual theonus probandi rests on the employer to
labor, such as tilling the land in a private prove that the dismissal of an employee is
cemetery and/or digging earthworks in for a valid cause.
petitioner corporation’s construction For abandonment to exist, it is
projects. Thereafter, petitioners told Sato essential (a) that the employee must have
that they could no longer afford to pay his failed to report for work or must have been
wages, and he was advised to look for absent without valid or justifiable reason;
employment in other construction and (b) that there must have been a clear
companies. intention to sever the employer-employee
Meanwhile, the project engineer of relationship manifested by some overt acts.
respondents Berdin, Parantar, and Lacida The employer has the burden of proof to
instructed them to affix their signatures on show the employee's deliberate and
various documents. They refused to sign the unjustified refusal to resume his
documents because they were written in employment without any intention of
English, a language that they did not returning. Mere absence is not sufficient.
understand. Irked by their disobedience, the There must be an unequivocal intent on the
project engineer terminated their part of the employee to discontinue his
employment. employment. Here, the reason why
Petitioners denied that they illegally respondents failed to report for work was
terminated respondents’ employment. because petitioner corporation barred them
According to them, respondents abandoned from entering its construction sites.
their work when they failed to report for DENIED.
work
The Labor Arbiter rendered a
decision finding that respondents were 194 EXODUS INTERNATIONAL
illegally dismissed from employment. In lieu CONSTRUCTION CORPORATION vs.
of reinstatement, due to the strained GUILLERMO BISCOCHO et.
relations of the parties and as prayed for by
respondents, each of them was granted Facts:
separation pay equivalent to one (1) month Exodus International Construction
pay for every year of service. On appeal, the Corporation obtained a contract from Dutch
National Labor Relations Commission (NLRC) Boy Philippines, Inc. for the painting of the
reversed the ruling of the Labor Arbiter. This Imperial Sky Garden located in Binondo,
was then reversed by the CA and ruled that Manila. Dutch Boy awarded another
the respondents were illegally dismissed. contract to Exodus for the painting of Pacific
Plaza, Towers in Fort Bonifacio, Taguig City.
ISSUE: In the furtherance of its business, Exodus
Whether or not the CA erred in hired respondents as painters on different
reinstating the decision of the Labor Arbiter, dates.
declaring that respondents were illegally On November 27, 2000, respondents
terminated from employment by petitioner filed a complaint for illegal dismissal and
corporation. non-payment of holiday pay, service
incentive leave pay, 13th month pay and
HELD: night-shift differential pay.
The petition lacks merit.
 280

Petitioners denied respondents' cursory examination of the records reveal no

allegations. As regards Gregorio, petitioners illegal dismissal to speak of.
averred that he absented himself from work The Labor Arbiter is also correct in
and applied as a painter with SAEI-EEI which ruling that there was no abandonment on
is the general building contractor of Pacific the part of respondents that would justify
Plaza Towers. Since then, he never reported their dismissal from their employment.
back to work. Abandonment is the deliberate and
Guillermo absented himself from work unjustified refusal of an employee to resume
without leave. When he reported for work his employment. It is a settled rule that mere
the following day, he was reprimanded so he absence or failure to report for work is not
worked only halfday and thereafter was enough to amount to abandonment of work.
unheard of until the filing of the instant To constitute abandonment of work, two
complaint. elements must concur: the employee must
Fernando, Ferdinand, and Miguel have failed to report for work or must have
were caught eating during working hours for been absent without valid or justifiable
which they were reprimanded by their reason and there must have been a clear
foreman. Since then they no longer reported intention on the part of the employee to
for work. sever the employer-employee relationship
The Labor Arbiter exonerated Exodus from manifested by some overt act.
the charge of illegal dismissal as respondents It is the employer who has the burden of
chose not to report for work. Since there is proof to show a deliberate and unjustified
neither illegal dismissal nor abandonment of refusal of the employee to resume his
job, respondents were ordered be reinstated employment without any intention of
but without any backwages. returning." It is therefore incumbent upon
petitioners to ascertain the respondents'
Issues: interest or non-interest in the continuance
WON respondents were illegally of their employment. However, petitioners
dismissed for abandonment of work failed to do so.
WON they are regular employees, Petitioners posit that the
thus entitled to reinstatement reinstatement of respondents to their
former positions, which were no longer
Ruling: existing, is impossible, highly unfair and
(1) No. There was no dismissal, much unjust. The project was already completed
less illegal, and there was also no by petitioners, having completed their tasks,
abandonment of job to speak of. their positions automatically ceased to exist.
As found by the Labor Arbiter, there Consequently, there were no more
was no evidence that respondents were positions where they can be reinstated as
dismissed nor were they prevented from painters.
returning to their work. It was only (2) Respondents are regular employees of
respondents' unsubstantiated conclusion petitioners. It is clear from the records that
that they were dismissed. As a matter of fact, when one project is completed, respondents
respondents could not name the particular were automatically transferred to the next
person who effected their dismissal and project awarded to petitioners. There was
under what particular circumstances. Absent no employment agreement given to
any showing of an overt or positive act respondents which clearly spelled out the
proving that petitioners had dismissed duration of their employment, the specific
respondents, the latters' claim of illegal work to be performed and that such is made
dismissal cannot be sustained. Indeed, a clear to them at the time of hiring . It is now
too late for petitioners to claim that
 281

respondents are project employees whose by Intercontinental Broadcasting

employment is coterminous with each Corporation (IBC).
project or phase of the project to which they On August 29, 1995, the DXWG
are assigned. personnel filed a complaint for illegal
Nonetheless, assuming that dismissal, unfair labor practice,
respondents were initially hired as project reimbursement of unpaid Collective
employees, a project employee may acquire Bargaining Agreement (CBA) benefits, and
the status of a regular employee. attorneys fees against IBC and BBC.
The evidence on record shows that On June 21, 1996, Labor Arbiter (LA)
respondents were employed and assigned decided in favour of the DXWG personnel.
continuously to the various projects of Both, parties, however, appealed to
petitioners. As painters, they performed the National Labor Relations Commission
activities which were necessary and (NLRC).
desirable in the usual business of petitioners, On May 15, 1997, a Motion to
who are engaged in subcontracting jobs for Dismiss, Release, Waiver and Quitclaim, was
painting of residential units, condominium jointly filed by IBC and the DXWG personnel
and commercial buildings. As regular based on the latter's admission that IBC is
employees, respondents are entitled to be not their employer as it does not own
reinstated without loss of seniority rights. DXWG-Iligan City.The NLRC granted the
Respondents are also entitled to their money Motion with respect to IBC.
claims such as the payment of holiday pay, BBC filed an MR.
service incentive leave pay, and 13th month On December 12, 1997, the NLRC
pay.However, they cannot be entitled to issued a Resolution vacating the Decision of
backwages. In cases where there is no LA and remanding the case to the arbitration
evidence of dismissal, the remedy is branch of origin on the ground that while the
reinstatement but without complaint was filed against both IBC and
backwages. BBC, only IBC was served with summons,
ordered to submit a position paper, and
furnished a copy of the assailed decision.
195 BANAHAW BROADCASTING On October 15, 1998, the new LA
CORPORATION, Petitioner, v. CAYETANO rendered a Decision adjudging BBC to be
PACANA III, NOE U. DACER, JOHNNY B. liable for the same amount discussed in the
RACAZA, LEONARDO S. OREVILLO, ARACELI vacated original Decision of the previous LA.
T. LIBRE, GENOVEVO E. ROMITMAN, Both BBC and respondents appealed
PORFERIA M. VALMORES, MENELEO G. to the NLRC.BBC challenged the monetary
LACTUAN, DIONISIO G. BANGGA, award itself. In the same Memorandum of
FRANCISCO D. MANGA, NESTOR A. Appeal, BBC incorporated a Motion for the
AMPLAYO, LEILANI B. GASATAYA, LORETA Recomputation of the Monetary Award (of
G. LACTUAN, RICARDO B. PIDO, RESIGOLO the Labor Arbiter),in order that the appeal
M. NACUA and ANACLETO C. REMEDIO, bond may be reduced.
Respondents. On September 16, 1999, the NLRC
issued an Order Denying the Motion for the
FACTS: Recomputation of the Monetary Award. The
Respondents in the case at bar (the NLRC ordered BBC to post the required bond
DXWG personnel), are employees of the within 10 days from receipt of said Order,
DXWG-Iligan City radio station which is with a warning that noncompliance will
owned by petitioner Banahaw Broadcasting cause the dismissal of the appeal for non-
Corporation (BBC), a corporation managed perfection.Instead of complying with the
Order to post the required bond, BBC filed a
 282

Motion for Reconsideration,alleging this entitled to an exemption from the posting of

time that since it is wholly owned by the an appeal bond.
Republic of the Philippines, it need not post FAILURE TO POST BOND
an appeal bond. CONSTITUTED NON-PERFECTION OF
On November 22, 1999, the NLRC APPEAL
rendered its Decision. In said Decision, the In case of a judgment involving a
NLRC denied the MR of BBC and accordingly monetary award, an appeal by the employer
dismissed the appeal of BBC for non- may be perfected only upon the posting of a
perfection. cash or surety bond issued by a reputable
BBC filed an MR which was denied by bonding company duly accredited by the
the NLRC. Commission in the amount equivalent to the
BBC filed with the CA a Petition for monetary award in the judgment appealed
Certiorari under Rule 65. from.The posting of the appeal bond within
On April 15, 2005, the CA rendered the period provided by law is not merely
the assailed Decision denying BBCs Petition mandatory but jurisdictional.The failure on
forCertiorari.The CA held that BBC, though the part of BBC to perfect the appeal thus
owned by the government, is a corporation had the effect of rendering the judgment
with a personality distinct from the Republic final and executory.
or any of its agencies or instrumentalities,
and therefore do not partake in the latter's
exemption from the posting of appeal 196 MIGUEL DELA PENA
bonds. BARAIRO,Petitioner, v. OFFICE OF THE
The Court of Appeals denied the PRESIDENT and MST MARINE SERVICES
MR.Hence, this Petition for Review. (PHILS.), INC. et al.,Respondents.

ISSUE: FACTS:
Whether BBC is exempt from Miguel Barairo (petitioner) was hired
posting an appeal bond. on June 29, 2004 by respondent MST Marine
Services (Phils.) Inc., (MST) for its principal,
HELD: TSM International, Ltd., as Chief Mate of the
Petition denied. vesselMaritina, for a contract period of six
GOCCs NOT EXEMPT FROM POSTING months.He boarded the vessel and
BOND discharged his duties on July 23, 2004, but
Generally, the government and all was relievedon August 28, 2004 ostensibly
the attached agencies with no legal for transfer to another
personality distinct from the former are vessel,Solar.Petitioner thus disembarked in
exempt from posting appeal bonds, whereas Manila on August 29, 2004.
government-owned and controlled Petitioner was later to claim that he
corporations (GOCCs) are not similarly was not paid the promised "stand-by fee" in
exempted except if it is sued in relation to its lieu of salary that he was to receive while
governmental functions. Here, BBC was awaiting transfer to another vessel as in fact
organized as a private corporation, the transfer never materialized.
sequestered in the 1980s and the ownership On October 20, 2004, petitioner
of which was subsequently transferred to signed a new Contract of Employmentfor a
the government. Its primary function is to six-month deployment as Chief Mate in a
engage in commercial radio and television newly-built Japanese vessel, M/THaruna.He
broadcasting. It is therefore clear that BBCs was paid a one-month "standby fee" in
function is commercial or proprietary and connection with theMaritinacontract.
not governmental.As such, BBC is not
 283

Petitioner boarded the LABOR LAW: Labor Relations,

M/THarunaon October 31, 2004 but he Appeals
disembarked a week later as MST claimed Following settled jurisprudence, the
that his boarding of M/THarunawas a "sea proper remedy to question the decisions or
trial" which, MST maintains, was priorly orders of the Secretary of Labor is via
made known to him on a "stand-by" fee.MST Petition for Certiorari under Rule 65, not via
soon informed petitioner that he would be an appeal to the OP.For appeals to the OP in
redeployed to the M/THarunaon November labor cases have indeed been eliminated,
30, 2004, but petitioner refused, prompting except those involving national interest over
MST to file a complaintfor breach of contract which the President may assume
against him before the Philippine Overseas jurisdiction.
Employment Administration (POEA). Petitioners appeal of the Secretary of
Petitioner claimed, however, that he Labors Decision to the Office of the President
was placed on "forced vacation" when he did not toll the running of the period, hence,
was made to disembark from the the assailed Decisions of the Secretary of
M/THaruna, and that not wanting to Labor are deemed to have attained finality.
experience a repetition of the previous At all events, on the merits, the
"termination" of his employment aboard petition just the same fails.
theMaritina,he refused to be redeployed to As found by the POEA Administrator
the M/THaruna. andthe Secretary of Labor, through
By Orderof April 5, 2006, then POEA Undersecretary Danilo P. Cruz,petitioners
Administrator Rosalinda D. Baldoz penalized refusal to board the M/THarunaon
petitioner with one year suspension from November 30, 2004 constituted unjustified
overseas deployment upon a finding that his breach ofhis contract of employment under
refusal to complete his contract aboard the Section 1 (A-2) Rule II,Part VI[sic] of the POEA
M/THarunaconstituted a breach thereof. Seabased Rules and Regulations.That
On appeal by petitioner, the petitioner believed that respondent
Secretary of Labor, by Orderof September company violated his rights when the period
22, 2006, noting that it was petitioners first of his earlier Maritinacontract was not
offense,modifiedthe POEA Order by followed and his "stand-by fees" were not
shortening the period of suspension from fully paid did not justify his refusal to abide
one year to six months. by the valid and existingHaruna contract
The Office of the President (OP), by requiring him to serve aboard
Decision of November 26, 2007, dismissed M/THaruna.For, as noted in the assailed
petitioners appeal for lack of jurisdiction. DOLE Order, "if petitioners rights has been
The OP held that appeals to it in labor violated as he claims, he has various
cases, except those involving national remedies under the contract which he did
interest, have been eliminated.Petitioners not avail of."
motion for partial reconsideration was Parenthetically, the Undersecretary
denied by Resolutionof June 26, 2009, of Labor declared that "the real reason
hence, the present petition. [petitioner] refused to re-joinHarunaon
November 30, 2004, is that he left the
ISSUE: Philippines on November 29, 2004 to join
Whether an appeal to the Office of MTAdriatiki, a vessel of another manning
the President is proper in this case agency," which declaration petitioner has
not refuted.
HELD: PETITION DENIED.
NO
 284

197 UNIVERSITY PLANS INCORPORATED, submit any financial statement or provide

Petitioner, v. BELINDA P. SOLANO, TERRY details anent its alleged receivership or its
A. LAMUG, GLENDA S. BELGA, MELBA S. sources of income.
ALVAREZ, WELMA R. NAMATA, MARIETTA On review, the CA held that the NLRC
D. BACHO and MANOLO L. CENIDO, in meritorious cases and upon motion by the
Respondents. appellant may reduce the amount of the
bond.However, in order for the NLRC to
FACTS: exercise this discretion, it is imperative for
Respondents filed before the Labor the petitioner to show veritable proof that it
Arbiter complaints for illegal dismissal, illegal is entitled to the same.Since petitioner failed
deductions, overriding commissions, unfair to provide the NLRC with sufficient basis to
labor practice, moral and exemplary determine its incapacity to post the required
damages, and actual damages against appeal bond, the CA opined that the NLRC's
petitioner University Plans Incorporated. denial of petitioner's Motion to Reduce Bond
The Labor Arbiter found petitioner was justified.Hence, this petition.
guilty of illegal dismissal and ordered
respondents reinstatement as well as the ISSUE:
payment of their full backwages, Did the NLRC and CA err when it
proportionate 13th month pay, denied petitioners motion to reduce bond?
moral/exemplary damages, and attorney's
fees. HELD:
On appeal, petitioner likewise Posting of bond is indispensable to
Motion to Reduce Bond alleging that it was the perfection of an appeal in cases involving
under receivership and that it cannot monetary awards from the Decision of the
dispose of its assets at such a short Labor Arbiter pursuant to Art 223 of the
notice.Because of this, it could not post the Labor Code in relation to Sections 4 and 6,
required bond.Nevertheless, it has Rule VI of the Revised Rules of Procedure of
P30,000.00 available for immediate the NLRC.
disposition and thus prayed that said The abovementioned provisions
amount be deemed sufficient to satisfy the highlight the importance of posting a cash or
required bond for the perfection of its surety bond in the perfection of an appeal to
appeal. But the NLRC denied petitioners the NLRC from the Labor Arbiters judgment
Motion to Reduce Bond and directed it to involving a monetary award.
post an additional appeal bond in the Under the Rules, appeals involving
amount ofP3,013,599.50 within a non- monetary awards are perfected only upon
extendible period of 10 days from notice, compliance with the following mandatory
otherwise the appeal shall be dismissed for requisites, namely: (1) payment of the
non-perfection pursuant to Article 223 of the appeal fees; (2) filing of the memorandum of
Labor Code. appeal; and (3)payment of the required cash
Petitioner filed a Motion for or surety bond.
Reconsideration Insisting that the NLRC has The intention of the lawmakers to
the discretion to reduce the appeal bond make the bond a mandatory requisite for the
upon motion of appellant and on perfection of an appeal by the employer is
meritorious grounds. The NLRC, however, clearly expressed in the provision that an
denied the same.It ruled that while it has the appeal by the employer may be perfected
discretion to reduce the appeal bond, it is only upon the posting of a cash or surety
nevertheless not persuaded that petitioner bond.The word only in Article 223 of the
was incapable of posting the required Labor Code makes it unmistakably plain that
bond.It noted that petitioner failed to the lawmakers intended the posting of a
 285

cash or surety bond by the employer to be correct this error in its March 21, 2003
the essential and exclusive means by which Resolution By further explaining that it was
an employers appeal may be perfected.The not persuaded by petitioners alleged
word may refers to the perfection of an incapability of posting the required amount
appeal as optional on the part of the of bond for failure to submit financial
defeated party, but not to the compulsory statement, list of sources of income and
posting of an appeal bond, if he desires to other details with respect to the alleged
appeal.The meaning and the intention of the receivership, we still find the hasty denial of
legislature in enacting a statute must be the motion to reduce bond not proper.
determined from the language employed; Notwithstanding petitioner's failure
and where there is no ambiguity in the words to submit its financial statement and list of
used, then there is no room for construction. sources of income and to give more details
(Ramirez v. Court of Appeals,G.R. No. relative to its receivership, it was
182626, December 4, 2009) nevertheless able to show through the
Notably, however, under Section 6, abovementioned SEC Orders that it was
Rule VI of the NLRC's Revised Rules of indeed under a state of receivership.This
Procedure, the bond may be reduced albeit should have been sufficient reason for the
only on meritorious grounds and upon NLRC to not outrightly deny petitioners
posting of a partial bond in a reasonable motion. Here, considering the clear showing
amount in relation to the monetary of petitioners state of receivership, the NLRC
award.Suffice it to state that while said Rules should have conducted such preliminary
allows the Commission to reduce the determination and therein require the
amount of the bond, the exercise of the submission of said documents and other
authority is not a matter of right on the part necessary evidence before proceeding to
of the movant, but lies within the sound resolve the subject motion.
discretion of the NLRC upon a showing of After all, the present case falls under
meritorious grounds. those cases where the bond requirement on
Petitioner attached to its Motion to appeal may be relaxed considering that (1)
Reduce Bond the SEC Orders dated August there was substantial compliance with the
23, 1999 and May 23, 2000. From the said Rules; (2) the surrounding facts and
SEC Orders, it is unmistakable that petitioner circumstances constitute meritorious
was under receivership.And from the tenor grounds to reduce the bond; and (3) the
and contents of said Orders, it is possible petitioner, at the very least, exhibited its
that petitioner has no liquid asset which it willingness and/or good faith by posting a
could use to post the required amount of partial bond during the reglementary period.
bond.Also, it is quite understandable that Thus, it was an error on the part of the NLRC
because of petitioners financial state, it when it denied petitioners Motion to Reduce
cannot raise the amount of more thanP3 Bond and likewise on the part of the CA
million within a period of 10 days from when it affirmed said denial.
receipt of the Labor Arbiters judgment. CA REVERSED
However, the NLRC ignored
petitioners allegations and instead remained
adamant that since the amount of bond is 198 Semblante vs. CA, G.R. No. 196426,
fixed by law, petitioner must post an August 15, 2011
additional bond of more thanP3 million. It is
an utter disregard of the provision of the Facts:
Labor Code and of the NLRC Revised Rules of Petitioners Marticio Semblante and
Procedure allowing the reduction of bond in Dubrick Pilar worked in the Gallera de
meritorious cases.While the NLRC tried to Mandaue owned by the respondents-
 286

spouses Vicente and Maria Luisa Loot. The necessary and indispensable to the usual
petitioners rendered their services as the trade or business of the respondents for a
official massiador and sentenciador in 1993. number of years. It h as ruled that
As the masiador, Semblante calls and takes petitioners were illegally dismissed and are
the bets from the gamecock owners and entitled to their backwages and separation
other bettors and orders the start of the pay. However, the NLRC reversed the Labor
cockfight. He also distributes the winnings Arbiter‘s decision. It held that respondents
after deducting the arriba, or the having no power on the selection and
commission for the cockpit. Meanwhile, as engagement of petitioners and that no
the sentenciador, Pilar oversees the proper separate individual contract with
gaffing of fighting cocks, determines the respondents was ever executed by
fighting cocks' physical condition and petitioners. In its appeal to the CA, the latter
capabilities to continue the cockfight, and ruled in favor for the respondents and held
eventually declares the result of the that referees and
cockfight. As masiador and sentenciador, bet-takers in a cockfight need to have the
Semblante receives PhP2,000 per week or a kind of expertise that is characteristic of the
total of PhP8,000 per month, while Pilar gets game to interpret messages conveyed by
PhP3,500 a mere gestures.
week or PhP14,000 per month. They work Hence, petitioners are akin to
every Tuesday, Wednesday, Saturday, and independent contractors who possess
Sunday every week, excluding monthly unique skills , expertise and talent to
derbies and cockfights held on special distinguish them from ordinary employees.
holidays. Their working days start at 1:00 Further, petitioners were not provided by
p.m. and last until 12:00 midnight, or until tools and instrumentalities they needed to
the early hours of the morning perform their work. They only need their
depending on the needs of the cockpit. unique skills and talents in the performance
Petitioners had both been issued employees' of their job as masiador and sentenciador.
identification cards that they wear every
time they report for duty. However on Issue:
November 14,1993, petitioners were denied Whether or not the dismissal of the
entry into the cockpit upon the instructions petitioners is illegal on the ground that that
of respondents and were informed of the they are regular employees of the
termination of their employment effective respondents?
that date.
Respondents denied that petitioners were Ruling:
their employees and alleged that they were Respondents had no part in
associates of respondents‘ independent petitioners' selection and management;
contractor, Tomas Vega. They claimed that petitioners' compensation was paid out of
petitioners have no regular working time or the arriba (which is a percentage deducted
day and they are free to decide for from the total bets), not by petitioners; and
themselves whether to report for work or petitioners performed their functions as
not on any cockfighting day. And the masiador and sentenciador free from the
identification card issued was only to free direction and control of respondents. In the
them from the normal entrance fees and to conduct of their work, petitioners relied
differentiate them from the general public. mainly on their "expertise that is
The Labor Arbiter found that there characteristic of the cockfight gambling,"
exist an employer-employee relationship and were never given by respondents any
between the petitioner and the respondents tool needed for the performance of their
because the latter performed the works work. Respondents, not being petitioners'
 287

employers, could never have dismissed, Respondents elevated their cause to

legally or illegally, petitioners, since the CAviaa petition forcertiorariunder Rule
respondents were without power or 65. The CA granted respondents petition
prerogative to do so in the first place. The forcertiorariand deleted the award of
rule on the posting of an appeal bond cannot financial assistance. Further, the CA held
defeat the substantive rights of respondents that it was grave abuse of discretion for the
to be free from an unwarranted burden of NLRC to rule on the issue of illegal dismissal
answering for an illegal dismissal for which when such issue was not raised on appeal.
they were never responsible. Petitioner filed an MR but this was
denied by the CA.

199 RODOLFO LUNA, Petitioner, v. ALLADO ISSUE:

CONSTRUCTION CO., INC., and/or RAMON (1) Whether the NLRC could still
ALLADO, Respondents. review issues not brought during the appeal,
(2) Whether the CA exercised grave
FACTS: abuse of discretion in disregarding the
Sometime in the afternoon of findings of fact by the NLRC, the principle of
November 24, 2001, petitioner alleges that social justice, and jurisprudence with respect
he was given a travel order dated to proceed to the award of financial assistance, and
to respondents main office in Davao City for (3) Whether the CA exhibited bias and
reassignment. Upon arrival at the office, he partiality when it rendered the decision and
was asked to sign several sets of "Contract of resolution considering the hasty and
Project Employment". He refused. Thus, he improvident issuance of a writ of preliminary
was not given a reassignment or any other injunction to frustrate petitioner in
work. These incidents prompted him to file implementing the final and executor
the complaint. judgment of the NLRC favouring petitioner.
Respondents, on the other hand,
alleged that petitioner applied for a leave of HELD:
absence which was granted. Upon expiration The petition is PARTLY
of his leave, he was advised to report to the GRANTED.The award of financial assistance
companys project in Sarangani Province. is REINSTATED.
However, he refused and claimed instead I. The 2002 Rules of Procedure of the
that he had been dismissed illegally. NLRC, which was in effect at the time
Finding that petitioner is deemed respondents appealed the Labor Arbiters
resigned, the Labor Arbiter (LA) dismissed decision, provided that the NLRC shall limit
petitioners complaint for illegal dismissal, itself only to the specific issues that were
but ordered respondent to pay the former elevated for review. Here, the NLRC passed
the amount ofP18,000.00 by way of financial upon the issue of illegal dismissal although
assistance. this was not brought up in the appeal.
Respondents appealed with the Therefore, by considering the arguments
National Labor Relations Commission (NLRC) and issues in the reply/opposition to appeal
which reversed the decision of the LA, which were not properly raised by timely
declared respondents guilty of illegal appeal nor comprehended within the scope
dismissal, and ordered them to pay of the issue raised in petitioners appeal,
petitioner one-month salary for every year public respondent committed grave abuse of
of service as separation pay. Respondents discretion amounting to excess of
moved for reconsideration but their motion jurisdiction.
was denied. II. As shown by the records,
inconsistent with his claim that he was
 288

actually dismissed petitioner applied for and 200 PAQUITO V. ANDO, Petitioner, v.
was granted a week long leave. Petitioner ANDRESITO Y. CAMPO, ET AL.,,
did not deny this. He merely claimed that he Respondents.
went on leave since he was not given any
work assignment by the Company.However, FACTS:
the leave application form which bore his Petitioner was the president of
signature clearly stated that his reason for PACSI, an independent labor contractor.
going on leave was "to settle [his] personal Respondents were hired by PACSI as pilers or
problem." Indeed, the NLRC gravely abused haulers. They filed a case for illegal dismissal
its discretion in reversing the Labor Arbiters and some money claims with the National
decision on mere conjectures and Labor Relations Commission (NLRC)
insubstantial grounds. The Labor Arbiter ruled in
III. We are not unmindful of the rule respondents’ favor. To answer for the
that financial assistance is allowed only in monetary award, NLRC issued a Notice of
instances where the employee is validly Sale on Execution of Personal Property over
dismissed for causes other than serious the property in the name of “Paquito V.
misconduct or those reflecting on his moral Ando x x x married to Erlinda S. Ando.
character. But we must stress that this Court Petitioner then filed an action for
did allow the grant of financial assistance as prohibition and damages with prayer for the
a measure of social justice and exceptional issuance of a temporary restraining order
circumstances, and as an equitable (TRO) before the Regional Trial Court (RTC).
concession.There appears to be no reason Petitioner claimed that the property
why petitioner, who has served respondent belonged to him and his wife, not to the
corporation for more than eight years corporation, and, hence, could not be
without committing any infraction, cannot subject of the execution sale. The RTC
be extended the reasonable financial denied petitioner’s prayer for a TRO, holding
assistance of P18,000.00 as awarded by the that the trial court had no jurisdiction to try
Labor Arbiter on equity considerations. and decide the case. The CA affirmed the RTC
IV. Granting of a TRO by a justice of Order.
the CA even without the concurrence of the Petitioner then filed the present
other associate justices in the division, is petition seeking the nullification of the CA
allowed in cases of extreme urgency. Here, Decision. He argued that there was no
the records of this case would attest to the indication in the body of the Decision that he
urgency of the situation. When the TRO was was solidarily liable with the corporation.
issued, the NLRC Regional Arbitration Branch
No. XI was already in the process of ISSUE:
enforcing the assailed Resolution of the Whether or not the CA erred in
NLRC dated May 9, 2003 as evidenced by its upholding the RTC Decision
issuance of a Notice of Hearingfor a pre-
execution conference which was impelled by
a motion made by petitioner. The pre- HELD:
execution conference was conducted as The petition is meritorious.
scheduled, thus, respondents filed with the LABOR LAW: Execution
Court of Appeals an Urgent Motion for the The power of the NLRC, or the courts,
Issuance of a Temporary Restraining Order to execute its judgment extends only to
and/or Writ of Preliminary Injunction. properties unquestionably belonging to the
judgment debtor alone. A sheriff, therefore,
has no authority to attach the property of
any person except that of the judgment
 289

debtor. Likewise, there is no showing that reinstatement of respondent, and the

the sheriff ever tried to execute on the payment of his backwages.
properties of the corporation.
Petition is GRANTED. ISSUE:
Whether or not the CA erred in
reinstating respondent.
201 FILIPINAS PALMOIL PROCESSING, INC.
and DENNIS T. VILLAREAL, Petitioners, v. HELD:
JOEL P. DEJAPA, represented by his The petition lacks merit.
Attorney-in-Fact MYRNA MANZANO, LABOR LAW: Judgment nunc pro
Respondent. tunc
As a general rule, final and executory
FACTS: judgments are immutable and unalterable,
In 1997, respondent Joey Dejapa filed except under these recognized exceptions,
a Complaint for illegal dismissal and money to wit: (a) clerical errors; (b) nunc pro tunc
claims against petitioner Asian Plantation entries which cause no prejudice to any
Phils., Inc. (formerly Veg. Oil Phils. Inc.), now party; and (c) void judgments.
Filipinas Palmoil Processing, Inc., Dennis T. The object of a judgment nunc pro
Villareal and Tom Madula. The Labor Arbiter tunc is not the rendering of a new judgment
(LA) dismissed respondent's complaint for and the ascertainment and determination of
lack of merit. The NLRC affirmed this. new rights, but is one placing in proper form
The CA reversed and set aside the on the record, the judgment that had been
NLRC decision and resolution. It found that previously rendered, to make it speak the
petitioner company was respondent's truth, so as to make it show what the judicial
employer and that Tom Madula was not action really was, not to correct judicial
really an independent contractor, but errors, such as to render a judgment which
petitioner company's Operations Manager. the court ought to have rendered, in place of
It ruled that respondent was illegally the one it did erroneously render, nor to
dismissed by petitioner company. supply nonaction by the court, however
Respondent filed with the LA a erroneous the judgment may have been.
Motion for Execution and Computation of Petition is DENIED. The decision of
the Award. The LA issued a Writ of CA is affirmed.
Execution. Petitioners filed a Motion to
Quash Writ of Execution on the ground that
it can be held liable only insofar as the 202 PFIZER, INC. AND/OR REY GERARDO
reinstatement aspect and/or the monetary BACARRO, AND/OR FERDINAND CORTES,
award were concerned, pursuant to the CA AND/OR ALFRED MAGALLON, AND/OR
Decision dated August 29, 2002, but not to ARISTOTLE ARCE, Petitioners, v.
backwages. GERALDINE VELASCO, Respondent.
Respondent then filed before the CA
a Very Urgent Motion for Clarification of FACTS:
Judgment, praying that the CA Decision Private respondent Geraldine L.
dated August 29, 2002 be clarified to the Velasco was terminated from employment
effect that petitioner be made solely liable to with petitioner PFIZER, INC. The Labor
the judgment award and, as a consequence Arbiter rendered its decision declaring the
thereof, to order the NLRC and the LA to dismissal of Velasco illegal, ordering her
implement the same and to direct the UCPB reinstatement. PFIZER appealed to the
to release the garnished amount. The CA, in National Labor Relations Commission (NLRC)
a new Resolution, then ordered the but its appeal was denied. The CA upheld the
 290

validity of respondents dismissal from alenga that, pursuant to the decision of the
employment but ordered Pfizer to pay board of directors of respondent CDC, the p
Velasco wages from the date of the Labor osition of head executive assistant the positi
Arbiters decision ordering her reinstatement on held by petitioner was declared redunda
until November 23, 2005, when the Court of nt. His employment was then terminated. H
Appeals rendered its decision declaring e then filed illegal dismissal case against CD
Velasco's dismissal valid. C and Colayco. The Labor Arbiter ruled in fa
vor of Salenga. When the Decision was rend
ered, CDC was already under the leadership
ISSUE: of Sergio T. Naguiat. He instructed Atty. Mo
Did the CA commit a serious but nina C. Pineda, manager of the Corporate a
reversible error when it ordered Pfizer to nd Legal Services Department and concurre
pay Velasco wages from the date of the nt corporate board secretary, not to appeal
Labor Arbiters decision ordering her the Decision and to so inform the OGCC. Ho
reinstatement until November 23, 2005, wever, two separate appeals were filed bef
when the Court of Appeals rendered its ore LA Darlucio. One from the OGCC on beh
decision declaring Velascos dismissal valid? alf of respondent CDC and Rufo Colayco and
the second from Rufo Colayco.
HELD: Petitioner opposed the two appeals
The order of reinstatement is on the grounds that both appellants had fail
immediately executory. The unjustified ed to observe Rule VI, Sections 4 to 6 of the
refusal of the employer to reinstate a NLRC Rules of Procedure; and that appellant
dismissed employee entitles him to payment s had not been authorized by respondent’s
of his salaries effective from the time the board of directors to represent the corporat
employer failed to reinstate him despite the ion and, thus, they were not the “employer”
issuance of a writ of execution. Unless there whom the Rules referred to.
is a restraining order issued, it is ministerial
upon the Labor Arbiter to implement the ISSUE:
order of reinstatement. In the case at bar, no Whether or not NLRC can entertain
restraining order was granted. PFIZER did an appeal absent a board resolution allowin
not immediately admit respondent back to g it.
work which, according to the law, should
have been done as soon as an order or award HELD:
of reinstatement is handed down by the No. The NLRC had no jurisdiction to
Labor Arbiter without need for the issuance entertain the appeal filed by TimbolRoman
of a writ of execution.Thus, respondent was and former CDC CEO Colayco.
entitled to the wages paid to her under the A corporation can only exercise its p
writ of execution. owers and transact its business through its
board of directors and through its officers a
nd agents when authorized by a board resol
203 ANTONIO P. SALENGA and ution or its bylaws. The power of a corporati
NATIONAL LABOR RELATIONS COMMISSIO on to sue and be sued is exercised by the bo
N vs COURT OF APPEALS and CLARK DEVEL ard of directors. The physical acts of the cor
OPMENT CORPORATION poration, like the signing of documents, can
G.R. Nos. 174941, February 1, 2012 be performed only by natural persons duly
authorized for the purpose by corporate byl
FACTS: aws or by a specific act of the board. The pu
President/Chief Executive Officer (CE rpose of verification is to secure an assuranc
O) Rufo Colayco issued an Order informing S e that the allegations in the pleading are tru
 291

e and correct and have been filed in good fa CGI awarded P20,000.00 to Nelson brother.
ith. Merridy Jane is now claiming the $90,000.00
Thus, absent the requisite board res less the P20,000.00 that Nelson brother
olution, neither TimbolRoman nor Atty. Mal received.
lari, who signed the Memorandum of Appea Respondents asserted that the NLRC
l and Joint Affidavit of Declaration allegedly had no jurisdiction over the action on
on behalf of respondent corporation, may b account of the absence of employer-
e considered as the “appellant” and “emplo employee relationship between GCI and
yer” referred to by Rule VI, Sections 4 to 6 o Nelson at the time of the latter death.
f the NLRC Rules of Procedure, which provid Nelson also had no claims against petitioners
es that appeal shall be verified by appellant for sick leave allowance/medical benefit by
himself in accordance with Section 4, Rule 7 reason of the completion of his contract with
of the Rules of Court. The OGCC failed to pr GCI.
oduce any valid authorization from the boar The Labor Arbiter ruled in favor of
d of directors despite petitioner Salenga’s re petitioner and ordered respondents to pay
peated demands. And the socalled appeal w P4,621,300.00, the equivalent of
as done against the instructions of then Pre US$90,000.00 less P20,000.00, at the time of
sident/CEO Naguiat not to file an appeal. judgment. The Labor Arbiter also ruled that
the proximate cause of Nelson death was not
work-related.
204 ESTATE OF NELSON R. DULAY, On appeal, the NLRC affirmed the
represented by his wife MERRIDY JANE P. Labor Arbiter decision as to the grant of
DULAY, Petitioner, v. ABOITIZ JEBSEN death benefits under the CBA but reversed
MARITIME, INC. and GENERAL the latter ruling as to the proximate cause of
CHARTERERS, INC., Respondents. Nelson death.
A special civil action for certiorari was
FACTS: filed with the CA. The appellate court
Since 1986, Nelson Dulay was granted the petition and referred the case to
employed as an ordinary seaman and later as the NCMB for the appropriate resolution of
bosun on contractual basis by General the issue on the matter of the applicable CBA
Charters, Inc,, a subsidiary of Aboitiz Jebsen provision.
Maritime. From September 3, 1999 up to The CA ruled that while the suit filed
July 19, 2000, Nelson was detailed in by Merridy Jane is a money claim, the same
petitionersvessel, the MV Kickapoo Belle. basically involves the interpretation and
At the time of his death on August 13, application of the provisions in the subject
2000, he was a bona fide member of the CBA. As such, jurisdiction belongs to the
AMOSUP, GCI collective bargaining agent. voluntary arbitrator and not the labor
Nelson widow, Merridy Jane, thereafter arbiter.
claimed for death benefits through the
grievance procedure of the CBA between
AMOSUP and GCI. However, on January 29, ISSUE:
2001, the grievance procedure was Whether or not the CA committed
"declared deadlocked" as petitioners error in ruling that the Labor Arbiter has no
refused to grant the benefits sought by the jurisdiction over the case?
widow.
On March 5, 2001, Merridy Jane filed HELD:
a complaint with the NLRC against GCI for Petitioner contends that Section 10
death and medical benefits and damages. of Republic Act (R.A.) 8042, otherwise known
Merridy Jane claimed $90,000.00 however, as the Migrant Workers and Overseas
 292

Filipinos Act of 1995, vests jurisdiction on the In any case, the Court agrees with
appropriate branches of the NLRC to petitioner's contention that the CBA is the
entertain disputes regarding the law or contract between the parties.
interpretation of a collective bargaining Upon this Court reading of the
agreement involving migrant or overseas pertinent provisions of the CBA, it is clear
Filipino workers. Petitioner argues that the that the parties really intended to bring to
abovementioned Section amended Article conciliation or voluntary arbitration any
217 (c) of the Labor Code which, in turn, dispute or conflict in the interpretation or
confers jurisdiction upon voluntary application of the provisions of their CBA. It
arbitrators over interpretation or is settled that when the parties have validly
implementation of collective bargaining agreed on a procedure for resolving
agreements and interpretation or grievances and to submit a dispute to
enforcement of company personnel policies. voluntary arbitration then that procedure
It is true that R.A. 8042 is a special should be strictly observed.
law governing overseas Filipino workers. It may not be amiss to point out that
However, there is no specific provision the CBA are in consonance with Rule VII,
thereunder which provides for jurisdiction Section 7 of the present Omnibus Rules and
over disputes or unresolved grievances Regulations Implementing the Migrant
regarding the interpretation or Workers and Overseas Filipinos Act of 1995,
implementation of a CBA. Section 10 of R.A. as amended by Republic Act No. 10022,
8042, which is cited by petitioner, simply which states that "[f]or OFWs with collective
speaks, in general, of "claims arising out of bargaining agreements, the case shall be
an employer-employee relationship or by submitted for voluntary arbitration in
virtue of any law or contract involving accordance with Articles 261 and 262 of the
Filipino workers for overseas deployment Labor Code." The Court notes that the said
including claims for actual, moral, exemplary Omnibus Rules and Regulations were
and other forms of damages." promulgated by the Department of Labor
On the other hand, Articles 217(c) and Employment (DOLE) and the
and 261 of the Labor Code are very specific Department of Foreign Affairs (DFA) and that
in stating that voluntary arbitrators have these departments were mandated to
jurisdiction over cases arising from the consult with the Senate Committee on Labor
interpretation or implementation of and Employment and the House of
collective bargaining agreements. Stated Representatives Committee on Overseas
differently, the instant case involves a Workers Affairs.
situation where the special statute (R.A. In consultation with the counterparts
8042) refers to a subject in general, which of the DOLE in the respective committees of
the general statute (Labor Code) treats in the Senate and the House of
particular. Representatives, as well as the DFA and the
In the present case, the basic issue POEA is that with respect to disputes
raised by Merridy Jane in her complaint filed involving claims of Filipino seafarers wherein
with the NLRC is: which provision of the the parties are covered by a collective
subject CBA applies insofar as death benefits bargaining agreement, the dispute or claim
due to the heirs of Nelson are concerned. should be submitted to the jurisdiction of a
The Court agrees with the CA in holding that voluntary arbitrator or panel of arbitrators.
this issue clearly involves the interpretation It is only in the absence of a collective
or implementation of the said CBA. Thus, the bargaining agreement that parties may opt
specific or special provisions of the Labor to submit the dispute to either the NLRC or
Code govern. to voluntary arbitration. It is elementary that
rules and regulations issued by
 293

administrative bodies to interpret the law claim. The Supreme Court, in upholding the
which they are entrusted to enforce, have Court of Appeals, held that the burden of
the force of law, and are entitled to great proof rests upon the party who asserts the
respect. Such rules and regulations partake affirmative of an issue. And in labor cases,
of the nature of a statute and are just as the quantum of proof necessary is
binding as if they have been written in the substantial evidence, or such amount of
statute itself. relevant evidence which a reasonable mind
DENIED might accept as adequate to justify a
conclusion. Petitioner had the duty to prove
by substantial evidence his own positive
205 Wilfredo Y. Antiquina v. Magsaysay assertions. He did not discharge this burden
Maritime Corporation and/or Masterbulk of proof when he submitted
Pte., Ltd., G.R. No. 168922. April 13, 2011. photocopied portions of a different CBA
with a different union.
Rules of Procedure; liberal construction in Wilfredo Y. Antiquina v.
favor of working class. Magsaysay Maritime Corporation and/or
Petitioner claimed disability benefits Masterbulk Pte., Ltd., G.R. No. 168922. April
under a Collective Bargaining Agreement 13, 2011. Public office; casual employees.
that the respondent employer entered into Respondent was a casual teller who was
with a foreign union. The Court of Appeals dismissed from service by petitioner
refused to admit the evidence of petitioner without being formally charged. On appeal,
showing his membership in the union on the the Civil Service Commission (CSC) upheld
ground that it was submitted only with the the dismissal and reasoned that respondent
Motion for Reconsideration. The Supreme was a casual employee, and therefore her
Court, in agreeing to examine the evidence services may be terminated at any time,
belatedly submitted by petitioner, pointed without need of a just cause. Upon review,
out that technical rules of procedure shall be both the Court of Appeals and the Supreme
liberally construed in favor of the working Court found that respondent was illegally
class in accordance with the demands of terminated. The Supreme Court recognized
substantial justice. Rules of procedure and its prono uncement in a recent case that
evidence should not be applied in a very rigid “Even a casual or temporary employee
and technical sense in labor cases in order enjoys security of tenure and cannot be
that technicalities would not stand in the dismissed except for cause enumerated in
way of equitably and completely resolving Sec. 22, Rule XIV of the Omnibus Civil Service
the rights and obligations of the parties. Rules and Regulations and other pertinent
Wilfredo Y. Antiquina v. Magsaysay Maritime laws.” However, the Court also went on to
Corporation and/or Masterbulk Pte., state that, despite this new ruling on casual
Ltd., G.R. No. 168922. April 13, employees, it is not the intention of the
2011. Disability Benefits; entitlement and Court to make the status of a casual
burden of proof. Petitioner suffered a employee at par with that of a regular
fractured arm while working on employee, who enjoys permanence of
respondent‟s vessel. He filed a complaint for employment. The rule is still that casual
permanent disa bility benefits, among employment will cease automatically at the
others. Petitioner claims that he is entitled to end of the period unless renewed. Casual
the higher amount of disability benefits employees may also be terminated anytime
under the Collective Bargaining Agreement though subject to certain conditions or
which respondent entered into with a union qualifications with reference to the CSC
of which petitioner was a member. The Form No. 001. Thus, they may be laid-off
Court of Appeals den ied the petitioner‟s anytime before the expiration of the
 294

employment period provided any of the petitioner‘s retained legal counsel with
following occurs: (1) when their services are matters pertaining to the prosecution of
no longer needed; (2) funds are no longer cases against illegal surface occupants within
available; (3) the project has already been the area covered by the company‘s mineral
completed/finished; or (4) claims. He also tasked to perform liason
their performance are below par. Philippine work with government agencies which he
Charity Sweepstakes Office Board of said his expertise. Respondent is not
Directors and Reynaldo P. Martin v. Marie required to report to its office on a regular
Jean C. Lapid, G.R. No. 191940. April 12, basis, except when occassionally requested
2011. Public office; security of tenure. by the management to discuss the matters
Respondent was a casual teller who, having which needs of his expertise as aconsultant.
been found guilty of „Discourtesy in the He is paid a retainer fee of 3,000Php a month
Course of Official Duties‟ and of „Grave and delivered to him either in his residence
Misconduct‟, was dismissed from service by or in a local restaurant. They have al so
petitioner. On appeal, the Civil Service executed a retainer agreement however was
Commission (CSC) ruled that despite lapses misplaced and can no longer be found. This
in procedural due process committed by kind of arrangement continued on for the
petitioner employer, the dismissal was next 11 years. Since respondent was getting
proper since respondent belonged to the old, he requested petitioner to cause his
category of a casual employee which does registration with the Social Security System
not enjoy security of tenure. Hence, she may but petitioner did not accede to his request
be separated from service at any time, there considering the former only a
being no need to show cause. The Court of retainer/consultant.
Appeals disagreed and declared the Respondent herein, filed a complaint
dismissal illegal. The Supreme Court with SSS against petitioner‘s refusal to cause
affirmed the findings of the Court of Appeals. his registration with the SSS. The Resident
In doing so, the Court relied on Manager of the petitioner issued then a
Section 3(2), Article XIII of the Constitution Memorandum advising respondent that
which guarantees the rights of all workers to within 30 days from receipt thereof,
security of tenure. The Court also recognized petitioner‘s services as a retainer/consultant
its pronouncement in a recent case that will be terminated since his services are no
“Even a casual or temporary employee longer necessary. As a result, respondent
enjoys security of tenure and cannot be filed a complaint for illegal dismissal, unfair
dismissed except for cause enumerated in labor practice, underpayment of wages, non-
Sec. 22, Rule XIV of the Omnibus Civil Service payment of 13th Month pay, vacation pay
Rules and Regulations and other pertinent and sick leave with the NLRC, Regional
laws.” Arbitration Branch and Cordillera
Administrative Region against the petitioner.
The Labor Arbiter rendered a
206 Atok Big Wedge Company vs. Gison, decision in favor of the petitioner ruling that
G.R. No. 169510, August 8, 2011 there is no employer-employee relationship
and dismissed the complaint for lack of
Facts: merit. An appeal was made before the NLRC
The respondent in this case, Jesus P. but same was dismissed and affirmed the
Gison, was engaged as part-time consultant decision of the Labor Arbiter.
of the petitioner, Atok Big Wedge Company A petition for review was filed under
thorugh its then Asst. VP and Acting Resident Rule 65 before the Court of Appeals. The
Manager, Rutillo A. Torres. As a consultant Court of Appeals annuled and has set aside
on retainer basis, the former assisted the the d ecision of NLRC. The CA opined that,
 295

both the Labor Arbiter and NLRC overlooked supported by substantial evidence. Being a
Article 280 of the Labor Code, which question of fact, the determination whether
distinguishes between the two kinds of such a relationship exists between petitioner
employees, i.e., regular and casual and respondent was well within the province
employees. The respondent is deemed a of the
regular employee of the petitioner after the Labor Arbiter and the NLRC. Being supported
lapse of one year from his employment. by substantial evidence, such determination
Considering also that the respondent had should have been accorded great weight by
been performing services for the petitioner the CA in resolving the issue. To ascertain the
for the last 11 years en titling him to the existence of an employer-employee
rights and privileges of a regular employee. relationship jurisprudence has invariably
The CA added that although there was an adhered to the four-fold test, to wit: (1) the
agreement between the parties that the selection and engagement of the employee;
employment of the (2) the payment of wages; (3) the power of
respondent will be only temporary, it clearly dismissal; and (4) the power to control the
disregarded the same by repeatedly giving employee's conduct, or the so-called
petitioner several tasks to perform. "control test." The so-called "control test" is
Moreover, although the respondent may commonly regarded as the most crucial and
have waived his right to attain a regular determinative indicator of the presence or
status when he agreed to perform these absence of an employer-employee
tasks on a temporary employment status, relationship
still it was the law that recognized and Applying the aforementioned test, an
considered him a regular employee after his employer-employee relationship is
first year of rendering service to petitioner. apparently absent in the case at bar. Among
As such, the waiver is ineffective. other things, respondent was not required to
Petitioner herein posits that CA erred report everyday during regular office hours
in applying Article 280 of the Labor Code in of petitioner. Respondent's monthly retainer
determining whether there exists an fees were paid to him either at his residence
employer-employee relationship. Petitioner or a local restaurant. More importantly,
contends that where the existence of an petitioner did not prescribe the manner in
employer-employee relationship is in which respondent would accomplish any of
dispute, Article 280 of the Labor Code is the tasks in which his expertise as a liaison
inapplicable. The said article only set the officer was needed; respondent was left
distinction between a casual employee from alone and given the freedom to accomplish
a regular employee for purposes of the tasks using his own means and method.
determining the rights Respondent was assigned tasks to perform,
of an employee to be entitled to certain but petitioner did not control the manner
benefits. and methods by which respondent
Issue: performed these tasks. Verily, the absence
Whether or not CA erred in applying of the element of control on the part of the
Article 280? petitioner engenders a conclusion that he is
not an employee of the petitioner.
Ruling: Moreover, the absence of the parties'
Well-entrenched is the doctrine that retainership agreement notwithstanding,
the existence of an employer-employee respondent clearly admitted that petitioner
relationship is ultimately a question of fact hired him in a limited capacity only and that
and that the findings thereon by the Labor there will be no employer-employee
Arbiter and the NLRC shall be accorded not relationship between them.
only respect but even finality when
 296

Respondent was well aware of the the existence of an employment relationship

agreement that he was hired merely as a is in dispute.It is, therefore, erroneous on
liaison or consultant of the petitioner and he the part of the Court of Appeals to rely on
agreed to perform tasks for the petitioner on Article 280 in determining whether an
a temporary employment status only. employer-employee relationship exists
However, respondent anchors his claim that between respondent and the petitioner.
he became a regular employee of the Considering that there is no
petitioner based on his contention that the employer-employee relationship between
"temporary" aspect of his job and its the parties, the termination of respondent's
"limited" nature could not have lasted for services by the petitioner after due notice
eleven years unless some time during that did not constitute illegal dismissal
period, he became a regular employee of the warranting his reinstatement and the
petitioner by continually performing services payment of full backwages, allowances and
for the company. other benefits.
Respondent is not an employee,
much more a regular employee of petitioner.
The appellate court's premise that regular 207 ATLANTA INDUSTRIES, INC. and/or
employees are those who perform activities ROBERT CHAN, petitioners, vs. APRILITO R.
which are desirable and necessary for the SEBOLINO, KHIM V. COSTALES, ALVIN V.
business of the employer is not ALMONTE, and JOSEPH H. SAGUN,
determinative in this case. In fact, any respondents.
agreement may provide that one party shall
render services for and in behalf of another, FACTS:
no matter how necessary for the latter's Sebolino et al. filed several
business, even without being hired as an complaints for illegal dismissal,
employee. Hence,respondent's length of regularization, underpayment, nonpayment
service and petitioner's repeated act of of wages and other money claims as well as
assigning responden t some tasks to be damages. They alleged that they had
performed did not result to respondent's attained regular status as they were allowed
entitlement to the rights and privileges of a to work with Atlanta for more than six (6)
regular employee. months from the start of a purported
Furthermore, despite the fact that apprenticeship agreement between them
petitioner made use of the services of and the company. They claimed that they
respondent for eleven years, he still cannot were illegally dismissed when the
be con sidered as a regular employee of apprenticeship agreement expired.
petitioner. Article 280 of the Labor Code, in In defense, Atlanta and Chan argued
which the lower court used to buttress its that the workers were not entitled to
findings that respondent became a regular regularization and to their money claims
employee of the petitioner, is not applicable because they were engaged as apprentices
in the case at bar. Indeed, the Court has under a government-approved
ruled that said provision is not the yardstick apprenticeship program. The company
for determining the existence of an offered to hire them as regular employees in
employment relationship because it merely the event vacancies for regular positions
distinguishes between two kinds of occur in the section of the plant where they
employees, i.e., regular employees and had trained. They also claimed that their
casual employees, for purposes of names did not appear in the list of
determining the right of an employee to employees (Master List) prior to their
certain benefits, to join or form a union, or engagement as apprentices.
to security of tenure; it does not apply where
 297

The Labor Arbiter found the dismissal because (1) they were already employees
to be illegal with respect to nine out of the when they were required to undergo
twelve complainants. Atlanta appealed the apprenticeship and (2) apprenticeship
decision to the NLRC which reversed the agreements were invalid.
illegal dismissal decision with respect to The following considerations support
Sebolino and three others. They moved for the CA ruling.
reconsideration but this was denied. They FBased on company operations at
then brought the case up to the Court of the time material to the case, Costales,
Appeals, which held that Sebolino and the Almoite, Sebolino and Sagun were already
three others were illegally dismiised. rendering service to the company as
The CA ruled that Sebolino and the employees before they were made to
three others were already employees of the undergo apprenticeship. The company itself
company before they entered into the first recognized the respondents status through
and second apprenticeship agreements. For relevant operational records in the case of
example, Sebolino was employed by Atlanta Costales and Almoite, the CPS monthly
on March 3, 2004 then he entered into his report for December 2003 which the NLRC
first apprenticeship agreement with the relied upon and, for Sebolino and Sagun, the
company on March 20, 2004 to August 19, production and work schedule for March 7
2004. The second apprenticeship agreement to 12, 2005 cited by the CA.
was from May 28, 2004 to October 8, 2004. The CA correctly recognized the
However, the CA found the apprenticeship authenticity of the operational documents,
agreements to be void because they were for the failure of Atlanta to raise a challenge
executed in violation of the law and the against these documents before the labor
rules. Therefore, in the first place, there arbiter, the NLRC and the CA itself. The
were no apprenticeship agreements. appellate court, thus, found the said
Also, the positions occupied by the documents sufficientto establish the
respondents machine operator, extruder employment of the respondents before their
operator and scaleman are usually necessary engagement as apprentices.
and desirable in the manufacture of plastic The fact that Sebolino and the three
building materials, the companys main others were already rendering service to the
business. Sebolino and the three others company when they were made to undergo
were, therefore, regular employees whose apprenticeship (as established by the
dismissals were illegal for lack of a just or evidence) renders the apprenticeship
authorized cause and notice. agreements irrelevant as far as the four are
concerned. This reality is highlighted by the
ISSUE: CA finding that the respondents occupied
Whether or not the CA erred in positions such as machine operator,
ruling that Sebolino and three others were scaleman and extruder operator - tasks that
illegally dismissed. are usually necessary and desirable in
Atlantas usual business or trade as
HELD: manufacturer of plastic building materials.
The petition is unmeritorious. These tasks and their nature characterized
LABOR LAW - Illegal dismissals the four as regular employees under Article
The CA committed no reversible 280 of the Labor Code.Thus, when they were
error in nullifying the NLRC decision and in dismissed without just or authorized cause,
affirming the labor arbiters ruling, as it without notice, and without the opportunity
applies toCostales, Almoite, Sebolino and to be heard, their dismissal was illegal under
Sagun. Specifically, the CA correctly ruled the law.
that the four were illegally dismissed
 298

reinstatement. Section 2 (c), Rule 7 of the

208 Prince Transport, Inc. and Mr. Renato Rules of Court provides that a pleading shall
Claros v. Diosdado Garcia, Luisito Garcia, specify the relief sought, but may add a
Et. Al. general prayer for such further or other
G.R. No. 167291, January 12, 2011 reliefs as may be deemed just and equitable.
Under this rule, a court can grant the relief
FACTS: warranted by the allegation and the proof
Prince Transport, Inc. (PTI), is a even if it is not specifically sought by the
company engaged in the business of injured party; the inclusion of a general
transporting passengers by land; prayer may justify the grant of a remedy
respondents were hired either as drivers, different from or together with the specific
conductors, mechanics or inspectors, except remedy sought, if the facts alleged in the
for respondent Diosdado Garcia (Garcia), complaint and the evidence introduced so
who was assigned as Operations Manager. warrant. The general prayer is broad enough
Sometime in October 2007 the commissions “to justify extension of a remedy different
received by the respondents were reduced from or together with the specific remedy
to 7 to 9% from 8 to 10%. This led sought.” Even without the prayer for a
respondents and other employees of PTI to specific remedy, proper relief may be
hold a series of meetings to discuss the granted by the court if the facts alleged in
protection of their interests as employees. the complaint and the evidence introduced
Ranato Claros, president of PTI, made known so warrant. The court shall grant relief
to Garcia his objections to the formation of a warranted by the allegations and the proof
union and in order to block the continued even if no such relief is prayed for. The
formation of the union, PTI caused the prayer in the complaint for other reliefs
transfer of all union members and equitable and just in the premises justifies
sympathizers to one of its sub-companies, the grant of a relief not otherwise specifically
Lubas Transport (Lubas). The business of prayed for. In the instant case, aside from
Lubas deteriorated because of the refusal of their specific prayer for reinstatement,
PTI to maintain and repair the units being respondents, in their separate complaints,
used therein, which resulted in the virtual prayed for such reliefs which are deemed
stoppage of its operations and respondents' just and equitable.
loss of employment. Hence, the respondent-
employees filed complaints against PTI for
illegal dismissal and unfair labor practice. PTI 209 The Heritage Hotel Manila vs.
contended that it has nothing to do with the NATIONAL UNION OF WORKERS IN THE
management and operations of Lubas as HOTEL, RESTAURANT AND ALLIED
well as the control and supervision of the INDUSTRIES-HERITAGE HOTEL MANILA
latter's employees. SUPERVISORS CHAPTER (NUWHRAIN-
HHMSC) G.R. No. 178296, January 12, 2011
ISSUE:
Whether or not the order to reinstate
FACTS:
respondents was valid considering that the
The respondent’s petition for certific
issue of reinstatement was never brought up
ation election was granted. Petitioner then
before the CA and respondents never
discovered that respondent had failed to su
questioned the award of separation pay.
bmit to the Bureau of Labor Relations (BLR)
its annual financial report for several years
HELD:
and the list of its members since it filed its r
YES. It is clear from the complaints
egistration papers in 1995. Consequently, it
filed by respondents that they are seeking
filed a Petition for Cancellation of Registrati
 299

on of respondent, on the ground of the non Furthermore, that the Labor Code’s
submission of the said documents. Petitione provisions on cancellation of union registrat
r prayed that respondent’s Certificate of Cre ion and on reportorial requirements have b
ation of Local/Chapter be cancelled and its een recently amended by Republic Act (R.A.
name be deleted from the list of legitimate l ) No. 9481, An Act Strengthening the Worke
abor organizations. It further requested the rs’ Constitutional Right to SelfOrganization,
suspension of the certification election proc Amending for the Purpose Presidential Decr
eedings. Nevertheless, the certification elec ee No. 442, As Amended, Otherwise Known
tion pushed through and the respondent w as the Labor Code of the Philippines, which
on. says that failure to file financial reports and
The Regional Director of DOLENCR a list of union members shall not be a ground
nd DOLE Secretary both held that constituti for cancellation of union registration but sh
onally guaranteed freedom of association a all subject the erring officers or members to
nd right of workers to selforganization outw suspension, expulsion from membership, o
eighed respondent’s noncompliance with th r any appropriate penalty.
e statutory requirements to maintain its sta
tus as a legitimate labor organization.
210 NELSON A. CULILI, Petitioner, v.
ISSUE: EASTERN TELECOMMUNICATIONS
Whether or not the failure to compl PHILIPPINES, INC., SALVADOR HIZON
y with the statutory requirement(filing finan (President and Chief Executive Officer),
cial reports and the list of its members) suffi EMILIANO JURADO (Chairman of the
cient ground for the cancellation of registrat Board), VIRGILIO GARCIA (Vice President)
ion of the respondent as a labor union. and STELLA GARCIA (Assistant Vice
President), Respondents.
HELD:
No, the noncompliance should not b FACTS:
e a ground for the cancellation. Articles 238 Respondent Eastern
and 239 of the Labor Code provide that failu Telecommunications Philippines, Inc. (ETPI)
re to file financial reports and the list of its is a telecommunications company engaged
members are grounds for the cancellation o mainly in the business of establishing
f Union Organization. However, considerati commercial telecommunications systems
on must be taken of the fundamental rights and leasing of international datalines or
guaranteed by Article XIII, Section 3 of the C circuits that pass through the international
onstitution, i.e., the rights of all workers to s gateway facility (IGF). The other respondents
elforganization, collective bargaining and ne are ETPIs officers.
gotiations, and peaceful concerted activities Petitioner Nelson A. Culili was
. Labor authorities should bear in mind that employed by ETPI as a Technician in its Field
registration confers upon a union the status Operations Department in 1981. In 1996,
of legitimacy and the concomitant right and Culili was promoted to Senior Technician in
privileges granted by law to a legitimate lab the Customer Premises Equipment
or organization, particularly the right to part Management Unit of the Service Quality
icipate in or ask for certification election in Department.
a bargaining unit. Thus, the cancellation of a As a telecommunications company
certificate of registration is the equivalent and an authorized IGF operator, ETPI was
of snuffing out the life of a labor organizatio required, under RA No. 7925 and EO No. 109,
n. For without such registration, it loses as a to establish landlines in Metro Manila and
rule its rights under the Labor Code. certain provinces. However, due to
interconnection problems with the PLDT,
 300

poor subscription and cancellation of ETPI, through its Assistant Vice

subscriptions, and other business difficulties, President Stella Garcia, informed Culili of his
ETPI was forced to halt its roll out of 129,000 termination from employment effective
landlines already allocated to a number of its April 8, 1999.
employees. Culili alleged that neither he nor the
In 1998, due to business troubles and DOLE were formally notified of his
losses, ETPI was compelled to implement a termination. Culili believed that ETPI had
Right-Sizing Program which consisted of two already decided to dismiss him even prior to
phases: the first phase involved the the March 8, 1999 letter. Moreover, Culili
reduction of ETPIs workforce to only those asserted that ETPI had contracted out the
employees that were necessary and which services he used to perform to a labor-only
ETPI could sustain; the second phase contractor which not only proved that his
entailed a company-wide reorganization functions had not become unnecessary, but
which would result in the transfer, merger, which also violated their Collective
absorption or abolition of certain Bargaining Agreement (CBA) and the Labor
departments of ETPI. Code. Aside from these, Culili also alleged
As part of the first phase, ETPI that he was discriminated against when ETPI
offered to its employees who had rendered offered some of his co-employees an
at least fifteen years of service, the Special additional benefit in the form of motorcycles
Retirement Program, which consisted of the to induce them to avail of the Special
option to voluntarily retire at an earlier age Retirement Program, while he was not.
and a retirement package equivalent to two ETPI denied singling Culili out for
and a half (2) months salary for every year of termination. ETPI claimed that because
service. This offer was initially rejected by there was no more work for Culili, it was
the Eastern Telecommunications Employees constrained to serve a final notice of
Union (ETEU), ETPIs duly recognized termination to Culili, which Culili ignored.
bargaining agent, which threatened to stage Thus, on March 26, 1999, ETPI tendered to
a strike. ETPI explained to ETEU the exact Culili his final pay check of P859,033.99
details of the Right-Sizing Program and the consisting of his basic salary, leaves, 13th
Special Retirement Program and after month pay and separation pay. ETPI claimed
consultations with ETEUs members, ETEU that Culili refused to accept his termination
agreed to the implementation of both and continued to report for work.
programs. Thus, ETPI re-offered the Special Culili filed a complaint against ETPI
Retirement Program and the corresponding and its officers for illegal dismissal, unfair
retirement package to the one hundred two labor practice, and money claims before the
(102) employees who qualified for the Labor Arbiter.
program. Of all the employees who qualified The Labor Arbiter found ETPI guilty of
to avail of the program, only Culili rejected illegal dismissal and unfair labor practice.
the offer. On appeal, the NLRC affirmed the
Among the departments abolished Labor Arbiters decision but modified the
was the Service Quality Department. The amount of moral and exemplary damages
functions of the Customer Premises awarded.
Equipment Management Unit, Culilis unit, The Court of Appeals found that
were absorbed by the Business and Culilis position was validly abolished due to
Consumer Accounts Department. As a result, redundancy. It further held that ETPI cannot
Culilis position was abolished due to be held guilty of unfair labor practice as mere
redundancy and his functions were absorbed contracting out of services being performed
by the Business and Consumer Accounts by union members does not per se amount
Department. to unfair labor practice unless it interferes
 301

with the employees right to self- reduce its workforce and streamline its
organization. Hence, this petition. organization. ETPI also submitted its old and
new tables of organization and sufficiently
ISSUE: described how limited the functions of the
Whether or not Culili is illegally abolished position of a Senior Technician
dismissed. were and how it decided on whom to absorb
these functions.
HELD: LABOR LAW
The decision of the Court of Appeals Although the Court finds Culilis
is sustained. dismissal was for a lawful cause and not an
LABOR LAW act of unfair labor practice, ETPI, however,
There is redundancy when the was remiss in its duty to observe procedural
service capability of the workforce is greater due process in effecting the termination of
than what is reasonably required to meet the Culili.
demands of the business enterprise. A For termination of employment as
position becomes redundant when it is defined in Article 283 of the Labor Code, the
rendered superfluous by any number of requirement of due process shall be deemed
factors such as over-hiring of workers, complied with upon service of a written
decrease in volume of business, or dropping notice to the employee and the appropriate
a particular product line or service activity Regional Office of the Department of Labor
previously manufactured or undertaken by and Employment at least thirty days before
the enterprise. Soriano, Jr. v. NLRC, G.R. No. effectivity of the termination, specifying the
165594, April 23, 2007 ground or grounds for termination.
This Court also held that the ETPI does not deny its failure to
following evidence may be proffered to provide DOLE with a written notice regarding
substantiate redundancy: the new staffing Culilis termination. It, however, insists that it
pattern, feasibility studies/ proposal on the has complied with the requirement to serve
viability of the newly created positions, job a written notice to Culili as evidenced by his
description and the approval by the admission of having received it and
management of the restructuring. forwarding it to his union president.
In the case at bar, ETPI was upfront The Court of Appeals, in finding that
with its employees about its plan to Culili was not afforded procedural due
implement a Right-Sizing Program. Even in process, held that Culilis dismissal was
the face of initial opposition from and ineffectual, and required ETPI to pay Culili
rejection of the said program by ETEU, ETPI full backwages in accordance with our
patiently negotiated with ETEUs officers to decision in Serrano v. NLRC, 387 Phil. 345
make them understand ETPIs business (2000).
dilemma and its need to reduce its Hence, since it has been established
workforce and streamline its organization. that Culilis termination was due to an
This evidently rules out bad faith on the part authorized cause and cannot be considered
of ETPI. unfair labor practice on the part of ETPI, his
The records show that ETPI had dismissal is valid. However, in view of ETPIs
sufficiently established not only its need to failure to comply with the notice
reduce its workforce and streamline its requirements under the Labor Code, Culili is
organization, but also the existence of entitled to nominal damages in addition to
redundancy in the position of a Senior his separation pay. DENIED.
Technician. ETPI explained how it failed to 211 Barroga vs. Data Center College, G.R.
meet its business targets and the factors that No. 174158, June 27, 2011
caused this, and how this necessitated it to
 302

administrative functions as Head for

Facts: Education during his stint in Laoag branch.
On November 11, 1991, petitioner He did not deny having been designated as
was employed as an Instructor in Data Head for Education in a temporary capacity
Center College Laoag City branch in Ilocos for which he cannot invoke any tenurial
Norte. In a Memorandum dated June 6, security. Hence, being temporary in
1992, respondents transferred him to character, such designation is terminable at
University of Northern Philippines (UNP) in the pleasure of respondents who made such
Vigan, Ilocos Sur where the school had a tie- appointment.
up program. Petitioner was informed Moreover, respondents‘ right to
through a letter dated June 6, 1992 that he transfer petitioner rests not only on
would be receiving, in addition to his contractual stipulation but also on
monthly salary, a P1,200.00 allowance for jurisprudential authorities. The Labor Arbiter
board and lodging during his stint as and the NLRC both relied on the condition
instructor in UNP-Vigan. In 1994, he was laid down in petitioner‘s employment
recalled to Laoag campus. On October 3, contract that respondents have the
2003, petitioner received a Memorandum prerogative to assign petitioner in any of its
transferring him to Data Center College branches or tie-up schools as the necessity
Bangued, Abra branch as Head for demands. In any event, it is management
Education/Instructor due to an urgent need prerogative for employers to transfer
for an experienced officer and computer employees on just and valid grounds such as
instructor thereat. genuine business necessity. It is also
However, petitioner declined to important to stress at this point that
accept his transfer to Abra citing the respondents have shown that it was
deteriorating health condition of his father experiencing some financial constraints.
and the absence of additional remuneration Because of this, respondents opted to
to defray expenses for board and lodging temporarily suspend the post-graduate
which constitutes implicit diminution of his studies of petitioner and some other
salary. employees who were given scholarship
On November 10, 2003, petitioner grants in order to prioritize more important
filed a Complaint for constructive dismissal expenditures.
against respondents. Petitioner alleged that
his proposed transfer to Abra constitutes a
demotion in rank and diminution in pay and 212 HYPTE R. AUJERO v. PHILIPPINE
would cause personal inconvenience and COMMUNICATIONS SATELLITE
hardship. CORPORATION G.R. No. 193484, 18
For their part, respondents claimed that they January 2012, SECOND DIVISION (Perez, J.)
were merely exercising their management
prerogative to transfer employees for the FACTS:
purpose of advancing the school‘s interests. Absent any evidence that any of the
They argued that petitioner‘s refusal to be vices of consent is present, the quitclaim
transferred to Abra constitutes executed by a party constitutes a valid and
insubordination. binding agreement. Petitioner Hypte Aujero
was the Vice President of respondent
Ruling: company Philippine Communications
Petitioner‘s transfer is not Satellite Corporation (Philcomsat). After 34
tantamount to constructive dismissal. years, he applied for an early retirement
Petitioner was originally appointed as which was approved. This entitled Aujero to
instructor in 1991 and was given additional receive his retirement benefits at a rate
 303

equivalent to one and a half of his monthly hometown and was in dire need of money
salary for every year of service. Aujero would likewise not qualify as undue pressure
subsequently executed a Deed of Release sufficient to invalidate the quitclaim. Dire
and Quitclaim in Philcomsat’s favor following necessity may be an acceptable ground to
his receipt from the latter of a check in the annul quitclaims if the consideration is
amount of P9,439,327.91. After 3 years, unconscionably low and the employee UST
Aujero filed a complaint for unpaid Law Review, Vol. LVII No. 1, November 2012
retirement benefits claiming that the actual was tricked into accepting it, but is not an
amount of his retirement pay is acceptable ground for annulling the release
P14,015,055.00. Aujero contends that the when it is not shown that the employee has
significantly deficient amount he previously been forced to execute it. While it is the
received was more than an enough reason to Court’s duty to prevent the exploitation of
declare his quitclaim null and void. Aujero employees, it also behooves this Court to
further claimed that he had no choice but to protect the sanctity of contracts that do not
accept the lesser amount as he was in dire contravene our laws.
need of money. The Labor Arbiter (LA) ruled Aujero’s educational background and
in favor of Aujero and directed Philcomsat to employment stature render it improbable
pay the balance of his retirement pay. The LA that he was pressured, intimidated or
maintained that Philcomsat failed to inveigled into signing the subject quitclaim.
substantiate its claim that the amount The Court cannot permit the petitioner to
received by Aujero was a product of relieve himself from the consequences of his
negotiations between the parties. On act, when his knowledge and understanding
appeal, the National Labor Relations thereof is expected. Also, the period of time
Commissions (NLRC) reversed the decision that Aujero allowed to lapse before filing a
of the LA and decided in favor of Philcomsat. complaint to recover the supposed
The Court of Appeals affirmed the decision deficiency in his retirement pay clouds his
of the NLRC. motives, leading to the reasonable
conclusion that his claim of being aggrieved
ISSUE: is a mere afterthought, if not a mere
Whether the quitclaim executed by pretention
the petitioner in Philcomsat’s favor is valid,
thereby foreclosing his right to institute any
claim against Philcomsat 213 SAN MIGUEL FOODS, INCORPORATED
VS SAN MIGUEL CORPORATION
HELD: SUPERVISORS and EXEMPT UNION G.R. No.
Petition GRANTED. While the law 146206
looks with disfavor upon releases and
quitclaims by employees who are inveigled FACTS:
or pressured into signing them by In the case of San Miguel Corporation
unscrupulous employers seeking to evade Supervisors and Exempt Union v. Laguesma,
their legal responsibilities, a legitimate the Court held that even if they handle
waiver representing a voluntary settlement confidential data regarding technical and
of a laborer's claims should be respected by internal business operations, supervisory
the courts as the law between the parties. employees 3 and 4 and the exempt
Considering Aujero’s claim of fraud and bad employees of petitioner San Miguel Foods,
faith against Philcomsat to be Inc. are not to be considered confidential
unsubstantiated, the Court finds the employees, because the same do not pertain
quitclaim in dispute to be legitimate waiver. to labor relations, particularly, negotiation
That Aujero was all set to return to his and settlement of grievances. Consequently,
 304

they were allowed to form an appropriate one-union policy. An appropriate bargaining

bargaining unit for the purpose of collective unit is defined as a group of employees of a
bargaining. The Court also declared that the given employer, comprised of all or less than
employees belonging to the three different all of the entire body of employees, which
plants of San Miguel Corporation Magnolia the collective interest of all the employees,
Poultry Products Plants in Cabuyao, San consistent with equity to the employer,
Fernando, and Otis, having community or indicate to be best suited to serve the
mutuality of interests, constitute a single reciprocal rights and duties of the parties
bargaining unit. under the collective bargaining provisions of
A certification election was the law.
conducted. On the date of the election, It held that while the existence of a
petitioner filed the Omnibus Objections and bargaining history is a factor that may be
Challenge to Voters, questioning the reckoned with in determining the
eligibility to vote by some of its employees appropriate bargaining unit, the same is not
on the grounds that some employees do not decisive or conclusive. Other factors must be
belong to the bargaining unit which considered. The test of grouping is
respondent seeks to represent or that there community or mutuality of interest. This is so
is no existence of employer-employee because the basic test of an asserted
relationship with petitioner. bargaining unit’s acceptability is whether or
Based on the results of the election, not it is fundamentally the combination
the Med-Arbiter issued the Order stating which will best assure to all employees the
that since the Yes vote received 97% of the exercise of their collective bargaining rights.
valid votes cast, respondent is certified to be Certainly, there is a mutuality of interest
the exclusive bargaining agent of the among the employees. Their functions mesh
supervisors and exempt employees of with one another. One group needs the
petitioner's Magnolia Poultry Products other in the same way that the company
Plants in Cabuyao, San Fernando, and Otis. needs them both. There may be differences
On appeal, the then Acting DOLE as to the nature of their individual
Undersecretary, in the Resolution, affirmed assignments, but the distinctions are not
the Order of the Med-Arbiter. enough to warrant the formation of a
CA affirmed the Resolution of DOLE separate bargaining unit.
Undersecretary with modification stating The Court affirms the finding of the
that those holding the positions of Human CA that there should be only one bargaining
Resource Assistant and Personnel Assistant unit for the employees in Cabuyao, San
are excluded from the bargaining unit. Fernando, and Otis of Magnolia Poultry
Hence, this petition by the San Products Plant involved in dressed chicken
Miguel Foods processing and Magnolia Poultry Farms
engaged in live chicken operations. Certain
ISSUE: factors, such as specific line of work, working
W/N CA departed from jurisprudence conditions, location of work, mode of
when it expanded the scope of the compensation, and other relevant
bargaining unit. conditions do not affect or impede their
RULING: commonality of interest. Although they
No. In San Miguel vs Laguesma, the seem separate and distinct from each other,
Court explained that the employees of San the specific tasks of each division are actually
Miguel Corporation Magnolia Poultry interrelated and there exists mutuality of
Products Plants of Cabuyao, San Fernando, interests which warrants the formation of a
and Otis constitute a single bargaining unit, single bargaining unit.
which is not contrary to the one-company,
 305

DISPOSITIVE: and filed a Notice of Strike. Respondent,

Respondent won upon the other hand, filed a Notice of
Lockout.
DOCTRINE: In the meantime, as amicable
An appropriate bargaining unit is settlement of the CBA was deadlocked,
defined as a group of employees of a given petitioner went on strike. The Secretary of
employer, comprised of all or less than all of Labor assumed jurisdiction over the
the entire body of employees, which the controversy and issued a Return to Work
collective interest of all the employees, Order which was complied with.
consistent with equity to the employer, Before the Secretary of Labor could
indicate to be best suited to serve the rule on the controversy, respondent created
reciprocal rights and duties of the parties a Labor Management Council through which
under the collective bargaining provisions of it concluded with the remaining officers of
the law. petitioner a Memorandum of Agreement
It held that while the existence of a providing for daily wage increases.
bargaining history is a factor that may be The Secretary of Labor resolved the
reckoned with in determining the CBA deadlock by awarding a wage increase.
appropriate bargaining unit, the same is not Respondent moved for a
decisive or conclusive. Other factors must be reconsideration of the Decision stating that
considered. The test of grouping is the union members were waiving their rights
community or mutuality of interest. This is so and benefits under the Secretarys Decision.
because the basic test of an asserted Reconsideration of the Decision was denied.
bargaining unit’s acceptability is whether or Hence, respondent filed a petition for
not it is fundamentally the combination certiorari before the Court of Appeals.
which will best assure to all employees the The appellate court ruled in favor of
exercise of their collective bargaining rights. respondent and accordingly set aside the
Certainly, there is a mutuality of interest Decision of the Secretary of Labor. It held
among the employees. Their functions mesh that the Secretary of Labor gravely abused
with one another. One group needs the his discretion in not respecting the MOA.
other in the same way that the company
needs them both. There may be differences ISSUE:
as to the nature of their individual Whether or not the Secretary of
assignments, but the distinctions are not Labor is authorized to give an award higher
enough to warrant the formation of a than that agreed upon in the MOA?
separate bargaining unit.
HELD
LABOR LAW
214-215 CIRTEK EMPLOYEES LABOR It is well-settled that the Secretary of
UNION-FEDERATION OF FREE WORKERS, Labor, in the exercise of his power to assume
Petitioner, v. CIRTEK ELECTRONICS, INC., jurisdiction under Art. 263 (g) of the Labor
Respondent. Code, may resolve all issues involved in the
controversy including the award of wage
FACTS: increases and benefits. While an arbitral
Prior to the 3rd year of the CBA of award cannot per sebe categorized as an
respondent and petitioner, the parties agreement voluntarily entered into by the
renegotiated its economic provisions but parties because it requires the intervention
failed to reach a settlement, particularly on and imposing power of the State thru the
the issue of wage increases. Petitioner Secretary of Labor when he assumes
thereupon declared a bargaining deadlock jurisdiction, the arbitral award can be
 306

considered an approximation of a collective which it is negotiated and purpose which it is

bargaining agreement which would intended to serve.
otherwise have been entered into by the GRANTED
parties, hence, it has the force and effect of
a valid contract obligation.
That the arbitral award was higher 216 THE HERITAGE HOTEL
than that which was purportedly agreed MANILA v. NATIONAL UNION OF WORKERS
upon in the MOA is of no moment. For the IN THE HOTEL, RESTAURANT AND ALLIED
Secretary, in resolving the CBA deadlock, is INDUSTRIES-HERITAGE HOTEL MANILA
not limited to considering the MOA as basis SUPERVISORS CHAPTER (NUWHRAIN-
in computing the wage increases. He could, HHMSC)
as he did, consider the financial documents
submitted by respondent as well as the FACTS:
parties bargaining history and respondents Respondents filed a petition for
financial outlook and improvements as certification of pre-election with the DOLE.
stated in its website. The Med-Arbiter approved the pre-election.
It bears noting that since the filing However, the certification election was
and submission of the MOA did not have the delayed, but pushed through nonetheless.
effect of divesting the Secretary of his Petitioner filed for cancellation of the
jurisdiction, or of automatically disposing certification due to the failure of respondent
the controversy, then neither should the to submit its financial statements to the
provisions of the MOA restrict the Secretarys Bureau of Labor Relations. The Med-Arbiter
leeway in deciding the matters before him. still ruled in favor of respondents. Petitioner
While a contract constitutes the law appealed the decision to the regional
between the parties, this is so in the present director of the DOLE. The Regional director
case with respect to the CBA, not to the MOA still rendered a decision in favor of
in which even the unions signatories had respondents, which prompted petitioners to
expressed reservations thereto. But even appeal the decision to the director of the
assuming arguendo that the MOA is treated Bureau of Labor Relations. The director of
as a new CBA, since it is imbued with public the BLR inhibited from the issue, as he was
interest, it must be construed liberally and previously the counsel of respondents. The
yield to the common good. Secretary of Labor resolved the issue in the
While the terms and conditions of a stead of the BLR director. She ruled in favor
CBA constitute the law between the parties, of respondents. The petitioner filed a motion
it is not, however, an ordinary contract to for reconsideration of the decision, but was
which is applied the principles of law turned down. Petitioner then filed for
governing ordinary contracts. A CBA, as a certiorari, challenging the jurisdiction of the
labor contract within the contemplation of DOLE Secretary. An appeal from the decision
Article 1700 of the Civil Code of the of the Regional Director is supposed to be
Philippines which governs the relations under the jurisdiction of the BLR. Also,
between labor and capital, is not merely petitioner claims to have been deprived of
contractual in nature butimpressed with due process as it was not informed of the
public interest, thus, it must yield to the inhibition of the BLR director.
common good. As such, it must be construed
liberally rather than narrowly and ISSUES:
technically, and the courts must place Is the ruling of the secretary of labor
apractical and realistic construction upon it, valid?
giving due consideration to the context in Was petitioner deprived of due
process?
 307

is not a legitimate labor organization

HELD: because of failure to comply with the
It is without question that the appeal documentation requirements set by law the
from the decision of the regional office is charter certificate was not executed under
within the jurisdiction of the BLR. Given the oath, and the inclusion of supervisory
circumstances, the BLR director inhibited employees within petitioner union. The
himself. Petitioner insists that the case Med-Arbiter dismissed the petition. The
should have gone to the subordinates of the DOLE, on appeal, granted the petition for
BLR director. However, this happens in cases certification election but the CA reversed the
where the director is incapacitated. This DOLE decision. The appellate court gave
does not obtain as the director merely credence to the findings of the Med-Arbiter.
inhibited himself. On the other hand, the Petitioner union claims that the
Secretary of DOLE has powers of supervision litigation of the issue as to its legal
and control over the BLR. As such, it may personality to file the subject petition for
validly step into the shoes of the BLR director certification election is barred by the
and resolve the issue. Decision of the DOLE. In this decision, the
The concept of due-process is DOLE ruled that petitioner union complied
different in proceedings before the courts, with all the documentation requirements
and before administrative agencies. For the and that there was no independent evidence
latter, the essence is the opportunity to be presented to prove an illegal mixture of
heard. In this case, the petitioner was able to supervisory and rank-and-file employees in
file a motion for reconsideration on the petitioner union. After the promulgation of
decision of the DOLE Secretary, albeit was this Decision, respondent company did not
denied. Petitioner was given due-process, move for reconsideration, thus, this issue
and its contention that it was unaware of the must be deemed settled.
inhibition of the BLR director is of no
moment. ISSUE:
Whether or not petitioner union has
legal personality to file for a petition for
217 SAMAHANG MANGGAGAWA SA certification election.
CHARTER CHEMICAL SOLIDARITY OF
UNIONS IN THE PHILIPPINES FOR HELD:
EMPOWERMENT AND REFORMS (SMCC- Court of Appeals decision is
SUPER), ZACARRIAS JERRY VICTORIO Union LABOR LAW
President, Petitioner, v. CHARTER The right to file a petition for
CHEMICAL AND COATING CORPORATION, certification election is accorded to a labor
Respondent. organization provided that it complies with
the requirements of law for proper
FACTS: registration. The inclusion of supervisory
Samahang Manggagawasa Charter employees in a labor organization seeking to
Chemical Solidarity of Unions in the represent the bargaining unit of rank-and-
Philippines for Empowerment and Reforms file employees does not divest it of its status
(petitioner union) filed a petition for as a legitimate labor organization.
certification election among the regular Petitioner unions charter certificate
rank-and-file employees of Charter Chemical need not be executed under oath.
and Coating Corporation (respondent Consequently, it validly acquired the status
company) with the Mediation Arbitration of a legitimate labor organization upon
Unit of the DOLE. Respondent company submission of (1) its charter certificate,(2)
opposedon the ground that petitioner union the names of its officers, their addresses,
 308

and its principal office,and (3) its Arbiter’s Decision. The Office of the
constitution and by-laws the last two Secretary of DOLE held that KML’s legitimacy
requirements having been executed under as a union could not be collaterally attacked.
oath by the proper union officials as borne It declared that any violation of the provision
out by the records. of Article 245 does not ipso facto render the
Petitioner union correctly argues that existence of the labor organization illegal.
its legal personality cannot be collaterally LEGEND filed a Petition for Certiorari
attacked in the certification election with the Court of Appeals , which found no
proceedings. grave abuse of discretion on the part of the
GRANTED. Office of the Secretary of DOLE. LEGEND filed
a Petition for Certiorari with the Court of
Appeals. held that the issue on the
218 LEGEND INTERNATIONAL RESORTS legitimacy of KML as a labor organization has
LIMITED, Petitioner, v. KILUSANG already been settled with finality in Case No.
MANGGAGAWA NG LEGENDA (KML- RO300-0108-CP-001. The March 26, 2002
INDEPENDENT), Respondent. Decision of the Bureau of Labor Relations
upholding the legitimacy of KML as a labor
FACTS: organization had long become final and
KML filed with the Med-Arbitration executory for failure of LEGEND to appeal
Unit of the DOLE, San Fernando, Pampanga, the same.
a Petition for Certification Election. LEGEND
moved to dismiss the petition alleging that ISSUE:
KML is not a legitimate labor organization Whether or not the the CA erred in
because its membership is a mixture of rank denying the petition for certiorari.
and file and supervisory employees in
violation of Article 245 of the Labor Code. HELD:
KML argued that even if 41 of its members The petition is partly meritorious.
are indeed supervisory employees and LABOR LAW: Certification election
therefore excluded from its membership, Records show that (in the
the certification election could still proceed cancellation of registration case) LEGEND
because the required number of the total has timely filed on September 6, 2002 a
rank and file employees necessary for petition forcertiorari before the Court of
certification purposes is still sustained. KML Appeals which was docketed as CA-G.R. SP
also claimed that its legitimacy as a labor No. 72659 assailing the March 26, 2002
union could not be collaterally attacked in Decision of the Bureau of Labor Relations.
the certification election proceedings but However, a certification election may
only through a separate and independent still be conducted during the pendency of
action for cancellation of union registration. the cancellation proceedings. This is because
The Med-Arbiter rendered judgment at the time the petition for certification was
dismissing for lack of merit the petition for filed, the petitioning union is presumed to
certification election. Since Article 245 of the possess the legal personality to file the same.
Labor Code expressly prohibits supervisory There is therefore no basis for LEGEND’s
employees from joining the union of rank assertion that the cancellation of KML’s
and file employees, the Med-Arbiter certificate of registration should retroact to
concluded that KML is not a legitimate labor the time of its issuance or that it effectively
organization. nullified all of KML’s activities, including its
The Office of the Secretary of DOLE filing of the petition for certification election
rendered its Decision granting KML’s appeal and its demand to collectively bargain. Also,
thereby reversing and setting aside the Med- the legitimacy of the legal personality of KML
 309

cannot be collaterally attacked in a petition (3) employees whose job grade is

for certification election proceeding. level 4, but are performing managerial work
Petition is PARTLY GRANTED. The CA and scheduled to be promoted;
Decision insofar as it affirms the Secretary's (4) employees who belong to the
Decision is AFFIRMED. Barrio Ugong plant;
(5) non-SMFI employees; and
(6) employees who are members of
other unions.
219-220 SAN MIGUEL FOODS, Respondent averred that (1) the
INCORPORATED v. SAN MIGUEL bargaining unit contemplated in the original
CORPORATION SUPERVISORS and EXEMPT petition is the Poultry Division of San Miguel
UNION, Corporation, now known as San Miguel
Foods, Inc.; (2) it covered the operations in
FACTS: Calamba, Laguna, Cavite, and Batangas and
In G.R. No. 110399, entitled San its home base is either in Cabuyao, Laguna or
Miguel Corporation Supervisors and Exempt San Fernando, Pampanga; and (3) it
Union v. Laguesma, the Court held that even submitted individual and separate
if they handle confidential data regarding declarations of the employees whose votes
technical and internal business operations, were challenged in the election.
supervisory employees 3 and 4 and the Based on the results of the votes, the
exempt employees of petitioner San Miguel Med-Arbiter issued the Orderstating that
Foods, Inc. (SMFI) are not to be considered since the "Yes" vote received 97% of the
confidential employees, because the same valid votes cast, respondent is certified to be
do not pertain to labor relations, the exclusive bargaining agent of the
particularly, negotiation and settlement of supervisors and exempt employees of
grievances. Consequently, they were petitioner's Magnolia Poultry Products
allowed to form an appropriate bargaining Plants in Cabuyao, San Fernando, and Otis.
unit for the purpose of collective bargaining. On appeal, the then Acting DOLE
The Court also declared that the employees Undersecretary affirmed the Order dated
belonging to the three different plants of San April 13, 1999, with modification that four
Miguel Corporation Magnolia Poultry (4) voters be excluded from the bargaining
Products Plants in Cabuyao, San Fernando, unit which respondent seeks to represent.
and Otis, having "community or mutuality of She opined that the challenged voters
interests," constitute a single bargaining should be excluded from the bargaining unit,
unit. because two (2) are members of Magnolia
Pursuant thereto, a certification Poultry Processing Plants Monthly
election was conducted on September 30, Employees Union, while the other two (2)
1998. On the date of the election, petitioner are employees of San Miguel Corporation,
filed the Omnibus Objections and Challenge which is a separate and distinct entity from
to Voters, questioning the eligibility to vote petitioner.
by some of its employees on the grounds The Court of Appeals affirmed with
that certain employees should not be modification the Resolution of the DOLE
allowed to vote as they are: Undersecretary, stating that those holding
(1) confidential employees; the positions of Human Resource Assistant
(2) employees assigned to the live and Personnel Assistant are excluded from
chicken operations, which are not covered the bargaining unit.
by the bargaining unit;
ISSUE:
 310

Did the CA err in expanding the conditions do not affect or impede their
scope of the bargaining unit so as to include commonality of interest. Although they
employees who do not belong to or who are seem separate and distinct from each other,
not based in its Cabuyao or San Fernando the specific tasks of each division are actually
plants? interrelated and there exists mutuality of
interests which warrants the formation of a
HELD: single bargaining unit.
Petitioner contentions are Although Article 245of the Labor
erroneous. In G.R. No. 110399, the Court Code limits the ineligibility to join, form and
explained that the employees of San Miguel assist any labor organization to managerial
Corporation Magnolia Poultry Products employees, jurisprudence has extended this
Plants of Cabuyao, San Fernando, and Otis prohibition to confidential employees or
constitute a single bargaining unit, which is those who by reason of their positions or
not contrary to the one-company, one-union nature of work are required to assist or act
policy. An appropriate bargaining unit is in a fiduciary manner to managerial
defined as a group of employees of a given employees and, hence, are likewise privy to
employer, comprised of all or less than all of sensitive and highly confidential
the entire body of employees, which the records.Confidential employees are thus
collective interest of all the employees, excluded from the rank-and-file bargaining
consistent with equity to the employer, unit. A confidential employee is one
indicate to be best suited to serve the entrusted with confidence on delicate, or
reciprocal rights and duties of the parties with the custody, handling or care and
under the collective bargaining provisions of protection of the employer
the law. property.Confidential employees, such as
The test of grouping is community or accounting personnel, should be excluded
mutuality of interest. This is so because the from the bargaining unit, as their access to
basic test of an asserted bargaining unit confidential information may become the
acceptability is whether or not it is source of undue advantage. The rationale for
fundamentally the combination which will their separate category and disqualification
best assure to all employees the exercise of to join any labor organization is similar to the
their collective bargaining rights. Certainly, inhibition for managerial employees,
there is a mutuality of interest among the because if allowed to be affiliated with a
employees, their functions mesh with one union, the latter might not be assured of
another. One group needs the other in the their loyalty in view of evident conflict of
same way that the company needs them interests and the union can also become
both. There may be differences as to the company-denominated with the presence of
nature of their individual assignments, but managerial employees in the union
the distinctions are not enough to warrant membership. Having access to confidential
the formation of a separate bargaining unit. information, confidential employees may
Thus, the Court affirms the finding of also become the source of undue advantage.
the CA that there should be only one Said employees may act as a spy or spies of
bargaining unit for the employees in either party to a collective bargaining
Cabuyao, San Fernando, and Otisof Magnolia agreement.
Poultry Products Plant involved in "dressed" In this regard, the CA correctly ruled
chicken processing and Magnolia Poultry that the positions of Human Resource
Farms engaged in "live" chicken operations. Assistant and Personnel Assistant belong to
Certain factors, such as specific line of work, the category of confidential employees and,
working conditions, location of work, mode hence, are excluded from the bargaining
of compensation, and other relevant unit, considering their respective positions
 311

and job descriptions. As Human Resource holding that former employees of the Far
Assistant,the scope of one work necessarily East Bank and Trust Company (FEBTC)
involves labor relations, recruitment and "absorbed" by BPI pursuant to the two banks
selection of employees, access to merger. The absorbed employees were
employees' personal files and compensation covered by the Union Shop Clause in the
package, and human resource management. then existing collective bargaining
As regards a Personnel Assistant,one's work agreement (CBA)of BPI with respondent BPI
includes the recording of minutes for Employees Union-Davao Chapter-
management during collective bargaining Federation of Unions in BPI Unibank (the
negotiations, assistance to management Union). Petitioners, despite the August 2010
during grievance meetings and decision moved for a Motion for
administrative investigations, and securing reconsideration of the decision.
legal advice for labor issues from the
petitioner team of lawyers, and ISSUE:
implementation of company programs. May the "absorbed" FEBTC
Therefore, in the discharge of their employees fell within the definition of "new
functions, both gain access to vital labor employees," under the Union Shop Clause,
relations information which outrightly such that they be required to join
disqualifies them from union membership. respondent union or suffer termination
DENIED upon request by the union?

HELD:
221 BANK OF THE PHILIPPINE ISLANDS v. The court agreed with Justice Brion's
BPI EMPLOYEES UNION-DAVAO CHAPTER- view that it is more in keeping with the
FEDERATION OF UNIONS IN BPI UNIBANK dictates of social justice and the State policy
of according full protection to labor to
FACTS: deem employment contracts as
In 2000, Far East Bank and trust automatically assumed by the surviving
Company (FEBTC) merged with Bank of the corporation in a merger, without break in
Philippine Islands. Petitioner had a Union the continuity of their employment, and
Shop agreement with respondent BPI even in the absence of an express
Employees Union-Davao Chapter- stipulation in the articles of merger or the
Federation of Unions in BPI Unibank (the merger plan.
Union).Pursuant to the merger, respondent By upholding the automatic
requested BPI to terminate the employment assumption of the non-surviving
of those new employees from FEBTC who did corporations existing employment contracts
not join the union. by the surviving corporation in a merger, the
BPI refused to undertake such action Court strengthens judicial protection of the
and brought the controversy before a right to security of tenure of employees
voluntary arbitrator. Although BPI won the affected by a merger and avoid confusion
initial battle at the Voluntary Arbitrator regarding the status of their various
level, BPIs position was rejected by the Court benefits.However, it shall be noted that
of Appeals which ruled that the Voluntary nothing in the Resolution shall impair the
Arbitrators interpretation of the Union Shop right of an employer to terminate the
Clause was at war with the spirit and employment of the absorbed employees for
rationale why the Labor Code allows the a lawful or authorized cause or the right of
existence of such provision. such an employee to resign, retire or
This was followed and affirmation by otherwise sever his employment, whether
the Supreme Court of the CA decision
 312

before or after the merger, subject to or one day before the expiration of the
existing contractual obligations. subject CBA, the Union sent a draft CBA
Although by virtue of the merger BPI proposal to GMC, with a request for counter-
steps into the shoes of FEBTC as a successor proposals from the latter, for the purpose of
employer as if the former had been the renegotiating the existing CBA between the
employer of the latters employees from the parties.In view of GMCs failure to comply
beginning it must be emphasized that, in with said request, theUnioncommenced the
reality, the legal consequences of the merger complaint for unfair labor practice which
only occur at a specific date,i.e.,upon its was dismissed for lack of merit. On appeal,
effectivity which is the date of approval of however, said dismissal was reversed and set
the merger by the SEC.Thus, the court aside in the 30 January 1998 decision
observed in the Decision that BPI and FEBTC rendered by the Fourth Division of the NLRC
stipulated in the Articles of Merger that they in NLRC Case No. V-0112-94. The Supreme
will both continue their respective business Court found GMC guilty of unfair labor
operations until the SEC issues the certificate practice.
of merger and in the event no such Thus, the Union filed a motion for
certificate is issued, they shall hold each issuance of a writ of execution to enforce the
other blameless for the non-consummation claims of the covered employees which it
of the merger. computed in the sum ofP433,786,786.36.
In other words, the obligation of BPI However, GMC opposed said motion on the
to pay the salaries and benefits of the former ground, among other matters, that the
FEBTC employees and its right of discipline bargaining unit no longer exist in view of the
and control over them only arose with the resignation, retrenchment, retirement and
effectivity of the merger.Concomitantly, the separation from service of workers who have
obligation of former FEBTC employees to additionally executed waivers and quitclaims
render service to BPI and their right to acknowledging full settlement of their
receive benefits from the latter also arose claims; that the covered employees have
upon the effectivity of the merger.What is already received salary increases and
material is that all of these legal benefits for the period 1991 to 1993; and,
consequences of the merger took place that aside from the aforesaid supervening
during the life of an existing and valid CBA events which precluded the enforcement
between BPI and the Union wherein they thereof, the decision rendered in the case
have mutually consented to include a Union simply called for the execution of a CBA
Shop Clause. incorporating the Unions proposal, not the
outright computation of benefits
thereunder.
27 October 2005 , the LA rendered a
222 GENERAL MILLING CORPORATION- decision limiting the computation of the
INDEPENDENT LABOR UNION (GMC-ILU), benefits of theUnions CBA proposal to the
Petitioner, v. GENERAL MILLING remaining two years of the duration of the
CORPORATION, Respondent. original CBA or from 1 December 1991 up to
30 November 1993.
FACTS: On appeal, the NLRC affirmed the
On April 28, 1989, GMC and decision of the LA, finding, among other
theUnionentered into a CBA which provided, matters, that the duty to maintain thestatus
among other terms, the latters quoand to continue in full force and effect
representation of the collective bargaining the terms of the existing agreement under
unit for a three-year term made to retroact Article 253 of theLabor Code of the
to 1 December 1988.On 29 November 1991 Philippinesapplies only when the parties
 313

agreed to the terms and conditions of the December 1991 remains in force until a new
CBA, the NLRC upheld the Executive Labor CBA is concluded between the parties?
Arbiters computation on the ground, among
others, that the decision sought to be HELD:
enforced covered only the remaining two CA-G.R. CEB-SP Nos. 02226 and
years of the duration of the original CBA. 02232 are reversed and set aside.
On their petitions before the CA, LABOR LAW
Unions petition (CA-G.R. CEB-SP No. 02226) Article XIV of the imposed CBA
was partially granted on October 10, 2007, provides that (t)his Agreement shall be in full
upon the finding that the parties old CBA was force and effect for a period of five (5) years
superseded by the imposed CBA which from 1 December 1991, provided that sixty
provided a term of five years from 1 (60) days prior to the lapse of the third year
December 1991 and remained in force until of effectivity hereof, the parties shall open
a new CBA is concluded between the parties. negotiations on economic aspect for the
The CA, however, faulted the Union for its fourth and fifth years effectivity of this
hasty and premature filing of its motion for Agreement. Considering that no new CBA
issuance of a writ of execution, instead of had been, in the meantime, agreed upon by
first demanding the enforcement of the GMC and the Union, we find that the CAs
imposed CBA from GMC and, failing the Special Twentieth Division correctly ruled in
same, referring the matter to the grievance CA-G.R. CEB-SP No. 02226 that, pursuant to
machinery or voluntary arbitration provided Article 253 of theLabor Code, the provisions
under the imposed CBA, in accordance with of the imposed CBA continues to have full
Articles 260 and 261 of theLabor Code. force and effect until a new CBA has been
On the other hand, GMCs petition entered into by the parties.Article 253
(CA-G.R. SP No. CEB-SP No. 02232) was mandates the parties to keep thestatus
dismissed for lack of merit on November 16, quoand to continue in full force and effect
2007, finding that both parties were given an the terms and conditions of the existing
opportunity to present their respective agreement during the 60-day period prior to
positions during the pre-execution the expiration of the old CBA and/or until a
conference conducteda quo, the CA ruled new agreement is reached by the parties. In
that the LAs 27 October 2005 order had the same manner that it does not provide for
attained finality insofar as GMC is any exception nor qualification on which
concerned, in view of its failure to perfect an economic provisions of the existing
appeal therefrom by paying the required agreement are to retain its force and
appeal fee and posting the cash or surety effect,the law does not distinguish between
bond in an amount equivalent to the a CBA duly agreed upon by the parties and
benefits computed. The CA likewise held an imposed CBA like the one under
that quitclaims did not extend to the consideration.
benefits provided under the imposed CBA Considering that the 30 January 1998
and that the additional benefits supposedly decision sought to be enforced confined the
received by GMCs employees should not be application of the imposed CBA to the
deducted therefrom, for lack of sufficient remaining two-year duration of the original
evidence to prove the same. CBA, we find that the computation of the
Hence, this petition. benefits due GMCs covered employees was
correctly limited to the period 1 December
ISSUE: 1991 to 30 November 1993 in the 27 October
Whether or not the imposed CBA 2005 order issued by Executive Labor Arbiter
which provided a term of five years from 1 Violeta Ortiz-Bantug and the 20 July 2006
 314

decision rendered by the NLRC in NLRC Case secretaries, probationary employees and the
No. V-000632-2005. employees covered by a separate Collective
Consequently, insofar as the Bargaining Agreement at the Companys Mill
execution of the 30 January 1998 decision is in Lapulapu City. Gauged from the express
concerned, theUnionis out on a limb in language of the foregoing provision, we find
espousing a computation which extends the that Executive Labor ArbiterVioleta Ortiz-
benefits of the imposed CBA beyond the Bantug correctly excluded the following
remaining two-year duration of the original employees fromthe list of 436 employees
CBA.The rule is, after all, settled that an submitted by the Union andthe computation
order of execution which varies the tenor of of the benefitsfor the period 1December
the judgment or exceeds the terms thereof 1991 to 30 November 1993, to wit: (a) 77
is a nullity. Since execution not in harmony employees who were hired or regularized
with the judgment is bereft of validity,it must after 30 November 1993; (b)36 daily paid
conform, more particularly, to that ordained rank and file employees who were covered
or decreed in the dispositive portion of the by a separate CBA; (c) 41
decision sought to be enforced.Considering managerial/supervisory employees; and, (d)
that the decision sought to be enforced 1 employee for whom no salary-rate
pertains to the period 1December 1991 to 30 information was submitted in the premises.
November 1993, it necessarily follows that However, we find that the 234 employees
the computation of benefits under the who had already been separated from GMCs
imposed CBA should be limited to covered employ by the time of the rendition of the 11
employees who were in GMCs employ February 2004 decision in G.R. No. 146728
during said period of time.While it is true should further be added to these excluded
that the provisions of the imposed CBA employees.
extend beyond said remaining two-year The record shows that said 234
duration of the original CBA in view of the employees were union members whose
parties admitted failure to conclude a new employment with GMC ceased as a
CBA, the corresponding computation of the consequence of death, termination due to
benefits accruing in favor of GMCs covered redundancy, termination due to closure of
employees after the term of the original CBA plant, termination for cause, voluntary
was correctly excluded in the aforesaid 27 resignation, separation or dismissal from
October 2005 order issued in RAB VII-06- service as well as retirement. Upon
0475-1992.Rather than the abbreviated pre- compliance with GMCs clearance
execution proceedings before Executive requirements and in consideration of sums
Labor ArbiterVioleta Ortiz-Bantug, the ranging fromP38,980.12 toP631,898.72, due
computation of the same benefits beyond 30 payment and receipt of which were duly
November 1993 should, instead, be acknowledged, it appears that said
threshed out by GMC and theUnionin employees executed deeds of waiver,
accordance with theGrievance Procedure. release and quitclaim.
Article II of the imposed CBA,
relatedly, provides that (t)he employees REMEDIAL LAW
covered by this Agreement are those The conflicting decisions in CA-G.R.
employed as regular monthly paid CEB-SP Nos. 02226 and 02232 would have
employees at the [GMC] offices in Cebu City been, in the first place, avoided had the CA
and Lapulapu City, including cadet consolidated said cases pursuant to Section
engineers, salesmen, veterinarians, field and 3, Rule III of its 2002 Internal Rules (IRCA).
laboratory workers, with the exception of Being intimately and substantially related
managerial employees, supervisory cases, their consolidation should have been
employees, executive and confidential
 315

ordered to avert the possibility of conflicting strike where several prohibited and illegal
decisions in the two cases. acts were committed by its participating
Although rendered on the merits by members.
a court of competent jurisdiction acting On the ground of lack of valid notice
within its authority, neither one of said of strike, ineffective conduct of a strike-vote
decisions can, however, be invoked as law of and commission of prohibited and illegal
the case insofar as the other case is acts, petitioners filed their Petition to
concerned.The doctrine of law of the case Declare the Strike of May 6, 2002 Illegal
means that whatever is once irrevocably before the NLRC. Petitioners prayed, inter
established as the controllinglegal rule or alia, that the officers and members of
decision between the same parties in the respondent KMLMS who participated in the
same case continues to be the law of the illegal strike and who knowingly committed
case,whether correct on general principles prohibited and illegal activities, respectively,
or not, so long as the facts on which such be declared to have lost or forfeited their
decision was predicated continue to be the employment status.
facts of the case before the On the ground of non-compliance
court.Considering that a decision becomes with the strict and mandatory requirements
the law of the case once it attains finality, it for a valid conduct of a strike under Article
is evident that, without having achieved said 263(c), (d) and (f) of the Labor Code and Rule
status, the herein assailed decisions cannot XXII, Book V of the Omnibus Rules
be invoked as the law of the case by either Implementing the Labor Code, LA Aglibut
GMC or theUnion. found the May 6, 2002 strike illegal and
The October 27, 2005 order by the accordingly dismissed all the 14 union
Labor Arbiter is reinstated and modified. officers of KMLMS. LA Aglibut likewise found
27 identified members of KMLMS to have
committed prohibited and illegal acts
223 MAGDALA MULTIPURPOSE & proscribed under Art. 264 of the Labor Code
LIVELIHOOD COOPERATIVE and SANLOR and accordingly declared them to have
MOTORS CORP., vs. KILUSANG forfeited their employment.
MANGGAGAWA NG LGS, MAGDALA Both parties appealed the Decision of
MULTIPURPOSE & LIVELIHOOD LA Aglibut before the NLRC
CORPERATIVE (KMLMS) and UNION NLRC affirmed with modification LA
MEMBERS/ STRIKERS Aglibut’s Decision by declaring an additional
seven (7) union members to have forfeited
FACTS: their employment status.
KMLMS filed a notice of strike on Both parties again filed their
March 5, 2002 and conducted its strike-vote respective appeals before the CA. CA
on April 8, 2002. However, KMLMS only affirmed the NLRC decision
acquired legal personality when its Petitioners prayed to SC for a partial
registration as an independent labor modification of the assailed CA Decision by
organization was granted on April 9, 2002 by declaring additional 72 similarly erring
the Department of Labor and Employment. KMLMS members to have lost their
On April 19, 2002, it became officially employment.
affiliated as a local chapter of the
Pambansang Kaisahan ng Manggagawang ISSUE:
Pilipino when its application was granted by Whether or not the CA erred in
the Bureau of Labor Relations. refusing to similarly declare as having lost
On May 6, 2002, KMLMS, now a their employment status the rest of the
legitimate labor organization (LLO), staged a union strikers who have participated in the
 316

illegal strike and commited prohibited / The petitioners have substantially

illegal acts, to the prejudice of petitioner's proved the identity of 72 other union
business operations. members who committed prohibited and
illegal acts during the May 6, 2002 illegal
HELD: strike. Thus, the 72 union members who
There is no question that the May 6, committed prohibited and illegal acts during
2002 strike was illegal, first, because when the May 6, 2002 strike are also declared to
KMLMS filed the notice of strike, it had not have forfeited their employment.
yet acquired legal personality and, thus,
could not legally represent the eventual
union and its members. And second,
similarly when KMLMS conducted the strike-
vote, there was still no union to speak of,
since KMLMS only acquired legal personality
as an independent LLO only on the day after
it conducted the strike-vote. These factual
findings are undisputed and borne out by the
records. Consequently, the mandatory
notice of strike and the conduct of the strike-
vote report were ineffective for having been
filed and conducted before KMLMS acquired
legal personality as an LLO, violating Art.
263(c), (d) and (f) of the Labor Code and Rule
XXII, Book V of the Omnibus Rules
Implementing the Labor Code.
When the May 6, 2002 illegal strike
was conducted, the members of
respondent KMLMS committed prohibited
and illegal acts which doubly constituted the
strike illegal. Proper sanctions for the
conduct of union officers in an illegal strike
and for union members who committed
illegal acts during a strike. Art. 264 of the
Code presents a substantial distinction of the
consequences of an illegal strike between
union officers and mere members of the
union.
For union officers, knowingly
participating in an illegal strike is a valid
ground for termination of their employment.
But for union members who participated in
a strike, their employment may be
terminated only if they committed
prohibited and illegal acts during the strike
and there is substantial evidence or proof of
their participation, that they are clearly
identified to have committed such
prohibited and illegal acts.
 317

224 VISAYAS COMMUNITY MEDICAL wearing black and red

CENTER (VCMC), formerly known as armbands/headbands, marching around the
METRO CEBU COMMUNITY HOSPITAL hospital premises and putting up placards,
(MCCH), Petitioner, v. ERMA YBALLE, NELIA posters and streamers.Atty. Alforque
ANGEL, ELEUTERIA CORTEZ and EVELYN immediately disowned the concerted
ONG, Respondents. activities being carried out by union
members which are not sanctioned by
FACTS: NFL.MCCHI directed the union officers led by
Respondents were hired as staff Nava to submit within 48 hours a written
nurses (Ong and Angel) and midwives (Yballe explanation why they should not be
and Cortez) by petitioner Visayas terminated for having engaged in illegal
Community Medical Center (VCMC), concerted activities amounting to strike, and
formerly the Metro Cebu Community place them under immediate preventive
Hospital, Inc. (MCCHI). MCCHI is a non-stock, suspension.
non-profit corporation hich operates the Responding to this directive, Nava
Metro Cebu Community Hospital (MCCH), a and her group denied there was a temporary
tertiary medical institution owned by the stoppage of work, explaining that employees
United Church of Christ in the Philippines wore their armbands only as a sign of protest
(UCCP). and reiterating their demand for MCCHI to
The National Federation of Labor comply with its duty to bargain collectively.
(NFL) is the exclusive bargaining On March 13 and 19, 1996, the
representative of the rank-and-file Department of Labor and Employment
employees of MCCHI.Under the 1987 and (DOLE) Regional Office No. 7 issued
1991 Collective Bargaining Agreements certifications stating thatthere is nothing in
(CBAs). their records which shows thatNAMA-
On December 6, 1995, Nava wrote MCCH-NFL isa registered labor organization,
Rev. Iyoy expressing the union desire to and that said union submitted only a copy of
renew the CBA, attaching to her letter a its Charter Certificate on January 31,
statement of proposals signed/endorsed by 1995.MCCHI then sent individual notices to
153 union members.Nava subsequently all union members asking them to submit
requested that the following employees be within 72 hours a written explanation why
allowed to avail of one-day union leave with they should not be terminated for having
pay on December 19, 1995. However, MCCHI supported the illegal concerted activities of
returned the CBA proposal for Nava to NAMA-MCCH-NFL which has no legal
secure first the endorsement of the legal personality as per DOLE records.
counsel of NFL as the official bargaining On March 13, 1996, NAMA-MCCH-
representative of MCCHI employees. NFL filed a Notice of Strike but the same was
Meanwhile, Atty. Alforque informed deemed not filed for want of legal
MCCHI that the proposed CBA submitted by personality on the part of the filer.
Nava was never referred to NFL and that NFL Meanwhile, the scheduled
has not authorized any other legal counsel or investigations did not push through because
any person for collective bargaining the striking union members insisted on
negotiations. attending the same only as a group.MCCHI
On February 26, 1996, upon the again sent notices informing them that their
request of Atty. Alforque, MCCHI granted refusal to submit to investigation is deemed
one-day union leave with pay for 12 union a waiver of their right to explain their side
members. The next day, several union and management shall proceed to impose
members led by Nava and her group proper disciplinary action under the
launched a series of mass actions such as circumstances.
 318

Unfazed, the striking union members

held more mass actions.The means of ISSUE:
ingress to and egress from the hospital were whether or not respondents did not
blocked so that vehicles carrying patients commit illegal acts during strike?
and employees were barred from entering
the premises.Placards were placed at the HELD:
hospital entrance gate stating: lease proceed The strike held by respondents were
to another hospitaland e are on protest. illegal.
Employees and patients reported acts of Labor Law - Illegal Strike
intimidation and harassment perpetrated by Paragraph 3, Article 264(a) of the
union leaders and members.With the Labor Code provides that . .any union officer
intensified atmosphere of violence and who knowingly participates in an illegal
animosity within the hospital premises as a strike and any worker or union officer who
result of continued protest activities by knowingly participates in the commission of
union members, MCCHI suffered heavy illegal acts during a strike may be declared to
losses due to low patient admission rates. have lost his employment status.
The hospital suppliers also refused to . We stress that the law makes a
make further deliveries on credit.With the distinction between union members and
volatile situation adversely affecting hospital union officers. A worker merely participating
operations and the condition of confined in an illegal strike may not be terminated
patients, MCCHI filed a petition for from employment.It is only when he
injunction in the NLRC on July 9, 1996.A commits illegal acts during a strike that he
temporary restraining order (TRO) was may be declared to have lost employment
issued on July 16, 1996. MCCHI presented 12 status. In contrast, a union officer may be
witnesses (hospital employees and patients), terminated from employment for knowingly
including a security guard who was stabbed participating in an illegal strike or
by an identified sympathizer while in the participates in the commission of illegal acts
company of Nava group.MCCHI petition was during a strike.The law grants the employer
granted and a permanent injunction was the option of declaring a union officer who
issued on September 18, 1996 enjoining the participated in an illegal strike as having lost
Nava group from committing illegal acts his employment. It possesses the right and
mentioned in Art. 264 of the Labor Code. prerogative to terminate the union officers
Thereafter, several complaints for from service.
illegal dismissal and unfair labor practice In this case, the NLRC affirmed the
were filed by the terminated employees finding of the Labor Arbiter that respondents
against MCCHI. Rev. Iyoy, UCCP and supported and took part in the illegal strike
members of the Board of Trustees of MCCHI. and further declared that they were guilty of
Executive Labor Arbiter Reynoso A. insubordination.It noted that the striking
Belarmino rendered in his decision employees were determined to force
dismissing the claim of unfair labor practice management to negotiate with their union
and illegal dismissal and declaring the and proceeded with the strike despite
termination of the following as an offshoot knowledge that NAMA-MCCH-NFL is not a
of the illegal strike. legitimate labor organization and without
NLRC dismissed the motion for regard to the consequences of their acts
reconsideration filed by the respondents. consisting of displaying placards and
CA reversed the rulings of the Labor marching noisily inside the hospital
Artbiter and NLRC, ordered the premises, and blocking the entry of vehicles
reinstatement of respondents and the and persons
payment of their full back wages.
 319

Are respondents then entitled to that they actually committed illegal acts
back wages? In G & S Transport Corporation during the strike.
v. Infante, ruled in the negative: with respect Notwithstanding the provision of the
to backwages, the principle of a air day wage Labor Code mandating that the
for a fair day labor remains as the basic reinstatement aspect of the decision be
factor in determining the award thereof.If immediately executory, the LA refused to
there is no work performed by the employee reinstate the dismissed Union members. On
there can be no wage or pay unless, of November 8, 1999, the NLRC affirmed the LA
course, the laborer was able, willing and decision insofar as it declared the strike
ready to work but was illegally locked out, illegal and ordered the Union officers
suspended or dismissed or otherwise dismissed from employment and liable for
illegally prevented from working. x x xIn damages but modified the same by
Philippine Marine Officers Guild v. Compaia considering the Union members to have
aritima, as affirmed in Philippine Diamond been validly dismissed from employment for
Hotel and Resort v. Manila Diamond Hotel committing prohibited and illegal acts.
Employees Union, the Court stressed that for On petition forcertiorari, the CA
this exception to apply, it is required that the annulled the NLRC decision and reinstated
strike be legal, a situation that does not that of the LA. Aggrieved, CASI, the Union
obtain in the case at bar. and the Union officers and members
In fine, we sustain the CA in ruling elevated the matter to the Court.
that respondents who are mere union During the pendency of the cases,
members were illegally dismissed for the affected Union members (who were
participating in the illegal strike conducted ordered reinstated) filed with the LA a
by the Nava group.However, we set aside motion for reinstatement pending appeal
the order for their reinstatement and and the computation of their backwages. But
payment of full backwages. the LA awarded separation pay and other
Petition for review on certiorari is benefits. On appeal, the NLRC denied the
PARTLY GRANTED. Union members claim for separation pay,
accrued wages and other benefits.When
elevated to the CA, the appellate court held
225 C. ALCANTARA & SONS, INC., that reinstatement pending appeal applies
Petitioner, v. COURT OF APPEALS only to illegal dismissal cases under Article
223 of the Labor Code and not to cases under
FACTS: Article 263. Hence, the petition by the Union
These cases were consolidated based and its officers and members in G.R. No.
on the following facts as follows: 179220.
The negotiation between CASI and The Court agreed with the CA on the
the Union on the economic provisions of the illegality of the strike as well as the
CBA ended in a deadlock prompting the termination of the Union officers, but
Union to stage a strike,but the strike was disagreed with the CA insofar as it affirmed
later declared by the LA to be illegal in the reinstatement of the Union members.
violation of the CBAs no strike-no lockout The Court, instead, sustained the dismissal
provision.Consequently, the Union officers not only of the Union officers but also the
were deemed to have forfeited their Union members who, during the illegal
employment with the company and made strike, committed prohibited acts by
them liable for actual damages plus interest threatening, coercing, and intimidating non-
and attorneys fees, while the Union striking employees, officers, suppliers and
members were ordered to be reinstated customers; obstructing the free ingress to
without backwages there being no proof and egress from the company premises; and
 320

resisting and defying the implementation of liable when he knowingly participates in the
the writ of preliminary injunction issued commission of illegal acts during a strike. We
against the strikers. find no reason to reverse the conclusion of
The Court further held that the the Court that CASI presented substantial
terminated Union members, who were evidence to show that the striking Union
ordered reinstated by the LA, should have members committed the following
been immediately reinstated due to the prohibited acts: (a) They threatened,
immediate executory nature of the coerced, and intimidated non-striking
reinstatement aspect of the LA decision. In employees, officers, suppliers and
view, however, of CASIs failure to reinstate customers;(b) They obstructed the free
the dismissed employees, the Court ordered ingress to and egress from the company
CASI to pay the terminated Union members premises; and (c) They resisted and defied
their accrued backwages from the date of the implementation of the writ of
the LA decision until the eventual reversal by preliminary injunction issued against the
the NLRC of the order of reinstatement. In strikers.
addition to the accrued backwages, the The commission of the above
Court awarded separation pay as a form of prohibited acts by the striking Union
financial assistance to the Union members members warrants their dismissal from
equivalent to one-half month salary for employment.
every year of service to the company up to Records show that the LA found the
the date of their termination. strike illegal and sustained the dismissal of
Hence, this motion for partial the Union officers, but ordered the
reconsideration by the petitioner. reinstatement of the striking Union
members for lack of evidence showing that
ISSUE: they committed illegal acts during the illegal
Whether or not the petitioner is liable strike. This decision, however, was later
to pay the accrued wages of the dismissed reversed by the NLRC.Pursuant to Article
employees? 223of the Labor Code and well-established
Whether or not the Court erred in jurisprudence, the decision of the LA
awarding separation pay to the dismissed reinstating a dismissed or separated
union officers and employees? employee, insofar as the reinstatement
HELD: aspect is concerned, shall immediately be
The motion for partial executory, pending appeal.[28]The
reconsideration is partly granted. employee shall either be admitted back to
LABOR LAW work under the same terms and conditions
Article 264 (a) of the Labor Code prevailing prior to his dismissal or
provides for the liabilities of the Union separation, or, at the option of the
officers and members participating in illegal employee, merely reinstated in the payroll.
strikes and/or committing illegal acts. Thus, It is obligatory on the part of the employer to
the said provision sanctions the dismissal of reinstate and pay the wages of the dismissed
a Union officer who knowingly participates employee during the period of appeal until
in an illegal strike or who knowingly reversal by the higher court.If the employer
participates in the commission of illegal acts fails to exercise the option of re-admitting
during a lawful strike. In this case, the Union the employee to work or to reinstate him in
officers were in clear breach of the above the payroll, the employer must pay the
provision of law when they knowingly employees salaries during the period
participated in the illegal strike. between the LAs order of reinstatement
As to the Union members, the same pending appeal and the resolution of the
provision of law provides that a member is higher court overturning that of the LA.
 321

In this case, CASI is liable to pay the

striking Union members their accrued wages
for four months and nine days, which is the FACTS:
period from the notice of the LAs order of On April 30, 2002 the three-year CBA
reinstatement until the reversal thereof by between the union Bukluran ng
the NLRC. Manggagawa sa Monterey-Ilaw at Buklod ng
LABOR LAW Manggagawa (the union) and Monterey
Separation pay may be given as a Foods Corporation (the company) expired.
form of financial assistance when a worker is On March 28, 2003 after the negotiation for
dismissed in cases such as the installation of a new CBA reached a deadlock, the union
labor-saving devices, redundancy, filed a notice of strike with the National
retrenchment to prevent losses, closing or Conciliation and Mediation Board (NCMB).
cessation of operation of the establishment, To head off the strike, on April 30, 2003 the
or in case the employee was found to have company filed with the DOLE a petition for
been suffering from a disease such that his assumption of jurisdiction over the dispute
continued employment is prohibited by in view of its dire effects on the meat
law.It is a statutory right defined as the industry. In an Order dated May 12, 2003,
amount that an employee receives at the the DOLE Secretary assumed jurisdiction
time of his severance from the service and is over the dispute and enjoined the union
designed to provide the employee with the from holding any strike. It also directed the
wherewithal during the period that he is union and the company to desist from taking
looking for another employment. It is any action that may aggravate the situation.
oriented towards the immediate future, the On May 21, 2003 the union filed a
transitional period the dismissed employee second notice of strike before the NCMB on
must undergo before locating a replacement the alleged ground that the company
job.As a general rule, when just causes for committed unfair labor practices. On June
terminating the services of an employee 10, 2003 the company sent notices to the
exist, the employee is not entitled to union officers, charging them with
separation pay because lawbreakers should intentional acts of slowdown. Six days later
not benefit from their illegal acts.The rule, or on June 16 the company sent new notices
however, is subject to exceptions. to the union officers, informing them of their
In the case at bar, not only did the termination from work for defying the DOLE
Court declare the strike illegal, rather, it Secretary's assumption order.
also found the Union officers to have On June 23, 2003, the DOLE Secretary
knowingly participated in the illegal strike. included the unions second notice of strike
Worse, the Union members committed in his earlier assumption order. But, on the
prohibited acts during the strike. Thus, the same day, the union filed a third notice of
awards of separation pay as a form of strike based on allegations that the company
financial assistance is deleted. had engaged in union busting and illegal
The motion for partial consideration dismissal of union officers. On July 7, 2003
by the petitioner is partly granted. The the company filed a petition for certification
decision of the Court is partly reconsidered. of the labor dispute to the NLRC for
compulsory arbitration but the DOLE
Secretary denied the motion. He, however,
226 YOLITO FADRIQUELAN, et al., subsumed the third notice of strike under
Petitioners, v. MONTEREY FOODS the first and second notices.
CORPORATION, Respondent. The DOLE upheld the company's
termination of the 17 union officers. On
appeal, the CA upheld the validity of the
 322

company's termination of 10 union officers terminated upon mere proof that he

but declaring illegal that of the other seven. knowingly participated in the illegal strike.
Both parties sought recourse to this Court, Still, the participating union officers
the union in G.R. 178409 and the company in have to be properly identified.The CA held
G.R. 178434. that the company illegally terminated union
officers Ruben Alvarez, John Asotigue,
ISSUES: Alberto Castillo, Nemesio Agtay, Carlito
Whether or not the CA erred in Abacan, Danilo Rolle, and Juanito Tenorio,
holding that slowdowns actually transpired there being no substantial evidence that
at the company's farms; and Whether or not would connect them to the slowdowns. The
the CA erred in holding that union officers CA said that their part in the same could not
committed illegal acts that warranted their be established with certainty.
dismissal from work. The Court sustains the validity of the
termination of the rest of the union officers.
HELD: The identity and participations of petitioners
The decision of the Court of Appeals in the slowdowns were properly established.
is overruled. These officers simply refused to work or they
LABOR LAW abandoned their work to join union
No strike shall be declared after the assemblies.
Secretary of Labor has assumed jurisdiction In termination cases, the dismissed
over a labor dispute. A strike conducted after employee is not required to prove his
such assumption is illegal and any union innocence of the charges against him. The
officer who knowingly participates in the burden of proof rests upon the employer to
same may be declared as having lost his show that the employees dismissal was for
employment. Labor Code, Article 264 (a). just cause. The employers failure to do so
Here, what is involved is a slowdown means that the dismissal was not
strike. Unlike other forms of strike, the justified.Here, the company failed to show
employees involved in a slowdown do not that all 17 union officers deserved to be
walk out of their jobs to hurt the company. dismissed.
They need only to stop work or reduce the
rate of their work while generally remaining
in their assigned post. 227 NELSON A. CULILI, Petitioner, v.
The Court finds that the union EASTERN TELECOMMUNICATIONS
officers and members in this case held a PHILIPPINES, INC., SALVADOR HIZON
slowdown strike at the company's farms (President and Chief Executive Officer),
despite the fact that the DOLE Secretary had EMILIANO JURADO (Chairman of the
on May 12, 2003 already assumed Board), VIRGILIO GARCIA (Vice President)
jurisdiction over their labor dispute. The and STELLA GARCIA (Assistant Vice
evidence sufficiently shows that union President), Respondents.
officers and members simultaneously
stopped work at the company's Batangas FACTS:
and Cavite farms at 7:00 a.m. on May 26, Respondent Eastern
2003. Telecommunications Philippines, Inc. (ETPI)
LABOR LAW is a telecommunications company engaged
The ordinary worker cannot be mainly in the business of establishing
terminated for merely participating in the commercial telecommunications systems
strike. There must be proof that he and leasing of international datalines or
committed illegal acts during its conduct. On circuits that pass through the international
the other hand, a union officer can be
 323

gateway facility (IGF). The other respondents retirement package to the one hundred two
are ETPIs officers. (102) employees who qualified for the
Petitioner Nelson A. Culili was program. Of all the employees who qualified
employed by ETPI as a Technician in its Field to avail of the program, only Culili rejected
Operations Department in 1981. In 1996, the offer.
Culili was promoted to Senior Technician in Among the departments abolished
the Customer Premises Equipment was the Service Quality Department. The
Management Unit of the Service Quality functions of the Customer Premises
Department. Equipment Management Unit, Culilis unit,
As a telecommunications company were absorbed by the Business and
and an authorized IGF operator, ETPI was Consumer Accounts Department. As a result,
required, under RA No. 7925 and EO No. 109, Culilis position was abolished due to
to establish landlines in Metro Manila and redundancy and his functions were absorbed
certain provinces. However, due to by the Business and Consumer Accounts
interconnection problems with the PLDT, Department.
poor subscription and cancellation of ETPI, through its Assistant Vice
subscriptions, and other business difficulties, President Stella Garcia, informed Culili of his
ETPI was forced to halt its roll out of 129,000 termination from employment effective
landlines already allocated to a number of its April 8, 1999.
employees. Culili alleged that neither he nor the
In 1998, due to business troubles and DOLE were formally notified of his
losses, ETPI was compelled to implement a termination. Culili believed that ETPI had
Right-Sizing Program which consisted of two already decided to dismiss him even prior to
phases: the first phase involved the the March 8, 1999 letter. Moreover, Culili
reduction of ETPIs workforce to only those asserted that ETPI had contracted out the
employees that were necessary and which services he used to perform to a labor-only
ETPI could sustain; the second phase contractor which not only proved that his
entailed a company-wide reorganization functions had not become unnecessary, but
which would result in the transfer, merger, which also violated their Collective
absorption or abolition of certain Bargaining Agreement (CBA) and the Labor
departments of ETPI. Code. Aside from these, Culili also alleged
As part of the first phase, ETPI that he was discriminated against when ETPI
offered to its employees who had rendered offered some of his co-employees an
at least fifteen years of service, the Special additional benefit in the form of motorcycles
Retirement Program, which consisted of the to induce them to avail of the Special
option to voluntarily retire at an earlier age Retirement Program, while he was not.
and a retirement package equivalent to two ETPI denied singling Culili out for
and a half (2) months salary for every year of termination. ETPI claimed that because
service. This offer was initially rejected by there was no more work for Culili, it was
the Eastern Telecommunications Employees constrained to serve a final notice of
Union (ETEU), ETPIs duly recognized termination to Culili, which Culili ignored.
bargaining agent, which threatened to stage Thus, on March 26, 1999, ETPI tendered to
a strike. ETPI explained to ETEU the exact Culili his final pay check of P859,033.99
details of the Right-Sizing Program and the consisting of his basic salary, leaves, 13th
Special Retirement Program and after month pay and separation pay. ETPI claimed
consultations with ETEUs members, ETEU that Culili refused to accept his termination
agreed to the implementation of both and continued to report for work.
programs. Thus, ETPI re-offered the Special Culili filed a complaint against ETPI
Retirement Program and the corresponding and its officers for illegal dismissal, unfair
 324

labor practice, and money claims before the rejection of the said program by ETEU, ETPI
Labor Arbiter. patiently negotiated with ETEUs officers to
The Labor Arbiter found ETPI guilty of make them understand ETPIs business
illegal dismissal and unfair labor practice. dilemma and its need to reduce its
On appeal, the NLRC affirmed the workforce and streamline its organization.
Labor Arbiters decision but modified the This evidently rules out bad faith on the part
amount of moral and exemplary damages of ETPI.
awarded. The records show that ETPI had
The Court of Appeals found that sufficiently established not only its need to
Culilis position was validly abolished due to reduce its workforce and streamline its
redundancy. It further held that ETPI cannot organization, but also the existence of
be held guilty of unfair labor practice as mere redundancy in the position of a Senior
contracting out of services being performed Technician. ETPI explained how it failed to
by union members does not per se amount meet its business targets and the factors that
to unfair labor practice unless it interferes caused this, and how this necessitated it to
with the employees right to self- reduce its workforce and streamline its
organization. Hence, this petition. organization. ETPI also submitted its old and
new tables of organization and sufficiently
ISSUE: described how limited the functions of the
Whether or not Culili is illegally abolished position of a Senior Technician
dismissed. were and how it decided on whom to absorb
these functions.
HELD: LABOR LAW
The decision of the Court of Appeals Although the Court finds Culilis
is sustained. dismissal was for a lawful cause and not an
LABOR LAW act of unfair labor practice, ETPI, however,
There is redundancy when the was remiss in its duty to observe procedural
service capability of the workforce is greater due process in effecting the termination of
than what is reasonably required to meet the Culili.
demands of the business enterprise. A For termination of employment as
position becomes redundant when it is defined in Article 283 of the Labor Code, the
rendered superfluous by any number of requirement of due process shall be deemed
factors such as over-hiring of workers, complied with upon service of a written
decrease in volume of business, or dropping notice to the employee and the appropriate
a particular product line or service activity Regional Office of the Department of Labor
previously manufactured or undertaken by and Employment at least thirty days before
the enterprise. Soriano, Jr. v. NLRC, G.R. No. effectivity of the termination, specifying the
165594, April 23, 2007 ground or grounds for termination.
This Court also held that the ETPI does not deny its failure to
following evidence may be proffered to provide DOLE with a written notice regarding
substantiate redundancy: the new staffing Culilis termination. It, however, insists that it
pattern, feasibility studies/ proposal on the has complied with the requirement to serve
viability of the newly created positions, job a written notice to Culili as evidenced by his
description and the approval by the admission of having received it and
management of the restructuring. forwarding it to his union president.
In the case at bar, ETPI was upfront The Court of Appeals, in finding that
with its employees about its plan to Culili was not afforded procedural due
implement a Right-Sizing Program. Even in process, held that Culilis dismissal was
the face of initial opposition from and ineffectual, and required ETPI to pay Culili
 325

full backwages in accordance with our officers andemployees. Obligations incurred

decision in Serrano v. NLRC, 387 Phil. 345 by them, while acting as corporate agents,
(2000). are not theirpersonal liability but the direct
Hence, since it has been established accountability of the corporation they
that Culilis termination was due to an represent. However,corporate officers may
authorized cause and cannot be considered be deemed solidarily liable with the
unfair labor practice on the part of ETPI, his corporation for the termination
dismissal is valid. However, in view of ETPIs ofemployees if they acted with malice or bad
failure to comply with the notice faith. In the present case, the lower
requirements under the Labor Code, Culili is tribunalsunanimously found that Percy and
entitled to nominal damages in addition to Harbutt, in their capacity as corporate
his separation pay. officers of Burgos,acted maliciously in
DENIED. terminating the services of respondents
without any valid ground and inorder to
suppress their right to self-
organization.Section 31 of the Corporation
Code makes a director personally liable for
corporatedebts if he willfully and knowingly
228 Park Hotel vs. Soriano votes for or assents to patently unlawful acts
of thecorporation. It also makes a director
FACTS: personally liable if he is guilty of gross
Soriano was initially hired by Park negligence or badfaith in directing the affairs
Hotel but was transferred to Burgos of the corporation. Thus, Percy and Harbutt,
Corporation.Gonzales and Badilla were having acted in badfaith in directing the
employees of Burgos Corporation.Burgos is a affairs of Burgos, are jointly and severally
sister company of Park Hotel. Harbutt and liable with the latter forrespondents'
Percy are the General Managerand owner, dismissal
respectively, of Park Hotel. Percy, Harbutt
and Atty. Roberto Enriquez are also
theofficers and stockholders of Burgos
Corporation.Soriano, Gonzales and Badilla
were dismissed from work for allegedly
stealing companyproperties. As a result,
respondents filed complaints for illegal
dismissal, unfair labor practice,before the
Labor Arbiter (LA). In their complaints,
respondents alleged that the real reason
fortheir dismissal was that they were
organizing a union for the company's
employees.

ISSUE:
Whether or not corporate officers
are solidarily and personally liable in a case
for illegaldismissal and unfair labor practice

HELD:
A corporation, being a juridical
entity, may act only through its directors,