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LABOR
EMPLOYER-EMPLOYEE RELATION
Ramy Gallego vs. Bayer Philippines, Inc., et. al.
G.R. No. 179807, July 31, 2009
Facts:
Ramy Gallego was contracted in 1992 by Bayer Philippines as crop protection technician to promote and
market Bayer products by making farm visits to convince the farmers to buy their products. Petitioner
employment came to a halt in 1996 prompting Gallego to seek another employment, but he was reemployed
in 1997 as part of the product image which actually performing the same task as crop protection technician.
In 2001, he was directed to submit a resignation letter and ordered to return all pieces of service equipment,
which he refused. He continued performing his duties and received compensation until January 2002,
however, in April 2002, he received a memorandum that he will be transferred to Luzon; and that he heard
that respondents spread rumors that reached the dealers in Antique that he is no longer connected with
Bayer and any transaction with him will not be honored as of April 30, 2002.
Believing he was terminated, he instituted a complaint for illegal dismissal before the NLRC. Respondents
Bayer and Guillermo denied the existence of employment relationship, while, respondents Product Image
and Bergonia admitted that the petitioner was hired as contractual employee and that he has stopped
reporting for work. The Labor Arbiter declared that respondents were guilty of illegal dismissal. On appeal by
the respondents, the NLRC reversed the Arbiter’s decision and contended that petitioner was not dismissed
but has abandoned his employment by failure to report on his duties. Hence, this petition for Review.
Issues:
(1) Was there employment relation between petitioner and respondent Bayer?
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(2) Was petitioner illegally dismissed from his employment?
Ruling (First Issue):
The existence of an employer-employee relationship is determined on the basis of four standards, namely:
(a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages;
(c) the presence or absence of power of dismissal; and (d) the presence or absence of control of the
putative employee’s conduct. Most determinative among these factors is the so-called "control test." If at all,
the only control measure retained by Bayer over petitioner was to act as his de facto supervisor in certifying
to the veracity of the accomplishment reports he submitted to Product Image. This is by no means the kind
of control that establishes an employer-employee relationship as it pertains only to the results and not the
manner and method of doing the work. It would be a rare contract of service that gives untrammelled
freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement.
Surely, it would be foolhardy for any company to completely give the reins and totally ignore the operations it
has contracted out. In fine, Product Image is ineluctably the employer of petitioner.
(Second Issue):
The Court appreciates no evidence that petitioner was dismissed. What it finds is that petitioner unilaterally
stopped reporting for work before filing a complaint for illegal dismissal, based on his belief that Guillermo
and Bergonia had spread rumors that his transactions on behalf of Bayer would no longer be honored as of
April 30, 2002. This belief remains just that – it is unsubstantiated. While in cases of illegal dismissal, the
employer bears the burden of proving that the dismissal is for a valid or authorized cause, the employee
must first establish by substantial evidence the fact of dismissal
Miguela Santuyo, et al. vs. Remerco Garments Manufacturing, Inc. and/or Victoria Reyes
GR No. 174420; March 22, 2010
Facts:
Petitioners, who are employees of the Remerco Garments Manufacturing, Inc. (RGMI), were among those
recalled to work by the company, after their union, the Kaisahan ng Manggagawa sa Remerco Garments
Manufacturing Inc. (KMM Kilusan), staged a 2-year illegal strike from 1992 to 1994. Among the conditions of
their recall was that they would no longer be paid a daily rate but on a piece-rate basis. However, even
before RGMI could normalize its operations, the union filed a notice of strike in the National Conciliation and
Mediation Board (NCMB) on August 8, 1995. According to the union, RGMI conducted a time and motion
study and changed the salary scheme from a daily rate to piece-rate basis without consulting it. It claimed
that RGMI therefore not only violated the existing collective bargaining agreement (CBA) but also diminished
the salaries agreed upon. It therefore committed an unfair labor practice. The conciliation proceedings
between the union and RGMI before the NCMB resulted in a lock-out. The union went on strike in
November 1995. Therafter, the Secretary of Labor assumed jurisdiction over the case, pursuant to Article
263(g) of the Labor Code. It ordered all striking workers to return to work.
The Secretary of Labor found that the employees would receive higher wages if they were paid on a piece-
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rate rather than on a daily rate basis. Hence, the new salary scheme would be more advantageous to the
employees. For this reason, despite the provisions of the CBA, the change in salary scheme was validated.
In an order dated September 18, 1996, the Secretary of Labor ordered all employees to return to work and
RGMI to pay its employees their unpaid salaries (from September 25, 1995 to October 14, 1995) on the
piece-rate basis. Neither the union nor RGMI appealed the aforementioned order. Meanwhile, however, on
October 18, 1995, while the conciliation proceedings between the union and respondent were pending,
petitioners filed a complaint for illegal dismissal against RGMI and respondent Victoria Reyes, accusing the
latter of harassment. Petitioners subsequently amended their complaint, demanding payment of their
accrued salaries from September 25 to October 14, 1995.
Respondents moved to dismiss the complaint in view of the pending conciliation proceedings, involving the
same issue, in the NCMB. It also claimed that alleged violations of the CBA should be resolved according to
the grievance procedure laid out therein. It argued that the labor arbiter had no jurisdiction over the
complaint. The labor arbiter assumed jurisdiction over the case and rendered a decision granting the claims
of the union. The NLRC denied the appeal of the respondents. The Court of Appeals, however, reversed the
NLRC and ruled that the labor arbiter had no jurisdiction over the complaint. This prompted the petitioners to
elevate the matter to the Supreme Court.
Issues:
1. Did the labor arbiter have jurisdiction over the complaint filed by the petitioners?
2. Was the labor arbiter barred by prior judgment from assuming jurisdiction over the complaint?
No, the labor arbiter did not have jurisdiction over the complaint. Petitioners clearly and consistently
questioned the legality of RGMI’s adoption of the new salary scheme (i.e., piece-rate basis), asserting that
such action, among others, violated the existing CBA. The controversy was not a simple case of illegal
dismissal but a labor dispute involving the manner of ascertaining employees’ salaries, a matter which was
governed by the existing CBA. Article 217 of the Labor Code provides that “[c]ases arising from the
interpretation or implementation of collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may be provided in said
agreements.”
This provision requires labor arbiters to refer cases involving the implementation of CBAs to the grievance
machinery provided therein and to voluntary arbitration.
Moreover, Article 260 of the Labor Code clarifies that such disputes must be referred first to the grievance
machinery and, if unresolved within seven days, they shall automatically be referred to voluntary arbitration.
Thus, under Article 261 of the Labor Code, voluntary arbitrators have original and exclusive jurisdiction over
matters which have not been resolved by the grievance machinery. Pursuant to Articles 217 in relation to
Articles 260 and 261 of the Labor Code, the labor arbiter should have referred the matter to the grievance
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machinery provided in the CBA. Because the labor arbiter clearly did not have jurisdiction over the subject
matter, his decision was void.
(Second Issue):
Yes, the labor arbiter was barred by prior judgment from assuming jurisdiction over the complaint. The
Secretary of Labor resolved the labor dispute between the union and RGMI in his September 18, 1996
order. Since neither the union nor RGMI appealed the said order, it became final and executory. Article
263(g) of the Labor Code gives the Secretary of Labor discretion to assume jurisdiction over a labor dispute
likely to cause a strike or a lockout in an industry indispensable to the national interest and to decide the
controversy or to refer the same to the NLRC for compulsory arbitration. In doing so, the Secretary of Labor
shall resolve all questions and controversies in order to settle the dispute. The Secretary of Labor assumed
jurisdiction over the controversy because RGMI had a substantial number of employees and was a major
exporter of garments to the United States and Canada
Settled is the rule that unions are the agent of its members for the purpose of securing just and fair wages
and good working conditions. Since petitioners were part of the bargaining unit represented by the union and
members thereof, the September 18, 1996 order of the Secretary of Labor applies to them.
Furthermore, since the union was the bargaining agent of petitioners, the complaint was barred under the principle of conclusiveness
of judgments. The parties to a case are bound by the findings in a previous judgment with respect to matters actually raised and
adjudged therein. Hence, the labor arbiter should have dismissed the complaint on the ground of res judicata.
APPEALS
Del Rosario vs. Philippine Journalists, Inc.
G.R. No. 181516, August 19, 2009
Facts:
The instant petition stemmed from a complaint filed by petitioner, Cesario L. del Rosario, against herein respondent, Philippine
Journalists, Inc. (PJI), for illegal dismissal with money claims.
On November 5, 2002, the Labor Arbiter rendered a decision in favor of petitioner. Respondent elevated its case to the National
Labor Relations Commission (NLRC). On January 6, 2003, it filed its memorandum of appeal together with the appeal bond issued by
Philippine Pryce Assurance Corporation (PPAC).
On December 15, 2003, the NLRC issued a resolutiondismissing the appeal for failure to perfect the same due to the posting of the
appeal bond from a bonding company not duly accredited by the Court. But in a bid of liberality, the NLRC directed respondent to post
a new bond, but respondent failed to comply. Thus, on March 31, 2005, the NLRC issued a resolution dismissing the appeal.
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Aggrieved, respondent filed a petition for certiorari under Rule 65 of the Rules of Court before the Court of Appeals (CA). The CA
reversed the NLRC, saying that the NLRC committed grave abuse of discretion in dismissing PJI’s appeal based on an erroneous
finding that the surety bond respondent posted was void. The CA ratiocinated that at the time the subject bond was issued, PPAC
was still authorized to issue the same. Thus, there was no legal basis to dismiss PJI’s appeal because it had actually posted a valid
bond. The CA directed the NLRC to give due course to the appeal, as well as directed the respondent to file a new bond.
Issue:
Should the appeal be granted due course?
Ruling:
Yes. The Supreme Court sided with the Court of Appeals. Article 223 of the Labor Code mandates that in cases of judgment involving
a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in an amount equivalent to the monetary award in the judgment appealed from.
The filing of a supersedeas bond for the perfection of an appeal is mandatory and jurisdictional. The requirement that employers post
a cash or surety bond to perfect their appeal is apparently intended to assure workers that if they prevail in the case, they will receive
the money judgment in their favor upon the dismissal of the former’s appeal. It was intended to discourage employers from using an
appeal to delay, or even evade, their obligations to satisfy their employees' just and lawful claims.
At the time of the filing of the surety bond by PJI on January 2, 2003, PPAC was still an accredited bonding company. Thus, it was but
proper to honor the appeal bond issued by a bonding company duly accredited by this Court at the time of its issuance. The
subsequent revocation of the authority of a bonding company should not prejudice parties who relied on its authority. The revocation
of authority of a bonding company is prospective in application.
Still, the Court takes due notice of the opportunity given to PJI to post a new bond issued by an accredited
bonding company in the NLRC resolution dated February 23, 2004. Yet, PJI insisted on the validity of the
bond it had filed despite the fact the PPAC was no longer accredited to act as a surety. This notwithstanding,
guided by the principle that technical rules of procedure should not hamper the quest for justice and truth,
this Court deems it prudent that the case be reviewed and decided on the merits, in view of the question on
the employer-employee relationship of the parties and its resultant legal consequences. But, so as not to
prejudice the rights of petitioner in this case, the Court reiterates the CA directive for PJI to post a new bond
issued by an accredited bonding company.
REGULAR EMPLOYEES
Philippine Long Distance Telephone Company vs. Rizalina Raut, et. al.
G.R. No. 174209, August 25, 2009
Facts:
This is an illegal case by Raut, Emnace and Capistrano against PLDT. They alleged that they were illegally
dismissed on November 30 and December 16, 1996. The Labor Arbiter ruled in their favor reinstating the
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respondents to their former position or if not feasible anymore to another equal position without loss of
seniority rights and benefits and its backwages.
Soon after, the respondents were reinstated, but allegedly continued to be treated as temporary employees
of the company. Petitioner appealed the decision alleging that the respondents were never employees of the
company but that of an independent contractor, Peerless Integrated Services. However, NLRC affirmed the
arbiter’s decision. The Court of Appeals also granted the NLRC’s ruling. The judgment became final and
exeutory.
Issue:
Are respondents considered regular employees?
Ruling:
The Labor Arbiter, the NLRC, and the Court of Appeals found that the respondents are regular employees of
the petitioner as provided under Article 279, in relation to Article 280 of the Labor Code. Thus, the lower
tribunals all affirmed the order of reinstatement of respondents and their corresponding entitlement to the
payment of salaries and other benefits received by petitioner’s regular employees.
Finally, on the increase in the computation of the monetary award to respondents, the decision of the Labor
Arbiter specified that for purposes of putting up a bond should petitioner appeal, the backwages were
computed only for a certain period. Otherwise, the actual backwages to be paid to respondents are
computed from the date of dismissal until the finality of the decision. In addition, because petitioner
continues to refuse and accord regular status to respondents and to pay them their corresponding wages
even after the lapse of two (2) years from the finality of the Labor Arbiter’s decision, the Labor Arbiter
correctly included that in its order of execution. Thus, the Labor Arbiter’s order of execution simply covered
the correct computation of wages and other payments enjoyed by petitioner’s regular employees.
Locsin vs. PLDT
GR No. 185251, October 2, 2009
Facts:
On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and the Security
and Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement (Agreement)
whereby SSCP would provide armed security guards to PLDT to be assigned to its various offices.
Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin, among other security guards,
were posted at a PLDT office.
On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the Agreement effective
October 1, 2001. Despite the termination of the Agreement, however, petitioners continued to secure the
premises of their assigned office. They were allegedly directed to remain at their post by representatives of
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respondent. In support of their contention, petitioners provided the Labor Arbiter with copies of petitioner
Locsin’s pay slips for the period of January to September 2002.
Then, on September 30, 2002, petitioners’ services were terminated. Thus, petitioners filed a complaint
before the Labor Arbiter for illegal dismissal and recovery of money claims such as overtime pay, holiday
pay, premium pay for holiday and rest day, service incentive leave pay, Emergency Cost of Living Allowance,
and moral and exemplary damages against PLDT.
The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was explained in the
Decision that petitioners were found to be employees of PLDT and not of SSCP. Such conclusion was
arrived at with the factual finding that petitioners continued to serve as guards of PLDT’s offices. As such
employees, petitioners were entitled to substantive and procedural due process before termination of
employment.
Issue:
Is there employer-employee relationship?
Ruling:
Yes. From the foregoing circumstances, reason dictates that we conclude that petitioners remained at their
post under the instructions of respondent. We can further conclude that respondent dictated upon petitioners
that the latter perform their regular duties to secure the premises during operating hours. This, to our mind
and under the circumstances, is sufficient to establish the existence of an employer-employee relationship.
To reiterate, while respondent and SSCP no longer had any legal relationship with the termination of the
Agreement, petitioners remained at their post securing the premises of respondent while receiving their
salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials proffered by
respondent do not shed any light to the situation. It is but reasonable to conclude that, with the behest and,
presumably, directive of respondent, petitioners continued with their services. Evidently, such are indicia of
control that respondent exercised over petitioners.
Evidently, respondent having the power of control over petitioners must be considered as petitioners’
employer––from the termination of the Agreement onwards––as this was the only time that any evidence of
control was exhibited by respondent over petitioners and in light of our ruling in Abella. Thus, as aptly
declared by the NLRC, petitioners were entitled to the rights and benefits of employees of respondent,
including due process requirements in the termination of their services.
Both the Labor Arbiter and NLRC found that respondent did not observe such due process requirements.
Having failed to do so, respondent is guilty of illegal dismissal.
Masonic Contractor Inc. vs Madjos, Tiamzon and Rapadas

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G.R. No. 185094, November 25, 2009
Facts:
Respondents Magdalena Madjos, Zenaida Tiamzon and Carmelita Rapadas were employed sometime in
1991 as all-around laborers (driver/sweeper/ “taga-libing”/grass-cutter) by Masonic Contractor, Inc. (MCI).
Each of them received an initial daily wage of P165.00 and were required to report for work from 7:00 a.m.
to 4:00 p.m. Three years thereafter, MCI increased their wages by P15.00 per day but not without earning
the ire of Melvin Balais, president of MCI.
Sometime in 2004, Balais told Madjos, Tiamzon and Rapadas, along with nine (9) other employees, to take
a two-day leave. When they reported for work two days thereafter, they were barred from entering the work
premises and were informed that they had already been replaced by other workers. This prompted Madjos
and her co-workers to file a complaint against herein petitioners for illegal dismissal and for non-payment of
overtime pay, holiday pay, 13th month pay, and damages.
Petitioners, for their part, denied being the direct employer of respondents. Essentially, they argued that MCI
had maintenance contracts with different memorial park companies and that, over the years, they had
engaged the services of a certain Luz Malibiran to provide them with the necessary manpower depending on
MCI’s volume of work.
Issue:
Are respondents regular employees of petitioner?
Ruling:
Yes. Petitioners’ defense that they merely contracted the services of respondents through Malibiran fails to
persuade us. The facts of this case show that respondents have been under the employ of MCI as early as
1991. They were hired not to perform a specific job or undertaking. Instead, they were employed as all-
around laborers doing varied and intermittent jobs, such as those of drivers, sweepers, gardeners, and even
undertakers or tagalibing, until they were arbitrarily terminated by MCI in 2004. Their wages were paid
directly by MCI, as evidenced by the latter’s payroll summary, belying its self-serving and unsupported
contention that it paid directly to Malibiran for respondents’ services. Respondents had identification cards or
gate passes issued not by Malibiran, but by MCI, and were required to wear uniforms bearing MCI’s emblem
or logo when they reported for work.
It is common practice for companies to provide identification cards to individuals not only as a security
measure, but more importantly to identify the bearers thereof as bona fide employees of the firm or
institution that issued them. The provision of company-issued identification cards and uniforms to
respondents, aside from their inclusion in MCI’s summary payroll, indubitably constitutes substantial
evidence sufficient to support only one conclusion: that respondents were indeed employees of MCI.
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Gomez vs PNOC
G.R. No. 174044, November 27, 2009
Facts:
Petitioner Gloria V. Gomez used to work as Manager of the Legal Department of Petron Corporation, then a
government-owned corporation. With Petron’s privatization, she availed of the company’s early retirement
program and left that organization on April 30, 1994. On the following day, May 1, 1994, however, Filoil
Refinery Corporation (Filoil), also a government-owned corporation, appointed her its corporate secretary
and legal counsel, with the same managerial rank, compensation, and benefits that she used to enjoy at
Petron. However, the privatization did not materialize so Gomez continued to serve as corporate secretary of
respondent PDMC. On September 23, 1996 its president re-hired her as administrator and legal counsel of
the company.
On March 29, 1999 the new board of directors of respondent PDMC removed petitioner Gomez as corporate
secretary. Further, at the board’s meeting on October 21, 1999 the board questioned her continued
employment as administrator. In answer, she presented the former president’s May 24, 1998 letter that
extended her term. Dissatisfied with this, the board sought the advice of its legal department, which
expressed the view that Gomez’s term extension was an ultra vires act of the former president. It reasoned
that, since her position was functionally that of a vice-president or general manager, her term could be
extended under the company’s by-laws only with the approval of the board. The legal department held that
her “de facto” tenure could be legally put to an end.
Petitioner Gomez for her part conceded that as corporate secretary, she served only as a corporate officer.
But, when they named her administrator, she became a regular managerial employee. Consequently, the
respondent PDMC’s board did not have to approve either her appointment as such or the extension of her
term in 1998.
Issue:
Is Gomez an ordinary employee whose complaint is within the jurisdiction of the NLRC?
Ruling:
Yes. The relationship of a person to a corporation, whether as officer or agent or employee, is not
determined by the nature of the services he performs but by the incidents of his relationship with the
corporation as they actually exist. That the employee served concurrently as corporate secretary for a time
is immaterial. A corporation is not prohibited from hiring a corporate officer to perform services under
circumstances which will make him an employee. Indeed, it is possible for one to have a dual role of officer
and employee. NLRC has jurisdiction over a complaint filed by one who served both as corporate officer
and employee, when the money claims were made as an employee and not as a corporate officer.
PROJECT EMPLOYEES
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William Uy Construction vs. Trinidad
G.R. No. 183250, March 10, 2010
Facts:
Trinidad claimed that he had been working with the latter company for 16 years since 1988 as driver of its
service vehicle, dump truck, and transit mixer. He had signed several employment contracts with the
company that identified him as a project employee although he had always been assigned to work on one
project after another with some intervals. On December 2004, he was terminated from work due to the
shutdown of operations due to lack of projects but he later found out that there was a project in Batangas but
he was no longer hired back.
Petitioner company countered that it was in the construction business. By the nature of such business, it
had to hire and engage the services of project construction workers, including respondent Trinidad, whose
employments had to be co-terminous with the completion of specific company projects. For this reason,
every time the company employed Trinidad, he had to execute an employment contract with it, called
Appointment as Project Worker.
The Labor Arbiter dismissed Trinidad’s complaint for unjust dismissal and ordered petitioner company to pay
Trinidad P1,500.00 in unpaid service incentive leave, taking into consideration the three-year prescriptive
period for money claims. The Labor Arbiter held that, since Trinidad was a project employee and since his
company submitted the appropriate establishment termination report to DOLE, his loss of work cannot be
regarded as unjust dismissal. National Labor Relations Commission (NLRC) affirmed the Labor Arbiter’s
ruling, prompting respondent Trinidad to elevate his case to the Court of Appeals (CA). The CA reversed
the NLRC’s findings
Issue:
Is respondent Trinidad a regular employee?
Ruling:
No. The test for distinguishing a “project employee” from a “regular employee” is whether or not he has been
assigned to carry out a “specific project or undertaking,” with the duration and scope of his engagement
specified at the time his service is contracted. Here, it is not disputed that petitioner company contracted
respondent Trinidad’s service by specific projects with the duration of his work clearly set out in his
employment contracts. He remained a project employee regardless of the number of years and the various
projects he worked for the company.
Generally, length of service provides a fair yardstick for determining when an employee initially hired on a
temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this
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standard will not be fair, if applied to the construction industry, simply because construction firms cannot
guarantee work and funding for its payrolls beyond the life of each project. The repeated and successive
rehiring of project employees do not qualify them as regular employees, as length of service is not the
controlling determinant of the employment tenure of a project employee, but whether the employment has
been fixed for a specific project or undertaking, its completion has been determined at the time of the
engagement of the employee.
Trinidad’s series of employments with petitioner company were co-terminous with its projects. When its Boni
Serrano-Katipunan Interchange Project was finished in December 2004, Trinidad’s employment ended with
it. He was not dismissed. His employment contract simply ended with the project for which he had signed
up. His employment history belies the claim that he continuously worked for the company. Intervals or gaps
separated one contract from another.
The CA noted that DOLE Order 19 required employers to submit a report of termination of employees every
completion of construction project. And, since petitioner company submitted at the hearing before the Labor
Arbiter only the termination report covering respondent Trinidad’s last project, it failed to satisfy such
requirement.
LABOR ONLY CONTRACTING
Coca-Cola Bottlers Phils., Inc., vs. Agito, Oca III, Alariao, Jr., Ong, Arvin, Francisco, and Golez
G.R. No. 179546, February 13, 2009
Facts:
Respondents filed before the NLRC two complaints against Petitioner, Interserve, Peerless Integrated
Services, Inc., Better Builders, Inc., and Excellent Partners, Inc. for reinstatement with backwages,
regularization, nonpayment of 13th month pay, and damages. Respondents alleged in their Position Paper
that they were salesmen assigned at the Lagro Sales Office of petitioner. They had been in the employ of
petitioner for years, but were not regularized. Their employment was terminated on 8 April 2002 without just
cause and due process. However, they failed to state the reason/s for filing a complaint against Interserve;
Peerless Integrated Services, Inc.; Better Builders, Inc.; and Excellent Partners, Inc.
Petitioner Coca-cola filed its Position Paper (with Motion to Dismiss), where it averred that respondents
were employees of Interserve who were tasked to perform contracted services in accordance with the
provisions of the Contract of Services executed between petitioner and Interserve on 23 March 2002. Said
Contract between petitioner and Interserve, covering the period of 1 April 2002 to 30 September 2002,
constituted legitimate job contracting, given that the latter was a bona fide independent contractor with
substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of
its business.
To prove the status of Interserve as an independent contractor, petitioner presented the following pieces of
evidence: (1) the Articles of Incorporation of Interserve; (2) the Certificate of Registration of Interserve with
the Bureau of Internal Revenue; (3) the Income Tax Return, with Audited Financial Statements, of
Interserve for 2001; and (4) the Certificate of Registration of Interserve as an independent job contractor,
issued by the Department of Labor and Employment (DOLE).
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As a result, petitioner asserted that respondents were employees of Interserve, since it was the latter which
hired them, paid their wages, and supervised their work, as proven by: (1) respondents’ Personal Data Files
in the records of Interserve; (2) respondents’ Contract of Temporary Employment with Interserve; and (3) the
payroll records of Interserve. Petitioner, thus, sought the dismissal of respondents’ complaint against it on
the ground that the Labor Arbiter did not acquire jurisdiction over the same in the absence of an employer-
employee relationship between petitioner and the respondents.
The Labor Arbiter found that respondents were employees of Interserve and not of petitioner. The Labor
Arbiter placed considerable weight on the fact that Interserve was registered with the DOLE as an
independent job contractor, with total assets amounting to P1,439,785.00 as of 31 December 2001. It was
Interserve that kept and maintained respondents’ employee records, including their Personal Data Sheets;
Contracts of Employment; and remittances to the Social Securities System (SSS), Medicare and Pag-ibig
Fund, thus, further supporting the Labor Arbiter’s finding that respondents were employees of Interserve.
She ruled that the circulars, rules and regulations which petitioner issued from time to time to respondents
were not indicative of control as to make the latter its employees.
Unsatisfied with the foregoing Decision of the Labor Arbiter, respondents filed an appeal with the NLRC. In
their Memorandum of Appeal, respondents maintained that contrary to the finding of the Labor Arbiter, their
work was indispensable to the principal business of petitioner. Respondents supported their claim with
copies of the Delivery Agreement between petitioner and TRMD Incorporated, stating that petitioner was
“engaged in the manufacture, distribution and sale of soft drinks and other related products with various
plants and sales offices and warehouses located all over the Philippines.” Moreover, petitioner supplied the
tools and equipment used by respondents in their jobs such as forklifts, pallet, etc. Respondents were also
required to work in the warehouses, sales offices, and plants of petitioner. Respondents pointed out that, in
contrast, Interserve did not own trucks, pallets cartillas, or any other equipment necessary in the sale of
Coca-Cola products.
The NLRC affirmed the Labor Arbiter’s Decision and pronounced that no employer-employee relationship
existed between petitioner and respondents. Aggrieved once more, respondents sought recourse with the
Court of Appeals by filing a Petition for Certiorari under Rule 65. The Court of Appeals reversed the NLRC
decision. The appellate court ruled that Interserve was a labor-only contractor, with insufficient capital and
investments for the services which it was contracted to perform. With only P510,000.00 invested in its
service vehicles and P200,000.00 in its machineries and equipment, Interserve would be hard-pressed to
meet the demands of daily soft drink deliveries of petitioner in the Lagro area. The Court Appeals concluded
that the respondents used the equipment, tools, and facilities of petitioner in the day-to-day sales
operations.
Additionally, the Court of Appeals determined that petitioner had effective control over the means and
method of respondents’ work as evidenced by the Daily Sales Monitoring Report, the Conventional Route
System Proposed Set-up, and the memoranda issued by the supervisor of petitioner addressed to workers,
who, like respondents, were supposedly supplied by contractors. The appellate court deemed that the
respondents, who were tasked to deliver, distribute, and sell Coca-Cola products, carried out functions
directly related and necessary to the main business of petitioner. The appellate court finally noted that
certain provisions of the Contract of Service between petitioner and Interserve suggested that the latter’s
undertaking did not involve a specific job, but rather the supply of manpower.
Issue:
Is Interserve a legitimate job contractor?
Ruling:
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No.The law clearly establishes an employer-employee relationship between the principal employer and the
contractor’s employee upon a finding that the contractor is engaged in “labor-only” contracting. Article 106
of the Labor Code categorically states: “There is ‘labor-only’ contracting where the person supplying
workers to an employee does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by such persons are
performing activities which are directly related to the principal business of such employer.” Thus, performing
activities directly related to the principal business of the employer is only one of the two indicators that
“labor-only” contracting exists; the other is lack of substantial capital or investment. The Court finds that
both indicators exist in the case at bar.
Respondents worked for petitioner as salesmen, with the exception of respondent Gil Francisco whose job
was designated as leadman. In the Delivery Agreement between petitioner and TRMD Incorporated, it is
stated that petitioner is engaged in the manufacture, distribution and sale of softdrinks and other related
products. The work of respondents, constituting distribution and sale of Coca-Cola products, is clearly
indispensable to the principal business of petitioner. The repeated re-hiring of some of the respondents
supports this finding. Petitioner also does not contradict respondents’ allegations that the former has Sales
Departments and Sales Offices in its various offices, plants, and warehouses; and that petitioner hires
Regional Sales Supervisors and District Sales Supervisors who supervise and control the salesmen and
sales route helpers.
As to the supposed substantial capital and investment required of an independent job contractor, petitioner
calls the attention of the Court to the authorized capital stock of Interserve amounting to P2,000,000.00. It
cites as authority Filipinas Synthetic Fiber Corp. v. National Labor Relations Commission and Frondozo v.
National Labor Relations Commission, where the contractors’ authorized capital stock of P1,600,000.00 and
P2,000,000.00, respectively, were considered substantial for the purpose of concluding that they were
legitimate job contractors. Petitioner also refers to Neri v. National Labor Relations Commission where it
was held that a contractor ceases to be a labor-only contractor by having substantial capital alone, without
investment in tools and equipment.
Note: Labor-only contracting would give rise to: (1) the creation of an employer-employee relationship
between the principal and the employees of the contractor or sub-contractor; and (2) the solidary liability of
the principal and the contractor to the employees in the event of any violation of the Labor Code.
Coca-cola Bottlers Philippines vs. Ricky Dela Cruz, et. al.
G.R. No. 184977, December 7, 2009
Facts:
Respondents filed two separate complaints for regularization with money claims against Coca-Cola Bottlers
Philippines, Inc. Before the Labor Arbiter, the respondents alleged that they are route helpers assigned to
work in the petitioner’s trucks. They go from the Coca-Cola sales offices or plants to customer outlets; they
were hired either directly by the petitioner or by its contractors, but they do not enjoy the full remuneration,
benefits and privileges granted to the petitioner’s regular sales force. They argued that the services they
render are necessary and desirable in the regular business of the petitioner. In defense, the petitioner
contended that it entered into contracts of services with Peerless and Excellent Partners Cooperative, Inc.
(Excellent) to provide allied services; under these contracts, Peerless and Excellent retained the right to
select, hire, dismiss, supervise, control and discipline and pay the salaries of all personnel they assign to the
petitioner; in return for these services, Peerless and Excellent were paid a stipulated fee. The petitioner
posited that there is no employer-employee relationship between the company and the respondents and the
complaints should be dismissed for lack of jurisdiction on the part of the NLRC. In reply, the respondents
countered that they worked under the control and supervision of the company’s supervisors who prepared
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their work schedules and assignments. Peerless and Excellent, too, did not have sufficient capital or
investment to provide services to the petitioner. The respondents thus argued that the petitioner’s contracts
of services with Peerless and Excellent are in the nature of "labor-only" contracts prohibited by law.
Issue:
Was there labor-only contracting?
Ruling:
Yes. The contract between the principal and the contractor is not the final word on how the contracted
workers relate to the principal and the purported contractor; the relationships must be tested on the basis of
how they actually operate. The legitimate job contractor must have the capitalization and equipment to
undertake the sale and distribution of the manufacturer’s products, and must do it on its own using its own
means and selling methods.
Even before going into the realities of workplace operations, the Court of Appeals found that the service
contracts themselves provide ample leads into the relationship between the company, on the one hand, and
Peerless and Excellent, on the other. The Court of Appeals noted that both the Peerless and the Excellent
contracts show that their obligation was solely to provide the company with “the services of contractual
employees,” and nothing more. These contracted services were for the handling and delivery of the
company’s products and allied services. Following D.O. 18-02 and the contracts that spoke purely of the
supply of labor, the Court of Appeals concluded that Peerless and Excellent were labor-only contractors
unless they could prove that they had the required capitalization and the right of control over their contracted
workers.
The contractors were not independently selling and distributing company products, using their own
equipment, means and methods of selling and distribution; they only supplied the manpower that helped the
company in the handing of products for sale and distribution. In the context of D.O. 18-02, the contracting for
sale and distribution as an independent and self-contained operation is a legitimate contract, but the pure
supply of manpower with the task of assisting in sales and distribution controlled by a principal falls within
prohibited labor-only contracting. Consequently, the contracted personnel, engaged in component functions
in the main business of the company under the latter’s supervision and control, cannot but be regular
company employees.
Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al.
G.R. No. 160506, March 9, 2010
Facts:
Petitioners worked as merchandisers of P&G. They all individually signed employment contracts with either
Promm-Gem or SAPS for periods of more or less five months at a time.They were assigned at different
outlets, supermarkets and stores where they handled all the products of P&G. They received their wages
from Promm-Gem or SAPS. Subsequently, petitioners filed a complaintagainst P&G for regularization,
service incentive leave pay and other benefits with damages. The complaint was later amendedto include
the matter of their subsequent dismissal.
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The Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employer-employee
relationship between petitioners and P&G. He found that the selection and engagement of the petitioners,
the payment of their wages, the power of dismissal and control with respect to the means and methods by
which their work was accomplished, were all done and exercised by Promm-Gem/SAPS. He further found
that Promm-Gem and SAPS were legitimate independent job contractors. On appeal to the NLRC, the NlRC
affirmed the decision of the labor arbiter. Petitioners then filed a petition for certiorari with the CA, alleging
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Labor Arbiter and the
NLRC. However, said petition was also denied by the CA.
Issues:
1.) Is P&G the employer of petitioners?
2.) Were petitioners illegally dismissed?
Ruling:
Qualify. In order to determine whether P&G is the employer of petitioners, it is necessary to first determine
whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors. There is "labor-
only" contracting where the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.
The Court held that Promm-Gem cannot be regarded as labor-only contractor but a legitimate independent
contractor because the financial statement of Promm-Gem shows that it has authorized capital stock of P1
million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long
term assets worth P432, 895.28 and current assets of P719, 042.32. Promm-Gem has also proven that it
maintained its own warehouse and office space with a floor area of 870 square meters. It also had under its
name three registered vehicles which were used for its promotional/merchandising business. Promm-Gem
also has other clients aside from P&G.
On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only P31,
250.00. There is no other evidence presented to show how much its working capital and assets are.
Furthermore, there is no showing of substantial investment in tools, equipment or other assets. Considering
that SAPS has no substantial capital or investment and the workers it recruited are performing activities
which are directly related to the principal business of P&G, the court held that SAPS is engaged in "labor-
only contracting". The contractor is considered merely an agent of the principal employer and the latter is
responsible to the employees of the labor-only contractor as if such employees had been directly employed
by the principal employer.
With regard to the termination letters given by Promm-Gem to its employees uniformly specified the cause of
dismissal as grave misconduct and breach of trust. The court held that there were no valid causes for the
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dismissal of petitioners-employees of Promm-Gem.
Misconduct to be valid just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the
performance of the employee’s duties; and (c) must show that the employee has become unfit to continue
working for the employer. In the case, petitioners-employees of Promm-Gem may have committed an error
of judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any
wrongful intent in doing so. As such, they are guilty of only simple misconduct for assailing the integrity of
Promm-Gem as a legitimate and independent promotion firm. A misconduct which is not serious or grave, as
that existing in the instant case, cannot be a valid basis for dismissing an employee.
Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on the willful breach of
the trust reposed in the employee by his employer. Ordinary breach will not suffice. Loss of trust and
confidence, as a cause for termination of employment, is premised on the fact that the employee concerned
holds a position of responsibility or of trust and confidence. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and must show that the employee is unfit to continue
to work for the employer. In the case at bar, In the instant case, the petitioners-employees of Promm-Gem
have not been shown to be occupying positions of responsibility or of trust and confidence. Neither is there
any evidence to show that they are unfit to continue to work as merchandisers for Promm-Gem. Hence, no
valid cause for dismissal by Promm-Gem against petitioner-employees.
With regard to the petitioners placed with P&G by SAPS, they were given no written notice of dismissal. The
records show that upon receipt by SAPS of P&G’s letter terminating their "Merchandising Services Contact",
they in turn verbally informed the concerned petitioners not to report for work anymore. It must be
emphasized that the onus probandi to prove the lawfulness of the dismissal rests with the employer. In
termination cases, the burden of proof rests upon the employer to show that the dismissal is for just and
valid cause. In the instant case, P&G failed to discharge the burden of proving the legality and validity of the
dismissals of those petitioners who are considered its employees. Hence, the dismissals necessarily were
not justified and are therefore illegal.
OUTSOURCING
Temic Automotic Philippines vs.
Temic Automotive Philipppines Employees Union-FFW
G.R. No. 186965, December 23, 2009
Facts:
By practice, the petitioner contracts out some of the work in the warehouse department, to three
independent service providers or forwarders. These forwarders also have their own employees who hold the
positions of clerk, material handler, system encoder and general clerk. The regular employees of the
petitioner and those of the forwarders share the same work area and use the same equipment, tools and
computers all belonging to the petitioner.
This outsourcing arrangement gave rise to a union grievance on the issue of the scope and coverage of the
collective bargaining unit, specifically to the question of "whether or not the functions of the forwarders’
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employees are functions being performed by the regular rank-and-file employees covered by the bargaining
unit." The union thus demanded that the forwarders' employees be absorbed into the petitioner's regular
employee force and be given positions within the bargaining unit. The petitioner, on the other hand, on the
premise that the contracting arrangement with the forwarders is a valid exercise of its management
prerogative, posited that the union's position is a violation of its management prerogative to determine who
to hire and what to contract out, and that the regular rank-and-file employees and their forwarders’
employees serving as its clerks, material handlers, system encoders and general clerks do not have the
same functions as regular company employees.
Issue:
Was the company validly outsourcing the services involving forwarding, packing, loading and clerical
activities related thereto?
Ruling:
Yes. The employer was within its right in entering the forwarding agreements with the forwarders as an
exercise of its management prerogative. The employer’s declared objective for the arrangement is to
achieve greater economy and efficiency in its operations – a universally accepted business objective and
standard that the union has never questioned. In Meralco v. Quisumbing,[G.R. No. 127598, January 27,
1999] the Court joined this universal recognition of outsourcing as a legitimate activity when it held that a
company can determine in its best judgment whether it should contract out a part of its work for as long as
the employer is motivated by good faith; the contracting is not for purposes of circumventing the law; and
does not involve or be the result of malicious or arbitrary action.
ALIEN EMPLOYMENT PERMIT
WPP Marketing Communications, Inc., et al. vs. Jocelyn M. Galera
GR No. 169207; March 25, 2010
Jocelyn M. Galera vs. WPP Marketing Communications, Inc., et al.
GR No. 169239; March 25, 2010
Facts:
Petitioner Jocelyn M. Galera is an American citizen, who was hired by respondent John Steedman,
Chairman of WPP Worldwide and Chief Executive Officer of Mindshare, Co., a corporation based in Hong
Kong, China, to work in the Philippines for private respondent WPP Marketing Communications, Inc. (WPP),
a corporation registered and operating under the laws of Philippines. Under the employment contract,
Galera would commence employment on September 1, 1999, with the position of Managing Director of
Mindshare Philippines. Thus, without obtaining an alien employment permit, Galera commenced her
employment with WPP Philippines on the said date. It was only after four months from the time she
commenced employment that private respondent WPP filed before the Bureau of Immigration an application
for petitioner Galera to receive a working visa. In the application, she was designated as Vice-President of
WPP. Petitioner alleged that she was constrained to sign the application in order that she could remain in the
Philippines and retain her employment.
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On December 14, 2000, private respondent Galera was verbally informed by Steedman that her
employment had been terminated. She received her termination letter the following day. Her termination
prompted Galera to commence a complaint for illegal dismissal before the labor arbiter. The labor arbiter
found WPP, Steedman, Webster, and Lansang liable for illegal dismissal and damages. Furthermore the
labor arbiter stated that Galera was not only illegally dismissed but was also not accorded due process,
saying that Galera was not given an opportunity by WPP to defend herself and explain her side. Thus, WPP
did not observe both substantive and procedural due process in terminating Galera’s employment. The labor
arbiter ordered WPP to reinstate Galera and to pay her backwages, transportation and housing benefits, and
moral and exemplary damages, among others.
On appeal, the NLRC reversed the labor arbiter’s ruling. The NLRC ruled that Galera was WPP’s Vice-
President, and therefore, a corporate officer at the time she was removed by the Board of Directors on 14
December 2000. The NLRC ruled that the labor arbiter had no jurisdiction over the case because being a
corporate officer, a case arising from her termination is considered as an intra-corporate dispute, which was
cognizable by the Securities and Exchange Commission under P.D. 902-A (but now by the Regional Trial
Courts designated as Commercial Courts by the Supreme Court pursuant to Section 5.2 of RA No.8799).
The Court of Appeals reversed the NLRC. It ruled that Galera’s appointment by the Board of Directors of the
WPP as Vice President for Media had no legal effect as WPP’s by-laws provided for only one Vice-
President, which at that time was occupied. Furthermore, WPP’s by-laws did not include a managing
director as among its corporate officers. The Court of Appeals ordered WPP to pay Galera backwages and
separation pay, as well as housing benefits, moral and exemplary damages, and attorney’s fees, among
others.
The case was subsequently elevated to the Supreme Court.
Issues:
1. Is Galera an employee or a corporate officer of WPP?
2. Did the labor arbiter have jurisdiction over the case?
3. Was Galera illegally dismissed?
4. Is Galera entitled to collect the award of backwages and damages even if she did not have an alien
employment permit when she commenced her employment in the Philippines?
Galera is an employee of WPP. She is not a corporate officer of WPP. An examination of WPP’s by-laws
resulted in a finding that Galera’s appointment as a corporate officer (Vice-President with the operational title
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of Managing Director of Mindshare) during a special meeting of WPP’s Board of Directors is an appointment
to a non-existent corporate office. WPP’s by-laws provided for only one Vice-President. At the time of
Galera’s appointment on December 31, 1999, WPP already had one Vice-President in the person of
Webster. Galera cannot be said to be a director of WPP also because all five directorship positions provided
in the by-laws are already occupied.
The appellate court further justified that Galera was an employee and not a corporate officer by subjecting
WPP and Galera’s relationship to the four-fold test: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee with
respect to the means and methods by which the work is to be accomplished. The appellate court found that
Sections 1 and 4 of the employment contract mandate where and how often she is to perform her work;
Sections 3, 5, 6 and 7 show that wages she receives are completely controlled by WPP; and Sections 10
and 11 clearly state that she is subject to the regular disciplinary procedures of WPP.
(Second Issue):
The Labor Arbiter had jurisdiction over the illegal dismissal complaint filed by Galera. Galera being an
employee, the Labor Arbiter and the NLRC had jurisdiction over her illegal dismissal complaint. Article 217
of the Labor Code vests the Labor Arbiter with the jurisdiction to hear and decide, among others termination
disputes, involving workers, whether agricultural or non-agricultural.
(Third Issue):
Yes, WPP’s dismissal of Galera lacked both substantive and procedural due process.
WPP failed to prove any just or authorized cause for Galera’s dismissal. WPP was unable to substantiate
the allegations of Steedman’s December 15, 2000 letter to Galera, (questioning her leadership and
competence). Galera, on the other hand, presented documentary evidence in the form of congratulatory
letters, including one from Steedman, which contents are diametrically opposed to the December 15, 2000
letter. Also, the law requires that the employer must furnish the worker sought to be dismissed with two
written notices before termination of employment can be legally effected: (1) notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice
which informs the employee of the employer’s decision to dismiss him. Failure to comply with the
requirements taints the dismissal with illegality. WPP’s acts clearly show that Galera’s dismissal did not
comply with the two-notice rule.
(Fourth Issue):
No, Galera could not claim the employees benefits she is entitled under Philippine Labor Laws. The law and
the rules are consistent in stating that the employment permit must be acquired prior to employment. Article
40 of the Labor Code states: "Any alien seeking admission to the Philippines for employment purposes and
any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall
obtain an employment permit from the Department of Labor. Section 4, Rule XIV, Book 1 of the
Implementing Rules and Regulations provides, among others, that if an alien enters the country under a
non-working visa and wishes to be employed thereafter, he may only be allowed to be employed upon
presentation of a duly approved employment permit.
Galera cannot come to this Court with unclean hands. To grant Galera’s prayer is to sanction the violation of
the Philippine labor laws requiring aliens to secure work permits before their employment. We hold that the
status quo must prevail in the present case and we leave the parties where they are. This ruling, however,
does not bar Galera from seeking relief from other jurisdictions.
ILLEGAL RECRUITMENT
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People vs. Balagan and Avila
G.R. No. 183099, February 3, 2010
Facts:
Complainant went into the office of a certain recruiter whom he heard can facilitate employment overseas.
Upon arriving at the latter’s office, the recruiter asked him if he was interested in getting employment abroad.
After answering in the affirmative, the recruiter told him to submit certain requirements (e.g. passport and
other requirements). After doing so, the recruiter told Complainant to prepare P150,000 for deployment. A
few days later, Complainant went to the recruiter’s office and handed P37,000. A day after that, he gave
another P20,000. These amounts, however, were not personally handed to said recruiter, but instead was
given to the accused (Balagan and Avila) who allegedly served as the recruiter’s clerk and secretary
respectively.
No deployment occurred. Complainant demanded for the return of the money, but the recruiter refused.
Upon Complainant’s inquiry with the POEA, he discovered that the recruiter and the accused (Balagan and
Avila) were not licensed to perform recruitment activities. Aggrieved he filed a case of Syndicated Illegal
Recruitment and Estafa against the accused (Balagan and Avila only). The RTC convicted the accused as
charged, but on appeal, the CA, while affirming the conviction of Estafa, modified the conviction of
Syndicated Illegal Recruitment to Simple Illegal Recruitment. Hence, the present petition.
Issue:
Was the modification correct?
Ruling:
Yes, because the prosecution failed to establish that the illegal recruitment was committed by a syndicate.[1]
People vs. Maritess Martinez y Dulay
G.R. No. 158627, March 5, 2010
Facts:
Appellant Maritess Martinez and her daughter, Jenilyn Martinez, were charged with seven counts of Estafa
before the RTC of Manila. In addition, appellant together with her children Jenilyn Martinez and Julius
Martinez, were also charged with the crime of Illegal Recruitment in large scale. However, warrants of arrest
were served only against appellantand Julius Martinez, whereas accused Jenilyn Martinez remains at large.
The RTC rendedered a decision acquitting Julius Martinez while declaring Maritess Martinez guilty of four
(4) counts of estafa and illegal recruitment. On appeal the CA affirmed the appellants conviction of (4)
counts of estafa, while in the case of illegal recruitment modified it as illegal recruitment in large scale.
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Issue:
Is appellant guilty of illegal recruitment in large scale?
Ruling:
Yes. As defined in Art. 38 of the Labor Code, Illegal Recruitment a) any recruitment activities, including the
prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-
holders of authority shall be deemed illegal and punishable under Article 39 of this Code. x x x (b) Illegal
recruitment when committed by a syndicate or in large scale shall be considered an offense involving
economic sabotage and shall be penalized in accordance with Article 39 hereof. illegal recruitment is
deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or
confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme
defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed
against three (3) or more persons individually or as a group.
In the instant case, the prosecution satisfactorily established that appellant was not a licensee or holder of
authority to deploy workers abroad. By this fact alone, she is deemed to have engaged in illegal recruitment
and the same was committed in large scale because it was carried out against the four complainants.
The three elements of the crime of illegal recruitment, to wit: a) the offender has no valid license or authority
required by law to enable him to lawfully engage in recruitment and placement of workers; b) the offender
undertakes any of the activities within the meaning of "recruitment and placement" under Article 13(b) of the
Labor Code, or any of the prohibited practices enumerated under Article 34 of the said Code (now Section 6
of RA 8042); and c) the offender committed the same against three or more persons, individually or as a
group, are present in the instant case.
LNS international Manpower Services vs. Armando Padua, Jr.
G.R. No. 179792, March 5, 2010
Facts:
Respondent Armando C. Padua, Jr. filed a Sworn Statement before the Adjudication Office of the POEA
against LNS and Sharikat Al Saedi International Manpower (Sharikat) for violation of Section 2(b), (d), and
(e) of Rule I, Part VI of the 2002 POEA Rules and Regulations Governing the Recruitment and Employment
of Land-based Overseas Workers. Respondent Padua alleged that he applied as auto electrician with
petitioner LNS and assured of a job in Saudi Arabia. Respondent paid to LNS the processing fees, medical
expenses, and trade test. Respondent Padua further alleged that it was another agency, Sharikat, which
processed his papers and eventually deployed him to Saudi Arabia. However, he returned to the Philippines
because he was not allegedly paid his salaries and also because of violations in the terms and conditions of
his employment contract.
In its answer, LNS admitted that Padua applied for employment abroad but he withdrew all the documents
he submitted to LNS. As proof, LNS attached the withdrawal letter duly signed by Padua. Thus, LNS claimed
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that it could not be held liable for non-issuance of receipt or misrepresentation. The POEA issued its order
finding LNS liable for non-issuance of receipt and misrepresentation. As to Sharikat, the POEA found no
sufficient evidence to hold it liable for the violations charged. On appeal to the Secretary of DOLE, it
dismissed the appeal of petitioner and affirmed the ruling of the POEA. Aggrieved, petitioner filed with the
CA a petition for certiorari but it was dismissed.
Issue:
Is petitioner liable for non-issuance of receipt and misrepresentation?
Ruling:
No. As a general rule, factual findings of administrative and quasi-judicial agencies specializing in their
respective fields, especially when affirmed by the CA, must be accorded high respect, if not finality.
However, the Court find out that the factual findings do not conform to the evidence on record or are not
supported by substantial evidence, as in the instant case.
The self-serving and unsubstantiated allegations of respondent cannot defeat the concrete evidence
submitted by petitioner. In fine, for failure to adduce any shred of evidence of payment made to petitioner, or
that petitioner referred or endorsed respondent for employment abroad to another agency, the charges of
non-issuance of receipt and misrepresentation against petitioner could not possibly prosper. By the voluntary
withdrawal of respondent’s application from petitioner, the latter could not have been involved in the
recruitment and placement of respondent and consequently could not be held liable for any violation.
People vs. Melissa Chua
G.R. No. 184058, March 10, 2010
Facts:
Melissa Chua (appellant) was indicted for Illegal Recruitment (Large Scale). Appellant pleaded not guilty on
arraignment. Her co-accused Josie remained at large. The cases were consolidated, hence, trial proceeded
only with respect to appellant. Of the five complainants, only three testified, namely, Marilyn D. Macaranas
(Marilyn), Erik de Guia Tan (Tan) and Harry James King (King). Appellant denied the charges. Claiming
having worked as a temporary cashier from January to October, 2002 at the office of Golden Gate, owned
by one Marilyn Calueng, she maintained that Golden Gate was a licensed recruitment agency and that
Josie, who is her godmother, was an agent.
Appellant was convicted thereof by the Regional Trial Court (RTC) of Manila. She was also indicted for five
counts of Estafa but was convicted only for three. The Court of Appeals affirmed appellant’s conviction.
Issue:
Is appellant guilty of illegal recruitment in large scale?
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Ruling:
Yes. For illegal recruitment in large scale to prosper, the prosecution has to prove three essential elements,
to wit: (1) the accused undertook a recruitment activity under Article 13(b) or any prohibited practice under
Article 34 of the Labor Code; (2) the accused did not have the license or the authority to lawfully engage in
the recruitment and placement of workers; and (3) the accused committed such illegal activity against three
or more persons individually or as a group.
In the present case, Golden Gate, of which appellant admitted being a cashier from January to October
2002, was initially authorized to recruit workers for deployment abroad. Per the certification from the POEA,
Golden Gate’s license only expired on February 23, 2002 and it was delisted from the roster of licensed
agencies on April 2, 2002.
Appellant was positively pointed to as one of the persons who enticed the complainants to part with their
money upon the fraudulent representation that they would be able to secure for them employment abroad. In
the absence of any evidence that the complainants were motivated by improper motives, the trial court’s
assessment of their credibility shall not be interfered with by the Court
Even if appellant were a mere temporary cashier of Golden Gate, that did not make her any less an
employee to be held liable for illegal recruitment as principal by direct participation, together with the
employer, as it was shown that she actively and consciously participated in the recruitment process.
Assuming arguendo that appellant was unaware of the illegal nature of the recruitment business of Golden
Gate, that does not free her of liability either. Illegal Recruitment in Large Scale penalized under Republic
Act No. 8042, or "The Migrant Workers and Overseas Filipinos Act of 1995," is a special law, a violation of
which is malum prohibitum, not malum in se. Intent is thus immaterial. And that explains why appellant was,
aside from Estafa, convicted of such offense.
JUST AND AUTHORIZED CAUSES
FRAUD AND LOSS OF CONFIDENCE
Eric dela Cruz and Raul Lacuata vs. Coca-Cola Bottlers Philippines, Inc.
G. R. No. 180465, July 31, 2009
Facts:
On August 12, 2000, Raymundo Sales, a salesman of Coca-Cola Bottlers met an accident while diving
respondent’s motor vehicle which he was then not authorized to us. While Sales was hospitalized, he was
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observed to have been under the influence of liquor during the incident. This was also indicated in the police
blotter dated the same day. However, respondent discovered that Sales’ co-employees (Espina, dela Cruz
and Lacuata) secured an August 15 police blotter and August 14 medical certificate omitting the statement
that Sales was under the influence of liquor.
After initial investigation, respondent issued memoranda requiring the petitioner to explain why no
disciplinary action should be taken against them for violation of the Employees’ Code vis a vis Article 282 of
the Labor Code in connection to their production of the police blotter and medical certificate which did not
state the full details of the accident. Petitioners denied the participation of the alteration of the document.
However, after further investigation, it showed that petitioners conspired to have an altered report prepared
to make it appear that Sales was not under an influence of liquor.
The Labor Arbiter dismissed Espina’s complaint for lack of merit, while de la Cruz was found to have been
illegally dismissed and reinstatement was ordered. Meanwhile, Lacuata was found to have been at fault and
that respondent was justified in losing trust and confidence in him. On appeal by the respondent, the NLRC
affirmed the decision of the Labor Arbiter. Respondent then filed a certiorari before the Court of Appeals
wherein it ruled that the petitioners were validly dismissed. Hence, this Review by the petitioners.
Issue:
Did the Court of Appeals err in deciding that the petitioners were validly dismissed?
Ruling:
The Court of Appeals correctly overturned the decision of the Labor Arbiter and the NLRC since the
petitioners were supervisory employees and thus covered with the trust and confidence rule. For loss of trust
and confidence to be a ground for termination of employment, it must be willful and must be connected with
the employee’s work. The records of the case are rife with proof that the supervisors committed acts which
are inimical to the interest and stability, not only to the management, but of the company itself. They did so
through deceitful means and methods. Indeed, by obtaining an altered police report and medical certificate,
petitioners attempted to cover up the fact that Sales was under the influence of liquor when the accident
took place. In doing so, they committed acts inimical to respondent’s interests. They thus committed a work-
related willful breach of trust and confidence reposed in them.
Eats-Cetera Food Services vs. Letran
GR No. 179507, October 2, 2009
Facts:
Espadero had been employed by Eats-cetera Food Services Outlet since June 30, 2001 as cashier. On
November 20, 2002, when she reported for duty, Espadero discovered that her time card was already
punched in. After asking around, she found out that a certain Joselito Cahayagan was the one who punched
in her time card. Espadero, however, failed to report the incident to her supervisor, Clarissa Reduca
(Reduca). This prompted Reduca to report the incident to the personnel manager, Greta dela Hostria.
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Espadero contended that she was dismissed outright without being given ample opportunity to explain her
side. She claimed that on November 21, 2002, petitioners called her and asked her to make a letter of
admission as a condition for her reemployment.
After writing the letter, Espadero was told to wait for an assignment. The following day, on November 22,
2002, the company issued a Memorandum terminating her for violation of Rule 24 of the company rules and
regulations. Because of this, Espadero decided to file a complaint for illegal dismissal before the NLRC.
Petitioners, however, maintained that the company rules and regulations, as well as the corresponding
penalties in case of violation thereof, were made known to Espadero before and upon her actual
employment as cashier. They also argued that contrary to her claim, petitioners gave Espadero ample
opportunity to explain her side.
Petitioners also claimed that they conducted an impartial investigation of the incident and found substantial
evidence that Espadero was in cahoots with a co-worker in punching in her time card. For this reason,
petitioners decided to terminate her.
Issue:
Is Espadero’s infraction serious enough to warrant the penalty of dismissal?
Ruling:
Yes. Espadero’s position as a cashier is one that requires a high degree of trust and confidence, and that
her infraction reasonably taints such trust and confidence reposed upon her by her employer. The rule,
therefore, is that if there is sufficient evidence to show that the employee occupying a position of trust and
confidence is guilty of a breach of trust, or that his employer has ample reason to distrust him, the labor
tribunal cannot justly deny the employer the authority to dismiss such employee.
In the instant case, petitioners cannot be faulted for losing their trust in Espadero. As an employee
occupying a job which requires utmost fidelity to her employers, she failed to report to her immediate
supervisor the tampering of her time card. Whether her failure was deliberate or due to sheer negligence,
and whether Espadero was or was not in cahoots with a co-worker, the fact remains that the tampering was
not promptly reported and could, very likely, not have been known by petitioners, or, at least, could have
been discovered at a much later period, if it had not been reported by Espadero’s supervisor to the
personnel manager. Petitioners, therefore, cannot be blamed for losing their trust in Espadero.
Moreover, the peculiar nature of Espadero’s position aggravates her misconduct. The misconduct, to be
serious, must be of such a grave character and not merely trivial or unimportant. To constitute just cause for
termination, it must be in connection with the employee’s work. With the degree of trust expected of
Espadero, such infraction can hardly be classified as one that is trivial or unimportant. Her failure to promptly
report the incident reflects a cavalier regard for the responsibility required of her in the discharge of the
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duties of her position.
Bibiana Farms and Mills v. Arturo Lado
G.R. No. 157861, February 2, 2010
Facts:
Respondent was a warehouseman for the Petitioner, acting as empty sacks controller among other
functions. On one occasion, a customer transacted with the Petitioner’s cashier for the purchase of 3,000
pieces of empty sacks. The cashier gave a note to the customer and instructed the latter to show said note
to the warehouseman. The note contained instructions as to how many sacks were to be loaded. After
showing the note to the Respondent (the warehouseman), the latter loaded the said sacks for the customer,
but despite the cashier’s instruction, the Respondent loaded a total of 3,400 sacks instead of just 3,000; and
if not for the cashier’s timely inspection, the 400 sack excess would have been brought by the customer
without payment.
The next day, the Petitioner’s General Operations Manager issued two (2) memoranda directing Respondent
to submit his written explanation on the release of sacks contrary to the cashier’s instructions. After
submitting his explanation, another memorandum was issued Manager informing him that he is being placed
under preventive suspension pending investigation. Another notice was sent to his house informing him of
the date of the investigation but Respondent’s house maid refused to accept it. On September 11, 1998, an
investigation was conducted, but before a decision can be made on the investigation, Respondent filed, a
complaint for illegal preventive suspension against the Petitioner. A few days after, Respondent received a
Notice of Termination dismissing him from the service the grounds being "serious misconduct, dishonesty,
willful breach of trust, fraud, loss of confidence and other grounds". Aggrieved, Respondent filed another
case for illegal termination. Both cases were consolidated.
Issue:
Was the termination valid?
Ruling:
Yes. Under the Labor Code, the requirements for the lawful dismissal of an employee are two-fold:
substantive and procedural. Not only must the dismissal be for a just or authorized cause, the basic
requirements of procedural due process – notice and hearing – must likewise be observed. Without the
concurrence of the two, the termination is illegal.
On the just cause issue, Respondent was no ordinary rank-and-file employee. As warehouseman, his duties
involved the handling of incoming and outgoing materials. He had, as the Arbiter noted, access to company
property;tasked to closely monitor and handle company property, especially the outflow of sacks to avoid or
minimize losses. In other words, Respondent held a position of trust and confidence. When he disregarded
the cashier’s note, Respondent violated company procedures, laying the company open to the possibility of
loss. This is a serious misconduct for which he should be held accountable.
On the issue of procedural due process, the essence of due process is the opportunity to be heard; it is the
denial of this opportunity that constitutes violation of due process of law. The respondent was given the
opportunity to be heard when a proper notice of investigation was sent to him, although the notice did not
reach him for reasons outside the petitioner’s control. He was not also totally unheard on the matter as he
was able to explain his side through the two (2) explanation letters he submitted.
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Philippine Journalists, Inc. vs. NLRC
G.R. No. 187120, February 16, 2010
Facts:
PJI is a corporation engaged in the publication of People's Journal, People's Journal Tonight, People's
Journal International, People's Taliba, Women's Journal, and Insider. In December 1978, it employed
respondent Eduardo S. Rivera (Rivera) as proof reader. Rivera rose from the ranks over the years,
becoming purchasing manager in 1998. His primary duty involved the canvassing and purchase of paper
and other materials for PJI's day-to-day operations. Sometime in November 2002, Women's Journal
implemented a calendar insertion project requiring paper-coated materials. Rivera canvassed and
purchased the material sheet. Consistencies in the canvass and prices were found. On January 8, 2003,
PJI's Chief Legal Counsel issued a memorandumrequiring Rivera to explain in writing why he "should not be
terminated from employment for defrauding or attempting to defraud the Company " in the canvassing and
purchase of Women’s Journal’s paper requirements. Rivera submitted his written explanation, denying that
he defrauded or attempted to defraud PJI. Ruiz-Bruno issued a memorandum on the same day to Assistant
Purchasing Manager Jean Alvarado (Alvarado), requiring her to explain the difference in the quotation
prices. On the same day, Alvarado submitted her explanation, stating that she signed the canvass sheet as
instructed by Rivera and she claimed that the figures were written by Rivera himself.
In a memorandum dated February 7, 2003, Rivera was terminated "on the ground of loss of confidence".
Rivera filed a complaint for illegal dismissal. Labor Arbiter found that Rivera's dismissal was proper. The
NLRC reversed the labor arbiter's decision which was affirmed by the CA.
Issue:
Is the dismissal on the ground of loss of confidence valid?
Ruling:
Yes. As the company's purchasing manager, Rivera held a position of trust and confidence; his role in the
procurement of the company's operational requirements is critical. PJI is a publication company and is
engaged in a highly competitive enterprise. The facts shows that Rivera arranged a purchase transaction
markedly disadvantageous to the company mainly due to: (1) his failure to conduct an honest-to-goodness
canvass of prices for the required paper material and (2) his dishonesty, or at least his misrepresentations,
in making it appear that he canvassed two suppliers when he really dealt only with one of them.
Substantial evidence exists justifying Rivera’s dismissal for a just cause – loss of trust and confidence. For
loss of trust and confidence to be a ground for dismissal, the law requires only that there be at least some
basis to justify the dismissal.
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To place this conclusion in Rivera’s own terms, contrary to what he claimed, his dismissal was not on the
basis of "mere speculation and conjecture," but on the basis of relevant evidence that a reasonable mind
might accept to support a conclusion. In legal terms, this is the quantum of proof required in administrative
proceedings.
White Diamond Trading Corporation and/or Jerry Uy and Jessie Uy vs. NLRC, Norlito Escoto, Mary
Grace Pastoril and Maria Myrna Omela
GR No. 186019; March 29, 2010
Facts:
The respondents were employees of White Diamond Trading Corporation, a company engaged in buying
and selling second-hand cars. At the time of their dismissal, Norlito Escoto was the company’s salesman,
Mary Grace Pastoril was the secretary, and Maria Myrna Omela was the assistant secretary.
On February of 2004, Norlito Escoto sold a Toyota Town Ace to Teodoro Aquino for P200,000. Acting on
instructions from Escoto, Aquino handed P200,000 to Omela, which amount Aquino counted in the presence
of Pastoril. Pastoril then took out the deed of sale and handed it to Aquino. The deed showed that the
consideration for the sale was P190,000. Omela issued to Aquino a receipt indicating the purchase price of
P200,000. However, the duplicate copy of the receipt, which the company retained, only reflected a
purchase price of P190,000. The address and telephone number of Aquino was also altered in the duplicate
receipt retained by the company. On the same day, another employee, Neil Rodriguez, made inquiries from
the company’s manager regarding the sale of the vehicle from. The manager told him that the purchase
price was P190,000. This prompted him to wonder why Escoto gave him P1,000. Upon learning of the said
fact, the manager instructed Rodriguez to investigate the sale. Soon, the company learned from Aquino that
he bought the vehicle for P200,000 and that days after the sale the three respondents went to his (Aquino)
house to return to him P10,000, which the respondents said was his discount. Prior to returning the P10,000,
the respondents told Aquino that if somebody would like to see the original receipt, he (Aquino) should just
say that the receipt was lost. As a result of the investigation, Escoto, Pastoril, and Omela were terminated by
the company. Thereafter, they filed a case of illegal dismissal against the petitioners.
The labor arbiter dismissed the complaint, ruling that the dismissal was valid because the respondents
conspired in defrauding the company. The NLRC affirmed the ruling of the labor arbiter, but with
modifications. The NLRC said that Pastoril showed no contributory act in the fraud committed as her role
was simply that of handing to Aquino the deed of sale. Thus, it ruled that Pastoril’s dismissal was without
just cause. The NLRC also ruled that while Escoto and Omela’s dismissal were valid, the company,
however, failed to observe the twin-notice rule required in termination of employment. It said that while the
company conducted an investigation, the questions posed to the respondents were not reduced to writing.
Thus, the NLRC awarded Escoto and Omela nominal damages. The Court of Appeals affirmed the NLRC.
Issues:
(1) Was the dismissal of Pastoril valid?
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(2) Are the dismissed employees entitled to nominal damages because on non-observance of the twin-
notice rule?
Yes, the dismissal of Pastoril was valid. Pastoril was not an innocent participant in the fraudulent sale of the
company's Toyota Town Ace. She acted in concert with Escoto and Omela in the transaction that defrauded
their employer in the amount of P10,000.00. Pastoril prepared and issued the deed of sale indicating that the
vehicle was sold for P190,000.00, although she knew that the buyer was being charged P200,000.00 for the
vehicle. Escoto, Omela and Pastoril helped themselves to the price difference and tried to silence Rodriguez
(who got wind of the anomaly) by giving him P1,000.00 and passing the P10,000.00 price difference off as
the approved discount Aquino asked for. Under these facts, there was a conspiracy where every participant
had made significant contributory acts. Pastoril's involvement in the questionable transaction was much
more than handing over to Aquino his copy of the deed of sale. The payment of the purchase price, the
issuance of the receipt and the handing of the deed of sale to Aquino were not separate isolated acts. They
occurred in one continuous logical sequence with the players in close proximity with one another. Under
these circumstances, to say that Pastoril merely handed over the deed of sale to Aquino without even
looking at the document or knowing what it contained, and without knowing what was actually happening,
can hardly be believed.
(Second Issue):
Yes, Pastoril, Escoto and Omela are entitled to nominal damages because of the company’s non-
observance of the twin notice rule required in termination of employment. The company itself admits that it
failed to observe procedural due process in Pastoril's dismissal and, for this reason, it states that the
payment of indemnity in the form of nominal damages is warranted. We note further that the NLRC had the
same conclusion with respect to Escoto and Omela; hence, the award to them of P10,000.00 each by way of
nominal damages. We find a similar award of nominal damages to Pastoril to be warranted.
SERIOUS/GRAVE/GROSS MISCONDUCT
Ester Maralit vs. Philippine National Bank
G. R. No. 163788, August 24, 2009
Facts:
Petitioner worked for respondent Bank from August 27, 1968 to December 31, 1998. She began as a casual
clerk and climbed her way to become branch manager. In February 1998, PNB offered its personnel an early
retirement plan through Special Separation Incentive Plan (SSIP). Under the Circular, personnel with
pending administrative cases or who are under preliminary investigation may the avail of it, however,
payment of their benefits shall be made only after the resolution of their cases and only if they are not
disqualified from receiving such benefits.
On September 8, 1998, PNB Internal Audit Group found that Maralit violated bank policies, which resulted in
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the return of unfunded checks. She was the asked to submit her written explanation under oath. On
September 15, 1998, Maralit filed her application for early retirement. However, on September 29, PNB
charged her with serious misconduct, gross violation of bank rules and regulations, and conduct prejudicial
to the best interest of the bank. Next month thereof, she was placed under preventive suspension.
On November 1998, PNB conditionally approved Maralit’s application for early retirement effective on
December 31, 1998. Only on January 11, 1999 that she submitted her answer and stated that she did the
same in good faith and favorable to the bank.
On April 14, 2000, Maralit received a letter from PNB’s Administrative Adjudication Panel finding her guilty
with the abovementioned violations. Then she filed a complaint with the arbitration branch of the NLRC for
non-payment of retirement benefits and separation pay against PNB. Both the Arbiter and the NLRC found
that she was entitled retirement benefits. However, the Court of Appeals set aside the decision and held that
the NLRC committed grave abuse of discretion when it affirmed the decision of the Arbiter for Maralit was
under preliminary investigation when she filed her application for early retirement and that she was afforded
due process.
Issue:
Was Maralit illegally dismissed by her employer Bank?
Ruling:
No. Respondent Bank termination is valid. PNB’s Administrative Adjudication Panel found her guilty of
serious misconduct, gross violation of bank rules and regulations, and conduct prejudicial to the best interest
of the bank for she violated bank policies which resulted in the return of unfunded checks amounting to
P54,950,000. Accordingly, PNB’s dismissal of Maralut from the service with forfeiture of her retirement
benefits is rightful. Having dismissed with just cause, she is not entitled with her retirement benefits.
There is substantial evidence showing that there was valid cause for the bank to dismiss petitioner’s
employment for loss of trust and confidence. Petitioner was a bank accountant, which is a position of trust
and confidence.
Superlines Transportation Company, Inc. vs. Pinera
G.R. No. 188742, Oct. 13, 2009
Facts:
Respondent Pinera was complained by Zeny Iligan through a letter addressed to petitioner for
misappropriation of money sent by Iligan thru petitioner. Petitioner immediately investigated the complaint. It
informed respondent of the allegations against him and ordered him to answer the same. Respondent
admitted using the money for his personal needs. Thus, petitioner terminated respondent’s employment on
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June 18, 2004 and notified him of its decision. Subsequently, respondent filed a complaint for illegal
dismissal with the labor arbiter asserting that petitioner did not have any just or valid cause for terminating
his employment. In a decision dated March 23, 2007, the labor arbiter dismissed the complaint for lack of
cause of action. She found that respondent’s dismissal was legal as he was guilty of serious misconduct. On
appeal, the National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter in toto.
On petition for certiorari in the Court of Appeals (CA), the appellate court held that misappropriation did not
constitute serious misconduct, hence, respondent was illegally dismissed. Petitioner moved for
reconsideration but it was denied, hence, this petition.
Issue:
Is respondent guilty of misconduct?
Ruling:
Yes. An employee who fails to account for and deliver the funds entrusted to him is liable for
misappropriating the same and is consequently guilty of serious misconduct. Petitioner therefore validly
dismissed respondent.
Jose, Jr. vs Michaelmar Phils., Inc.
G.R. No. 169606, November 27, 2009
Facts:
Michaelmar Philippines, Inc. (MPI) is the Philippine agent of Michaelmar Shipping Services, Inc. (MSSI). In
an undertaking dated 2 July 2002 and an employment contract dated 4 July 2002, MSSI through MPI
engaged the services of Bernardo B. Jose, Jr. as oiler of M/T Limar. The employment contract stated in part
that any seaman will be instantly dismissed if they are found to have positive trace of alcohol or any of the
banned substances in any random testing sample. Jose, Jr. began performing his duties on board the M/T
Limar on 21 August 2002. On 8 October 2002, a random drug test was conducted on all officers and crew
members of M/T Limar at the port of Curacao. Jose, Jr. was found positive for marijuana. Jose, Jr. was
informed about the result of his drug test and was asked if he was taking any medication. Jose, Jr. said that
he was taking Centrum vitamins. He was allowed to continue performing his duties on board the M/T Limar
from 8 October to 29 November 2002. Despite getting a 96% total rating and was described as very
hardworking, trustworthy, and reliable, Jose, Jr. was repatriated to the Philippines when M/T Limar reached
the next port of destination after the random drug test. Jose, Jr. filed with the NLRC a complaint against MPI
and MSSI for illegal dismissal with claim for his salaries for the unexpired portion of the employment
contract.
Issue:
Was the dismissal based on a just cause?
Ruling:
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Yes. Article 282(a) of the Labor Code states that the employer may terminate an employment for serious
misconduct. Drug use in the premises of the employer constitutes serious misconduct. In Bughaw, Jr. v.
Treasure Island Industrial Corporation, the Court held that:
The charge of drug use inside the company’s premises and during working hours against petitioner
constitutes serious misconduct, which is one of the just causes for termination. Misconduct is improper or
wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not merely an error in judgment. The
misconduct to be serious within the meaning of the Act must be of such a grave and aggravated character
and not merely trivial or unimportant. Such misconduct, however serious, must nevertheless, in connection
with the work of the employee, constitute just cause for his separation. This Court took judicial notice of
scientific findings that drug abuse can damage the mental faculties of the user. It is beyond question
therefore that any employee under the influence of drugs cannot possibly continue doing his duties without
posing a serious threat to the lives and property of his co-workers and even his employer. (Emphasis
supplied)
However, Jose, Jr. was not given any written notice about his dismissal. But the propriety of Jose,
Jr.’s dismissal is not affected by the lack of written notices. When the dismissal is for just cause, the lack of
due process does not render the dismissal ineffectual but merely gives rise to the payment of P30,000 in
nominal damages.
Wilfredo Baron vs. NLRC
G.R. No. 182299, February 22, 2010
Facts:
The president and general manager of the MSI ordered an inventory to be conducted and even ordered
Baron to be temporarily relieved for the audit and the employees were instructed (1) to give all the support
needed by the audit team; (2) to surrender all keys and documents; (3) not to bring out anything belonging to
management; and (4) to undergo a search before leaving the office.Petitioners, however, refused to
cooperate in the audit process, and thereafter, refrained from reporting for work. Nonetheless, the audit was
completed, and an Internal Audit Reportwas submitted. According to the audit team, there were several
irregularities in the operations of MSI. The accounting system designed by Baron was generally weak and
compliance to procedures was not strictly implemented. The team was also convinced that Baron abused
his authority and took advantage of the laxity of the system he designed.
Hence, MSI decided to terminate their services. The petitioners filed a complaint in the NLRC that they were
dismissed whimsically and capriciously in a very oppressive manner, without valid cause and without due
process of law.
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Issues:
(1) Were petitioners validly dismissed on the grounds of grave misconduct and loss of confidence?
(2) Were petitioners accorded their right to due process when they were terminated from their employment?
Yes. The Constitution, statutes and jurisprudence uniformly mandate that no worker shall be dismissed
except for a just or valid cause provided by law, and only after due process is properly observed. The just
causes for termination of employment are enumerated in Article 282 of the Labor Code, as amended. For
there to be a valid dismissal based on loss of trust and confidence, the breach of trust must be willful,
meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse. The basic
premise for dismissal on the ground of loss of confidence is that the employees concerned hold a position of
trust and confidence. It is the breach of this trust that results in the employer’s loss of confidence in the
employee. In the instant case, we note that petitioners were holding the following positions: Wilfredo Baron -
operations manager, Jomar dela Rosa and Jefferson dela Rosa - sales representatives, Cynthia Junatas
and Marife Ballesca - accounting clerks, and Lourdes Rabago - warehouse checker. Clearly, petitioners
were holding positions imbued with trust and confidence, which are deemed to have been reposed on them
by virtue of the nature of their work.
(Second Issue):
Yes. Records show that respondents complied with the two-notice rule. On various dates, two [2] separate
notices were given the employees. In the first notice, the acts imputed against them were enumerated with a
call for an investigation, while the second notice contained MSI’s decision terminating them after they failed
to respond to the first notice. Thus, the employees’ inaction is attributable to them. Due process is not
violated where a person is given the opportunity to be heard but chooses not to give his side of the case.
Evidence shows that petitioners were properly notified of the charges against them. They received letters
instructing them to explain within seventy-two (72) hours from receipt why they should not be dismissed for
their offenses. They were likewise warned that failure to reply would mean that they were waiving their right
to present evidence in their favor.
Caltex vs. Agad
G.R. 162017, APRIL 23, 2010
Facts:
Petitioner Caltex Philippines, Inc. (Caltex) employed respondent Hermie G. Agad (Agad) as Depot
Superintendent-A on a probationary basis for six months. On 28 February 1984, Agad became a regular
employee. After Agad had served for two years since 1990 as Superintendent of the Tacloban Bulk Depot
(Depot) in Leyte, Caltex transferred Agad to Bauan Bulk Depot in Batangas effective 16 May 1992. To
transfer his belongings from Leyte to Batangas, Agad secured the carpentry services of Alfredo Delda
(Delda), the owner of A.A. Delda Engineering Services (Delda Services) for the construction of two crates.
Agad paid Delda P15,500, evidenced by Official Receipt and submitted the receipt and Caltex reimbursed
him the said amount.
Caltex conducted its regular audit of employees’ account and expenses. The company auditor of Caltex
verified the crating expense incurred by Agad with Delda. Delda alleged that he was forced by Agad to
issue the official receipt in order to get a favorable recommendation from the incoming superintendent of the
Depot.
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In another audit report, the company auditor declared that 190 pieces of 11 kg. liquefied petroleum gas
(LPG) cylinders from the Depot were allegedly withdrawn when Agad was still depot superintendent In a
Confidential Memorandum, Agad was informed of his dismissal on the grounds of serious misconduct and
loss of trust and confidence. The LA held that there were no just causes for Agad’s termination of
employment. The NLRC reversed the decision of the LA and held that there existed just causes which
justified Agad’s dismissal. Agad filed a Motion for Reconsideration which was denied. He then filed a
petition for certiorari under Rule 65 with the CA for the nullification of the decision of the NLRC. The CA
modified the judgment of the NLRC and ruled in favor of Agad. Caltex filed a Motion for Reconsideration
which was denied. Hence, the instant petition.
Issue:
Did Caltex legally terminate Agad’s employment on just causes?
Ruling:
The findings of the CA and National Labor Relations Commission (NLRC) establish the following: (1) Agad’s
request for withdrawal of the 190 cylinders of LPG as stated in a Memorandum dated 12 February 1992
cannot be given credence since the Memorandum pertains to the replacement of the scrap materials due to
Boy Bato consisting of 3,000 kilograms of black iron plates and not to the subject LPG cylinders;
(2) Agad did not observe Caltex’s rules and regulations when he transferred the said cylinders to Millanes’
compound without the RMRD form as required under Caltex’s Field Accounting Manual; (3) Agad gave
specific instructions to Millanes to sell the cylinders without bidding to third parties in violation of company
rules; (4) Agad failed to submit the periodic inventory report of the LPG cylinders to the accounting
department; (5) Agad did not remit the proceeds of the sale of the LPG cylinders; and (6) even if considered
as scrap materials, the LPG cylinders still had monetary value which Agad cannot appropriate for himself
without Caltex’s consent.
Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of
company property. This act is akin to serious misconduct or willful disobedience by the employee of the
lawful orders of his employer in connection with his work, a just cause for termination of employment
recognized under Article 282(a) of the Labor Code. Misconduct has been defined as a transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. To be serious, the misconduct must be of such
grave and aggravated character.
RETRENCHMENT
Tala vs. NLRC
G. R. 1755040, April 6, 2010
Facts:
The respondent, The Software Factory, Inc. (TSFI), is a domestic corporation engaged in providing
information technology and computer consultancy to the public. In April 2001, it employed Talam as a full-
time programmer. In the latter part of 2001 and in 2002, TSFI suffered financial reverses. Its external
financial auditor advised that it cut on its payroll expenses which accounted for 41% of its total operating
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costs. TSFI heeded the advice and decided to retrench some of its employees, using as basis its
employees' service income and contribution margins to the company. TSFI found that Talam was one of two
employees with the least or with no income contribution for the year 2002. Consequently, respondents
verbally informed Talam that his services with the company would be terminated thirty (30) days after
September 27, 2002.
On November 29, 2002, Talam questioned the legality of his separation from the service through a complaint
for illegal dismissal and illegal deduction, with claims for service incentive leave pay, damages and
attorney's fees against TSFI. Talam alleged before the Labor Arbiter that his dismissal from employment
was illegal because the company did not comply with the requisites under Article 283 of the Labor Code for
a valid retrenchment action. On October 28, 2003, Executive Labor Arbiter rendered a decision declaring
Talam's dismissal illegal. The Arbiter held that while it is TSFI's right to reduce its workforce to prevent
losses, it failed to present evidence that the company adopted a retrenchment program and there was also
no evidence showing clearly that Talam should be retrenched.
TSFI appealed to the NLRC. In a Decision, the NLRC set aside the labor arbiter's ruling and dismissed
Talam's complaint without prejudice, for improper venue. TSFI moved for reconsideration of the NLRC
resolution which was partially granted. This time, the NLRC deleted the award of backwages and 13th
month pay, but ordered the company to pay Talam P30,000.00 as nominal damages for violating his right to
procedural due process, citing Jaka Food Processing Corp. v. Darwin Pacot, et al., where the Court held
that although the complainant's dismissal was based on an authorized cause, nominal damages were
awarded because of the respondent's failure to comply with the notice requirement. The NLRC ruled that
the non-observance of the notice requirement will not invalidate Talam's separation on the ground of
retrenchment; thus, the award of full backwages was not proper. Talam moved for reconsideration, but the
NLRC denied the motion. Talam thereafter sought relief from the CA through a petition for certiorari under
Rule 65 of the Rules of Court, charging the NLRC with grave abuse of discretion for its resolutions of
September 27, 2005 and January 31, 2006. In particular, Talam questioned the deletion of the award to him
of backwages and 13th month pay.
The CA denied the petition for lack of merit. It found Talam's separation from the service by reason of
retrenchment to be valid. However, while it acknowledged that TSFI was suffering from financial losses as
confirmed by the report of independent external auditor, it ruled that the company failed to give Talam the
notice required by law. The CA opined that although the law mandated that the written notice of termination
of employment for authorized causes should be served at least one month before the effective date of the
termination, the employment contract should prevail because it does not violate the minimum requirement
under Article 283 of the Labor Code. Even if Article 283 were to be followed, the CA added, TSFI still failed
to comply with the notice requirement considering that the notices to Talam and to DOLE were for less than
thirty (30) days.
Although Talam's dismissal was due to a cause authorized by law, the CA deemed TSFI liable for nominal
damages for violation of Talam's right to procedural due process. The appellate court affirmed with
modification the assailed NLRC decision. It increased to P50,000.00 the nominal damages of P30,000.00
awarded by the NLRC. Talam moved for reconsideration of the decision, but the CA denied the motion.
Hence, the present recourse to the Court.
Issue:
Is the dismissal valid?
Ruling:
Yes. Talam was not an unlettered employee; he was an information technology consultant and must have
been fully aware of the consequences of what he was entering into. The quitclaim was a voluntary act as
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there is no showing that he was coerced into executing the instrument; he received a valuable consideration
for his less than two years of service with the company. Thus, from all indications, the release and quitclaim
was a valid and binding undertaking that should have been recognized by the labor authorities and the CA.
While the law frowns upon releases and quitclaims executed by employees who are inveigled or pressured
into signing them by unscrupulous employers seeking to evade their legal responsibilities, a legitimate
waiver representing a voluntary settlement of a laborer’s claims should be respected by the courts as the
law between the parties. In the Court’s view, Talam’s release and quitclaim fall into the category of legitimate
waivers as defined by the Court.
With Talam’s voluntary execution of the release and quitclaim, the Court found the filing of the illegal
dismissal case tainted with bad faith. Neither can TSFI be made to answer for failure to
afford Talam procedural due process. The release and quitclaim, in the Court’s mind, erased whatever
infirmities there might have been in the notice of termination as Talam had already voluntarily accepted his
dismissal through the release and quitclaim. As such, the written notice became academic; the notice, after
all, is merely a protective measure put in place by law and serves no useful purpose after protection has
been assured. The Court thus finds no basis for the conclusion that TSFI violated procedural due process
and should pay nominal damages.
The CA committed no reversible error in affirming the NLRC ruling that Talam was validly dismissed on the
ground of retrenchment.
First. The decision to retrench had a basis; it was not simulated nor resorted to for the purpose of getting
rid of employees. The decision was upon the recommendation of the company’s external auditor Leah A.
Villanueva, as contained in her letter to the TSFI Board of Directors in October 2002. As the CA noted, the
standard proof of a company’s financial standing is its financial statements duly audited by credible external
auditors. We see nothing in the records which impugns Villanueva's assessment of the financial condition of
TSFI at the time material to the case.
Second. The cost-cutting measure recommended involved reduction of TSFI’s payroll expense account
which, as the auditor found, makes up 41% of the company’s total operating expenses. Talam insinuates
that the share in the company’s operating costs of personnel expenses is misleading, contending that the
bulk of the expense goes into management fees. While this may be so, it cannot be denied that the
management group is still part of the personnel component of the company, and absent any showing of bad
faith, the choice of who should be retrenched must be conceded to the company for as long as there exists a
basis for it.
In the present case, we note that the auditor suggested that TSFI “review the contribution margin per
consultant and compensation packages of personnel in the executive and support group.” Again, absent
any showing of bad faith, we cannot fault the company for choosing the option of looking at the margins of
contribution of the consultants to the income of the company as primary retrenchment standard. It is just
unfortunate that based on this yardstick, Talam came out as one of two consultants with very high negative
contribution margins and was therefore chosen for retrenchment.
Third. Talam was dismissed due to a cause authorized by law – retrenchment to prevent losses. At the
time of Talam’s dismissal, TSFI’s financial condition, as found by the external auditor, showed that it was not
just expecting losses, it already suffered a net income loss of P2,474,418.00 and retained earnings deficit of
P7,424,250.00 for the period ending December 31, 2002.
Fourth. TSFI resorted to other measures to abate its losses. It claimed that during the crises period, it
used as an office a small-room (a mere cubicle) with only a two-person support staff; it reduced the salaries
of its employees by as much as 30%. This submission by the company is substantiated by the schedule of
Operating Expenses for the year ended December 31, 2002 and September 30, 2002. A quick glance at the
schedule readily shows a reduction of TSFI’s operating expenses across the board. The schedule indicates
a substantial decrease in the operating expenses. On the whole, we find that TSFI satisfied the requisites for
a valid retrenchment.
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REDUNDANCY
Lowe, Inc. vs. CA and Mutuc
G.R. Nos. 164813 & 174590, August 14, 2009
Facts:
Lowe, an advertising agency, is a corporation duly organized and existing under the laws of the Philippines.
On 23 June 2000, at the height of the influx of advertising projects, Lowe hired Mutuc as a Creative Director
to help out the four other Creative Directors of Lowe. Mutuc was given a salary of P100,000 a month. On 26
February 2001, Mutuc became a regular employee of Lowe.
However, in 2001, most of Lowe’s clients reduced their advertising budget. In response to the situation,
Lowe implemented cost-cutting measures including a redundancy program. On 31 October 2001, Lowe
terminated Mutuc’s services because her position was declared redundant.
Subsequently, Mutuc filed a complaint for illegal dismissal, nonpayment of 13th month pay with prayer for
the award of moral and exemplary damages plus attorney’s fees against Lowe.
The Labor Arbiter ruled that Lowe satisfied the requisites for a valid implementation of a redundancy
program. The Labor Arbiter found self-serving Mutuc’s allegation that she was terminated from service due
to professional jealousy.
Issue:
Was there a valid dismissal on the ground of redundancy?
Held:
Yes. Redundancy, which is one of the authorized causes for the dismissal of an employee, is governed by
Article 283 of the Labor Code. Redundancy exists when the service of an employee is in excess of what is
reasonably demanded by the actual requirements of the business.A redundant position is one rendered
superfluous by any number of factors, such as overhiring of workers, decreased volume of business,
dropping of a particular product line previously manufactured by the company or phasing out of a service
activity formerly undertaken by the enterprise.
For a valid implementation of a redundancy program, the employer must comply with the following
requisites: (1) written notice served on both the employee and the DOLE at least one month prior to the
intended date of termination; (2) payment of separation pay equivalent to at least one month pay or at least
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one month pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant
position; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant.
The controversy lies on whether Lowe used any fair and reasonable criteria in declaring Mutuc’s position
redundant and whether there was bad faith in the abolition of her position. Lowe insists that it used fair and
reasonable criteria in declaring Mutuc’s position redundant. Lowe argues that Mutuc was the most junior of
all the executives of Lowe and that, based on its performance evaluation, Mutuc was also the least efficient
among the Creative Directors.
The Court recognizes that a host of relevant factors comes into play in determining who among the
employees should be retained or separated. Among the accepted criteria in implementing a redundancy
program are: (1) preferred status; (2) efficiency; and (3) seniority.
The determination of the continuing necessity of a particular officer or position in a business corporation is a
management prerogative, and the courts will not interfere unless arbitrary or malicious action on the part of
management is shown. Aside from Mutuc’s self-serving statements, we find no evidence to support her
conclusion that she was dismissed because of the "rift" with Castro. Considering further that Mutuc held a
position which was definitely managerial in character, Lowe had a broad latitude of discretion in abolishing
her position. An employer has a much wider discretion in terminating the employment of managerial
personnel as compared to rank and file employees.
De Lecciones vs. NLRC, NNA Philippines Co., Inc. et. al.
G.R. No. 184735, September 17, 2009
Facts:
The respondent, a research and translation service company with less than ten employees and a wholly-
owned subsidiary of NNA Japan employed the petitioner on August 1, 1997, and she held various positions
in the company, the latest of which as Administrator. Additionally, she served as Corporate Secretary until
July 3, 2002. She alleged that she usually worked from 9:00 a.m. to 10:00 p.m. - 12:00 midnight and
sometimes even until 2:00 a.m. or 9:00 a.m. She claimed that the respondent promised to compensate her
for extra hours, as well as for doing tasks other than that what she was contracted for.
On May 17, 2002, the Board of Directors of NNA Japan decided to streamline the operations of its
subsidiaries including the respondent, and thus issued a memorandum directing the respondent to transfer
the corporate secretary’s functions to the external counsel. The memorandum also gave management the
discretion to determine which positions should be declared redundant.
On July 4, 2002, the respondent’s Board of Directors held an organizational meeting where the petitioner
was not re-elected as corporate secretary. The board also directed the respondent’s President at the time,
Ms. Kimi Kimura, to reorganize the corporation and abolish any redundant position.
On October 17, 2002, the petitioner received a notice of termination of employment on the ground that her
position as Administrator had been declared redundant. On the same day, the respondent filed a report of
the petitioner’s separation from service with the Office of the DOLE in the National Capital Region.
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On November 15, 2002, the respondent issued the petitioner a memorandum advising her of the release of
checks in her favor representing her salary and accrued benefits including her separation pay. On the same
day, she accepted the checks for her last salary; 13th month pay; unused leave credits for seven days; year-
end tax refund; and reimbursement of advances made to the company. She refused to accept the check
representing her separation pay in the amount of P244, 182.07 (based on her salary and allowances).
On January 16, 2004, Labor Arbiter Aliman D. Mangandog dismissed the complaint for lack of merit, but
ordered the respondent to pay the petitioner separation pay computed at one (1) month’s salary for every
year of service. The petitioner appealed the decision to the NLRC.
Issue:
Was the termination valid?
Ruling:
Yes. The separation of the petitioner by reason of redundancy was supported by the evidence on record.
She was separated from the service after the respondent’s reorganization where her position as
Administrator was declared redundant. She was served notice within the statutory period of thirty (30) days
and so was the DOLE-NCR. The petitioner was assured of all the benefits under the law.
The petitioner imputes bad faith and malice on the respondent in declaring her position as Administrator
redundant, but failed to present convincing proof that the respondent abused its prerogative in terminating
her employment or that it was motivated by ill-will in doing so. It was a business decision arrived at in the
face of financial losses being suffered by the company at the time.
The general rule is that the characterization by an employer of an employee’s services as no longer
necessary or sustainable is an exercise of business judgment on the part of the employer. The wisdom or
soundness of such a characterization or decision is not, as a general rule, subject to discretionary review on
the part of the Labor Arbiter, the NLRC and the CA. Such characterization may, however, be rejected if the
same is found to be in violation of the law or is arbitrary or malicious.
We find no violations of law in the respondent’s actions against the petitioner, nor was the respondent
arbitrary or influenced by malice in terminating the petitioner’s employment for redundancy. This ground for
termination is a legitimate exercise of management prerogative unless attended to by arbitrariness or by the
failure to follow statutory requirements. No arbitrariness or any violations took place in the present case.
MANAGEMENT PREROGATIVE
Aguanza vs. Asian Terminal, Inc.
G.R. No. 163505, August 14, 2009
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Facts:
Petitioner Gualberto Aguanza was employed with respondent company Asian Terminal, Inc. from April 15,
1989 to October 1997. He was initially employed as Derickman or Crane Operator and was assigned as
such aboard Bismark IV, a floating crane barge owned by Asian Terminals, Inc. based at the port of Manila.
Aside from his basic pay, he received meal allowance, fixed overtime pay and out-of port allowance [when
the barge is assigned outside Metro Manila].
Sometime in September 1997, the Bismark IV, together with its crew, was temporarily assigned at the
Mariveles Grains Terminal in Mariveles, Bataan. Then, on October 20, 1997, respondent James Keith issued
a memo to the crew of Bismark IV stating that the barge had been permanently transferred to the Mariveles
Grains terminal beginning October 1, 1997 and because of that, its crew would no longer be entitled to out of
port benefits of 16 hours overtime and P200 a day out-of port allowance.
Because of the said development, Aguanza questioned the diminution of his benefits. Aguanza insisted on
reporting to work in Manila although his barge, Bismark IV, and its other crew were already permanently
based in Mariveles, Bataan. [Aguanza] was not allowed to time in in Manila because his work was in
Mariveles, Bataan. He therefore was not able to render his services, and was accordingly not paid for doing
nothing.
Issue:
Was Aguanza constructively dismissed?
Ruling:
No. The transfer of operations is a valid exercise of management prerogative. Aguanza asserts that his
transfer constituted constructive dismissal, while ATI asserts that Aguanza’s transfer was a valid exercise of
management prerogative.
ATI’s transfer of Bismark IV’s base from Manila to Bataan was, contrary to Aguanza’s assertions, a valid
exercise of management prerogative. The transfer of employees has been traditionally among the acts
identified as a management prerogative subject only to limitations found in law, collective bargaining
agreement, and general principles of fair play and justice. Even as the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot
be denied.
On the other hand, the transfer of an employee may constitute constructive dismissal "when continued
employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
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unbearable to the employee." Aguanza’s situation is not within the purview of this discussion.
Malayan Employees Association, et. al. vs. Malayan Insurance Company
G.R. No. 181357, February 2, 2010
Facts:
Petitioner is the exclusive bargaining agent of the rank-and-file employees of Respondent company whose
CBA with the latter allows union officials to avail of union leaves with pay for the purpose of attending labor
relations activities. While the CBA was in effect, the company issued a rule requiring not only the prior notice
that the CBA expressly requires, but prior approval by the department head before the union and its
members can avail of union leaves. The rule was placed into effect in November 2002 without any objection
from the union until a union officer, Mangalino, filed union leave applications in January and February, 2004.
His department head disapproved the applications because the department was undermanned at that time.
Despite the disapproval, Mangalino proceeded to take the union leave. He said he believed in good faith that
he had complied with the existing company practice and with the procedure set forth in the CBA. The
company responded by suspending him for one week and, thereafter, for a month, for his second offense in
February 2004. After all internal grievance machineries, and subsequent recourse to the NCMB failed to
arrive at a conciliation between the parties, they submitted the matter for voluntary arbitration. The VA ruled
that the suspension was illegal, but on appeal to the CA, the latter reversed the VA. .
Issue:
Was the suspension based on failure to comply with the company’s “prior approval rule” valid
notwithstanding its absence in the CBA?
Ruling:
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. In any event, the rule on its face is not unreasonable, oppressive, nor violative of CBA terms.
Furthermore, ample evidence exists in the records indicating the union’s acquiescence to the rule. Notably,
no letter from the union complaining about the unilateral change in policy appears on record. The "prior
approval" policy fully supported the validity of the suspensions the company imposed on Mangalino. As an
employee, Mangalino had the clear obligation to comply with the management disapproval of his requested
leave. That he still went on leave, in open disregard of his superior’s orders, rendered Mangalino open to the
charge of insubordination, separately from his absence without official leave
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Jimmy Areno, Jr. vs. Sky Cable PCC –Baguio
G.R. No. 180302, February 5, 2010
Facts:
Petitioner was an employee of Respondent Sky Cable. Pursuant to a complaint filed by a co-worker against
the Petitioner, Respondent Sky Cable conducted an administrative investigation to determine the truth on
the matter. Both parties were notified and given the opportunity to be heard. After the proper investigation,
the panel found the allegations to be true, and by virtue of the Company’s Code of Discipline, the Petitioner
was suspended for three days. Despite the order of suspension, however, the Petitioner continued to report
for work. When the matter was brought to the attention of the Respondent, the latter issued a 1st Notice of
Termination, requiring the Petitioner to explain why he should not be terminated for insubordination.
Unsatisfied by Petitioner’s explanation, Respondent terminated the Petitioner, giving notice therefor.
Aggrieved, petitioner filed a case for illegal dismissal. The Labor Arbiter, NLRC and eventually the CA all
agreed that the dismissal was valid. Unsatisfied, Petitioner filed the present petition for Certiorari.
Issue:
Is the petition meritorious?
Ruling:
No. The decision to suspend petitioner was rendered after investigation and a finding by respondent that
petitioner has indeed made malicious statements against a co-employee. It is axiomatic that appropriate
disciplinary sanction is within the purview of management imposition. What should not be overlooked is the
prerogative of an employer company to prescribe reasonable rules and regulations necessary for the proper
conduct of its business and to provide certain disciplinary measures in order to implement said rules to
assure that the same would be complied with. Respondent then acted within its rights as an employer when
it decided to exercise its management prerogative to impose disciplinary measure on its erring employee.
The suspension and subsequent termination were therefore valid.
Pantoja vs. Sca Hygiene Products
G.R. 163554, April 23, 2010
Facts:
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Respondent, a corporation engaged in the manufacture, sale and distribution of industrial paper and tissue
products, employed petitioner as a utility man on March 15, 1987. In a Notice of Transfer, respondent
informed petitioner of its reorganization plan and offered him a position at Paper Mill No. 5 under the same
terms and conditions of employment in anticipation of the eventual closure and permanent shutdown of
Paper Mill No. 4 effective May 5, 1999. The closure and concomitant reorganization is in line with
respondent’s decision to streamline and phase out the company’s industrial paper manufacturing operations
due to financial difficulties brought about by the low volume of sales and orders for industrial paper products.
However, petitioner rejected respondent’s offer for his transfer. Thus, a notice of termination of employment
was sent to petitioner as his position was declared redundant by the closure of Paper Mill No. 4. He then
received his separation pay and thereafter executed a release and quitclaim in favor of respondent. On June
20, 2000, petitioner filed a complaint for illegal dismissal against respondent assailing his termination as
without any valid cause.
On March 23, 2001, the Labor Arbiter rendered a Decision dismissing petitioner’s complaint for lack of
merit. Upon appeal by petitioner, the NLRC reversed the Labor Arbiter’s Decision by finding petitioner’s
separation from employment illegal. The CA reversed the NLRC’s Decision and reinstated the Labor
Arbiter’s Decision dismissing the compliant. It ruled that there was no illegal dismissal as the act of
petitioner in rejecting the transfer and accepting the separation pay constitutes a valid basis for the
separation from employment.
Issue:
Is the respondent guilty of illegal dismissal?
Ruling:
No. Respondent’s right of management prerogative was exercised in good faith. Respondent presented
evidence of the low volume of sales and orders for the production of industrial paper in 1999 which inevitably
resulted to the company’s decision to streamline its operations. This fact was corroborated by respondent’s
VP-Tissue Manufacturing Director and was not disputed by petitioner. Exercising its management
prerogative and sound business judgment, respondent decided to cut down on operational costs by shutting
down one of its paper mill. In this case, the abolishment of Paper Mill No. 4 was undoubtedly a business
judgment arrived at in the face of the low demand for the production of industrial paper at the time. Despite
an apparent reason to implement a retrenchment program as a cost-cutting measure, respondent, however,
did not outrightly dismiss the workers affected by the closure of Paper Mill No. 4 but gave them an option to
be transferred to posts of equal rank and pay. This is an indication of good faith on respondent’s part as it
exhausted other possible measures other than retrenchment. Besides, the employer’s prerogative to bring
down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic
means have been tried and found wanting. Giving the workers an option to be transferred without any
diminution in rank and pay specifically belie petitioner’s allegation that the alleged streamlining scheme was
implemented as a ploy to ease out employees, thus, the absence of bad faith. Apparently, respondent
implemented its streamlining or reorganization plan with good faith, not in an arbitrary manner and without
prejudicing the tenurial rights of its employees.
GROSS NEGLIGENCE/GROSS AND HABITUAL NEGLECT OF DUTY
Estacio and Manliclic vs. Pampanga I Electric Coop.
G.R. No. 183196, August 19, 2009
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Facts:
Petitioner Estacio had been employed at respondent PELCO I as a bill custodian since 1977, while
petitioner Manliclic had been working for respondent PELCO I as a bill collector since June 1992. On 22
August 2002, Nelia D. Lorenzo (Lorenzo), the Internal Auditor of respondent PELCO I, submitted her "Audit
Findings at the San Luis Area Office" to respondent Engr. Allas, pertinent portions of which state:
Evaluation of the results of physical inventory of bills through reconciliation of records such as aging
schedule of consumer accounts receivable balance, collection reports and other related documents revealed
87 bills amounting to One Hundred Twenty Six Thousand Seven Hundred Fifty and 93/100 (P126,750.93)
remained unremitted as of August 20, 2002.
Accounting of which includes the accountability of Ms. Estacio amounting to One Hundred Twenty Three
Thousand Eight Hundred Seven and 14/100 (P123,807.14) representing 86 bills.
Respondent Engr. Allas issued a Memorandum dated 6 September 2002 to petitioner Estacio informing her
of the audit findings, and directing her to explain in writing why no disciplinary action should be imposed
upon her for Gross Negligence of Duty under Section 6.6 of Board Policy No. 01-04 dated 23 July 2001.
Unsatisfied with petitioner Estacio’s explanation, respondent Engr. Allas issued a Memorandumcharging
Estacio with gross negligence of duty. A formal investigation/hearing then ensued, during which petitioner
Estacio was duly represented by counsel. The investigating committee, in the report it submitted to
respondent Engr. Allas on 23 October 2002, found petitioner Estacio guilty of dishonesty and gross
negligence of duty. Allas then dismissed Estacio from service.
In the same "Audit Findings at the San Luis Area Office" submitted to respondent Engineer Allas on 22
August 2002, Internal Auditor Lorenzo reported that petitioner Manliclic, a bill collector, failed to remit to
respondent PELCO I management his collection amounting to P4,813.11, as of 20 August 2002.
Respondent Engr. Allas issued a Memorandum dated 6 September 2002 directing petitioner Manliclic to
explain in writing why no disciplinary action should be taken against him for committing offenses against
respondent PELCO I properties,under Section 2.1 of Board Policy No. 01-04 dated 23 July 2001.
On 11 September 2002, petitioner Manliclic submitted his written explanation admitting the he used the
amount of P4,813.11 from his collection to cover pressing family obligations and requesting two months to
pay the same. With this admission, respondent Engr. Allas issued another Memorandum dated 28
September 2002 dismissing petitioner Manliclic from service effective 1 October 2002, with forfeiture of
benefits.
Issue:
Were Estacio and Manliclic illegally dismissed?
Ruling:
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No. The requisites for a valid dismissal are: (a) the employee must be afforded due process, i.e., he must be
given an opportunity to be heard and defend himself; and (b) the dismissal must be for a valid cause as
provided in Article 282 of the Labor Code or for any of the authorized causes under Articles 283 and 284 of
the same Code. Well-settled is the rule that the essence of due process is simply an opportunity to be heard
or as applied to administrative proceedings, an opportunity to explain one's side or an opportunity to seek a
reconsideration of the action or ruling complained of.
It is undisputed that petitioners were accorded due process. Through the Memoranda issued by respondent
Engr. Allas, petitioners were duly informed of the results of the audit conducted by Internal Auditor Lazaro,
which were unfavorable to petitioners. Petitioners were given a chance to submit their written explanations.
As to petitioner Estacio, a formal hearing/investigation was even conducted by an investigating committee.
Only thereafter, did respondent Engr. Allas notify petitioners Estacio and Manliclic, through a Decision dated
25 October 2002 and Memorandum dated 28 September 2002, respectively, that they were found guilty of
the charges against them and were being dismissed from service. Both petitioners had the opportunity to
seek reconsideration of their dismissal.
Llamas vs. Ocean Gateway & Management, Inc.
G.R. No. 179293, August 14, 2009
Facts:
Ocean Gateway Maritime and Management, Inc. hired Eden Llamas on August 1, 2001 as an accounting
manager. On February 9, 2002, Mary Anne T. Macaraig, respondent’s Chief Executive Officer, called
petitioner’s attention to her failure, despite repeated demands, to accomplish the long overdue monthly and
annual company financial reports and to remit the company’s contributions to the SSS and PhilHealth for
November and December 2001. Subsequently or on February 20, 2002, Mary Anne again instructed
petitioner to remit on that day or until the following day the company’s contributions to the SSS and
PhilHealth for January 2002. Again, she failed to comply. On February 26, 2002 Mary Anne sent a
memorandum to petitioner charging her with gross and habitual neglect of duty and/or misconduct or willful
disobedience and insubordination, detailing therein the bases of the charges, and requiring her to submit a
written explanation why she should not be penalized or dismissed from employment. Complying with the
show cause order, petitioner claimed that the delay was due to the fact that she was overloaded with work
and undermanned.
On account of the delay in the remittance of those contributions, respondent was penalized in the amount of
P18,580.41 which it charged to petitioner via salary deductions. Respondent sent her a notice of termination
from employment on July 31, 2002, anchored on gross and habitual neglect of duty and/or serious
misconduct or willful disobedience/insubordination. Petitioner, on the other hand, filed before the NLRC a
Complaint against respondent and Mary Anne for illegal dismissal, damages and attorney’s fees. She later
amended her complaint to include as cause of action non-payment of overtime pay. Still, in her Position
Paper, she included illegal deductions as additional cause of action.
Issue:
Was the dismissal valid?

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Ruling:
Yes. Under Article 282 (b) of the Labor Code, negligence must be both gross and habitual to justify the
dismissal of an employee. Gross negligence is characterized by want of even slight care, acting or omitting
to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a
conscious indifference to consequences insofar as other persons may be affected.
In the present case, petitioner, as respondent’s Accounting Manager, failed to discharge her important duty
of remitting SSS/PhilHealth contributions not once but quadruple times, resulting in respondent’s incurring of
penalties totaling P18,580.41, not to mention the employees/members’ contributions being unupdated.
Her claim of being overworked and undermanned does not persuade. As noted by respondent, the company
had been in operation for less than three (3) months at the time the negligence and delays were committed,
with only a few transactions and only with one principal, Malaysian Merchant Marine Bhd., hence, its
financial and accounting books should not have been difficult to prepare. Moreover, as claimed by
respondent which was not refuted by petitioner, shefailed to remit the contributions as early as November
2001 during which time, however, on-the-job trainees were still with the company, hence, her claim of being
undermanned behind such failure does not lie.
On petitioner’s declaration that "I believe that I did something good for our office when our declaration of
gross income submitted to City Hall for the renewal of our municipal license was lower than our actual gross
income for which the office had paid a lower amount," the Court finds the same as betraying a streak of
dishonesty in her. It partakes of serious misconduct.
For misconduct or improper behavior to be a just cause for dismissal, (a) it must be serious; (b) must relate
to the performance of the employee’s duties; and (c) must show that the employee has become unfit to
continue working for the employer. Indeed, an employer may not be compelled to continue to employ such
person whose continuance in the service would be patently inimical to his employer’s interest.
For her act of understating the company’s profits or financial position was willful and not a mere error of
judgment, committed as it was in order to "save" costs, which to her warped mind, was supposed to benefit
respondent. It was not merely a violation of company policy, but of the law itself, and put respondent at risk
of being made legally liable. Verily, it warrants her dismissal from employment as respondent’s Accounting
Manager, for as correctly ruled by the appellate court, an employer cannot be compelled to retain in its
employ someone whose services is inimical to its interests.
[1]This is a minute resolution. The ruling did not discuss in detail the prosecution’s failure to prove the
existence of a syndicate
ILLEGAL DISMISSAL
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CONSTRUCTIVE DISMISSAL
Payno vs. Orizon Trading Corp / Orata Trading
G.R. No. 175345, August 19, 2009
Facts:
On October 21, 1993, petitioner Baltazar L. Payno was employed as electrician by Orata Trading, a single
proprietorship engaged in signboard and billboard advertising. He was later promoted to senior installer.
On April 11, 2000, petitioner was informed by the personnel manager that Orata Trading would cease its
business operations and that Orizon Trading Corporation was taking over. Petitioner asked about the status
of his employment, and further inquired if he would be receiving separation pay due to the closure of Orata
Trading. He was told that no separation pay was forthcoming, since Orizon Trading Corporation was merely
absorbing Orata Trading - maintaining its premises, and retaining all its officers and employees without any
diminution in salary and rank. He was, however, informed that he would have to sign a new employment
contract with Orizon Trading Corporation.
Perturbed with the new set-up, petitioner, on May 4, 2000, filed a complaint against Orizon Trading for
payment of separation pay due to the closure of Orata Trading. Petitioner, nonetheless, continued to work
with Orizon Trading Corporation. Subsequently, petitioner was called to the office, and was told not to report
for work anymore if he did not sign the employment contract. The general manager, respondent Flordeliza
Legaspi, offered him the amount of P7,000.00 as separation pay. Petitioner refused since it was insufficient
and not commensurate to the more than seven (7) years he had worked with Orata Trading.
On June 5, 2000, petitioner filed an Amended Complaint to include "illegal dismissal" as another cause of
action against respondents, maintaining the relief for payment of separation pay, damages and attorney’s
fees. Respondent however alleged that it was respondent who resigned.
Issue:
Was there constructive/illegal dismissal of Payno?
Ruling:
Yes. In termination cases, it is incumbent upon the employer to prove either the non-existence or the validity
of dismissal. Inasmuch as respondents alleged petitioner’s resignation as the cause of his separation from
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work, respondents had the burden to prove the same. The case of the employer must stand or fall on its own
merits and not on the weakness of the employee’s defense.
Resignation is the voluntary act of an employee who is in a situation where one believes that personal
reasons cannot be sacrificed in favor of the exigency of the service, and one who has no other choice but to
dissociate oneself from employment. As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation must be considered in
determining whether, in fact, he intended to sever his employment. In this case, we find no overt act on the
part of petitioner that he was ready to sever his employment ties. The alleged resignation was actually
premised by respondents only on the filing of the complaint for separation pay, but this alone is not sufficient
proof that petitioner intended to resign from the company. What strongly negates the claim of resignation is
the fact that petitioner filed the amended complaint for illegal dismissal immediately after he was not allowed
to report for work on June 3, 2000. Resignation is inconsistent with the filing of the complaint for illegal
dismissal.
Furthermore, it must be noted that respondents admit the closure of the business of Orata Trading and the
immediate takeover by Orizon Trading Corporation. Under Article 283 of the Labor Code, the closing or
cessation of the operations of Orata Trading renders it liable for the payment of separation pay to the
employees. Since petitioner was informed by Orata’s personnel manager that no separation pay was
forthcoming, the former was constrained to file a claim therefor. Petitioner was afraid to lose all benefits to
which he was entitled for the seven years he had worked with Orata Trading. This fear was not unfounded,
since he was required to sign a new employment contract and considered as a new employee of Orizon
Trading Corporation, and the years of service behind him would amount to nothing.
Martinez vs. B&B Fish Broker
G.R. No. 179985, September 18, 2009
Facts:
Odilon L. Martinez was employed as a cashier on February 2000 by B&B Fish Broker, a partnership owned
and managed by respondent Norberto M. Lucinario and Jose Suico. On November 24, 2002, Lucinario
called petitioner’s attention to his alleged shortages in his cash collections and ordered him to, as he did,
take a leave the following day. When petitioner reported back for work on November 26, 2002, he was
relieved of his position and reassigned as company custodian.
On December 2, 2002, petitioner filed an application for a four-day leave effective on even date due to an
inflamed jaw. His application, addressed to Lucinario, was received by a co-employee, Arielle Penaranda.
On December 9, 2002, petitioner discovered that his name had been removed from the company logbook
and was prevented from logging in. And he was informed that his application for a four-day leave of absence
had been denied. The following day, petitioner, having understood that the removal of his name from the
logbook amounted to the termination of his employment, tried to confer with Lucinario but to no avail, hence,
filed a complaint against B&B Fish Broker and/or Lucinario, for illegal dismissal, underpayment and non-
payment of wages with prayer for reinstatement, before the Arbitration Branch of the National Labor
Relations Commission.
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Issue:
Ruling:
No. On his [petitioner] return, he discovered that his name was erased from the logbook, was refused entry
into the company premises, and learned that his application for a 4-day leave was not approved. He
thereupon exerted efforts to communicate with Lucinario on the status of his employment, but to no avail.
What thus surfaces is that petitioner was constructively dismissed. No actual dismissal might have occurred
in the sense that petitioner was not served with a notice of termination, but there was constructive dismissal,
petitioner having been placed in a position where continued employment was rendered impossible and
unreasonable by the circumstances indicated above.
Pilapil vs. NLRC
G.R. No. 178229, Oct. 23, 2009
Facts:
Petitioners, 188 in all, were employees of C. Alcantara and Sons, Inc. (CASI) and members of the
Nagkahiusang Mamumuo sa Alsons, Southern Philippines Federation of Labor (NAMAAL-SPFL). NAMAAL-
SPFL and CASI forged a collective bargaining agreement (CBA) effective January 10, 1995 up to December
31, 1999. On the proposal of NAMAAL-SPFL, negotiation for the modification of the CBA was commenced
but ended in a deadlock. NAMAAL-SPFL filed a Notice of Strike before the National Conciliation and
Mediation Board (NCMB) on the ground of "deadlock in collective bargaining." As conciliation failed, majority
of the employees voted for the holding of a strike. A strike was held with makeshift structures, huge
streamers and banners, the strikers barricaded the main private road leading to, and prevented ingress to
and egress from, the CASI compound, thereby paralyzing CASI’s operations. CASI filed a petition to declare
the strike illegal before the NLRC against the officers and members of the union, excluding petitioners, who
were alleged to be responsible for some of the prohibited and illegal activities during the strike. NLRC issued
a TRO which was enforced finally. CASI resumed its operation and instructed petitioners to report to work
within two (2) days from receipt of notice with the caveat that if they don’t, it would take necessary measures
for the protection of its interest. Petitioners ignored the directives of CASI.
The Labor Arbiter declared the strike illegal which was affirmed by the NLRC. While NAMAAL-SPFL’s
petition for certiorari before the Court of Appeals was pending, petitioners voluntarily offer to return to work.
CASI refused the offer of petitioners. In the meantime, the CA affirmed the decision of NLRC that the strike
was illegal. Petitioners filed complaints for constructive dismissal. The Labor Arbiter dismissed the complaint
but ordered the payment of separation pay. Both petitioners and CASI appealed to the NLRC. The NLRC,
finding merit only in the appeal of CASI, nullified the decision of the LA. The motion for reconsideration was
denied by NLRC. The CA dismissed the appeal of the petitioners, hence this petition.
Issue:
Were petitioners constructively dismissed?
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Ruling:
No. Petitioners’ citation in their favor of Article 264 (A) of the Labor Code which provides that "mere
participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during such lawful strike" is misplaced.
First, the strike in which petitioners participated was declared illegal. Second, petitioners were not dismissed
for their participation in the strike but for abandonment of their jobs. For abandonment to exist, it is essential
that (a) the employee must have failed to report for work or must have been absent without valid or
justifiable reason; and (b) there must have been a clear intention to sever the employer-employee
relationship manifested by some overt acts.
In petitioners’ case, despite the directive cum caveat of CASI for them to report back for work within two
days from receipt thereof, they failed to comply therewith. After three years, as reflected above, they offered
to return to work. Their intention to sever the employer-employee relationship with CASI is manifested,
however, by the length of time they refused to return to work, for they had, in the interim, been looking for
other jobs. In fine, as petitioners were not constructively dismissed for they abandoned their jobs, they are
not entitled to reinstatement, backwages, damages, and attorney’s fees.
Merck Sharp and Dohme (Philippines) vs Robles, Gonito and Cristobal
G.R. No. 176506, November 25, 2009
Facts:
Respondents are former health care representatives assigned at the District V-MSD Cardiovascular Unit,
Region I of Merck Sharp. They were placed under preventive suspension on the ground of loss of trust and
confidence by allegedly submitting false, misleading, or inaccurate data about the work of other employees.
Subsequently, Robles and Gonito were informed that their services had been terminated. Cristobal, on the
other hand, was informed that his suspension was lifted. However, he was reassigned to District I of Baguio
City and La Union as his new area of responsibility. Christian requested for a transfer. His request was not
favorably acted upon, instead, he received his second Employees’ Notice to Explain dated January 19,
2004, for dishonesty and offenses against company interest. Thereafter, Christian got sick due to the stress
brought about by his receiving several ENTEs. As such, he was compelled to apply for a sick leave.
Christian stated that his sick leave application was not acted upon and instead he received his third ENTE
dated February 4, 2004, for insubordination, serious misconduct or willful disobedience. Christian, thereafter,
resigned citing oppression and utter unbearability of the work atmosphere. Christian then amended his
complaint for constructive dismissal.
Issue:
Was there constructive dismissal?
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Ruling:
Yes. MSD is adamant that the CA erred in not characterizing the work reassignment of respondent Cristobal
as falling within the ambit of management prerogative and, thus, beyond challenge. In addition, MSD
postulates that the work reassignment of medical representatives, such as respondent Cristobal, is not only
dictated by the nature of the work, but is, more importantly, written in the employment contract.
Once more, the Court agreed with MSD’s statement of the general rule that the work reassignment of an
employee is a management prerogative. Indeed, even the Constitution recognizes “the right of enterprises to
reasonable returns on investments, and to expansion and growth.” Yet, the invocation of management
prerogative carries the corresponding burden of proving such contention.
Time and again the Court has ruled that in constructive dismissal cases, the employer has the burden of
proving that the transfer of an employee is for just and valid grounds, such as genuine business necessity.
The employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee and that the transfer does not involve a demotion in rank or a diminution of salary and other
benefits. If the employer fails to overcome this burden of proof, the employee’s transfer is tantamount to
unlawful constructive dismissal.
Philippine Veterans Bank vs. NLRC and Benigno Martinez
GR No. 188882; March 30, 2010
Facts:
Respondent Benigno Martinez was the Dumaguete City branch manager of the Philippine Veterans Bank
from September 1, 2001 upto January 8, 2003, the date respondent tendered his resignation because “it
[was] so expensive for [him] to be staying away from [his] family,” which circumstance was brought about by
his transfer to the Makati head office the bank since October 2002..
Respondent claimed that he was transferred to the Makati branch office after he earned the ire of the bank’s
Area Head for Visayas and Mindanao. This was because he requested one of the big depositors of the
bank, who was the mayor of Valencia, Negros Oriental, to talk to the said Area Head regarding huge
withdrawals by depositors, which was precipitated by newspaper reports of alleged anomalies hounding the
bank’s high-ranking officials. Earlier, the respondent already approached the Area Head about the same
matter but the said Area Head simply brushed off the issue. On October 2002, the Area Head went to the
Dumaguete branch of the bank and brought with him the person who would replace respondent as branch
manager. The respondent was ordered to report to the bank’s head office in Makati. There, the bank’s Vice
President and Head of its Branch Banking Division told him that he would undergo training. No such training
took place. Instead, the respondent was made to do clerical jobs. He had to travel four hours everyday from
his rented house in Cavite to Makati. This consumed travel and living expenses consumed half of his salary.
This prompted him to tender his resignation on January 8, 2003. Thereafter, he filed a complaint for
constructive dismissal before the labor arbiter.
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In its position paper, the petitioner claimed that Martinez’s transfer was not motivated by bad faith. It said
that it was pursuant to Special Order No. 880, which ordered the respondent's transfer to the Branch
Banking Division to undergo Branch Head Training effective October 21, 2002. The labor arbiter dismissed
his complaint and ruled that the respondent voluntarily resigned from service. The NLRC reversed the labor
arbiter. It ruled that respondent was constructively dismissed and that the unceremonious replacement of the
respondent on October 2002 was akin to contructive dismissal. The Court of Appeals affirmed the NLRC
and ruled that the respondent's transfer from Dumaguete to Makati City was clearly unreasonable,
inconvenient and put him in the difficult predicament of choosing whether to live away from his family or to
bring them to Manila which will entail additional expenses on his part. The petitioner elevated the case to the
Supreme Court.
Issue:
Was the respondent constructively dismissed?
Ruling:
Yes, the transfer of the Dumaguete Branch Manager of Veterans Bank to Makati constituted constructive
dismissal. The test of constructive dismissal is whether a reasonable person in the employee's position
would have felt compelled to give up his position under the circumstances. Based on the factual
considerations in the present case, we hold that the hostile and unreasonable working conditions of the
petitioner justified the finding of the NLRC and the CA that respondent was constructively dismissed.
In constructive dismissal cases, the employer has the burden of proving that its conduct and action or the
transfer of an employee are for valid and legitimate grounds such as genuine business necessity.
Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able to show
that such transfer is not unreasonable, inconvenient, or prejudicial to the employee. Failure of the employer
to overcome this burden of proof taints the employee's transfer as a constructive dismissal. In the present
case, the petitioner failed to discharge this burden. The combination of the harsh actions of the petitioner
rendered the employment condition of respondent hostile and unbearable. First, the petitioner failed to show
any urgency or genuine business necessity to transfer the respondent to the Makati Head Office. Second,
the respondent's transfer from Dumaguete to Makati City is clearly unreasonable, inconvenient and
oppressive, since the respondent and his family are residents of Dumaguete City. Third, the petitioner failed
to present any valid reason why it had to require the respondent to go to Makati Head Office to undergo
branch head training when it could have just easily required the latter to undertake the same training in the
VISMIN area. Finally, there was nothing in the order of transfer as to what position the respondent would
occupy after his training; the respondent was effectively placed in a "floating" status.
Manolo Peñaflor vs. Outdoor Clothing Manufacturing Corp.
G.R. No. 177114, April 13, 2010
Facts:
Peñaflor was hired as probationary HRD Manager of Outdoor Clothing on September 2, 1999. On March 13,
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2000, more than six months from the time he was hired, Outdoor Clothing’s President, Nathaniel Syfu,
appointed Edwin Buenaobra as the concurrent HRD and Accounting Manager. After enduring what he
claimed as discriminatory treatment at work, Peñaflor considered the appointment of Buenaobra to his
position as the last straw, and thus filed his irrevocable resignation from Outdoor Clothing effective at the
close of office hours on March 15, 2000. He thereafter filed an illegal dismissal complaint with the labor
arbiter claiming that he had been constructively dismissed. The labor arbiter agreed with Peñaflor and
issued a decision in his favor. On appeal, the NLRC reversed the earlier decision. The CA likewise affirmed
the decision of the NLRC. Hence this petition.
Issue:
Can Peñaflor’s resignation be considered as constructive dismissal equivalent to an illegal dismissal?
Ruling:
Yes. While the letter states that Peñaflor’s resignation was irrevocable, it does not necessarily signify that it
was also voluntarily executed. Precisely because of the attendant hostile and discriminatory working
environment, Peñaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely within
the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily resignation
due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear
discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee.
The gauge for constructive dismissal is whether a reasonable person in the employee’s position would feel
compelled to give up his employment under the prevailing circumstances. With the appointment of
Buenaobra to the position he then still occupied, Peñaflor felt that he was being eased out and this
perception made him decide to leave the company.
The fact of filing a resignation letter alone does not shift the burden of proving that the employee’s dismissal
was for a just and valid cause from the employer to the employee. In Mora v. Avesco, we ruled that should
the employer interpose the defense of resignation, it is still incumbent upon the employer to prove that the
employee voluntarily resigned. To our mind, Outdoor Clothing did not discharge this burden by belatedly
presenting the three memoranda it relied on. If these memoranda were authentic, they would have shown
that Peñaflor’s resignation preceded the appointment of Buenaobra. Thus, they would be evidence
supporting the claim of voluntariness of Peñaflor’s resignation and should have been presented early on in
the case. Outdoor Clothing however raised them only before the NLRC when they had lost the case before
the labor arbiter.
Whatever doubts that remain in our minds on the credibility of the parties’ evidence should, by the law’s
dictate, be settled in favor of the working man. Our ruling that Peñaflor was constructively dismissed from his
employment with Outdoor Clothing therefore stands.
Peñaflor vs. Outdoor Clothing Manufacturing Corp.
G.R. No. 177114, April 13, 2010
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Facts:
Peñaflor was hired as probationary HRD Manager of Outdoor Clothing on September 2, 1999. On March 13,
2000, more than six months from the time he was hired, Peñaflor learned that Outdoor Clothing’s President,
Nathaniel Syfu (Syfu), appointed Edwin Buenaobra (Buenaobra) as the concurrent HRD and Accounting
Manager. After enduring what he claimed as discriminatory treatment at work, Peñaflor considered the
appointment of Buenaobra to his position as the last straw, and thus filed his irrevocable resignation from
Outdoor Clothing effective at the close of office hours on March 15, 2000. He thereafter filed an illegal
dismissal complaint with the labor arbiter claiming that he had been constructively dismissed. The labor
arbiter agreed with Peñaflor and issued a decision in his favour.
On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter’s ruling. When
Peñaflor questioned the NLRC’s decision before the CA, the appellate court affirmed the NLRC’s decision.
Hence, Peñaflor filed a petition for review on certiorari with the Court.
Issue:
Was Peñaflor constructively dismissed?
Ruling:
Yes. While the letter states that Peñaflor’s resignation was irrevocable, it does not necessarily signify that it
was also voluntarily executed. Precisely because of the attendant hostile and discriminatory working
environment, Peñaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely
within the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily
resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear
discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee.
The gauge for constructive dismissal is whether a reasonable person in the employee’s position would feel
compelled to give up his employment under the prevailing circumstances. With the appointment
of Buenaobra to the position he then still occupied, Peñaflor felt that he was being eased out and this
perception made him decide to leave the company.
The fact of filing a resignation letter alone does not shift the burden of proving that the employee’s dismissal
was for a just and valid cause from the employer to the employee. In Mora v. Avesco [G.R. No. 177414,
November 14, 2008, 571 SCRA 226], the Court ruled that should the employer interpose the defense of
resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned.
ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF ABANDONMENT
Mantle Trading Services, Inc., et. al. vs. NLRC, et. a.
G.R. No. 166705, July 28, 2009
Facts:
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Petitioner company, Mantle Trading Services, Inc., is engaged in the fishing business. Madriaga was hired
by petitioner company as a "batilyo" or fish hauler. Subsequently, he became a "tagapuno" It was reported
that Madriaga received money to put more fish in Alfaro’s tubs, formal incident reports were submitted to the
petitioner company. On September 11, 1999, Madriaga was allegedly barred by the payroll master, Mr.
Charlie Baqued, from reporting for work. Petitioner company, on the other hand, alleged that Madriaga
abandoned his work when he was about to be investigated for the reports.
Petitioner company alleged, among others, that Madriaga was a seasonal employee and he was not
dismissed.
The Labor Arbiter ruled that Madriaga was a regular. The Labor Arbiter also faulted the petitioner company
in failing to comply with the requirement of notice before dismissing an employee. The NLRC affirmed the
Labor Arbiter’s ruling that Madriaga was a regular employee but it held that Madriaga was not illegally
dismissed. In any case, even if it were true, the act of the payroll master in preventing the complainant from
reporting for work cannot be deemed respondent’s act in the absence of evidence that said payroll master
had the authority to dismiss employees. What appears to have happened here is that complainant was not
dismissed by the respondent company but the complainant without ascertaining the authority of the payroll
master, heeded the latter’s order for him not to report for work.The NLRC rejected petitioner company’s
contention that Madriaga abandoned his work. It ruled that mere absence is not sufficient. There must be
proof that there was deliberate and unjustified refusal on the part of the employee to resume his employment
without any intention of returning.
The Court of Appeals affirmed the finding of the Labor Arbiter and the NLRC that Madriaga was a regular
employee, however, reversed the Labor Arbiter and the NLRC on the issue of abandonment of work. It held
that there was a causal connection between the charge against Madriaga of having received money from a
fish trader and his failure to seek his immediate reinstatement. It ruled that Madriaga abandoned his work as
it was only invoked two years after his alleged dismissal.
Issue:
Was private respondent illegally dismissed?
Ruling:
Yes. It is settled that to effect a valid dismissal, the law requires that a) there be just and valid cause as
provided under Article 282 of the Labor Code; and b) the employee be afforded an opportunity to be heard
and to defend himself. The two-notice requirement must be complied with, to wit: a) a written notice
containing a statement of the cause for the termination to afford the employee ample opportunity to be heard
and defend himself with the assistance of his representative, if he so desires; and b) if the employer decides
to terminate the services of the employee, the employer must notify him in writing of the decision to dismiss
him, stating clearly the reason therefore.20
The case of Agabon v. NLRC, et al. applies to the case at bar. In Agabon, the dismissal was found by the
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Court to be based on a just cause because the employee abandoned his work. But it also found that the
employer did not follow the notice requirement demanded by due process. It ruled that this violation of due
process on the part of the employer did not nullify the dismissal, or render it illegal, or ineffectual.
Nonetheless, the employer was ordered to indemnify the employee for the violation of his right to due
process.
A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty
of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty
of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that
the employee himself initiated the dismissal process.
Since in the case of JAKA, the employee was terminated for authorized causes as the employer was
suffering from serious business losses, the Court fixed the indemnity at a higher amount of P50,000.00. In
the case at bar, the cause for termination was abandonment, thus it is due to the employee’s fault. It is
equitable under these circumstances to order the petitioner company to pay nominal damages in the amount
of P30,000.00, similar to the case of Agabon.
We affirm the award of salary differentials, 13th month pay and holiday pay, awarded by the NLRC and the
Court of Appeals. We note that although petitioner company had cause to terminate Madriaga, this has no
bearing on the issue of award of salary differentials, holiday pay and 13th month pay because prior to his
valid dismissal, he performed work as a regular employee of petitioner company, and he is entitled to the
benefits provided under the law. Thus, in the case of Agabon, even while the Court found that the dismissal
was for a just cause, the employee was still awarded his monetary claims.
Eagle Star Security Services vs. Bonifacio Mirando
G.R. No. 179512, July 30, 2009
Facts:
Bonifacio Mirando, who was hired by Eagle Star Security Services, Inc. as a security guard on July 29,
1997. When he reported for work on December 15, 2001, he was told by the detachment commander,
Juanito Endencio (Endencio), not to report for duty per instruction of the head office. Respondent thus called
up the head office and was told by Wilfredo Dayon that he was removed from duty by Ernesto Agodilla
(Agodilla), petitioner’s operations manager. As respondent was thereafter no longer asked to report for duty,
he filed on December 18, 2001 a complaint for illegal dismissal against petitioner and its president Wilfredo
Encarnacion at the National Labor Relations Commission . He later amended his complaint on February 1,
2002 to include a prayer for reinstatement and payment of full backwages, damages and attorney’s fees.
Responding to the complaint, petitioner alleged that respondent went on absence without official leave on
December 16, 2001 and had not since reported for work, drawing it to send him a notice on December 26,
2001 to explain his absence, but he failed to respond thereto. Labor Arbiter found that respondent was
illegally dismissed.On appeal, the NLRC modified the Labor Arbiter’s Decision by dismissing the complaint
as against Encarnacion and amended the awards granted.
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Issue:
Was petitioner illegally dismissed?
Ruling:
Yes. The persistence of respondent to resume his duties, not to mention his immediate filing of the illegal
dismissal complaint, should dissipate any doubt that he did not abandon his job. Clutching at straws,
petitioner argues that respondent was on temporary "off-detail," the period of time a security guard is made
to wait until he is transferred or assigned to a new post or client and since petitioner’s business is primarily
dependent on contracts entered into with third parties, the temporary "off-detail" of respondent does not
amount to dismissal as long as the period does not exceed 6 months, following Art. 286 of the Labor
Code.25
Petitioner’s citation of Article 286 of the Labor is misplaced. Philippine Industrial Security Agency v. Dapiton
teaches:
We stress that Article 286 applies only when there is a bonafide suspension of the employer’s operation of a
business or undertaking for a period not exceeding six (6) months. In such a case, there is no termination of
employment but only a temporary displacement of employees, albeit the displacement should not exceed six
(6) months. The paramount consideration should be the dire exigency of the business of the employer that
compels it to put some of its employees temporarily out of work. In security services, the temporary "off-
detail" of guards takes place when the security agency’s clients decide not to renew their contracts with the
security agency, resulting in a situation where the available posts under its existing contracts are less than
the number of guards in its roster.26
In the present case, there is no showing that there was lack of available posts at petitioner’s clients or that
there was a request from the client-bank, where respondent was last posted and which continued to hire
petitioner’s services, to replace respondent with another. Petitioner suddenly prevented him from reporting
on his tour of duty at the bank on December 15, 2001 and had not thereafter asked him to report for duty. In
fine, the appellate court’s affirmance of the NLRC decision is in order.
Faeldonia vs. Tong Yak Groceries
GR No. 182499, October 2, 2009
Facts:
Petitioner alleged that she worked at Tong Yak Groceries as sales/stock clerk from March 1978 until her
dismissal on April 20, 2000; that on January 26, 2000, while on an errand for her employer, she stepped on
a rusted half-inch nail which injured her foot and caused her to be absent from work. Her foot was operated
on and she was confined at the hospital for 24 days. Respondents paid the hospital bill amounting to
P22,266.40. Petitioner was released from the hospital on March 1, 2000, but was advised to report daily for
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wound dressing for three weeks. Respondents paid for all the expenses.
Petitioner also alleged that on March 10, 2000, she was summoned by respondent Merlita Go who told her
that, “ayaw na namin sa iyo dahil may sakit ka, paengkang-engkang kung lumakad at pagtatawanan ka
lamang ng mga kasamahan mo dito.” However, petitioner did not give much attention to said statement.
She was able to secure from the SSS a Sickness Notification signed by Dr. William Ty certifying that she is
fit to resume work by April 20, 2000. Petitioner reported back to work on April 20, 2000 but was told to resign
and that she would be given a sum of money to start a business. When petitioner asked how much financial
assistance would be given her, respondent Merlita Go angrily stated, “Marami na akong nagastos sa
pagpapa-ospital sa iyo.”
Thereafter, respondents no longer allowed petitioner to go back to work. Hence, she filed a complaint for
illegal dismissal with money claims before the NLRC,claiming that her dismissal was not for cause and
without due process.
Issue:
Is there illegal dismissal?
Ruling:
Yes. In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a
just and valid cause and failure to do so would necessarily mean that the dismissal was illegal. Following
this principle, it is incumbent upon the respondents to prove by substantial evidence that petitioner
abandoned her job. For abandonment to exist, it must be shown that (1) the employee has failed to report
for work or must have been absent without valid or justifiable reason; and (2) that there must have been a
clear intention to sever the employer-employee relationship as manifested by some overt acts.
Respondents failed to discharge this burden. Mere absence of petitioner is not sufficient to establish the
allegation of abandonment. The prolonged absence of petitioner was not without justifiable reason because
it was established that her failure to report for work was due to the injury she suffered in the course of her
employment and with sufficient notice to respondents. Above all, the intention to sever the employer-
employee relationship was not duly established by respondents. The prior submission of a medical
certificate that petitioner is fit to resume work negates the claim of respondents that the former demanded
for separation pay on account of her failing health. Certainly, petitioner cannot demand for separation
benefits on the ground of illness while at the same time presenting a certification that she is fit to work.
Respondents could have denied petitioner’s demand at that instance and ordered her to return to work had it
not been their intention to sever petitioner from their employ. Hence, we find the allegation that petitioner
presented herself for work but was refused by respondents more credible.
It should be noted that respondents also failed to observe the requirements of procedural due process in
effecting petitioner’s dismissal. In dismissing an employee, the employer has the burden of proving that the
dismissed worker has been served two notices: (1) the first to inform the employee of the particular acts or
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omissions for which the employer seeks his dismissal, and (2) the second to inform the employee of his
employer’s decision to terminate him. In cases of abandonment of work, notice shall be served at the
worker’s last known address. Here, no such notice was served to petitioner. Hence, for breach of the due
process requirements, respondents shall also be liable in the amount of P30,000 as indemnity in the form of
nominal damages.
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Baron Republic Theatrical vs. Peralta
GR No. 170525, October 2, 2009
Facts:
Petitioner [herein respondent], Normita P. Peralta (“PERALTA”) was hired by BARON REPUBLIC
THEATRICAL (“BARON”) sometime in 1983 as a ticket seller and was later on promoted as General
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Manager. On March 14, 1993, she was informed by the owner and operator of BARON, respondent [herein
petitioner] Rodrigo Salazar (“SALAZAR”) that her employment was already terminated effective that day.
She was not given any reason why her services were being terminated. Thereafter, she filed a case for
illegal dismissal with claim for reinstatement, payment of backwages, unpaid salary, 13th month pay, service
incentive leave, damages and attorney's fees against her employer, BARON/SALAZAR.
As to petitioner [herein respondent] Edilberto H. Aguilar (“AGUILAR”), he was hired as electrician/air-

conditioner operator at MAJOR CINEMA (“MAJOR”) sometime in January of 1983. In May 1994, he was
informed by the owner-operator of MAJOR, [herein petitioner] Wilson Pascual (“PASCUAL”), that his
employment was terminated effective that day. No explanation was given to AGUILAR why his service was
being terminated. Hence, he filed a complaint against his employers, PASCUAL/MAJOR for illegal dismissal,
payment of wage differentials as a result of underpayment, overtime pay, holiday and rest day/pay and
service incentive leave pay.
The CA held that as to Peralta, Salazar failed to discharge his burden of proving that he paid the former her
13th month pay. In the same manner, the appellate court ruled that Pascual failed to prove that Aguilar was
guilty of abandonment. Moreover, the CA reinstated the award of attorney's fees holding that Peralta and
Aguilar were both forced to litigate in order to protect their rights and interests. On the other hand, the CA
affirmed the ruling of the NLRC which deleted the award of service incentive leave pay to Peralta and
Aguilar.
Issue:
Does the employer have the burden of proving that the employee was dismissed for a just cause?
Ruling:
Yes. It is a basic principle that in illegal dismissal cases, the burden of proof rests upon the employer to
show that the dismissal of the employee is for a just cause and failure to do so would necessarily mean that
the dismissal is not justified. In addition, in claims of abandonment by an employee, the settled rule is that
the employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume
his employment without any intention of returning. Moreover, in evaluating a charge of abandonment, the
jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from
equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to report for work or
absence without valid or justifiable reason, and (2) a clear intent, manifested through overt acts, to sever the
employer-employee relationship.
In the present case, petitioner Pascual consistently denies that Aguilar was terminated from his employment
and that, instead, he abandoned his work and never returned after his request for salary increase was
rejected. However, denial, in this case, does not suffice; it should be coupled with evidence to support it.
Contrary to petitioners' asseveration that Aguilar is guilty of abandoning his job, the Court finds no error in
the finding of the Labor Arbiter, as affirmed by the CA, that there was no clear intention on Aguilar’s part to
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sever the employer-employee relationship. Considering that “intention” is a mental state, petitioners must
show that respondent Aguilar’s overt acts point unerringly to his intent not to work anymore. In this regard,
petitioners failed.
In fact, Aguilar’s filing of a complaint for illegal dismissal the day following his termination, as well as his
subsequent prayer for reinstatement in his Position Paper, are indications which strongly speak against the
petitioners' charge of abandonment. An employee who loses no time in protesting his layoff cannot by any
reasoning be said to have abandoned his work for it is illogical for an employee to abandon his employment
and, thereafter, file a complaint for illegal dismissal and pray for reinstatement.
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Cobarrubias vs. Saint Louis University
G.R. No. 176717, March 17, 2010
Facts:
Cobarrubias (petitioner) was hired as a faculty member at St. Louis University, Inc. (respondent) in Baguio
City in 1982. On May 2003, she was informed that she had failed to meet the required minimum evaluation
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rating for faculty members during the 5-year period beginning school year 1998 until 2003 to thus place her
on forced leave during the first semester of school year 2003-2004; and that while on forced leave, all
benefits due her would be suspended following Section 7.7 of the existing Collective Bargaining Agreement
(CBA) between respondent and the Union of Faculty and Employees of Saint Louis University.
Petitioner thereupon filed on June 5, 2003 a complaint for illegal dismissal with prayer for reinstatement,
backwages, moral and exemplary damages, attorney’s fees and payment of service incentive leave before
the Regional Arbitration Branch, Cordillera Administrative Region of the National Labor Relations
Commission. The Executive Labor Arbiter, for lack of jurisdiction, was later to refer the case to the National
Conciliation and Mediation Board by Order of January 19, 2005.
Before the start of the Second Semester for School Year 2003-2004, petitioner was informed by respondent
that a 24-unit teaching load had been prepared for her and that the Second Semester will begin on
November 3, 2003. However, petitioner did not respond and despite subsequent letters by respondent
requesting her to report for work, she did not resume her teaching post. On Dec 6, 2003, after their letters to
petitioner were left unanswered, she was dismissed for abandonment.
Before the Voluntary Arbitrator designated to handle the case, the issues of the legality of petitioner’s
dismissal for abandonment and the validity of her forced leave were raised. The Arbiter ruled that there was
no abandonment and that the CBA provision from which her forced leave had been based was void.
Further, petitioner was not accorded due process as the twin requirements of notice and hearing were not
observed. Petitioner was ordered to be reinstated. Respondent filed a petition for review before the CA,
which ruled that the Arbiter breached the bounds of his authority by nullifying Sec. 7.7 of the CBA and that
the Arbiter’s authority to settle labor disputes is confined only to the proper interpretation and implementation
of the CBA provisions. The CA further ruled that the assailed CBA provision was not contrary to law and that
there was sufficient compliance with the due process requirement. In its decision, the CA declared that the
petitioner was illegally suspended but validly dismissed.
Issue:
Did petitioner abandon her work that would constitute a valid ground for her dismissal?
Ruling:
Yes. Petitioner was, for five times, notified in writing by respondent to resume teaching for the second
semester of school year 2003-2004 following the service of her suspension during the first semester. She
was advised that a teaching load had already been prepared for her. Respondent never ever replied to
those notices.
Petitioner forgets that her complaint for “illegal dismissal” which she filed on June 5, 2003 sprang, not from
her dismissal on December 6, 2003 due to abandonmentbut, from her suspension during the first semester
of school year 2003-2004. While the filing of a complaint with a prayer for reinstatement negates an
intention to sever the employer-employee relationship, the same contemplates an action made subsequent
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to dismissal. Petitioner’s justification for her failure to respond to the notices – that her acceptance of the
offer could be constituted as a waiver of her claims – is not indeed a valid excuse.
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Diversified Security vs. Bautista
G.R. No. 152234, April 15, 2010
Facts:
Respondent was employed by petitioner as an Executive Pool Secretary, but petitioner alleged that
respondent turned out to be incompetent. Petitioner then assigned her to perform menial or insignificant jobs
and allegedly transferred her to their branch office in Makati City. However, respondent allegedly failed to
report for work at said branch office on the day she was supposed to do so. On the other hand, respondent
claimed that petitioner dismissed her on October 31, 1997 without any valid reason, neither was she given
any notice and hearing. In December of 1997, respondent filed a case for illegal dismissal against petitioner.
Petitioner countered that respondent was not dismissed; rather, she was the one who severed her
connection with petitioner by her "voluntary and unequivocal acts." The Labor Arbiter issued a Decision,
ordering the respondents jointly and severally, to pay the total sum of P92,733.33 as separation pay and
proportionate mandatory 13th month pay of complainant.
The foregoing Decision was appealed to the (NLRC), but the NLRC affirmed the Labor Arbiter's ruling that
herein respondent was illegally dismissed. Petitioners then filed a petition for certiorari with the CA which
modified the Decision of the NLRC. Petitioner moved for reconsideration, but the same was denied. Hence,
this petition.
Issue:
Is there an illegal dismissal?
Ruling:
The Court views with approval the observation of the CA and the NLRC that the employer cannot justify the
defense of abandonment as it failed to prove that indeed the employee had abandoned her work. It did not
even bother to send a letter to her last known address requiring her to report for work and explain her
alleged continued absences.
The ratiocination of the NLRC on this score merits the Court’s imprimatur, viz: The law clearly spells out the
manner by which an unjustified refusal to return to work by an employee may be established. Thus,
respondent should have given complainant a notice with warning concerning her alleged absences (Section
2, Rule XIV, Book V, Implementing Rules and Regulations of the Labor Code). The notice requirement
actually consists of two parts to be separately served on the employee to wit: (1) notice to apprise the
employee of his absences with a warning concerning a possible severance of employment in the event of an
unjustified excuse therefor, and (2) subsequent notice of the decision to dismiss in the event of an
employee’s refusal to pay heed to such warning. Only after complying with those requirements can it be
reasonably concluded that the employee actually abandoned his job. In the present case, more than two (2)
months had already lapsed since the employee allegedly started to absent herself when she instituted her
action for illegal dismissal. During the said period of time, no action was taken by the company regarding
the employee’s alleged absences, something which is quite peculiar had her employment not been severed
at all. Accordingly, the Court found no merit in the company’s defense of abandonment in view of an utter
lack of evidence to support the same. Hence, the employee’s charge of illegal dismissal
stands uncontroverted.
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ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF RETRENCHMENT/REDUNDANCY
Bio Quest Marketing vs. Edmund Rey
G.R. No. 181503, September 18, 2009
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Facts:
Edmund Rey was hired by petitioner Bio Quest Marketing, Inc. on December 1, 1997 as its Area Collector in
Quezon, Batangas and all the provinces of the Bicol region. As Area Collector, he was tasked to collect
payment for various veterinary products sold to feedmill companies, piggery and poultry farms within his
area of assignment. Allegedly as part of its cost cutting measures brought about by a decline in its sales
receipts and collections, petitioner furnished the DOLE a copy of the retrenchment notice on September 3,
2003. And by letter of August 30, 2003 which was received by respondent, petitioner terminated his services
on September 29, 2003.
Claiming that he was dismissed without a valid cause and the observance of due process, respondent filed a
complaint for illegal dismissal against petitioner. Petitioner averred, however, that it furnished complainant a
retrenchment notice in compliance with Art. 283 of the Labor Code; and that it had the prerogative to
retrench its employees including respondent to forestall business losses, to prove which claim of business
losses it submitted a comparative report of its sales and collections for 2001-2003.
Issue:
Ruling:
No. While retrenchment to avoid or minimize business losses is a justified ground to dismiss employees
under Article 283 of the Labor Code, the employer, however, bears the burden to prove such ground with
clear and satisfactory evidence, failing which the dismissal on such ground is unjustified. Petitioner contends
that contrary to the findings of the Labor Arbiter and the appellate court, the comparative report of its sales
and collections for years 2001, 2002 and 2003 sufficiently proves that it was "suffering or was about to suffer
imminent losses due to the gap between sales and collection, and/or poor collection efforts, coupled with
declining sales;" and that although the report showed an increase of sales from 2001 to 2002, there was a
sharp decline thereof in 2003 by more than P38 Million while collections from 2002 to 2003 decreased by
almost P100 Million.
While the above-said comparative report of sales and collections indicates that there was a decrease in the
amount of sales and collections from 2002 to 2003, the same does not suffice to prove that petitioner was
suffering or about to suffer losses within the contemplation of Article 283 of the Labor Code.
Clarion Printing House, Inc. v. NLRC teaches that sliding incomes or decreasing gross revenues alone do
not necessarily indicate business losses within the meaning of Article 283, for, in the nature of things, the
possibility of incurring losses is constantly present in business operations. The decline in petitioner’s sales
and collections from 2002 to 2003 cannot thus be considered as the loss referred to in Article 283 of the
Labor Code, petitioner having failed to prove the stringent requirement that it was substantial, continuing
and without any immediate prospect of abating.
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To consider every loss incurred or expected to be incurred by a company as a justification of retrenchment

would be susceptible to abuse by scheming employers who might be merely feigning business losses or
reverses in their business ventures to ease out employees.
As for the Statement of Profit and Loss submitted by petitioner, the same does not bear the signature of a
certified public accountant. Neither is there a showing that it was audited by an independent auditor, hence,
it is a self-serving document which ought to be treated as a mere scrap of paper devoid of any probative
value.
At all events, even if the comparative report were to be considered, the Court is not persuaded on the
necessity of resorting to retrenchment to prevent or minimize actual or imminent business losses on the part
of petitioner. For retrenchment should only be resorted to when other less drastic means have been tried
and found to be inadequate. So Polymart Paper Industries, Inc. v. NLRC instructs:
. . . Even if business losses were indeed sufficiently proven, the employer must still prove that retrenchment
was resorted to only after less drastic measures such as the reduction of both management and rank-and-
file bonuses and salaries, going on reduced time, improving manufacturing efficiency, reduction of marketing
and advertising costs, faster collection of customer accounts, reduction of raw materials investment and
others, have been tried and found wanting.
In the case at bar, petitioner did not adduce evidence to prove that retrenchment was resorted to because
other measures were undertaken to abate actual or future business losses but thus failed.
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SMC vs. Teodosio
GR No. 163033, October 2, 2009
Facts:
On September 5, 1991, respondent Eduardo Teodosio was hired by San Miguel Corporation (SMC) as a
casual forklift operator in its Bacolod City Brewery. As a forklift operator, respondent was tasked with
loading and unloading pallet of beer cases within the brewery premises. Respondent continuously worked
from September 5, 1991 until March 1992, after which he was “asked to rest” for a while. A month after, or
sometime in April 1992, respondent was rehired for the same position, and after serving for about five to six
months, he was again “asked to rest.” After three weeks, he was again rehired as a forklift operator. He
continued to work as such until August 1993.
Sometime in August 1993, respondent was made to sign an “Employment with a Fixed Period” contract by
SMC, wherein it was stipulated, among other things, that respondent’s employment would be “from August
7, 1993 to August 30, 1995, or upon cessation of the instability/fluctuation of the market demand, whichever
comes first.” Thereafter, respondent worked at the plant without interruption as a forklift operator.
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On March 20, 1995, respondent was transferred to the plant’s bottling section as a case piler. In a letter
dated April 10, 1995, respondent formally informed SMC of his opposition to his transfer to the bottling
section. He asserted that he would be more effective as a forklift operator because he had been employed
as such for more than three years already. Respondent also requested that he be transferred to his former
position as a forklift operator. However, SMC did not answer his letter.
In an undated letter, respondent informed SMC that he was applying for the vacant position of bottling crew
as he was interested in becoming a regular employee of SMC.
On June 1, 1995, SMC notified the respondent that his employment shall be terminated on July 1, 1995 in
compliance with the Employment with a Fixed Period contract. SMC explained that this was due to the
reorganization and streamlining of its operations.
In a letter dated July 3, 1995, respondent expressed his dismay for his dismissal. He informed SMC that
despite the fact that he would be compelled to receive his separation pay and would be forced to sign a
waiver to that effect, this does not mean that he would be waiving his right to question his dismissal and to
claim employment benefits as provided in the Collective Bargaining Agreement (CBA) and company
policies.
Thereafter, respondent signed a Receipt and Release document in favor of SMC and accepted his
separation pay, thereby releasing all his claims against SMC.On July 4, 1995, respondent filed a Complaint
against SMC.
Issues:
(1) Is respondent a regular employee?
(2) Is there illegal dismissal?
Yes. Based on the circumstances surrounding respondent’s employment by SMC, this Court is convinced
that he has attained the status of a regular employee long before he executed the employment contract with
a fixed period. The Labor Code provides that a casual employee can be considered as a regular employee
if said casual employee has rendered at least one year of service regardless of the fact that such service
may be continuous or broken. Section 3, Rule V, Book II of the Implementing Rules and Regulations of the
Labor Code clearly defines the term “at least one year of service” to mean service within 12 months, whether
continuous or broken, reckoned from the date the employee started working, including authorized absences
and paid regular holidays, unless the working days in the establishment, as a matter of practice or policy, or
as provided in the employment contract, is less than 12 months, in which case said period shall be
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considered one year. If the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business of
the employer.
Moreover, the nature of respondent’s work is necessary in the business in which SMC is engaged. SMC is
primarily engaged in the manufacture and marketing of beer products, for which purpose, it specifically
maintains a brewery in Bacolod City. Respondent, on the other hand, was engaged as a forklift operator
tasked to lift and transfer pallets and pile them from the bottling section to the piling area. SMC admitted
that it hired respondent as a forklift operator since the third quarter of 1991 when, in the absence of fully
automated palletizers, manual transfers of beer cases and empties would be extensive within the brewery
and its premises.
Undoubtedly, respondent is a regular employee of SMC. Consequently, the employment contract with a
fixed period which SMC had respondent execute was meant only to circumvent respondent’s right to
security of tenure and is, therefore, invalid.
(Second Issue):
Yes. Since respondent was already a regular employee months before the execution of the Employment
with a Fixed Period contract, its execution was merely a ploy on SMC’s part to deprive respondent of his
tenurial security. Hence, no valid fixed-term contract was executed. The employment status of a person is
defined and prescribed by law and not by what the parties say it should be. Equally important to consider is
that a contract of employment is impressed with public interest such that labor contracts must yield to the
common good. Provisions of applicable statutes are deemed written into the contract, and the parties are
not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other.
Having gained the status of a regular employee, respondent is entitled to security of tenure and could only
be dismissed on just or authorized causes and after he has been accorded due process.
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Virgilio Anabe vs. Asian Construction (Asiakonstruckt)
G.R. No. 183233, December 23, 2009
Facts:
The petitioner was hired by respondent Asian Construction (Asiakonstrukt) as radio technician/operator. His
services were terminated on the ground of retrenchment. He thus filed a complaint for illegal dismissal and
illegal deduction of his pay. Because Asiakonstrukt failed to submit financial statements to prove losses, the
Labor Arbiter ruled that petitioner was not validly dismissed. Respondents are ordered to pay Virgilio Anade
his 13th month pay, illegal deductions and overtime pay. When the case was elevated to the NLRC,
Asiakonstrukt submitted the certified true copies of the Audited Financial Statements from 1998 to 2000,
NLRC modified the Labor Arbiter’s Decision by holding that petitioner was not illegally dismissed and
reduced the reimbursable amount of illegal deductions. Petitioner filed a Motion for Reconsideration but it
was denied. He then appealed to the Court of Appeals which affirmed the decision rendered by the NLRC,
hence, this appeal.
Issue:
Was petitioner’s dismissal justified?
Ruling:
No.Retrenchment is the termination of employment initiated by the employer through no fault of and without
prejudice to the employees, it is resorted to during periods of business recession, industrial depression, or
seasonal fluctuations or during lulls occasioned by lack of orders, shortage of materials, conversion of the
plant for a new production program or the introduction of new methods or more efficient machinery or of
automation. It is a management prerogative resorted to, to avoid or minimize business losses.
To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably
necessary and likely to prevent business losses; (2) the employer serves written notice both to the
employee/s concerned and the Department of Labor and Employment at least a month before the intended
date of retrenchment; (3) the employer pays the retrenched employee separation pay in an amount
prescribed by the Code; (4) the employer exercises its prerogative to retrench in good faith; and (5) the
employer uses fair and reasonable criteria in ascertaining who would be retrenched or retained.
The losses must be supported by sufficient and convincing evidence. The normal method of discharging this
burden of proof is the submission of financial statements duly audited by independent external auditors. For
failure of Asiakonstrukt to clearly and satisfactorily substantiate its financial losses, the dismissal of the
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employee on account of retrenchment is unjustified.
Metro Construction, Inc. vs. Aman
G.R. No. 168324 , Oct. 12, 2009
Facts:
Respondent Aman has been working with the petitioners since 1975, as a laborer until he was promoted as
a foreman. On May 15, 2001, petitioner Dr. Lai summoned him to his office where the former
unceremoniously and illegally dismissed him from his employment by asserting that the company no longer
needed his services. In a letter dated July 19, 2001, petitioners informed respondent that he will be
temporarily terminated because of completed projects, lack of work and continuous financial losses with an
assurance that petitioners will be contracting him if ever there will be new projects. On July 24, 2001,
petitioner sent a letter to respondent informing him of the prospective project that petitioners would
undertake in a few months time.
On July 6, 2001, respondent filed a case of illegal dismissal against petitioners which was dismissed by the
Labor Arbiter for lack of merit. The Labor Arbiter found that petitioner did not dismiss Aman, but only laid him
off temporarily. Respondent filed an appeal with the NLRC which affirmed the decision of the LA and denied
the motion for reconsideration.
On appeal, the appellate court ruled that petitioners illegally dismissed respondent and ordered the payment
of backwages from the time of illegal dismissal. The finding by the NLRC of Aman’s temporary termination
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was not supported by substantial evidence. Moreover, the appellate court declared that Aman’s dismissal
was illegal because of the lack of observance of both procedural and substantive due process. The
appellate court denied petitioners motion for reconsideration, hence this petition.
Issue:
Ruling:
Yes. In an unlawful dismissal case, the employer has the burden of proving the lawful cause sustaining the
dismissal of the employee. The employer must affirmatively show rationally adequate evidence that the
dismissal was for a justifiable cause. Apart from its self-serving allegations, Metro failed to prove that it
sustained serious business losses. To justify retrenchment, the employer must prove serious business
losses, and not just any kind or amount of loss. Metro should have produced its books of accounts, profit
and loss statements, and even its accountant to competently amplify its financial position. Petitioners’
unsubstantiated assertion that they did not dismiss Aman, coupled with the two letters sent to Aman, shows
that petitioners failed to observe the twin requirements of notice and hearing for a valid dismissal. The law
requires that the employer must furnish the worker sought to be dismissed with two written notices before
termination of employment can be legally effected: (1) notice which apprises the employee of the particular
acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the
employee of the employer’s decision to dismiss him. Failure to comply with the requirements taints the
dismissal with illegality.
Article 279 of the Labor Code mandates that the employee who is illegally dismissed and not given due
process is entitled to reinstatement without loss of seniority rights and other privileges and full backwages,
inclusive of allowances, and other benefits or their monetary equivalent computed from the time the
compensation was not paid up to the time of actual reinstatement.
Farley Fulache vs. ABS-CBN Broadcasting
G.R. No. 183810, January 21, 2010
Facts:
The petitioners alleged that the ABS-CBN Rank-and-File Employees Union executed a collective bargaining
agreement (CBA) which came to their knowledge only when they obtained copies of the agreement. They
were excluded from coverage of the CBA as ABS-CBN considered them temporary and not regular
employees. They claimed they had already rendered more than a year of service in the company and,
therefore, should have been recognized as regular employees entitled to security of tenure and to the
privileges and benefits enjoyed by regular employees. They asked that they be paid overtime, night shift
differential, holiday, rest day and service incentive leave pay. They also prayed for an award of moral
damages and attorney’s fees.
On the other hand, ABS-CBN alleged that the petitioners’ services were contracted on various dates by its
Cebu station as independent contractors/off camera talents, and they were not entitled to regularization in
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these capacities. The Labor Arbiter a decision holding that the petitioners were regular employees of ABS-
CBN, not independent contractors, and are entitled to the benefits and privileges of regular employees.
While the regularization case was pending appeal before the NLRC, ABS-CBN dismissed the petitioners
Fulache, Jabonero, Castillo, Lagunzad and Atinen (all drivers) for their refusal to sign up contracts of
employment with service contractor Able Services. The four drivers then filed a complaint for illegal
dismissal.
The Labor Arbiter rendered a decision on the illegal dismissal case upholding the validity of ABS-CBN's
contracting out of certain work or services in its operations. The labor arbiter found that petitioners Fulache,
Jabonero, Castillo, Lagunzad and Atinen had been dismissed due to redundancy, an authorized cause
under the law. He awarded them separation pay of one (1) month’s salary for every year of service.
On appeal, the NLRC rendered a joint decision on the regularization and illegal dismissal cases. The NLRC
ruled that there was an employer-employee relationship between the petitioners and ABS-CBN as the
company exercised control over the petitioners in the performance of their work; the petitioners were regular
employees because they were engaged to perform activities usually necessary or desirable in ABS-CBN's
trade or business; they cannot be considered contractual employees since they were not paid for the result
of their work, but on a monthly basis and were required to do their work in accordance with the company’s
schedule. On the illegal dismissal case, the NLRC found Fulache, Jabonero, Castillo, Lagunzad and Atinen
had been illegally dismissed and awarded them backwages and separation pay in lieu of reinstatement.
Under both cases, the petitioners were awarded CBA benefits and privileges from the time they became
regular employees up to the time of their dismissal.
Upon the filing of the Motion for Reconsideration by ABS-CBN however, the NLRC ruled again on the illegal
dismissal case and held that while petitioners were recognized as regular employees, were declared
dismissed due to redundancy. On appeal to the Court of Appeals, the CA ruled that the petitioners failed to
prove their claim to CBA benefits since they never raised the issue in the compulsory arbitration
proceedings, and did not appeal the labor arbiter’s decision which was silent on their entitlement to CBA
benefits. The CA found that the petitioners failed to show with specificity how Section 1 (Appropriate
Bargaining Unit) and the other provisions of the CBA applied to them. The CA likewise affirmed the decision
of the NLRC holding that the drivers were not illegally dismissed as their separation from the service was
due to redundancy. Furthermore, they had not presented any evidence that ABS-CBN abused its
prerogative in contracting out the services of drivers.
Issues:
1. Are petitioners regular employees of ABS-CBN and thus entitled to CBA benefits?
2. Were petitioners illegally dismissed?
Yes. The Supreme Court upheld the decision of the Labor Abiter that petitioners are regular employees of
ABS-CBN. As regular employees, the petitioners fall within the coverage of the bargaining unit and are
therefore entitled to CBA benefits as a matter of law and contract. The parties’ 1999-2002 CBA provided in
its Article I (Scope of the Agreement) that:
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Section 1. APPROPRIATE BARGAINING UNIT. – The parties agree that the appropriate bargaining unit
shall be regular rank-and-file employees of ABS-CBN BROADCASTING CORPORATION but shall not
include:
a) Personnel classified as Supervisor and Confidential employees;
b) Personnel who are on "casual" or "probationary" status as defined in Section 2 hereof;
c) Personnel who are on "contract" status or who are paid for specified units of work such as writer-
producers, talent-artists, and singers.
Under these terms, the petitioners are members of the appropriate bargaining unit because they are regular
rank-and-file employees and do not belong to any of the excluded categories. Specifically, nothing in the
records shows that they are supervisory or confidential employees; neither are they casual nor probationary
employees. Most importantly, the labor arbiter’s decision – affirmed all the way up to the CA level – ruled
against ABS-CBN’s submission that they are independent contractors. Thus, as regular rank-and-file
employees, they fall within CBA coverage under the CBA’s express terms and are entitled to its benefits.
(Second Issue):
Yes.The termination of employment of the four drivers occurred under highly questionable circumstances
and with plain and unadulterated bad faith. The records show that the regularization case was in fact the
root of the resulting bad faith as this case gave rise and led to the dismissal case. In the course of this
appeal, ABS-CBN took matters into its own hands and terminated the petitioners’ services, clearly
disregarding its own appeal then pending with the NLRC. Notably, this appeal posited that the petitioners
were not employees (whose services therefore could be terminated through dismissal under the Labor
Code); they were independent contractors whose services could be terminated at will, subject only to the
terms of their contracts. To justify the termination of service, the company cited redundancy as its authorized
cause but offered no justificatory supporting evidence. It merely claimed that it was contracting out the
petitioners’ activities in the exercise of its management prerogative. ABS-CBN’s intent, of course, based on
the records, was to transfer the petitioners and their activities to a service contractor without paying any
attention to the requirements of our labor laws; hence, ABS-CBN dismissed the petitioners when they
refused to sign up with the service contractor. In this manner, ABS-CBN fell into a downward spiral of
irreconcilable legal positions, all undertaken in the hope of saving itself from the decision declaring its
"talents" to be regular employees. Furthermore, ABS-CBN forgot that by claiming redundancy as authorized
cause for dismissal, it impliedly admitted that the petitioners were regular employees whose services, by
law, can only be terminated for the just and authorized causes defined under the Labor Code.
Likewise ABS-CBN forgot that it had an existing CBA with a union, which agreement must be respected in
any move affecting the security of tenure of affected employees; otherwise, it ran the risk of committing
unfair labor practice – both a criminal and an administrative offense. ABS-CBN clearly acted with patent bad
faith. The injustice committed on the petitioners/drivers requires rectification. The bad faith in ABS-CBN’s
move toward its illegitimate goal was not even hidden; it dismissed the petitioners – already recognized as
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regular employees – for refusing to sign up with its service contractor. Thus, from every perspective, the
petitioners were illegally dismissed.
By law, illegally dismissed employees are entitled to reinstatement without loss of seniority rights and other
privileges and to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent
from the time their compensation was withheld from them up to the time of their actual reinstatement. The
four dismissed drivers deserve no less. Moreover, they are also entitled to moral damages since their
dismissal was attended by bad faith. For having been compelled to litigate and to incur expenses to protect
their rights and interest, the petitioners are likewise entitled to attorney’s fees.
ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF DISHONESTY/FRAUD/BREACH OF TRUST/

LOSS OF CONFIDENCE
Abelardo Abel vs. Philex Mining Corporation
G. R. No. 178976, July 31, 2009
Facts:
Petitioner was hired by respondent sometime in 1988. He was assigned as legal claim consultant for five
years prior to his transfer to Mine Engineering and Draw Control Department wherein he was assigned as
the Unit Head in early 2002. Sometime in September 2002, petitioner was implicated in an irregularity
occurring in the subsidence area of respondent’s mine site. Lupega, a subsidence checker at the mine area
executed an affidavit against the petitioner alleging the anomaly committed by petitioner against the
corporation for not acting on the reports submitted by Lupega regarding the irregular practice of the loading
operations in the site. Lupega’s basis was some exchange phone calls he heard between the petitioner and
Caballero, ANSECA’s accountant.
Due to this, through a Memorandum by the respondent’s Litigation and investigation division, petitioner was
found guilty of fraud resulting in loss and confidence and gross of neglect of duties and was eventually
meted out the penalty of dismissal for employment. The petitioner filed a complaint for illegal dismissal
before the NLRC wherein the Labor Arbiter ruled in favor of the petitioner. The Labor Arbiter found that
respondent failed to prove by substantial evidence the alleged fraud committed by petitioner, explaining that
the telephone conversations between petitioner and Didith Caballero of ANSECA would not suffice to lay the
basis for respondent’s loss of trust and confidence in petitioner. The NLRC reversed the decision of the
Labor Arbiter and held that petitioner is guilty of gross and habitual neglect of duty. Hence, this petition.
Issue:
Ruling:
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The law mandates that the burden of proving the validity of the termination of employment rests with the
employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not
justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do
not provide legal justification for dismissing employees. In case of doubt, such cases should be resolved in
favor of labor pursuant to the social justice policy of labor laws and the Constitution.
Respondent relies on petitioner’s reports regarding his inspection of the work accomplishment of such
contractors. As a result of his monitoring the enforcement of respondent’s contracts which involve large
sums of money, petitioner may well be considered an employee with a position of trust analogous to those
falling under the second class. A position where a person is entrusted with confidence on delicate matters,
or with the custody, handling or care and protection of the employer’s property is one of trust and
confidence.
Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and
founded on clearly established facts. The basis for the dismissal must be clearly and convincingly
established but proof beyond reasonable doubt is not necessary.Respondent’s evidence against petitioner
fails to meet this standard. Its lone witness, Lupega, did not support his affidavit and testimony during the
company investigation with any piece of evidence at all. No other employee working at respondent’s mine
site attested to the truth of any of his statements. Standing alone, Lupega’s account of the subsidence area
anomaly could hardly be considered substantial evidence. And while there is no concrete showing of any ill
motive on the part of Lupega to falsely accuse petitioner, that Lupega himself was under investigation when
he implicated petitioner in the subsidence area anomaly makes his uncorroborated version suspect.
There being no just cause for the termination of petitioner’s employment, the compelling conclusion is that
he was dismissed illegally. While it is unnecessary at this point to delve into the requirement of procedural
due process, the Court shall nevertheless discuss it in view of its importance.
Henlin Panay Company vs. NLRC
G.R. No. 180718, Oct.23, 2009
Facts:
Private respondent Nory A. Bolanos worked as a service crew for the petitioner. While manning Counter B,
the brother-in-law of private respondent, Javier arrived and ordered mami from her and paid for it. After
private respondent closed her counter, Javier ordered again from the other counter. Petitioner Francisco, the
supervisor checked the journal tape of Counter B and did not find the food ordered by Javier punched in the
cash register. Private respondent told petitioner that the food was ordered at Counter A, which when
scrutinized did not reflect the last order of Javier. The service crew of Counter A admitted that got the order
of Javier and made a mistake in the entry. Petitioner Francisco ordered private respondent not to report for
work the next day and that she was dismissed from service. Petitioners on part presented that the matter
was under investigation. And that when private respondent reported for work to the owner of the Henlin
franchise, she was required to report to work but she did not report.
Mediation between the parties failed. Private respondent filed an illegal dismissal complaint. The Labor
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Arbiter dismissed the claim. Upon appeal with the NLRC, the decision was reversed. Petitioners elevated
the case to the Court of Appeals which affirmed the findings of the NLRC. Petitioners argue that no illegal
dismissal took place. They aver that petitioner Francisco just informed private respondent that her case was
still under investigation. Indeed, the Henlin Panay management did not give her any notice of termination
nor prevented her from coming to work. Neither was she stripped of her right to work in the premises. They
insist that it was Bolanos who, after the incident, refused to work despite being required to report for duty.
They aver that Francisco had no authority to dismiss employees.
Issue:
Are petitioners liable for illegal dismissal?
Ruling:
Yes. Clearly, this case is one of illegal dismissal. First, there is no just or authorized cause for petitioners to
terminate private respondent’s employment. Her alleged act of dishonesty of “passing out” food for free was
not proven. Neither was there incompetence on her part when some food items were not punched in the
cash register as she was not the cashier manning it when the food items were ordered. In fact, the other
cashier even owned up to said mistake. Second, private respondent was not afforded due process by
petitioners before she was dismissed. A day after the incident, she was verbally dismissed from her
employment without being given the chance to be heard and defend herself. Article 279 of the Labor Code,
as amended, provides that an illegally dismissed employee shall be entitled to reinstatement without loss of
seniority rights, full backwages and other benefits or their monetary equivalent computed from the time her
compensation was withheld from her up to her actual reinstatement. In the instant case, however, we will not
order private respondent’s reinstatement as she did not pray for it and considering that antagonism caused a
severe strain in the parties’ employer-employee relationship. Instead, she is awarded separation pay
pegged at one month pay for every year of service reckoned from her first day of employment up to the
finality of this decision.
St. Luke’s Medical Center vs. Fadrigo
G.R. No. 185933, November 25, 2009
Facts:
Respondent Jennifer Lynne C. Fadrigo was the Customer Affairs Department Manager of petitioner SLMC.
As such, respondent supervised the Wellness Program Office (WPO), which administers SLMC’s check up
packages. On April 23, 2005, Dr. Charity Gorospe called up the WPO to refer a patient for immediate check
up. The call was answered by Michelle Rillo, a trainee at the front desk, who transferred the call to Hazel
Tingzon, a casual employee. Tingzon explained to Dr. Gorospe the mechanics of undergoing a check up,
which could not be administered immediately as Dr. Gorospe wanted.
On April 27, 2005, respondent received a memorandum from Lagniton requiring her to show cause why no
disciplinary action should be taken against her for insubordination, gross inefficiency and incompetence due
to the April 23 incident. The memorandum stated that respondent allowed a trainee and a casual employee,
Rillo and Tingzon, to man the WPO during official business hours. Likewise, respondent allegedly failed to
comply with the management order to immediately pull out Rillo and Tingzon. Consequently, she was
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terminated. Claiming termination without cause, respondent filed with the Labor Arbiter a complaint for illegal
dismissal.
Before the Supreme Court, SLMC insists that respondent was validly dismissed. It argues that respondent
was a managerial employee and, as such, the mere existence of a basis for believing that respondent has
breached the trust of her employer would suffice for her dismissal.
Issue:
Is there breach of trust in the case at bar?
Ruling:
No. Willful disobedience or insubordination, as alleged in this case, necessitates the concurrence of at least
two requisites: (1) the employee's assailed conduct must have been willful, that is, characterized by a
wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known
to the employee, and must pertain to the duties which he had been engaged to discharge. The facts of this
case do not show the presence of the first requisite.
The loss of confidence must be based not on an ordinary breach by the employee of the trust reposed in him
by the employer, but on a willful breach. A breach is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or
inadvertently. It must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or
suspicion; otherwise, the employee would eternally remain at the mercy of the employer. It should be
genuine and not simulated; nor should it appear as a mere afterthought to justify an earlier action taken in
bad faith or as a subterfuge for causes that are improper, illegal or unjustified.
Sargasso Construction and Development Corp. vs. NLRC
G.R. No. 164118 , February 9, 2010
Facts:
Mongcal was employed as a payloader operator by the respondent company and was paid a monthly salary
of not less than P3,900.00 for working seven (7) days a week including Saturdays, Sundays and holidays.
On June 29, 1995 at around 2:30 o'clock in the morning, a Aldrin Rasote, a dump truck driver of the
respondent company requested complainant to load his dump truck with construction materials at the
crusher site; that fully aware of the policy of the company allowing dump truck drivers to start hauling
materials even at early hours of the morning and considering that truck drivers were required by the
company to haul a quota of the number of truck loads of aggregates to be delivered to the construction site
everyday as per instruction given to them, complainant willingly obliged to do his job. It was later on
discovered that Rasote had diverted the delivery of said materials loaded to another person. As a result of
this incident, complainant was dismissed from his job effective 30 June 1995. A criminal complaint for theft
was filed against him. Complainant alleged that his dismissal from work was without any valid ground and
violative of the rules on due process. Hence, he prays for reinstatement, backwages, and separation pay if
reinstatement is no longer feasible. Respondents aver that complainant was validly dismissed from his job
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based on loss of confidence due to commission of offense constituting act of dishonesty and flagrant
violation of respondent's policy. The Labor Arbiter dismissed the complaint but ordered the company to pay
the complainant P1,000.00 for failure to observe due process requirements of law. On appeal, the National
Labor Relations Commission (NLRC) overturned the Labor Arbiter's ruling. Thus, this petition for certiorari.
Issue:
Whether private respondent Mongcal was illegally dismissed by petitioner.
Ruling:
Yes. The long-standing rule is that the existence of a conspiracy must be proved by clear, direct and
convincing evidence. While it is true that in conspiracy, direct proof is not essential, it must however, be
shown that it exists as clearly as the commission of the offense itself. There must at least be adequate proof
that the malefactors had come to an agreement concerning the commission of a felony and decided to
commit it. It is quite clear that the evidence presented in this case did not reach the level required to find
respondent Mongcal guilty of conspiring to commit theft of company property. Petitioner failed to prove that
respondent Mongcal was involved at all or agreed with the scheme to steal aggregates from petitioner.
There was no showing whatsoever, that respondent Mongcal had any knowledge that Aldrin Rasote had the
intention of stealing company property.
Under Article 279 of the Labor Code, an illegally dismissed employee "shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement." In addition to full backwages, the Court has also repeatedly
ruled that in cases where reinstatement is no longer feasible due to strained relations, then separation pay
may be awarded instead of reinstatement.Petitioner is ORDERED to pay respondent Gorgonio Mongcal (a)
separation pay in the amount equivalent to one (1) month pay for every year of service; and (b) backwages,
computed from the time compensation of respondent Mongcal was withheld from him when he was unjustly
terminated, up to the time of payment thereof.
ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF GROSS AND HABITUAL NEGLECT OF DUTIES
Kulas Ideas & Creations vs. Juliet Alcoseba, et. al.
G.R. No. 180123, February 18, 2010
Facts:
Respondents Juliet Alcoseba (Juliet) and Flordelinda Arao-arao (Flordelinda) were employed as sales
attendants of herein petitioner KULAS Ideas & Creations (KULAS), a gift boutique owned by petitioners Gil
Francis Maningo and Ma. Rachel Maningo. As part of their duties and responsibilities, Juliet and Flordelinda
were tasked to sell KULAS’s products, prepare weekly sales reports and assist the clerk in the monthly
inventory of saleable goods. DOLE inspected the outlet in Ayala Center and found that the employers made
several violations and made to pay salary differentials to their employees. After this occurrence KULAS
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found discrepancies in the inventory and in the monetary issues which lead to the suspension of the
respondents via memorandum. Then both respondents were asked to give reasons why should they not be
dismissed because of "gross neglect of duties and responsibilities resulting to huge economic loss incurred
by the company" and "dishonesty" which they did and later on asked about the status of their employment
and KULAS did not answer, instead filed an action for estafa against the two but was dismissed. The
respondents alleged that they were suspected that they were the one who instigated the DOLE to make the
inspection which lead them to file a complaint for illegal dismissal. Both the Arbiter and the NLRC found that
there was no illegal dismissal. The Court of Appeals reversed the decision and awarded respondents money
claims as well .
Issue:
Is there an illegal dismissal?
Ruling:
Yes. Article 282 (b) imposes a stringent condition before an employer may terminate an employment due to
gross and habitual neglect by the employee of his duties. To sustain a termination of employment based on
this provision of law, the negligence must not only be gross but also habitual. Inventory preparation and
reporting did not fall on respondents’ shoulders since they were to "assist the [stock] clerk" only. They were
neither cashiers nor clerks tasked with handling the daily sales proceeds of the outlet. Worth mentioning at
this point is the allegation of the [respondents] that upon their assumption at the Ayala Center branch, the
management did not conduct an actual inventory as well as a proper turnover of stocks. Verily, [petitioners]
are guilty of contributory negligence for failure to conduct a proper turnover of stocks in the boutique upon
[respondents’] assumption therein.
The Court finds that petitioners even failed to comply with the procedural requirements for a valid dismissal.
The law mandates the following requisites:
(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so
desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented
against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.
The case be REMANDED to the Labor Arbiter for proper computation of respondents’ backwages and
separation pay.
ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF SERIOUS MISCONDUCT
Philippine Long Distance Telephone Company vs Berbano, Jr.
G.R. No. 165199, November 27, 2009
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Facts:
Berbano was hired by PLDT as a Computer Assistant. However, he alleged that he also performed the
functions of a Specialist for EWSD who was responsible for handling, operations and maintenance of the
whole EWSD Network handling network database, fault clearance, database modification alarm monitoring,
traffic routing, trunk administration, password and tariff administration and others. Being trained as EWSD
OMC Specialist, complainant claimed that respondent expected him to have “depth of understanding” in
continuous painstaking research and study. Thus, he initiated a study of “hi-tech EWSD Switching
Equipment,” a part of which is the software installation of various subscriber service features and control
operation. It is at this time that complainant tapped his brother-in-law’s number without the latter’s
knowledge and installed service features in it for study.
When PLDT found out about the unauthorized installation of the said features, Berbano admitted that he
was responsible for such installation for purposes of study and testing. After formal investigation and finding
unacceptable the complainant’s explanation, respondent PLDT dismissed complainant from the service.
The Labor Arbiter ordered the reinstatement of Berbano and the payment of backwages. On appeal to the
NRLC, the order was reversed. However, the CA reinstated the Labor Arbiter’s decision.
Issue:
Was the dismissal of Berbano warranted?
Ruling:
No. Well-settled is the rule that no employee shall be validly dismissed from employment without the
observance of substantive and procedural due process. The minimum standards of due process are
prescribed under Article 277(b) of the Labor Code of the Philippines.
Thus, dismissal from service of an employee is valid if the following requirements are complied with: (a)
substantive due process which requires that the ground for dismissal is one of the just or authorized causes
enumerated in the Labor Code, and (b) procedural due process which requires that the employee be given
an opportunity to be heard and defend himself.
In this case, procedural due process was followed by PLDT when it notified respondent of the complaint
against him through an inter-office memorandum and in another inter-office memorandum informing
respondent that his act of installing special features in his brother-in-law’s telephone line without
authorization from petitioner constituted “gross misconduct” and was “grossly violative of existing company
rules and regulations,” hence, warranting his termination from service.
As regards substantial due process, the grounds for termination of employment must be based on just or
authorized causes. The notice of termination sent by petitioner to respondent indicated that the latter was
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dismissed from service due to unauthorized installation of service features in his brother-in-law’s telephone
line, which allegedly constituted gross misconduct. Misconduct has been defined as improper or wrong
conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere error of judgment. Ordinary misconduct
would not justify the termination of services of the employee as the Labor Code is explicit that the
misconduct must be serious. To be serious, the misconduct must be of such grave and aggravated character
and not merely trivial and unimportant. Such misconduct, however serious, must nevertheless be in
connection with the employee’s work to constitute just cause for his separation. As amplified by
jurisprudence, misconduct, to be a just cause for dismissal, must (a) be serious; (b) relate to the
performance of the employee’s duties; and (c) show that the employee has become unfit to continue working
for the employer. Moreover, in National Labor Relations Commission v. Salgarino, this Court stressed that
“[i]n order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph
(a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated
some established rules or policies. It is equally important and required that the act or conduct must have
been performed with wrongful intent.”
The Supreme Court found that the misconduct of respondent is not of serious nature as to warrant
respondent’s dismissal from service. The records of this case are bereft of any showing that the alleged
misconduct was performed by respondent with wrongful intent. On the contrary, respondent readily admitted
having installed the service features in his brother-in-law’s telephone line for purposes of study and research
which could have benefitted petitioner. Moreover, as pointed out by the appellate court, respondent’s
misconduct did not result in any economic loss on the part of petitioner since the service features were not
yet available in the market at the time respondent caused its unauthorized installation.
The penalty of dismissal from service is not commensurate to respondent’s offense. Although petitioner, as
an employer, has the right to discipline its erring employees, exercise of such right should be tempered with
compassion and understanding. The magnitude of the infraction committed by an employee must be
weighed and equated with the penalty prescribed and must be commensurate thereto, in view of the gravity
of the penalty of dismissal or termination from the service. The employer should bear in mind that in
termination cases, what is at stake is not simply the employee’s job or position but his very livelihood.
Blazer Car Marketing, Inc. & Freddie Chua vs.
Spouses Tomas T. Bulauan, et al.
G.R. No. 181483, March 9, 2010
Facts:
Respondents, spouses Tomas Bulauan and Analyn Briones, were employees of petitioner Blazer Car Marketing, Inc., which is owned
and managed by petitioner Freddie Chua. Respondent Briones was hired as a secretary/warehouse clerk, while Bulauan, worked as
a driver. Respondent spouses Briones and Balauan filed a complaint against petitioners for illegal dismissal.
In their position paper, respondent Briones told Chua she needed an ID card so that she could apply for a loan from the SSS and the
Pag-ibig Fund and so that she could show it to customers when they asked for it. Briones recounted that when Chua affixed his
signature to her ID card, she commented, "Sir, napapansin ko iba ang pirma mo sa certification na ibinigay mo sa asawa ko." She
was referring to the certificate of employment that Chua previously issued to respondent Bulauan. Petitioner Chua allegedly reacted
wildly, became furious, and shouted at the top of his voice, "Hoy, wala ka na doon, wala kang pakialam." Briones claimed that when
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she reported for work the following day, she was barred by Chua, who told her, "Pa SSS ka pa diyan. Hoy, tanggal ka sa trabaho."
For his part, respondent Bulauan after making deliveries, he was instructed to proceed to Chua’s residence. There, Chua, who was
then holding a golf club, angrily told him, "Hoy, hiwalayan mo ang asawa mo kung gusto mo tanggapin kita sa trabaho." The following
day, he was barred from reporting for work by Chua, who told him, "Hoy, tanggal ka na rin sa trabaho."
Petitioner claimed that Briones was caught making company ID cards without management authority. He said that they immediately
conducted an investigation, and some of the employees attested that Briones had, indeed, made ID cards for them, for a price.
Petitioner Chua maintained that Briones was not dismissed from employment
The Labor Arbiter rendered a decision dismissing the complaint, but ordering petitioners to pay prorated 13th month pay. On appeal,
the NLRC affirmed the Labor Arbiter’s decision. Respondents elevated the case to the CA through a petition for certiorari. The CA
granted the petition and awarded backwages and separation pay, in lieu of reinstatement, to respondents.
Issue:
Were respondent spouses illegally dismissed?
Ruling:
Yes. The Supreme Court sustained CA’s finding that respondents were dismissed from employment and that such dismissal was
without just cause. The contention that respondent Briones was being investigated for making ID cards for the other employees,
without authority, impresses us merely as a contrived excuse resorted to, simply to justify the unlawful dismissal. Its truthfulness is
highly suspect. But even if it were true that respondent Briones made ID cards for petitioners’ employees without authority, the act
would not amount to serious misconduct as to justify dismissal. For misconduct to be a just cause for dismissal (a) it must be serious;
(b) it must relate to the performance of the employee’s duties; and (c) it must show that the employee has become unfit to continue
working for the employer. To be serious within the meaning and intendment of the law, the misconduct must be of such grave and
aggravated character and not merely trivial and unimportant.It requires a wrongful intent, which is apparently absent in respondent
Briones’ case.
ILLEGAL DISMISSAL BASED ON ALLEGED VIOLATION OF CLOSED-SHOP AGREEMENT
General Milling Corporation vs. Ernesto Casio, et al.
G.R. No. 149552, March 10, 2010
Facts:
The labor union Ilaw at Buklod ng Mangagawa (IBM) was the sole and exclusive bargaining agent of the rank and file employees of
GMC in Lapu-Lapu City. Through its officers entered into a close shop provisions in the CBA. Ernesto Casio, et al. were regular
employees of GMC. Rodolfo Gabiana, the IBM Regional Director for Visayas and Mindanao, sent a letter and furnished Casio, et al.
with copies of the Affidavits of GMC employees Basilio Inoc and Juan Potot, charging Casio, et al. with "acts inimical to the interest of
the union." Through the same letter, Gabiana gave Casio, et al. three days from receipt thereof within which to file their answers or
counter-affidavits. However, Casio, et al. refused to acknowledge receipt of Gabiana’s letter. Subsequently, Pino, et al., as officers
and members of the IBM-Local 31, issued a Resolution expelling Casio, et al. from the union. Pressured by the threatened filing of a
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suit for unfair labor practice, GMC acceded to Gabiana’s request to terminate the employment of Casio, et al. GMC issued a
Memorandum dated March 24, 1992 terminating the employment of Casio, et al. effective April 24, 1992 and placing the latter under
preventive suspension for the meantime.
The Voluntary Arbitrator dismissed the complaint for lack of merit. Dissatisfied with the Voluntary Arbitration Award, Casio, et al. went
to the Court of Appeals by way of a Petition for Certiorari under Rule 65. The Court of Appeals granted the writ of certiorari and set
aside the Voluntary Arbitration Award. The appellate court ruled that while the dismissal of Casio, et al., was made by GMC pursuant
to a valid closed shop provision under the CBA, the company, however, failed to observe the elementary rules of due process in
implementing the said dismissal.
Issue:
Were Casio, et al. illegally dismissed?
Ruling:
Yes. Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing Casio, et al. even when said
dismissal is pursuant to the closed shop provision in the CBA. The rights of an employee to be informed of the charges against him
and to reasonable opportunity to present his side in a controversy with either the company or his own union are not wiped away by a
union security clause or a union shop clause in a collective bargaining agreement.
In the case at bar, Casio, et al. did not receive any other communication from GMC, except the written notice of termination dated
March 24, 1992. GMC, by its own admission, did not conduct a separate and independent investigation to determine the sufficiency of
the evidence supporting the expulsion of Casio, et al. by IBP-Local 31. It straight away acceded to the demand of IBP-Local 31 to
dismiss Casio, et al.
In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only did GMC fail to make a determination of the
sufficiency of evidence to support the decision of IBM-Local 31 to expel Casio, et al., but also to accord the expelled union members
procedural due process, i.e., notice and hearing, prior to the termination of their employment
An employee who is illegally dismissed is entitled to the twin reliefs of full back wages and reinstatement. If reinstatement is not
viable, separation pay is awarded to the employee. In awarding separation pay to an illegally dismissed employee, in lieu of
reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service.
Blazer Car Marketing, Inc. & Freddie Chua vs.
Spouses Tomas T. Bulauan, et al.
G.R. No. 181483, March 9, 2010
Facts:
Respondents, spouses Tomas Bulauan and Analyn Briones, were employees of petitioner Blazer Car
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Marketing, Inc., which is owned and managed by petitioner Freddie Chua. Respondent Briones was hired as
a secretary/warehouse clerk, while Bulauan, worked as a driver. Respondent spouses Briones and Balauan
filed a complaint against petitioners for illegal dismissal.
In their position paper, respondent Briones told Chua she needed an ID card so that she could apply for a
loan from the SSS and the Pag-ibig Fund and so that she could show it to customers when they asked for it.
Briones recounted that when Chua affixed his signature to her ID card, she commented, "Sir, napapansin ko
iba ang pirma mo sa certification na ibinigay mo sa asawa ko." She was referring to the certificate of
employment that Chua previously issued to respondent Bulauan. Petitioner Chua allegedly reacted wildly,
became furious, and shouted at the top of his voice, "Hoy, wala ka na doon, wala kang pakialam." Briones
claimed that when she reported for work the following day, she was barred by Chua, who told her, "Pa SSS
ka pa diyan. Hoy, tanggal ka sa trabaho." For his part, respondent Bulauan after making deliveries, he was
instructed to proceed to Chua’s residence. There, Chua, who was then holding a golf club, angrily told him,
"Hoy, hiwalayan mo ang asawa mo kung gusto mo tanggapin kita sa trabaho." The following day, he was
barred from reporting for work by Chua, who told him, "Hoy, tanggal ka na rin sa trabaho."
Petitioner claimed that Briones was caught making company ID cards without management authority. He
said that they immediately conducted an investigation, and some of the employees attested that Briones
had, indeed, made ID cards for them, for a price. Petitioner Chua maintained that Briones was not dismissed
from employment
The Labor Arbiter rendered a decision dismissing the complaint, but ordering petitioners to pay prorated
13th month pay. On appeal, the NLRC affirmed the Labor Arbiter’s decision. Respondents elevated the
case to the CA through a petition for certiorari. The CA granted the petition and awarded backwages and
separation pay, in lieu of reinstatement, to respondents.
Issue:
Were respondent spouses illegally dismissed?
Ruling:
Yes. The Supreme Court sustained CA’s finding that respondents were dismissed from employment and that
such dismissal was without just cause. The contention that respondent Briones was being investigated
for making ID cards for the other employees, without authority, impresses us merely as a contrived excuse
resorted to, simply to justify the unlawful dismissal. Its truthfulness is highly suspect. But even if it were true
that respondent Briones made ID cards for petitioners’ employees without authority, the act would not
amount to serious misconduct as to justify dismissal. For misconduct to be a just cause for dismissal (a) it
must be serious; (b) it must relate to the performance of the employee’s duties; and (c) it must show that the
employee has become unfit to continue working for the employer. To be serious within the meaning and
intendment of the law, the misconduct must be of such grave and aggravated character and not merely
trivial and unimportant.It requires a wrongful intent, which is apparently absent in respondent Briones’ case.
ILLEGAL DISMISSAL BASED ON ALLEGED VIOLATION OF CLOSED-SHOP AGREEMENT
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General Milling Corporation vs. Ernesto Casio, et al.
G.R. No. 149552, March 10, 2010
Facts:
The labor union Ilaw at Buklod ng Mangagawa (IBM) was the sole and exclusive bargaining agent of the
rank and file employees of GMC in Lapu-Lapu City. Through its officers entered into a close shop provisions
in the CBA. Ernesto Casio, et al. were regular employees of GMC. Rodolfo Gabiana, the IBM Regional
Director for Visayas and Mindanao, sent a letter and furnished Casio, et al. with copies of the Affidavits of
GMC employees Basilio Inoc and Juan Potot, charging Casio, et al. with "acts inimical to the interest of the
union." Through the same letter, Gabiana gave Casio, et al. three days from receipt thereof within which to
file their answers or counter-affidavits. However, Casio, et al. refused to acknowledge receipt of Gabiana’s
letter. Subsequently, Pino, et al., as officers and members of the IBM-Local 31, issued a Resolution expelling
Casio, et al. from the union. Pressured by the threatened filing of a suit for unfair labor practice, GMC
acceded to Gabiana’s request to terminate the employment of Casio, et al. GMC issued a Memorandum
dated March 24, 1992 terminating the employment of Casio, et al. effective April 24, 1992 and placing the
latter under preventive suspension for the meantime.
The Voluntary Arbitrator dismissed the complaint for lack of merit. Dissatisfied with the Voluntary Arbitration
Award, Casio, et al. went to the Court of Appeals by way of a Petition for Certiorari under Rule 65. The Court
of Appeals granted the writ of certiorari and set aside the Voluntary Arbitration Award. The appellate court
ruled that while the dismissal of Casio, et al., was made by GMC pursuant to a valid closed shop provision
under the CBA, the company, however, failed to observe the elementary rules of due process in
implementing the said dismissal.
Issue:
Were Casio, et al. illegally dismissed?
Ruling:
Yes. Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing
Casio, et al. even when said dismissal is pursuant to the closed shop provision in the CBA. The rights of an
employee to be informed of the charges against him and to reasonable opportunity to present his side in a
controversy with either the company or his own union are not wiped away by a union security clause or a
union shop clause in a collective bargaining agreement.
In the case at bar, Casio, et al. did not receive any other communication from GMC, except the written notice
of termination dated March 24, 1992. GMC, by its own admission, did not conduct a separate and
independent investigation to determine the sufficiency of the evidence supporting the expulsion of Casio, et
al. by IBP-Local 31. It straight away acceded to the demand of IBP-Local 31 to dismiss Casio, et al.
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In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only did GMC fail to make a
determination of the sufficiency of evidence to support the decision of IBM-Local 31 to expel Casio, et al.,
but also to accord the expelled union members procedural due process, i.e., notice and hearing, prior to the
termination of their employment
An employee who is illegally dismissed is entitled to the twin reliefs of full back wages and reinstatement. If
reinstatement is not viable, separation pay is awarded to the employee. In awarding separation pay to an
illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one
month salary for every year of service.
QUITCLAIMS
Goodrich Manufacturing Corp. v. Emerlina Ativo, et. al.
G.R. No. 188002, February 1, 2010
Facts:
On account of lingering financial constraints, Petitioner gave all its employees the option to voluntarily resign
from the company. Pursuant to this move, several employees, including Respondents, decided to avail of
the voluntary resignation option. They executed their respective waivers and quitclaims and were paid their
separation pay. However, the following day, the Respondents filed complaints against Petitioner for illegal
dismissal with prayer for payment of their full monetary benefits before the NLRC. The Labor Arbiter
rendered a Decision favorable to the Respondents; but the NLRC reversed it on the ground that the
considerations in the deeds of waiver/quitclaim were reasonable and that there was no showing that they
signed the deeds of waiver/ quitclaim involuntarily or without understanding its implication and
consequences.
Issue:
(1) Was the waiver and quitclaim valid?
(2) What are the elements of a valid waiver and quitclaim?
Ruling:
Yes. The waiver and quitclaim was valid. While it is true that the law disfavors quitclaims and releases by
employees who have been inveigled or pressured into signing them, in certain cases however, the Court
has given effect to such quitclaims if the employer is able to prove the following requisites, to wit: (1) the
employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the
parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary
to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right
recognized by law.
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In the case at bar, there is no evidence of coercion. In fact, in their Comment, Respondents themselves
admitted that they were not coerced to sign the quitclaims. The contents of the quitclaim documents are
simple, clear and unequivocal. The records of the case are also bereft of any substantial evidence to show
that respondents did not know that they were relinquishing their right short of what they would have
expected. Put differently, at the time they were signing their quitclaims, respondents honestly believed that
the amounts received by them were fair and reasonable in comparison to what they would have received
had they refused to voluntarily resign from the said company. Finally, the considerations received by the
Respondents from Petitioner do not appear to be grossly inadequate vis-à-vis what they should receive in
full. The difference between the amounts expected from those that were received may be considered as a
fair and reasonable bargain on the part of both parties.
CLOSURE OF BUSINESS
Carmen Dy-Dumalasa vs. Domingo Fernandez
G.R. No. 178760, July 23, 2009
Facts: Respondents are former employees of Helios Manufacturing Corporation, a closed domestic
corporation engaged in soap manufacturing located in Muntinlupa, of which petitioner is a stockholder, a
member of the Board of Directors, and Acting Corporate Secretary. On October 23, 2001, respondents filed
a complaint for illegal dismissal or illegal closure of business, non-payment of salaries and other money
claims against HELIOS.
The Labor Arbiter found that the closure of the Muntinlupa office/plant was a sham, as HELIOS simply
relocated its operations to a new plant in Carmona, Cavite under the new name of "Pat & Suzara," in
response to the newly-established local union. As to HELIOS being a separate juridical entity, the Labor
Arbiter held that it and "Pat & Suzara" are one and the same, using the same machineries and personnel in
the new plant. The Labor Arbiter thus concluded that "indeed, fraud and bad faith on the part of the
management are well-established" and, as such, HELIOS et al. are liable for the judgment award.
While the appellate court reinstated the Labor Arbiter’s decision, it held that since its fallo did not indicate
with certainty the solidary nature of the obligation, the obligation is merely joint.
Issue:
Is a member of the board of directors solidarily liable?
Ruling:
No. A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation,
and each creditor is entitled to demand the whole obligation. In a joint obligation each obligor answers only
for a part of the whole liability and to each obligee belongs only a part of the correlative rights. Well-
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entrenched is the rule that solidary obligation cannot lightly be inferred. There is a solidary liability only when
the obligation expressly so states, when the law so provides or when the nature of the obligation so requires.
And as held in Carag v. NLRC:
To hold a director personally liable for debts of the corporation, and thus pierce the veil of corporate fiction,
the bad faith or wrongdoing of the director must be established clearly and convincingly. Bad faith is never
presumed. Bad faith does not connote bad judgment or negligence. Bad faith imports a dishonest purpose.
Bad faith means breach of a known duty through some ill motive or interest. Bad faith partakes of the nature
of fraud.
Ineluctably, absent a clear and convincing showing of the bad faith in effecting the closure of HELIOS that
can be individually attributed to petitioner as an officer thereof, and without the pronouncement in the
Decision that she is being held solidarily liable, petitioner is only jointly liable.
PROCEDURAL DUE PROCESS
Placido and Caragay vs. NLRC
G.R. No. 180888, September 18, 2009
Facts:
Petitioners Rolando Placido and Edgardo Caragay were employed as cable splicers by respondent PLDT. It
appears that since August 2000, PLDT had been receiving reports of theft and destruction of its cables. On
March 13, 2001, PLDT Duty Inspector Ricardo Mojica and PLDT Security Guard/Driver Mark Anthony Cruto,
proceeded to one of the residences in Quezon City where they saw petitioners’ service vehicle parked in
front of the house at No. 162. They likewise saw petitioners stripping and burning cables inside the
compound of the house which turned out to belong to Caragay’s mother. With the assistance of police and
barangay officials, PLDT recovered the cables bearing the "PLDT" marking.
An information for Qualified Theft was filed before the RTC. In a related move, PLDT required petitioners to
explain within 72 hours why no severe disciplinary action should be taken against them for Serious
Misconduct and Dishonesty. Petitioners denied the charges against them claiming that they were on their
way back from the house of one Jabenz Quezada from whom they were inquiring about a vehicle when they
were detained by Mojica.
On petitioners’ request, a formal hearing was scheduled. Their request for a copy of the Security
Investigation was denied, however, on the ground that they are only entitled to "be informed of the charges,
and they cannot demand for the report as it is still on the confidential stage."
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On May 17, 2002, PLDT sent notices of terminationto petitioners, prompting them to file on May 24, 2002 a
complaint for illegal dismissal before the Labor Arbiter. They aver that they were denied due process when
PLDT refused to furnish them a copy of the Investigation Report and grant them a formal hearing in which
they could be represented by counsel of their choice.
Issue:
Were they (petitioners) denied of due process?
Ruling:
No.For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if
he so desires, is given opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.
The above quoted provision of Section 2(d) should not be taken to mean, however, that holding an actual
hearing or conference is a condition sine qua non for compliance with the due process requirement in case
of termination of employment. For the test for the fair procedure guaranteed under the above-quoted Article
277(b) of the Labor Code is not whether there has been a formal pretermination confrontation between the
employer and the employee. The "ample opportunity to be heard" standard is neither synonymous nor
similar to a formal hearing. To confine the employee’s right to be heard to a solitary form narrows down that
right.
The essence of due process is simply an opportunity to be heard or, as applied to administrative
proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the action or
ruling complained of. What the law prohibits is absolute absence of the opportunity to be heard, hence, a
party cannot feign denial of due process where he had been afforded the opportunity to present his side. A
formal or trial type hearing is not at all times and in all instances essential to due process, the requirements
of which are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of
the controversy.
In the present case, petitioners were, among other things, given several written invitations to submit
themselves to PLDT’s Investigation Unit to explain their side, but they failed to heed them. A hearing, which
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petitioners attended along with their union MKP representatives, was conducted on June 25, 2001 during
which the principal witnesses to the incident were presented. Petitioners were thus afforded the opportunity
to confront those witnesses and present evidence in their behalf, but they failed to do so.
Celebes Japan Foods Corp vs. Yermo
GR No. 175855, October 2, 2009
Facts:
Petitioner Celebes Japan Foods Corporation is engaged in the business of buying, processing and exporting
of tuna fish, with buying station and plant located at the Davao Fish Port Complex, Daliao, Toril, Davao City.
Kanemitsu Yamaoka, Cesar Romero and Kenji Fuji were the Chairman, Office Manager and Plant
Supervisor, respectively, of petitioner Celebes. Petitioner contracted with Penta Manpower and Allied
Resources to provide manpower services for the former's business, with the latter recruiting people to work
for the former, people who included respondents Susan Yermo, Orson Mamalis, Bai Annie Alano, Michie
Alfanta, Ginalyn Panilagao, Annalie Ayag, Jocelyn Agton, Jose Jurie Surigao, Gilda Serrano, Joy Remarca,
Erick Tac-An, and Jenne Carlos. Respondents performed jobs such as slicer, laboratory crew packers,
recorders/encoders, loiners, vinyl bag openers/receivers or storage persons, and who were necessary and
desirable to the main business of petitioner.
On November 7, 2000, respondents were refused entrance by the guards manning the gate of the Davao
Fish Port Complex, as they were already terminated from work effective November 1, 2000 based on a
memorandum dated November 7, 2000 issued by Romero, petitioner's office manager. The memorandum
was posted in the guardhouse.
On November 16, 2000, respondents filed with the Labor Arbiter (LA), Davao City, a Complaint for illegal
dismissal with money claims for holiday pay, service incentive, leave pay, allowances, unpaid salaries,
damages and attorney's fees against petitioner and Penta Manpower, alleging that they were dismissed
without just and valid cause and due process. Petitioner was served a summons and a complaint.
On December 11, 2000, a mandatory conference was ordered but the amicable settlement failed. The LA
then ordered all the parties to file their respective position papers. Respondents and Penta Manpower filed
their position papers, while petitioner did not file any despite receipt of notice.
Although respondents were dismissed for an authorized cause, the CA found that petitioner did not comply
with the statutory requirement of due process; thus, it ordered petitioner to pay each of the respondents
nominal damages in the amount of P50,000.00. Petitioner filed a motion for reconsideration, praying for the
reduction of the nominal damages awarded from P50,000.00 to P5,000.00 for each respondent, claiming
that the financial condition of the employer must be considered in fixing the amount of nominal damages.
Issue:
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Should the award for nominal damages be reduced?
Ruling:
No. There was no bona fide attempt on the part of petitioner to comply with the notice requirements under
Article 283 of the Labor Code. Records show that on November 7, 2000, respondents were refused
entrance by the guards manning the gate of the Davao Fish Port Complex, based on a memorandum of
even date issued by Romero, petitioner's Office Manager, stating that respondents had been terminated
effective November 1, 2000. Respondents learned of the existence of such memorandum, which was posted
only in the guardhouse on the day they were refused entrance to the gate. There was indeed no notice at all
to respondents. Notably, there was not even any reason stated in the memorandum why they were being
terminated. We cannot overemphasize the importance of the requirement of the notice of termination, for
we have ruled in a number of cases that non-compliance therewith is tantamount to deprivation of the
employee’s right to due process.
Petitioner's reliance on Viernes v. National Labor Relations Commission to support its claim for the reduction
of the award of nominal damages is misplaced. The factual circumstances are different. Viernes is an illegal
dismissal case, since there was no authorized cause for the dismissal of the employees. The employer was
ordered to pay backwages inclusive of allowances and other benefits, computed from the time the
compensation was withheld up to the actual reinstatement. In addition, since the dismissal was done without
due process, the nominal damages awarded was only P2,590.00 equivalent to one-month salary of the
employee. In this case, the dismissal was valid, as it was due to an authorized cause, but without the
observance of procedural due process, and the only award given was nominal damages.
CRC Agricultural Trading, et. al. vs. NLRC
G.R. No. 177664, December 23, 2009
Facts:
The present petition traces its roots to the complaint for illegal dismissal filed by the respondent against
petitioners CRC Agricultural Trading and its owner, Rolando B. Catindig (collectively, petitioners), before the
Labor Arbiter. In his Sinumpaang Salaysay, the respondent alleged that the petitioners employed him as a
driver. The respondent worked for the petitioners until he met an accident, after which the petitioners no
longer allowed him to work. After six years, the petitioners again hired the respondent as a driver and
offered him to stay inside the company’s premises.
Sometime in March 2003, the petitioners ordered respondent to have the alternator of one of its vehicles
repaired. The respondent brought the vehicle to a repair shop and subsequently gave the petitioners two
receipts issued by the repair shop. The latter suspected that the receipts were falsified and stopped talking
to him and giving him work assignments. Petitioners no longer gave him any salary after that. As a result,
the respondent and his family moved out of the petitioners’ compound. The respondent claimed that the
petitioners paid him a daily wage of P175.00, but did not give him service incentive leave, holiday pay, rest
day pay, and overtime pay. He also alleged that the petitioners did not send him a notice of termination.
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Issue:
Was respondent’s dismissal justified?
RULING:
No.To justify the dismissal of an employee for a just cause, the employer must furnish the worker with two
written notices. The first is the notice to apprise the employee of the particular acts or omissions for which
his dismissal is sought. This may be loosely considered as the charge against the employee. The second is
the notice informing the employee of the employer’s decision to dismiss him. This decision, however, must
come only after the employee is given a reasonable period from receipt of the first notice within which to
answer the charge, and ample opportunity to be heard and defend himself with the assistance of his
representative, if he so desires. The requirement of notice is not a mere technicality, but a requirement of
due process to which every employee is entitled.
The employer clearly failed to comply with the two-notice requirement. Nothing in the records shows that the
company ever sent the employee a written notice informing him of the ground for which his dismissal was
sought. It does not also appear that the company held a hearing where the employee was given the
opportunity to answer the charges of abandonment. Neither did the company send a written notice to the
employee informing him that his service had been terminated and the reasons for the termination of his
employment. Under these facts, the respondent’s dismissal was illegal.
Hilton Heavy Equipment v. Ananias Dy
G.R. No. 164860, February 2, 2010
Facts:
Respondent was previously employed with Petitioner Corporation as the personal bodyguard of Petitioner’s
President. On 19 April 2000, in the presence of the Petitoner’s employees and President, Respondent
mauled a co-employee, within the premises of the principal office of the Petitioner. Respondent defied orders
of the President to stop mauling said co-employee and also threatened to kill the latter, uttering that if he will
be given monetary consideration, he will cease working in the company. The Secretary of the Petitioner,
executed an affidavit attesting to the fact of Respondent’s utterance of his intention to resign from his job.
Thereafter, Respondent stopped reporting to work. Subsequently, the co-employee filed criminal complaints
against Respondent for grave threats and less serious physical injuries and the corresponding Informations
were filed before the Municipal Trial Court. These cases were later dismissed upon motion filed by the
mauled co-employee. A month after the mauling incident, on 19 May 2000, Lim requested Respondent to
come to the office where he was confronted by the Petitioner’s President and the latter’s brother. Thereat,
Respondent was paid the amount of P120,000.00 as may be shown by a Solidbank Mandaue Branch
payable to cash, as separation pay. Aggrieved, Respondent filed a complaint for illegal dismissal before the
NLRC Regional Arbitration Branch.
Issues:
(1) Was the dismissal based on a just cause?
(2) Was due process observed?
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Ruling:
Yes, the dismissal was based on a just cause but one done without due process. The Court ruled: “In an
unlawful dismissal case, the employer has the burden of proving the lawful cause sustaining the dismissal of
the employee. The employer must affirmatively show rationally adequate evidence that the dismissal was for
a justifiable cause. Respondent’s behavior constituted just cause.[1] However, petitioners cannot deny that
they failed to observe due process. The law requires that the employer must furnish the worker sought to be
dismissed with two written notices before termination of employment can be legally effected: (1) notice which
apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the
subsequent notice which informs the employee of the employer’s decision to dismiss him. Failure to comply
with the requirements taints the dismissal with illegality.
Petitioners should thus indemnify Respondent for their failure to observe the requirements of due process.
Respondent is not entitled to reinstatement, backwages and attorney’s fees because Respondent’s
dismissal is for just cause but without due process. In light of this Court’s ruling in Agabon v. National Labor
Relations Commission, the violation of Respondent’s right to statutory due process by petitioners, even if the
dismissal was for a just cause, warrants the payment of indemnity in the form of nominal damages. This
indemnity is intended not to penalize the employer but to vindicate or recognize the employee’s right to
statutory due process which was violated by the employer. Considering that both the Labor Arbiter and the
NLRC found that petitioners already gave Respondent P120,000 of their own free will, this amount should
thus constitute the nominal damages due to Respondent.”
Rolando Ancheta vs. Destiny Financial Plans, Inc.
G.R. No. 179702, February 16, 2010
Facts:
On December 1, 2002, respondent Destiny Financial Plans, Inc., a pre-need insurance company, hired
petitioner as Head of its Marketing Group, with a compensation package of Ninety Thousand Pesos
(P90,000.00) a month. On February 2, 2004, a Marketing Committee meeting was called at the conference
room of respondent company. Present at the meeting were various leaders of the marketing team, and the
operations director of the company. During the meeting, it was announced that petitioner was to resign from
the respondent company. On February 11, 2004, petitioner received a letter from respondent company,
asking him to explain within forty-eight (48) hours why his services should not be terminated for loss of
confidence in his ability to perform the functions of Marketing Director of the company. On February 13,
2004, petitioner submitted his letter of explanation to respondent company.
On February 17, 2004, the board of directors of respondent company terminated petitioner’s services on the
ground of loss of confidence. Thus, on March 16, 2004, petitioner filed before the Labor Arbiter a complaint
for illegal dismissal, with prayer for reinstatement, payment of full backwages, payment of 13th month pay,
moral and exemplary damages, and attorney’s fees, against respondent. Labor Arbiter rendered a Decision
declaring complainant’s dismissal from employment to be illegal. On appeal, the National Labor Relations
Commission (NLRC) reversed the decision of the Labor Arbiter.
Issue:
(1) Is petitioner’s employment validly terminated because of loss of confidence?
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(2) Is there violation of petitioner’s right to procedural due process?
Yes. Two requisites must concur in order that there be a valid dismissal from employment, namely: (1) the
dismissal must be for any of the causes expressed in Article 282 of the Labor Code; and (2) the employee
must be given an opportunity to be heard and to defend himself. Under Article 282(c) of the Labor Code, the
doctrine of loss of confidence requires the concurrence of the following: (1) loss of confidence should not be
simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal, or unjustified; (3)
it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; (4) it must be
genuine, not a mere afterthought to justify an earlier action taken in bad faith; and (5) the employee involved
holds a position of trust and confidence.
Petitioner was a managerial employee of respondent company, holding a highly sensitive position. Being the
Head of the Marketing Group of respondent company, he was in charge, among others, of the over-all
production and sales performance of the company. His performance was practically the lifeblood of the
corporation, because its earnings depended on the sales of the marketing group, which he used to head.
The position held by petitioner required the highest degree of trust and confidence of his employer in the
former’s exercise of managerial discretion insofar as the conduct of the latter’s business was
concerned.Petitioner’s inability to perform the functions of his office to the satisfaction of his employer and
the former’s poor judgment as marketing head caused the company huge financial losses.
(Second Issue):
Yes. Private respondents did not strictly comply with the "two notice" requirement in dismissing petitioner
Ancheta. While private respondents sent a show cause letter to petitioner Ancheta, the same letter
precipitately implemented termination procedures, i.e., demanded the return of the Executive elevator key
which allows petitioner Ancheta access to the office premises and the surrender of the company car
assigned to him, even as petitioner Ancheta had yet to answer and air his side. Such betrays the fact that
the said show cause letter was but a formality and petitioner Ancheta’s dismissal is a foregone conclusion.
Respondents’ failure to observe due process in the termination of employment of petitioner for a just cause
does not invalidate the dismissal but makes respondent company liable for non-compliance with the
procedural requirements of due process. The violation of petitioner’s right to statutory due process warrants
the payment of nominal damages.
Genesis Transport Service, Inc. vs.
Unyon ng Malayang Manggagawa ng Genesis Transport (UMMGT)
G.R. No. 182114, April 5, 2010
Facts:
Respondent Juan Taroy was hired on February 2, 1992 by petitioner Genesis Transport Service, Inc.
(Genesis Transport) as driver on commission basis at 9% of the gross revenue per trip. On May 10, 2002,
Taroy was, after due notice and hearing, terminated from employment after an accident on April 20, 2002
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where he was deemed to have been driving recklessly.
Taroy thus filed a complaint for illegal dismissal and payment of service incentive leave pay, claiming that he
was singled out for termination because of his union activities, other drivers who had met accidents not
having been dismissed from employment. Taroy later amended his complaint to implead his herein co-
respondent Unyon ng Malayang Manggagawa ng Genesis Transport (the union) as complainant and add as
grounds of his cause of action unfair labor practice (ULP), reimbursement of illegal deductions on tollgate
fees, and payment of service incentive leave pay.
Respecting the claim for refund of illegal deductions, Taroy alleged that in 1997, petitioner started deducting
from his weekly earnings an amount ranging from P160 to P900 representing toll fees, without his consent
and written authorization as required under Article 113 of the Labor Code and contrary to company practice;
and that deductions were also taken from the bus conductor’s earnings to thus result to double deduction.
Genesis Transport countered that Taroy committed several violations of company rules for which he was
given warnings or disciplined accordingly; that those violations, the last of which was the April 20, 2002
incident, included poor driving skills, tardiness, gambling inside the premises, use of shabu, smoking while
driving, insubordination and reckless driving; and that Taroy’s dismissal was on a valid cause and after
affording him due process.
Issue:
Ruling:
Yes. What the Rules require is that the employer act on the suspended worker’s status of employment within
the 30-day period by concluding the investigation either by absolving him of the charges, or meeting the
corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds the 30-day period
without any corresponding action on the part of the employer, the employer must reinstate the employee or
extend the period of suspension, provided the employee’s wages and benefits are paid in the interim.
In the present case, petitioner Company had until May 20, 2002 to act on Taroy’s case. It did by terminating
him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the
termination notice was received only on June 4, 2002, absent any showing that the delayed service of the
notice on Taroy was attributable to Genesis Transport.
Technol Eight Philippines Corp. vs. NLRC
G.R. No. 187605, April 13, 2010
Facts:
The petitioner Technol Eight Philippines Corporation (Technol), manufactures metal parts and motor vehicle
components. It hired the respondent Dennis Amular (Amular) in March 1998 and assigned him to Technol’s
Shearing Line, together with Clarence P. Ducay (Ducay). Rafael Mendoza (Mendoza) was the line’s team
leader. On April 16, 2002 at about 5:30 p.m., Mendoza went to the Surf City Internet Café in Laguna. As
Mendoza was leaving the establishment, he was confronted by Amular and Ducay who engaged him in a
heated argument regarding their work in the shearing line, particularly Mendoza’s report to Avelino S. De
Leon, Jr. (De Leon), Technol’s Production Control and Delivery (PCD) assistant supervisor, about Amular’s
and Ducay’s questionable behavior at work. The heated argument resulted in a fistfight that required the
intervention of the barangay tanods in the area.
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Upon learning of the incident, Technol’s management sent to Amular and Ducay a notice of preventive
suspension/notice of discharge advising them that their fistfight with Mendoza violated Section 1-k of
Technol’s Human Resource Department (HRD) Manual. The two were given forty-eight (48) hours to explain
why no disciplinary action should be taken against them for the incident. They were placed under preventive
suspension for thirty (30) days. Thereafter, Amular received a notice informing him that Technol
management will conduct an administrative hearing. He was also given two (2) days to respond in writing to
the statements attached to and supporting the notice. A day before the hearing or on June 13, 2002, Amular
filed a complaint for illegal suspension/constructive dismissal with a prayer for separation pay, backwages
and several money claims, against Technol. Amular failed to attend the administrative hearing. On July 4,
2002, Technol sent him a notice of dismissal.
Executive Labor Arbiter Salvador V. Reyes rendered a decision finding that Amular’s preventive suspension
and subsequent dismissal were illegal. He ruled that Amular’s preventive suspension was based solely on
unsubscribed written statements and that Mendoza, Amular and Ducay had settled their differences even
before Amular was placed under preventive suspension. With respect to Amular’s dismissal, the Arbiter held
that Technol failed to afford him procedural due process since he was not able to present his side because
he had filed a case before the National Labor Relations Commission (NLRC) at the time he was called to a
hearing; Technol also failed to substantiate its allegations against Amular; the fistfight occurred around 200
to 300 meters away from the work area and it happened after office hours. Arbiter Reyes awarded Amular
separation pay (since he did not want to be reinstated), backwages, 13th month pay, service incentive leave
pay and attorney’s fees in the total amount of P158,987.70.
Technol appealed to the NLRC. The NLRC affirmed the labor arbiter’s ruling. Technol thereafter sought relief
from the CA through a petition for certiorari under Rule 65 of the Rules of Court. The CA found no grave
abuse of discretion on the part of the NLRC when it affirmed the labor arbiter’s ruling that Amular was
illegally dismissed. The CA denied the motion for reconsideration Technol subsequently filed, hence, the
present petition.
Issue:
Is Amular’s dismissal valid?
Ruling:
The records belie Amular’s claim of denial of procedural due process. He chose not to present his side at
the administrative hearing. In fact, he avoided the investigation into the charges against him by filing his
illegal dismissal complaint ahead of the scheduled investigation. These facts show that the employee was
given the opportunity to be heard and he cannot now come to the Court protesting that he was denied this
opportunity. To belabor a point the Court has repeatedly made in employee dismissal cases, the essence of
due process is simply an opportunity to be heard; it is the denial of this opportunity that constitutes violation
of due process of law.
[1] The Court did not specify under which “just” cause the acts of the Respondent fell under.
JURISDICTION
Jethro Intelligence and Yakult Phils. vs. SOLE, Garcia, et. al.
G.R. No. 172537, August 14, 2009
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Facts:
On the basis of a complaintfiled by respondent Frederick Garcia (Garcia), one of the security guards deployed by Jethro for
underpayment of wages, legal/special holiday pay, premium pay for rest day, 13th month pay, and night shift differential, the
Department of Labor and Employment (DOLE)-Regional Office conducted an inspection at Yakult’s premises in Calamba, Laguna in
the course of which several labor standards violations were noted, including keeping of payrolls and daily time records in the main
office, underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE.
The DOLE Regional Director, noting petitioners’ failure to rectify the violations noted during the above-stated inspection within the
period given for the purpose, found them jointly and severally liable to herein respondents for the aggregate amount of EIGHT
HUNDRED NINE THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16) representing their wage differentials,
regular holiday pay, special day premium pay, 13th month pay, overtime pay, service incentive leave pay, night shift differential
premium and rest day premium. This was affirmed by the Secretary of Labor and Employment (SOLE) and by the Court of Appeals.
Unsatisfied, Jethro and Yakult went to the Supreme Court, alleging grave abuse of discretion on the part of the DOLE Regional
Director and the SOLE in this wise: (1) the SOLE has no jurisdiction over the case because, following Article 129 of the Labor Code,
the aggregate money claim of each employee exceeded P5,000.00; (2) petitioner Jethro, as the admitted employer of respondents,
could not be expected to keep payrolls and daily time records in Yakult’s premises as its office is in Quezon City, hence, the
inspection conducted in Yakult’s plant had no basis.
Petitioners maintain that Garcia’s affidavit should not have been given weight, they not having been afforded the opportunity to cross-
examine him.
Issues:
(1) Does the case fall under DOLE Regional Director’s jurisdiction?
(2) Is the lack of opportunity to cross examine detrimental to the case?
Yes. While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to
hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said
provisions do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or
his duly authorized representatives. Rather, said powers are defined and set forth in Article 128[1] of the
Labor Code (as amended by R.A. No. 7730).
Art. 128 (b) retains and further strengthens the power of the Secretary of Labor or his duly authorized representative to issue
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compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of
labor employment and enforcement officers or industrial safety engineers made in the course of inspection. Non-compliance is within
the SOLE Representative’s jurisdiction.
While the employment records of the employees could not be expected to be found in Yakult’s premises in Calamba, as Jethro’s
offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent
documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to do so, more
particularly to submit competent proof that it was giving its security guards the wages and benefits mandated by law.
Jethro’s failure to keep payrolls and daily time records in Yakult’s premises was not the only labor standard violation found to have
been committed by it; it likewise failed to register as a service contractor with the DOLE, pursuant to Department Order No. 18-02
and, as earlier stated, to pay the wages and benefits in accordance with the rates prescribed by law.
(Second Issue):
No. Respecting petitioners’ objection to the weight given to Garcia’s affidavit, it bears noting that said affidavit was not the only basis
in arriving at the judgment award. The payrolls for June 16-30, 2003 and February 1-15, 2004 reveal that the overtime rates were
below the required rate.That Garcia was not cross-examined on his affidavit is of no moment. For, as Mayon Hotel and Restaurant vs.
Adana instructs:
Article 221 of the Labor Code is clear: technical rules are not binding, and the application of technical rules of procedure may be
relaxed in labor cases to serve the demand of substantial justice. The rule of evidence prevailing in court of law or equity shall not be
controlling in labor cases and it is the spirit and intention of the Labor Code that the Labor Arbiter shall use every and all reasonable
means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the
interest of due process. Labor laws mandate the speedy administration of justice, with least attention to technicalities but without
sacrificing the fundamental requisites of due process
Halagueña vs. Philippine Airlines Inc.
G.R. No. 172013, Oct. 2, 2009
Facts:
Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) and members of the Flight Attendants
and Stewards Association of the Philippines (FASAP), a labor organization certified as the sole and exclusive certified as the sole and
exclusive bargaining representative of the flight attendants, flight stewards and pursers of respondent. Respondent and FASAP
entered into a Collective Bargaining Agreement incorporating the terms and conditions of their agreement for the years 2000 to 2005.
Section 144 of the CBA provides that the compulsory retirement for females shall be fifty-five (55) and for males shall be sixty (60).
Petitioners and several female cabin crews manifested that the aforementioned CBA provision on compulsory retirement is
discriminatory, and demanded for an equal treatment with their male counterparts.
Petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of
Preliminary Injunction with RTC. The RTC issued an order upholding its jurisdiction over the present case as the thrust of the Petition
is Sec. 144 of the subject CBA which is allegedly discriminatory as it discriminates against female flight attendants, in violation of the
Constitution, the Labor Code, and the CEDAW. The allegations in the Petition do not make out a labor dispute arising from employer-
employee relationship as none is shown to exist. The RTC issued a TRO enjoining the respondent from implementing Section 144 of
the CBA.
Respondent filed a Petition for Certiorari and Prohibition with Prayer for a Temporary Restraining Order and Writ of Preliminary
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Injunction with the Court of Appeals (CA) praying that the order of the RTC, which denied its objection to its jurisdiction, be annulled
and set aside for having been issued without and/or with grave abuse of discretion amounting to lack of jurisdiction. The CA rendered
a decision granting the respondents’ petition declaring that respondent court has no jurisdiction over the case. The CA denied the
motion for reconsideration, hence the instant petition.
Issue:
Does the trial court have jurisdiction over the petitioners' action challenging the legality or constitutionality of the provisions on the
compulsory retirement age contained in the CBA?
Ruling:
Yes. The petitioners' primary relief is the annulment of Section 144, Part A of the PAL-FASAP CBA, which allegedly discriminates
against them for being female flight attendants. The subject of litigation is incapable of pecuniary estimation, exclusively cognizable
by the RTC, pursuant to Section 19 (1) of B.P. Blg. 129, as amended. The said issue cannot be resolved solely by applying the Labor
Code. Rather, it requires the application of the Constitution, labor statutes, law on contracts and the CEDAW, and the power to apply
and interpret the constitution and CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction. In George Grotjahn
GMBH & Co. v. Isnani, this Court held that not every dispute between an employer and employee involves matters that only labor
arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and
the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only
be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement.
Not every controversy or money claim by an employee against the employer or vice-versa is within the
exclusive jurisdiction of the labor arbiter. Actions between employees and employer where the employer-
employee relationship is merely incidental and the cause of action precedes from a different source of
obligation is within the exclusive jurisdiction of the regular court. Here, the employer-employee relationship
between the parties is merely incidental and the cause of action ultimately arose from different sources of
obligation, i.e., the Constitution and CEDAW. [1] Art. 128 (b): Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of employer-employee exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and
other labor legislation based on the indings of labor employment and enforcement of icers or industrial safety engineers made in the
course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the inding of the labor employment and enforcement of icer and
raises issues supported by documentary proofs which were not considered in the course of inspection. [Emphasis, underscoring and italics
supplied]
Leslie Okol vs. Slimmers World International
G.R. No. 160146 , December 11, 2009
Facts:
Slimmers World employed petitioner Okol as a management trainee. She rose up the ranks to become Head Office Manager and
then Director and Vice President until her dismissal. Prior to Okol’s dismissal, Slimmers World preventively suspended Okol. The
suspension arose from the seizure by the Bureau of Customs of seven Precor elliptical machines and seven Precor treadmills
belonging to or consigned to Slimmers World. The shipment of the equipment was placed under the names of Okol and two customs
brokers for a value less than US$500. For being undervalued, the equipment was seized. Okol filed a complaint with the Arbitration
branch of the NLRC against Slimmers World, Behavior Modifications, Inc. and Moy (collectively called respondents) for illegal
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suspension, illegal dismissal, unpaid commissions, damages and attorney’s fees, with prayer for reinstatement and payment of
backwages.
Respondents filed a Motion to Dismisson the ground that the NLRC had no jurisdiction over the subject matter of the complaint. The
labor arbiter granted the motion to dismiss. The labor arbiter ruled that Okol was the vice-president of Slimmers World at the time of
her dismissal. Since it involved a corporate officer, the dispute was an intra-corporate controversy falling outside the jurisdiction of the
Arbitration branch. Upon appeal, the NLRC reversed the labor arbiter’s order. Hence, the instant petition.
Issue:
Does the NLRC have jurisdiction over instant case?
Ruling:
No. From the documents submitted by the company, petitioner was a director and officer of Slimmers World. The charges of illegal
suspension, illegal dismissal, unpaid commissions, reinstatement and back wages imputed by petitioner against the company fall
squarely within the ambit of intra-corporate disputes. In a number of cases, the Court has held that a corporate officer’s dismissal is
always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation. The question of
remuneration involving a stockholder and officer, not a mere employee, is not a simple labor problem but a matter that comes within
the area of corporate affairs and management and is a corporate controversy in contemplation of the Corporation Code.
It is a settled rule that jurisdiction over the subject matter is conferred by law. The determination of the rights of a director and
corporate officer dismissed from his employment as well as the corresponding liability of a corporation, if any, is an intra-corporate
dispute subject to the jurisdiction of the regular courts. Thus, the appellate court correctly ruled that it is not the NLRC but the regular
courts which have jurisdiction over the present case.
Ronila Sorreda vs. Cambri DGE Electronics Corp.
G.R. No. 172927, February 11, 2010
Facts:
On May 8, 1999, petitioner was hired by respondent as a technician for a period of 5 months. Five weeks into the job, petitioner met
an accident in which his left arm was crushed by a machine and had to be amputated. Petitioner claimed that, shortly after his release
from the hospital, officers of respondent company called him to a meeting with his common-law wife, father and cousin. There he was
assured a place in the company as a regular employee for as long as the company existed and as soon as he fully recovered from
his injury. In September 1999, after he recovered from his injury, petitioner reported for work. Instead of giving him employment, they
made him sign a memorandum of resignation to formalize his separation from the company in the light of the expiration of his five-
month contract. Petitioner filed a complaintfor illegal dismissal (later changed to breach of contract) claiming that respondent failed to
comply with the terms of the contract of perpetual employment which was perfected in June 1999 when he was called to a meeting by
management. The labor arbiter ruled in favor of petitioner and that reinstatement and payment of backwages were the proper reliefs.
Respondent assailed the labor arbiter’s jurisdiction over the case, claiming a lack of causal connection between the alleged breach of
contract and their employer-employee relationship.
Issue:
Does the Labor Arbiter have the jurisdiction to take cognizance of the case?
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Ruling:
No. Jurisdiction over the subject matter of a complaint is determined by the allegations of the complaint. Whereno employer-
employee relationship exists between the parties, and the Labor Code or any labor statute or collective bargaining agreement is not
needed to resolve any issue raised by them, it is the Regional Trial Court which has jurisdiction. Thus it has been consistently held
that the determination of the existence of a contract as well as the payment of damages is inherently civil in nature. A labor arbiter
may only take cognizance of a case and award damages where the claim for such damages arises out of an employer-employee
relationship.
Based on petitioner’s allegations, his cause of action was based on an alleged second contract of employment separate and distinct
from the per-project employment contract. While there was an employer-employee relationship between the parties under their five-
month per-project contract of employment, the present dispute is neither rooted in the aforestated contract nor is it one inherently
linked to it. Petitioner insists on a right to be employed again in respondent company and seeks a determination of the existence of a
new and separate contract that established that right. As such, his case is within the jurisdiction not of the labor arbiter but of the
regular courts. Even assuming arguendo that the labor arbiter had the jurisdiction to decide the case, the Court cannot countenance
petitioner’s claim that a contract of perpetual employment was ever constituted. While the Constitution recognizes the primacy of
labor, it also recognizes the critical role of private enterprise in nation-building and the prerogatives of management. A contract of
perpetual employment deprives management of its prerogative to decide whom to hire, fire and promote, and renders inutile the basic
precepts of labor relations. An absolute and unqualified employment for life in the mold of petitioner’s concept of perpetual
employment is contrary to public policy and good customs, as it unjustly forbids the employer from terminating the services of an
employee despite the existence of a just or valid cause.
Hugo, et. al. vs. LRTA
GR. 181866, March 18, 2010
Facts:
LRTA, a GOCC, entered into a 10-year Agreement for the Management and Operation of the Metro Manila Light Rail Transit System
(the Agreement) from June 8, 1984 until June 8, 1994 with Metro Transit Organization, Inc. (METRO). One of the stipulations in the
Agreement was “ METRO shall be free to employ such employees and officers as it shall deem necessary in order to carry out the
requirements of the Agreement. Such employees and officers shall be the employees of METRO and not of LRTA. METRO shall
prepare a compensation schedule for the salaries and fringe benefits of its personnel (Article 3, par. 3.05).” METRO thus hired its own
employees including herein petitioners-members of the Pinag-isang Lakas ng Manggagawa sa METRO, Inc.-National Federation of
Labor, otherwise known as PIGLAS-METRO, INC.-NFL-KMU (the Union), the certified exclusive collective bargaining representative
of METRO’s rank-and-file employees.
LRTA later purchased the shares of stocks of METRO via Deed of Sale of June 9, 1989. The two entities, however, continued with
their distinct and separate juridical personalities such that when the ten-year Agreement expired on June 8, 1994, they renewed the
same. On July 25, 2000, on account of a deadlock in the negotiation for the new CBA between METRO and the Union, petitioners
filed a Notice of Strike before the National Conciliation and Mediation Board, National Capital Region (NCR). On even date, the Union
went on strike, completely paralyzing the operations of the light rail transit system. The Secretary of Labor assumed jurisdiction and
ordered the striking employees to return to work and for METRO to accept them back under the same terms and conditions prevailing
before the strike.
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When the Agreement with METRO expired on July 31, 2000, the LRTA did not renew it but instead took over the management and
operation of the LRT, hiring new personnel. This prompted METRO to consider their employees, including herein petitioners,
terminated as of September 30, 2000. On February 28, 2002, petitioners filed a complaint for illegal dismissal and unfair labor
practice with prayer for reinstatement and damages against METRO and LRTA before the NCR Arbitration Branch, National Labor
Relations Commission (NLRC). LRTA filed a motion to dismiss on the ground that the Labor Arbiter and the NLRC had no jurisdiction
over it and there was no employer-employee relationship between LRTA and petitioners. The motion was granted and petitioners
appealed to the NLRC, which reversed the Labor Arbiter’s order and ruled that the NLRC has jurisdiction and that LRTA was an
“indirect employer”. It further ruled that the LRTA is a “necessary party” which ought to be joined as party for a complete
determination of petitioners’ claims that the non-renewal of the Agreement by LRTA and the cessation of business by METRO were
carried out with the intent to cover up the illegal dismissal of petitioners. The case was remanded to the Labor Arbiter who by
Decision of August 18, 2004 found for the petitioners.
LRTA appealed the decision to the NLRC and filed a motion for leave to post a property bond in lieu of cash or surety bond. NLRC
dismissed LRTA’s appeal due to its failure to perfect the same, no cash or surety bond having been posted. LRTA filed a Petition for
Certiorari before the CA which it granted and accordingly reversed the assailed issuances of the NLRC. Petitioners filed a Petition for
Review on Certiorari alleging that LRTA’s failure to perfect its appeal by posting a cash or surety bond “renders the Labor Arbiter’s
judgment final and executory and the appeal ineffective and invalid.”
Issue:
Does the NLRC or the Labor Arbiter have jurisdiction over LRTA, a GOCC?
Ruling:
No. The Labor Arbiter and the NLRC do not have jurisdiction over LRTA. Petitioners themselves admitted in their complaint that
LRTA “is a government agency organized and existing pursuant to an original charter (Executive Order No. 603),” and that they are
employees of METRO. LRTA, being a government-owned or controlled corporation created by an original charter, is beyond the
reach of the Department of Labor and Employment which has jurisdiction over workers in the private sector. Employees of METRO
cannot be considered as employees of petitioner LRTA. The employees hired by METRO are covered by the Labor Code and are
under the jurisdiction of the Department of Labor and Employment, whereas the employees of LRTA, a government-owned and
controlled corporation with original charter, are covered by civil service rules. The workers of METRO cannot have the best of two
worlds, e.g., be considered government employees of LRTA, yet allowed to strike as private employees under our labor laws.
Miguela Santuyo, et al. vs. Remerco Garments Manufacturing, Inc. and/or Victoria Reyes
GR No. 174420; March 22, 2010
Facts:
Petitioners, who are employees of the Remerco Garments Manufacturing, Inc. (RGMI), were among those
recalled to work by the company, after their union, the Kaisahan ng Manggagawa sa Remerco Garments
Manufacturing Inc. (KMM Kilusan), staged a 2-year illegal strike from 1992 to 1994. Among the conditions of
their recall was that they would no longer be paid a daily rate but on a piece-rate basis. However, even
before RGMI could normalize its operations, the union filed a notice of strike in the National Conciliation and
Mediation Board (NCMB) on August 8, 1995. According to the union, RGMI conducted a time and motion
study and changed the salary scheme from a daily rate to piece-rate basis without consulting it. It claimed
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that RGMI therefore not only violated the existing collective bargaining agreement (CBA) but also diminished
the salaries agreed upon. It therefore committed an unfair labor practice. The conciliation proceedings
between the union and RGMI before the NCMB resulted in a lock-out. The union went on strike in
November 1995. Therafter, the Secretary of Labor assumed jurisdiction over the case, pursuant to Article
263(g) of the Labor Code. It ordered all striking workers to return to work.
The Secretary of Labor found that the employees would receive higher wages if they were paid on a piece-
rate rather than on a daily rate basis. Hence, the new salary scheme would be more advantageous to the
employees. For this reason, despite the provisions of the CBA, the change in salary scheme was validated.
In an order dated September 18, 1996, the Secretary of Labor ordered all employees to return to work and
RGMI to pay its employees their unpaid salaries (from September 25, 1995 to October 14, 1995) on the
piece-rate basis. Neither the union nor RGMI appealed the aforementioned order. Meanwhile, however, on
October 18, 1995, while the conciliation proceedings between the union and respondent were pending,
petitioners filed a complaint for illegal dismissal against RGMI and respondent Victoria Reyes, accusing the
latter of harassment. Petitioners subsequently amended their complaint, demanding payment of their
accrued salaries from September 25 to October 14, 1995.
Respondents moved to dismiss the complaint in view of the pending conciliation proceedings, involving the
same issue, in the NCMB. It also claimed that alleged violations of the CBA should be resolved according to
the grievance procedure laid out therein. It argued that the labor arbiter had no jurisdiction over the
complaint. The labor arbiter assumed jurisdiction over the case and rendered a decision granting the claims
of the union. The NLRC denied the appeal of the respondents. The Court of Appeals, however, reversed the
NLRC and ruled that the labor arbiter had no jurisdiction over the complaint. This prompted the petitioners to
elevate the matter to the Supreme Court.
Issues:
1. Did the labor arbiter have jurisdiction over the complaint filed by the petitioners?
2. Was the labor arbiter barred by prior judgment from assuming jurisdiction over the complaint?
No, the labor arbiter did not have jurisdiction over the complaint. Petitioners clearly and consistently
questioned the legality of RGMI’s adoption of the new salary scheme (i.e., piece-rate basis), asserting that
such action, among others, violated the existing CBA. The controversy was not a simple case of illegal
dismissal but a labor dispute involving the manner of ascertaining employees’ salaries, a matter which was
governed by the existing CBA. Article 217 of the Labor Code provides that “[c]ases arising from the
interpretation or implementation of collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may be provided in said
agreements.”
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This provision requires labor arbiters to refer cases involving the implementation of CBAs to the grievance
machinery provided therein and to voluntary arbitration.
Moreover, Article 260 of the Labor Code clarifies that such disputes must be referred first to the grievance
machinery and, if unresolved within seven days, they shall automatically be referred to voluntary arbitration.
Thus, under Article 261 of the Labor Code, voluntary arbitrators have original and exclusive jurisdiction over
matters which have not been resolved by the grievance machinery. Pursuant to Articles 217 in relation to
Articles 260 and 261 of the Labor Code, the labor arbiter should have referred the matter to the grievance
machinery provided in the CBA. Because the labor arbiter clearly did not have jurisdiction over the subject
matter, his decision was void.
(Second Issue):
Yes, the labor arbiter was barred by prior judgment from assuming jurisdiction over the complaint. The
Secretary of Labor resolved the labor dispute between the union and RGMI in his September 18, 1996
order. Since neither the union nor RGMI appealed the said order, it became final and executory. Article
263(g) of the Labor Code gives the Secretary of Labor discretion to assume jurisdiction over a labor dispute
likely to cause a strike or a lockout in an industry indispensable to the national interest and to decide the
controversy or to refer the same to the NLRC for compulsory arbitration. In doing so, the Secretary of Labor
shall resolve all questions and controversies in order to settle the dispute. The Secretary of Labor assumed
jurisdiction over the controversy because RGMI had a substantial number of employees and was a major
exporter of garments to the United States and Canada
Settled is the rule that unions are the agent of its members for the purpose of securing just and fair wages
and good working conditions. Since petitioners were part of the bargaining unit represented by the union and
members thereof, the September 18, 1996 order of the Secretary of Labor applies to them.
Furthermore, since the union was the bargaining agent of petitioners, the complaint was barred under the principle of conclusiveness
of judgments. The parties to a case are bound by the findings in a previous judgment with respect to matters actually raised and
adjudged therein. Hence, the labor arbiter should have dismissed the complaint on the ground of res judicata.
APPEALS
Del Rosario vs. Philippine Journalists, Inc.
G.R. No. 181516, August 19, 2009
Facts:
The instant petition stemmed from a complaint filed by petitioner, Cesario L. del Rosario, against herein respondent, Philippine
Journalists, Inc. (PJI), for illegal dismissal with money claims.
On November 5, 2002, the Labor Arbiter rendered a decision in favor of petitioner. Respondent elevated its case to the National
Labor Relations Commission (NLRC). On January 6, 2003, it filed its memorandum of appeal together with the appeal bond issued by
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Philippine Pryce Assurance Corporation (PPAC).
On December 15, 2003, the NLRC issued a resolutiondismissing the appeal for failure to perfect the same due to the posting of the
appeal bond from a bonding company not duly accredited by the Court. But in a bid of liberality, the NLRC directed respondent to post
a new bond, but respondent failed to comply. Thus, on March 31, 2005, the NLRC issued a resolution dismissing the appeal.
Aggrieved, respondent filed a petition for certiorari under Rule 65 of the Rules of Court before the Court of Appeals (CA). The CA
reversed the NLRC, saying that the NLRC committed grave abuse of discretion in dismissing PJI’s appeal based on an erroneous
finding that the surety bond respondent posted was void. The CA ratiocinated that at the time the subject bond was issued, PPAC
was still authorized to issue the same. Thus, there was no legal basis to dismiss PJI’s appeal because it had actually posted a valid
bond. The CA directed the NLRC to give due course to the appeal, as well as directed the respondent to file a new bond.
Issue:
Should the appeal be granted due course?
Ruling:
Yes. The Supreme Court sided with the Court of Appeals. Article 223 of the Labor Code mandates that in cases of judgment involving
a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in an amount equivalent to the monetary award in the judgment appealed from.
The filing of a supersedeas bond for the perfection of an appeal is mandatory and jurisdictional. The requirement that employers post
a cash or surety bond to perfect their appeal is apparently intended to assure workers that if they prevail in the case, they will receive
the money judgment in their favor upon the dismissal of the former’s appeal. It was intended to discourage employers from using an
appeal to delay, or even evade, their obligations to satisfy their employees' just and lawful claims.
At the time of the filing of the surety bond by PJI on January 2, 2003, PPAC was still an accredited bonding company. Thus, it was but
proper to honor the appeal bond issued by a bonding company duly accredited by this Court at the time of its issuance. The
subsequent revocation of the authority of a bonding company should not prejudice parties who relied on its authority. The revocation
of authority of a bonding company is prospective in application.
Still, the Court takes due notice of the opportunity given to PJI to post a new bond issued by an accredited
bonding company in the NLRC resolution dated February 23, 2004. Yet, PJI insisted on the validity of the
bond it had filed despite the fact the PPAC was no longer accredited to act as a surety. This notwithstanding,
guided by the principle that technical rules of procedure should not hamper the quest for justice and truth,
this Court deems it prudent that the case be reviewed and decided on the merits, in view of the question on
the employer-employee relationship of the parties and its resultant legal consequences. But, so as not to
prejudice the rights of petitioner in this case, the Court reiterates the CA directive for PJI to post a new bond
issued by an accredited bonding company.
Republic Cement Corp. vs. Guinmapang
G.R. No. 16891, August 24, 2009
Facts:
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Guinmapang was an employee of Republic Cement from May 1996 to 15 August 2001. Guinmapang’s last position was supervisor
with a monthly salary of P13,100. On 4 July 2001, Republic Cement issued General Circular No. 101-027 announcing the
implementation of a retrenchment program. On 12 July 2001, Guinmapang received a notice from Republic Cement that his services
were being terminated effective 15 August 2001 pursuant to the retrenchment program. On the same date, Republic Cement also
sent the required notice to the Department of Labor and Employment. However, Guinmapang refused to receive the separation
package offered by Republic Cement.
Thereafter, Guinmapang filed a complaint for illegal dismissal and other money claims against Republic Cement. On 30 May 2003,
the Labor Arbiter ruled in Republic Cement’s favor.The dispositive portion of the 30 May 2003 decision provides:
WHEREFORE, premises considered, let the complaint be, as it is hereby, DISMISSED for lack of merit. However, respondent
Republic Cement Corporation, is hereby ordered to pay the complainant his separation pay in the amount of Seventy Eight Thousand
Six Hundred Pesos (Php 78,600)
On 23 June 2003, Guinmapang’s counsel received a copy of the Labor Arbiter’s 30 May 2003 Decision. However, Guinmapang’s
counsel filed his appeal with the NLRC only on 4 July 2003, one day beyond the 10-day reglementary period to file an appeal.
In its 29 January 2004 Order, the NLRC dismissed Guinmapang’s appeal. The 29 January 2004 Order of the NLRC provides:
WHEREFORE, premises considered, the instant appeal, having been filed after the reglementary period, is hereby, DISMISSED.
Issue:
Was the dismissal by the NLRC, for failure to file within the 10-day reglementary period, proper?
Ruling:
No. The Supreme Court agrees with the Court of Appeals. The Court of Appeals started by declaring that in labor cases, the rules of
procedure are not to be strictly adhered to. The Court of Appeals said that technicalities should not be permitted to stand in the way
of equitably and completely resolving the rights and obligations of the parties. The Court of Appeals gave credence to Guinmapang’s
explanation that the appeal was filed one day late because Guinmapang’s counsel suffered from an asthma attack a few days before
the last day for the filing of the appeal. Since no intent to delay the administration of justice could be attributed to Guinmapang, a one
day delay does not justify the appeal’s denial. More importantly, the Court of Appeals declared that Guinmapang’s appeal, on its face,
appears to be impressed with merit. The constitutional mandate to accord full protection to labor and to safeguard the employee’s
means of livelihood should be given proper attention and sanction.A greater injustice may occur if said appeal is not given due course
than if the reglementary period to appeal were strictly followed.
Hilario Ramirez vs. Court of Appeals
G.R. No. 182626, December 4, 2009
Facts:
Petitioner Ramirez hired respondent Valcueba as a rescue/emergency mechanic in his taxi business. As
alleged by Ramirez, Valcueba was assigned at the Babag station, however he was directed to proceed to
Calawisan, Lapu-lapu City, as a unit had developed engine trouble and the mechanic assigned in that area
was absent. Valcueba did not report to the Calawisan station. In fact, he did not report to work anymore.
Petitioner on the other hand claimed that he was illegally dismissed when the seecretary of Ramirez,
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informed him that he would not be allowed to return to work unless he agreed to work on pakyaw basis.
Ramirez however insisted that Valcueba was never terminated from his employment. On the contrary, it was
the latter who abandoned his job. The Labor Arbiter held petitioner Ramirez not guilty of illegal dismissal and
ordered Valcueba to report back to work. In addition, Ramirez was ordered to pay Valcueba his wage
differential and 13th month pay equivalent to P45,825.98. Ramirez thereafter filed a Memorandum of Appeal
with Urgent Motion to Reduce Appeal Bond before the NLRC. The NLRC however dismissed the appeal on
the ground that the same does not comply with Section 6, Rule VI of the NLRC Rules of Procedure:
“Ramirez has not offered a meritorious ground for the reduction of the appeal bond and the amount of
P10,000.00 he posted is not a reasonable amount in relation to the monetary award of P45,825.98.” A
subsequent Motion for Reconsideration was denied by the NLRC. On appeal, the CA dismissed the petition
for failure to comply with the requisite verification.
Issue:
Was the bond posted by Ramirez sufficient to perfect his appeal?
Ruling:
No. Under the Rules, appeals involving monetary awards are perfected only upon compliance with the
following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of
appeal; and (3) payment of the required cash or surety bond. The posting of a bond is indispensable
to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter. The
intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the
employer is clearly expressed in the provision that an appeal by the employer may be perfected "only upon
the posting of a cash or surety bond." Clearly, the filing of the bond is not only mandatory but also a
jurisdictional requirement that must be complied with in order to confer jurisdiction upon the NLRC. Non-
compliance with the requirement renders the decision of the Labor Arbiter final and executory. This
requirement is intended to assure the workers that if they prevail in the case, they will receive the money
judgment in their favor upon the dismissal of the employer's appeal.
Article 223 of the Labor Code indubitably requires that the appeal be perfected only upon the posting of the
cash or surety bond which is equivalent to the monetary award in the judgment appealed from. While the
bond may be reduced upon motion by the employer, this is subject to the conditions that (1) the motion to
reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the
monetary award is posted by the appellant; otherwise, the filing of the motion to reduce bond shall not stop
the running of the period to perfect an appeal. The qualification effectively requires that unless the NLRC
grants the reduction of the cash bond within the 10-day reglementary period, the employer is still expected
to post the cash or surety bond securing the full amount within the said 10-day period. Thus, the non-
compliance of the employer Ramirez of the legal requirements is fatal and had the effect of rendering the
judgment of the Labor Arbiter final and executory.
Juanito Tabigue vs. International Copra Export Corp.
G.R. No. 183335, December 23, 2009
Facts:
Petitioner Tabigue and his 19 co-petitioners, all employees of respondent INTERCO, filed a Notice of Preventive Mediation with the
Department of Labor and Employment – National Conciliation and Mediation Board (NCMB), against respondent, for violation of
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Collective Bargaining Agreement (CBA) and failure to sit on the grievance conference/meeting.
As the parties failed to reach a settlement before the NCMB, petitioners requested to elevate the case to voluntary arbitration. Before
the parties could finally meet, respondent presented before the NCMB a letter of the president of the INTERCO Employees/Laborers’
Union (the union) of which petitioners are members, addressed to respondent’s plant manager, stating that petitioners "are not duly
authorized by the board or the officers to represent the union.” Respondent thus moved to dismiss petitioners’ complaint for lack of
jurisdiction.
The NCMB Director thus concluded that "the demand to submit the issues to voluntary arbitration CAN NOT BE GRANTED. On
petitioners’ Motion for Reconsideration, the NCMB Director, stated that the NCMB "has no rule-making power to decide on issues as
it only facilitates settlement among the parties to labor disputes."
Petitioners thus assailed the NCMB Director’s decision via Petition for Review before the Court of Appeals which dismissed it stating
that NCMB is not a quasi-judicial agency exercising quasi-judicial functions but merely a conciliatory body for the purpose of
facilitating settlement of disputes between parties, its decisions or that of its authorized officer cannot be appealed either through a
petition for review under Rule 43 or under Rule 65 of the Revised Rules of Court.
Issue:
Does the NCMB, when exercising adjudicative powers, act as a quasi-judicial agency?
Ruling:
No. Rule 43 of the Rules of Court under which petitioners filed their petition before the Court of Appeals applies to awards,
judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Given
NCMB’s functions, it cannot be considered a quasi-judicial agency. Hence, its decisions or that of its authorized officer cannot be
appealed either through a petition for review under Rule 43 or under Rule 65 of the Revised Rules of Court.
Mindanao Times Corp. vs. Mitchel Confessor
G.R. No. 183417, February 5, 2010
Facts:
Aggrieved by the decision of the Labor Arbiter awarding separation pay, backwages and attorney’s fees, the employer appealed the
arbiter’s decision to the NLRC. But in posting the required appeal bond necessary for the perfection of the appeal, the Petitioner
deposited the prescribed amount with a bank and only surrendered to the NLRC the passbook covering the deposit, along with a
Deed of Assignment it executed assigning the proceeds of the deposit in favor of respondent and authorizing the NLRC to release the
same in the event that the Labor Arbiter’s Decision becomes final and executory.
Issue:
Did the Petitioner comply with the required cash or surety bond prescribed for cases elevated to the NLRC?
Ruling:
No. Article 223 of the Labor Code provides that an appeal by the employer to the NLRC from a judgment of a labor arbiter which
involves a monetary award may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company
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duly accredited by the NLRC, in an amount equivalent to the monetary award in the judgment appealed from. The posting of a bond
is indispensable to the perfection of an appeal. In the present case, the Deed of Assignment, as well as the passbook, which
petitioner submitted to the NLRC is neither a cash nor a surety bond. Petitioner’s appeal to the NLRC was thus not duly perfected,
thereby rendering the Labor Arbiter’s Decision final and executory.
REINSTATEMENT
Cabigting vs San Miguel Foods, Inc.
G.R. No. 167706, November 5, 2009
Facts:
Petitioner Reynaldo G. Cabigting was hired as a receiver/ issuer at the San Miguel Corporation, Feeds and Livestock Division (B-
Meg) and after years of service, he was promoted as inventory controller. Subsequently, respondent San Miguel Foods, Inc., through
its President sent petitioner a letter informing him that his position as sales office coordinator under its logistic department has been
declared redundant. Simultaneously, respondent terminated the services of petitioner effective July 31, 2000, and offered him an
early retirement package.
Petitioner was surprised upon receipt of the letter because he was not a sales office coordinator, and yet he was being terminated as
such. Accordingly, petitioner refused to avail of the early retirement package. Prior to petitioner’s termination on July 31, 2000, he was
an inventory controller, performing at the same time the function of a warehouseman. Furthermore, petitioner was an active union
officer of respondent’s union but upon his termination, was only a member thereof. With the support of his union, petitioner filed a
Complaint questioning his termination.
The Labor Arbiter rendered a Decision, where it ruled that petitioner was illegally dismissed. Accordingly, the LA ordered respondent
to pay petitioner backwages, separation pay in lieu of reinstatement and attorney’s fees. Petitioner appealed the LA’s Decision as to
his non-reinstatement to his previous post. The NLRC ordered his reinstatement. However, the CA, on the ground that there were
strained relations between employee and employer, reversed the portion of the NLRC Decision which decreed petitioner’s
reinstatement.
Issue:
Do “strained relations” bar petitioner’s reinstatement?
Ruling:
No. Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right.
However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship
between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly where the
illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of
separation pay instead of reinstatement.
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In order for the doctrine of strained relations to apply, it should be proved that the employee concerned occupies a position where he
enjoys the trust and confidence of his employer and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may
be generated as to adversely affect the efficiency and productivity of the employee concerned.
Both the LA and the CA based their conclusions on impression alone. It bears to stress that reinstatement is the rule and, for the
exception of strained relations to apply, it should be proved that it is likely that if reinstated, an atmosphere of antipathy and
antagonism would be generated as to adversely affect the efficiency and productivity of the employee concerned. However, both the
LA and the CA failed to state the basis for their finding that a strained relationship exists.
Pangilinan vs. Wellmade Manufacturing Corp.
G.R. No. 187005, April 7, 2010
Facts:
Petitioner Ferdinand Pangilinan was employed by Wellmade Manufacturing Corporation (respondent) on July 2, 2001 as Key Account
Specialist tasked to sell Speed Detergent products to supermarkets and groceries within his assigned area. On October 31, 2003,
petitioner used the service vehicle to travel to Naga City without approval from respondent. While returning to Manila on November 3,
2003, the vehicle broke down and it took more than two days to have it repaired. Petitioner admitted having used the vehicle without
respondent’s approval and reported the incident1 on November 8, 2003 to the District Sales Manager.
The District manager, thereupon sent on November 13, 2003 a memorandum2 to petitioner requiring him to explain within 48 hours
why he should not be disciplined. Petitioner explained that the vehicle had to undergo major repairs for two days the expenses for
which he himself shouldered. He stated that he would accept any sanctions that may be imposed upon him. In another
memorandum4 dated December 15, 2003, respondent required petitioner to explain within 24 hours his unauthorized absence for the
period November 22 to December 15, 2003. Petitioner explained that he did not report for work starting November 22 because on
November 21, he was told by his supervisors to resign. and that he was willing to resign, as requested, provided that the benefits due
him would be given. It appears, however, that petitioner’s letter was received by respondent only on January 20, 2004, hence, in the
interim or on December 22, 2003 and January 5, 2004, respondent sent petitioner memoranda giving him a last chance to explain his
unauthorized absences.
Petitioner filed with the Labor Arbiter a complaintfor constructive dismissal. By Decision of Labor Arbiter found respondent liable for
illegal dismissal and ordered it to pay petitioner separation pay computed at one month for every year of service, as well as
proportionate 13th month pay and service incentive leave pay. The Arbiter awarded separation pay instead of reinstatement.
However, NLRC affirmed the complainant was illegally dismissed but ordered to reinstate Complainant to his former position and to
pay him his full backwages. The appellate court, on respondent’s petition, modified the NLRC decision. It held that the NLRC erred in
ordering reinstatement, instead of payment of separation pay,
Issue:
Whether Petitioner is entitled to bakwages or reinstatement.
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Ruling:
Article 279 of the Labor Code provides that "[a]n employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages...” An illegally dismissed employee is entitled to two
reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. In instances where reinstatement is no
longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and
backwages. Since reinstatement is no longer feasible in the present case, the award of separation pay in lieu of reinstatement is in
order. Petitioner’s prayer for the award of backwages is meritorious, it, and the award of separation pay not being mutually exclusive.
NPC vs. Olandesca
G.R. No. 171434, April 23, 2010
Facts:
Respondent Alan A. Olandesca was first employed by petitioner as an Extension Aide and was assigned at the Tiwi Watershed.
Thereafter, he held various positions in petitioner's corporation. While an employee of petitioner, respondent was allowed to stay in a
house within petitioner’s premises. As Supervising Property Officer, respondent had custody of all the materials and supplies stored.
On several occasions, from November 17, 1996 to January 25, 1997, respondent withdrew several items from the
warehouse/property office, without the required WRS(Warehouse Requisition Slip). Among these items were barbed wires, interlink
wires, nails, and G.I. wires. Upon respondent's directive, all items he withdrew from the property office were duly recorded on the
security logbook of the security guard on duty. However, the items withdrawn were already replaced by the said respondent.
Section Chief of the Angat filed a complaint against respondent for acts inimical to the government and for violation of Article VI,
Section 3(f) and 3.15 of the NPC Code of Conduct and Discipline. Petitioner's Regional Board of Inquiry and Discipline (RBID) heard
the case and recommended that respondent suffer the penalty of dismissal with forfeiture of all cash and non-cash benefits due him
by virtue of his employment. Respondent moved for the reconsideration of the decision, but the Board denied his motion. The CA,
however, granted the petition and ordered respondent’s reinstatement on the ground that respondent did not commit dishonesty. It
said that respondent acted in complete good faith, and was motivated only by a desire to serve the public beyond the call of duty..
Issue:
Whether respondent is entitled to reinstatement.
Ruling:
Yes. It is not disputed that respondent took several materials and supplies from petitioner's warehouse without the approved WRS.
However, this should not be construed as dishonesty on the part of respondent that would warrant his dismissal from the service for
the following reasons: 1) The withdrawals of the supplies were duly recorded in the security guard's logbook, 2) Right after
withdrawing the items, respondent replaced them on his own initiative, without anyone instructing him to do so, 3) There is no clear
showing that respondent misappropriated or converted the items for his own personal use or benefit and 4) there was no basis to
charge him for malversation of public property as there was no misappropriation of the supplies for his personal use and that the
same were for general purpose and not for any specific use.
Nonetheless, although the respondent did not commit an overt act of dishonesty, he is not exonerated from liability. Given the
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circumstances of the case, however, where the proper penalty should only be a reprimand, this Court finds the aforementioned
cases to be inapplicable herein. On this note, this Court deems it proper to distinguish between the penalties of dismissal or
suspension and reprimand and their respective effects on the grant or award of backwages. When an employee is dismissed or
suspended it is but logical that since he is barred from reporting to work the same negates his right to be paid backwages. He has no
opportunity to work during the period he was dismissed or suspended and, therefore, he has no salary to expect. However, the same
does not hold true for an employee who is reprimanded. A reprimand usually carries a warning that a repetition of the same or similar
act will be dealt with more severely. Under normal circumstances, an employee who is reprimanded is never prevented from reporting
to work. He continues to work despite the warning. Thus, in the case at bar, since respondent’s penalty should only be a
reprimand, this Court deems it proper and equitable to affirm the CA’s award of backwages.
BACKWAGES/SEPARATION PAY
Daniel P. Javellana, Jr. vs. Albino Belen / Albino Belen vs. Daniel P. Javellana, Jr. and Javellana farms
G.R. No. 181913, G.R. No. 182158, March 5, 2010
Facts:
Petitioner Albino Belen filed a complaint against respondents Javellana Farms, Inc. and Daniel Javellana, Jr. for illegal dismissal and
underpayment or non-payment of salaries, overtime pay, holiday pay, service incentive leave pay (SILP), 13th month pay, premium
pay for holiday, and rest day as well as for moral and exemplary damages and attorney's fees. Petitioner alleged that respondent
Javellana hired him as company driver on January 31, 1994and assigned him the tasks of picking up and delivering live hogs, feeds,
and lime stones used for cleaning the pigpens. On August 20, 1999, respondent Javellana suddenly fired petitioner, which prompted
petitioner to file a complaint. Respondent Javellana on the other hand claimed that he hired petitioner not as a company driver but as
a family driver.
The Labor Arbiter found petitioner Belen to be a company driver as evidenced by the pay slips that the farm issued to him and
awarded him backwages, separation pay, 13th month pay, SILP, holiday pay, salary differential, and attorney's fees. On appeal, the
National Labor Relations Commission (NLRC) declared Belen as a family driver. The NLRC also found Belen to have been illegally
dismissed. But since he was but a family driver, the NLRC deleted the award of backwages and separation pay and instead ordered
Javellana to pay him 15 days salary by way of indemnity pursuant to Article 149 of the Labor Code. Aggrieved, petitioner elevated the
matter to the CA, the CA held Belen as a company driver since, aside from driving respondent Javellana and his family, he also did
jobs that were needed in Javellana's business operations, such as hauling and delivering live hogs, feeds, and lime stones for the pig
pens.The CA also said that Javellana's abrupt dismissal of Belen for an isolated case of neglect of duty was unjustified.
Issue:
Should the monetary award in his favor run until the finality of the decision in his case?
Ruling:
Yes. As provided in Art. 279 of the Labor Code, the law intends the award of backwages and similar benefits to accumulate past the
date of the Labor Arbiter's decision until the dismissed employee is actually reinstated. But if, as in this case, reinstatement is no
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longer possible, this Court has consistently ruled that backwages shall be computed from the time of illegal dismissal until the date
the decision becomes final.
The parties filed separate petitions before this Court. The petition in G.R. 181913, filed by respondent Javellana, questioned the CA's
finding of illegality of dismissal while the petition in G.R. 182158, filed by petitioner Belen, challenged the amounts of money claims
awarded to him. The Court denied the first with finality in its resolution of September 22, 2008; the second is the subject of the
present case. Consequently, Belen should be entitled to backwages from August 20, 1999, when he was dismissed, to September
22, 2008, when the judgment for unjust dismissal in G.R. 181913 became final.In his separation pay, technically the computation of
separation pay would end on the day he was dismissed on August 20, 1999 when he supposedly ceased to render service and his
wages ended. But, since Belen was entitled to collect backwages until the judgment for illegal dismissal in his favor became final,
here on September 22, 2008, the computation of his separation pay should also end on that date.
Further, since the monetary awards remained unpaid even after it became final on September 22, 2008, it is but fair that respondent
Javellana be required to pay 12% interest per annum on those awards from September 22, 2008 until they are paid.
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8/27/2020 LABOR(S.U.

HOME CASE DIGEST NOTES AND LEGAL FORMS COMMENTARY GUESTBOOK

Ramy Gallego vs. Bayer Philippines, Inc., et. al.

G.R. No. 179807, July 31, 2009

(2) Was petitioner illegally dismissed from his employment?

Ruling (First Issue):

GR No. 174420; March 22, 2010

Ruling (First Issue):

Del Rosario vs. Philippine Journalists, Inc.

G.R. No. 181516, August 19, 2009

Should the appeal be granted due course?

G.R. No. 174209, August 25, 2009

Are respondents considered regular employees?

GR No. 185251, October 2, 2009

Is there employer-employee relationship?

Masonic Contractor Inc. vs Madjos, Tiamzon and Rapadas

G.R. No. 185094, November 25, 2009

Are respondents regular employees of petitioner?

G.R. No. 174044, November 27, 2009

William Uy Construction vs. Trinidad

G.R. No. 183250, March 10, 2010

Is respondent Trinidad a regular employee?

LABOR ONLY CONTRACTING

G.R. No. 179546, February 13, 2009

Is Interserve a legitimate job contractor?

Coca-cola Bottlers Philippines vs. Ricky Dela Cruz, et. al.

G.R. No. 184977, December 7, 2009

Was there labor-only contracting?

G.R. No. 160506, March 9, 2010

1.) Is P&G the employer of petitioners?

2.) Were petitioners illegally dismissed?

dismissal of petitioners-employees of Promm-Gem.

Temic Automotic Philippines vs.

Temic Automotive Philipppines Employees Union-FFW

G.R. No. 186965, December 23, 2009

WPP Marketing Communications, Inc., et al. vs. Jocelyn M. Galera

GR No. 169207; March 25, 2010

Jocelyn M. Galera vs. WPP Marketing Communications, Inc., et al.

GR No. 169239; March 25, 2010

The case was subsequently elevated to the Supreme Court.

1. Is Galera an employee or a corporate officer of WPP?

2. Did the labor arbiter have jurisdiction over the case?

3. Was Galera illegally dismissed?

Ruling (First Issue):

People vs. Balagan and Avila

G.R. No. 183099, February 3, 2010

Was the modification correct?

G.R. No. 158627, March 5, 2010

Is appellant guilty of illegal recruitment in large scale?

G.R. No. 179792, March 5, 2010

Is petitioner liable for non-issuance of receipt and misrepresentation?

G.R. No. 184058, March 10, 2010

Is appellant guilty of illegal recruitment in large scale?

JUST AND AUTHORIZED CAUSES

FRAUD AND LOSS OF CONFIDENCE

G. R. No. 180465, July 31, 2009

Eats-Cetera Food Services vs. Letran

GR No. 179507, October 2, 2009

Is Espadero’s infraction serious enough to warrant the penalty of dismissal?